G.R. No. L-12183; May 29, 1959
SIXTO CELESTINO, petitioner-appellant, vs. AUDITOR GENERAL OF THE PHILIPPINES, and THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, respondents-appellees.

FACTS

Under the Roxas-Vegelback Agreement and Republic Act No. 33 , surplus U.S. war property was transferred to the Philippine Government. Part of this property was located at Ordinance Sub-Depot No. 6 in Manila. The Government Enterprises Council (GEC) approved turning over all combat materials in the depot to the Armed Forces of the Philippines (AFP). When the remaining property was put up for negotiated sale, a clause was inserted excluding “All combat materials (military weapons, gun parts and accessories) that may be found.” The AFP was authorized to earmark and withdraw such materials. On May 5, 1949, the AFP, through Col. Benjamin C. Molina, conditioned its release of the depot on retaining the exclusive right to screen all items as buyers hauled them, to segregate any needed combat material. On July 12, 1949, the GEC approved the negotiated sale of the depot’s remaining fixed installations and movable property to the Fil-American Irregular Troops, represented by petitioner Sixto Celestino, for P42,000. Before the sale, Celestino signified his written agreement to the condition set by Col. Molina. The sales invoice and tally-out sheet delivered to Celestino both contained the clause excluding all combat materials. About three months after the sale, AFP representatives withdrew 7,926 boxes of ordinance items and 20 radial engines from the depot. Celestino demanded payment, but the AFP refused, asserting ownership never passed to him as the items were excluded. After denials by the Secretary of National Defense and the President, Celestino filed a claim with the Auditor General, who disallowed it on February 6, 1957. Celestino appealed.

ISSUE

Whether the 7,926 boxes of ordinance items and 20 radial engines withdrawn by the AFP from the depot were excluded from the sale to petitioner Celestino and thus not payable to him.

RULING

The Supreme Court affirmed the decision of the Auditor General, denying Celestino’s claim. The items withdrawn were expressly excluded from the sale. From the beginning, the sale was conditioned on the exclusion of all combat materials, defined to include military weapons, gun parts, and accessories. Petitioner had agreed in writing to the AFP’s condition to screen and segregate such materials. The sales invoice and tally-out sheet he signed contained the exclusion clause. The withdrawn ordinance items fell within this category of combat materials. The radial engines, as spare parts for tanks (military weapons), were also combat materials within the contract’s exclusion. The Court rejected the petitioner’s reliance on a purported classification between “essentially” and “non-essentially” combat materials, as the contract stipulations were clear and needed no further interpretation. Ownership of the excluded combat materials never passed to the petitioner.