AUYONG HIAN (HONG WHUA HANG) vs. CTA - G.R. No. L-28782

AUYONG HIAN (HONG WHUA HANG) vs.

COURT OF TAX APPEALS, ET AL.

G.R. No. L-28782         November 27, 1981

The 600 hogs heads of Virginia type tobacco were stored at Customs Bonded Warehouse No. 81, operated by Consolidated Terminals, Inc. In 1962, seizure proceedings was instituted against the tobacco as an illegal importation pursuant to Republic Acts No. 698 and 1194. A decision on the seizure case was rendered by the collector, Port of Manila, declaring the 600 hogs heads of tobacco forfeited in favor of the government. The Special Committee which was created for the disposal of the forfeited tobacco ordered and scheduled the sale thereof through public bidding wherein the terms and condition of the sale were specified. At the scheduled sale of the forfeited tobacco, Consolidated Tobacco Industries Of The Philippines, Inc. (CTIP) turned out to be the 'highest bidder'. The Collector approved the final sale subject to the condition that the balance of the purchase price should be paid within five (5) days from receipt thereof and that the said tobacco will be released in favor of CTIP upon the posting of a surety bond to guarantee CTIP's undertaking to export locally grown tobacco. However, movant was unable to secure delivery of the tobacco purchased by it in view of the pendency of several court proceedings filed by petitioner, Auyong Hian wherein such delivery was judicially enjoined. When the last of those injunctions was lifted and before another one could be obtained by said petitioner, movant demanded delivery of the tobacco but the Consolidated Terminals, Inc. (or Luzon Stevedoring Co., Inc.) in whose warehouses the tobacco was stored, refused to release the same without its being paid the storage fees due as of then. Apprehensive that a new injunction might be secured by Auyong Hian, which would further delay its getting delivery of the tobacco, and because the Bureau of Customs could not immediately make the corresponding payment, movant paid the Consolidated Terminals, Inc. the storage fees demanded under an express understanding, with the Bureau of Customs that the same would be refunded to it.

ISSUE:

Whether the sale of the tobacco from the public auction to CTIP was valid.

HELD:

Yes. The sale of the tobacco from the public auction to CTIP was valid. Even if the consideration paid for the forfeited tobacco was inadequate, it is not a ground for the invalidity of a contract. Article 1355 of the Civil Code provides the law for this matter. It was not shown that the instant sale is a case exempted by law from the operation of Art. 1355. Neither has the petitioner shown that there was fraud, mistake or undue influence in the sale. Therefore, there is no reason to invalidate the sale of said tobacco to CTIP.