G.R. No. L-3659 April 30, 1954
PHILIPPINE OPERATIONS, INC., petitioner, vs. AUDITOR GENERAL OF THE PHILIPPINES and the BUREAU OF PRISONS, respondents.

FACTS

On October 3, 1947, petitioner Philippine Operations, Inc., entered into a barter agreement with the Bureau of Prisons. Petitioner agreed to deliver a sawmill (complete, with accessories) and two LCMs (landing barges) in good running condition to the Bureau. In exchange, the Bureau agreed to deliver 350,000 board feet of sawn lumber in installments, with the first 70,000 board feet due thirty days after installation of the sawmill. Upon delivery, the Bureau’s receipts indicated the sawmill and barges were in unsatisfactory condition, with missing and defective parts. Petitioner later furnished some missing parts. The Bureau claimed it verbally notified petitioner of the defects and that petitioner’s manager agreed to reimburse repair costs. Due to delays in making the equipment operational, the Bureau could not deliver the lumber on time. Petitioner later proposed to settle the Bureau’s obligation by acquiring surplus properties from the Surplus Property Commission instead of receiving lumber, but no suitable arrangement was finalized. The Bureau later offered to deliver the lumber, but petitioner rejected this as too late and instead filed a claim with the Auditor General for P70,000 (alleged value of the equipment) plus P35,000 in damages. The Secretary of Justice opined the contract was pure barter with no money consideration, and the Bureau was willing to perform, so the contract should be carried out. The Auditor General denied the claim. Pending appeal, the parties agreed in April 1950 to sell the 350,000 board feet of lumber and give the proceeds to petitioner, who received P45,500. Petitioner’s claim before the Court was thus reduced to P24,500 (the difference between the alleged P70,000 value and the P45,500 received) and P35,000 in damages. Respondents contested the Auditor General’s jurisdiction over the claim.

ISSUE

1. Whether the Auditor General has jurisdiction over petitioner’s claim for P24,500 and P35,000 in damages.
2. Whether petitioner is entitled to the claimed amounts of P24,500 and P35,000.

RULING

1. The Court found it unnecessary to resolve the jurisdictional issue definitively, as the claim could be decided on its merits. However, Justice Pablo, in a separate concurrence, stated he concurred in the dismissal specifically on the ground that the Auditor General lacked jurisdiction to decide the claim.
2. The Court denied petitioner’s claims. The delay in the Bureau’s delivery of lumber was attributable to petitioner’s own faults: (a) petitioner failed to deliver the sawmill and barges complete and in good running condition as guaranteed, which delayed installation and thus the start of the lumber delivery period; and (b) petitioner’s own proposals to accept surplus properties instead of lumber contributed to the belated delivery. The Bureau had indicated readiness to deliver lumber in November 1948, but petitioner was not willing to accept it at that time. Therefore, petitioner was not entitled to the difference in value or to damages. The petition for review was dismissed.