Lim vs. People of the Philippines

A receipt acknowledging goods received "to be sold" at a specified price, with the proceeds to be given to the owner "as soon as it was sold," constitutes a contract of agency to sell, not a contract of sale, because ownership of the goods does not transfer to the recipient. Consequently, the agent's failure to remit the proceeds upon sale gives rise to criminal liability for estafa, and the obligation being demandable upon sale, Article 1197 on judicial fixing of a period does not apply.

Petitioner Lourdes Valerio Lim was a businesswoman who approached complainant Maria de Guzman Vda. de Ayroso, a tobacco owner from Gapan, Nueva Ecija, to propose selling the latter's tobacco. The transaction was documented in a receipt drawn by Salud Bantug, the complainant's sister, and witnessed by Bantug and her maid. The central legal question was whether this receipt created an agency to sell or a contract of sale, a distinction that determined whether petitioner could be held criminally liable for estafa.

On January 10, 1966, petitioner Lourdes Valerio Lim, a businesswoman, went to the house of Maria de Guzman Vda. de Ayroso in Gapan, Nueva Ecija, and proposed to sell Ayroso's tobacco. Ayroso agreed, and petitioner was to receive the overprice for which she could sell the tobacco. The agreement was made in the presence of Ayroso's sister, Salud G. Bantug, who drew the document, Exhibit "A," dated January 10, 1966. The receipt stated that petitioner had received 615 kilos of leaf tobacco from Ayroso to be sold at P1.30 per kilo, with the proceeds in the amount of P799.50 to be given to Ayroso as soon as it was sold. The document was signed by petitioner and witnessed by Salud Bantug and her maid, Genoveva Ruiz. Petitioner arrived with a jeep, loaded the tobacco, and brought it away.

Of the total value of P799.50, petitioner paid Ayroso only P240.00, made in three separate payments. Demands for payment of the balance were made by Ayroso and particularly by her sister, Salud Bantug, who testified that she went to petitioner's house several times but petitioner often eluded her, and that petitioner's "camarin" was empty. Although petitioner denied that demands were made, on October 19, 1966, she wrote a letter to Salud Bantug explaining that she had difficulty collecting from the market in Cabanatuan because her customers were transferring stalls, and promising to pay. Pursuant to this letter, petitioner sent a money order for P100.00 on October 24, 1967, another for P50.00 on March 8, 1967, and paid P90.00 on April 18, 1967, totaling P240.00. As no further amount was paid, the complainant filed a complaint for estafa.

The Court of Appeals found that petitioner was a businesswoman, that she asked Ayroso to be her agent in selling the tobacco, and that she admitted there was an agreement that she would be given something upon the sale of the tobacco. The appellate court reasoned it was unbelievable that petitioner would go to the extent of going to Ayroso's house and taking the tobacco with a jeep she had brought if she did not intend to make a profit from the transaction.

• Nature of the Contract: Petitioner argued that Exhibit "A" was a contract of sale, not a contract of agency to sell, because the receipt did not expressly state that she would be paid a commission if the goods were sold.
• Fixing of Period: Petitioner argued that the obligation did not fix a period, and that from its nature and circumstances it could be inferred that a period was intended, in which case the only action that could be maintained was a petition to ask the court to fix the duration thereof under Article 1197 of the New Civil Code.
• Alternative Theory on Period: Petitioner alternatively argued that the receipt gave rise to an obligation wherein the duration of the period depended upon the will of the debtor, in which case the only action that could be maintained was likewise a petition to ask the court to fix the duration of the period.

N/A — The decision does not separately recount the respondent's arguments beyond the prosecution's position implicit in the complaint and the lower courts' rulings.

• Nature of the Contract: Whether the receipt, Exhibit "A," is a contract of agency to sell or a contract of sale of the subject tobacco between petitioner and complainant, thereby precluding criminal liability of petitioner for the crime charged.
• Applicability of Article 1197: Whether the Court of Appeals was legally right in holding that Article 1197 of the New Civil Code does not apply, as against petitioner's theory that the obligation did not fix a period and that the only action that could be maintained was a petition to ask the court to fix the duration thereof.
• Fixing of Period: Whether the Court of Appeals was legally right in holding that Exhibit "A" "fixed a period" and that the obligation was therefore immediately demandable as soon as the tobacco was sold.

• Nature of the Contract: No. The receipt constituted a contract of agency to sell, not a contract of sale, because the fact that petitioner received the tobacco to be sold at P1.30 per kilo with the proceeds to be given to complainant as soon as it was sold strongly negates transfer of ownership of the goods to petitioner.
• Applicability of Article 1197: No. Article 1197 of the New Civil Code does not apply because the agreement clearly fixed the period — the obligation was immediately demandable as soon as the tobacco was disposed of.
• Fixing of Period: Yes. The Court of Appeals was correct in holding that Exhibit "A" fixed a period and that the obligation was immediately demandable as soon as the tobacco was sold.

• Nature of the Contract: The Court reasoned that the agreement clearly showed that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold. The fact that petitioner received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it was sold strongly negates transfer of ownership of the goods to petitioner. The agreement constituted her as an agent with the obligation to return the tobacco if the same was not sold. The Court adopted the Court of Appeals' reasoning that aside from Maria Ayroso's testimony that petitioner asked to be her agent, petitioner herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The Court found it unbelievable that a businesswoman would go to the extent of going to Ayroso's house and taking the tobacco with a jeep she had brought if she did not intend to make a profit out of the transaction. If petitioner were merely doing a favor, it would have been Ayroso who would have gone to petitioner's house to deliver the tobacco, not the reverse.

• Applicability of Article 1197: The Court held that it is clear in the agreement, Exhibit "A," that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold, or that the obligation was immediately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the New Civil Code, which provides that the courts may fix the duration of the obligation if it does not fix a period, does not apply.

• Fixing of Period: The Court affirmed the Court of Appeals' ruling that Exhibit "A" fixed a period — the obligation was immediately demandable as soon as the tobacco was sold. Since the tobacco had been sold and the proceeds were not remitted, petitioner's failure to pay constituted estafa.

• Agency to Sell vs. Contract of Sale — In an agency to sell, ownership of the goods remains with the principal, and the agent is obligated to return the goods if they are not sold; in a contract of sale, ownership transfers to the buyer. The Court applied this distinction by holding that the receipt's language — that the tobacco was "to be sold" at a specified price with proceeds to be given to the owner "as soon as it was sold" — negated transfer of ownership and established an agency relationship, making petitioner liable for estafa upon failure to remit the proceeds.

• Obligation with a Fixed Period — Under Article 1197 of the New Civil Code, courts may fix the duration of an obligation only when the obligation does not fix a period. The Court held that where the agreement expressly provides that payment is due "as soon as" the goods are sold, the period is fixed and the obligation becomes immediately demandable upon the occurrence of that event, rendering Article 1197 inapplicable.

• "It is clear in the agreement, Exhibit 'A', that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold, or, that the obligation was immediately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the New Civil Code, which provides that the courts may fix the duration of the obligation if it does not fix a period, does not apply." — This passage states the ratio decidendi on the inapplicability of Article 1197, establishing that a "as soon as sold" clause fixes a period and makes the obligation immediately demandable.

• "The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it was sold, strongly negates transfer of ownership of the goods to the petitioner. The agreement (Exhibit 'A') constituted her as an agent with the obligation to return the tobacco if the same was not sold." — This passage articulates the controlling distinction between agency to sell and contract of sale, grounding the Court's finding that no transfer of ownership occurred.

• "The appellant is a businesswoman, and it is unbelievable that she would go to the extent of going to Ayroso's house and take the tobacco with a jeep which she had brought if she did not intend to make a profit out of the transaction. Certainly, if she was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would not have been the appellant who would have gone to the house of Ayroso, but it would have been Ayroso who would have gone to the house of the appellant and deliver the tobacco to the appellant." — This passage, adopted from the Court of Appeals, supports the finding of an agency relationship based on circumstantial evidence of profit motive and the practical dynamics of the transaction.

N/A — The decision does not cite any prior case law.

• Article 1197, New Civil Code — Provides that courts may fix the duration of an obligation if it does not fix a period. The Court held this provision inapplicable because Exhibit "A" fixed a period — the obligation became demandable as soon as the tobacco was sold.

Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr., and De la Fuente, JJ., concurred.

N/A — No dissenting opinions are noted in the decision.