FACTS: Plaintiff Tan Sen Guan & Co.

secured a judgment for a sum

of P21,426 against the Mindoro Sugar Co. of which the Philippine Trust
is the trustee. The plaintiff entered into an agreement with the defendant
Philippine Trust Co. wherein the former assigned, transferred, and sold to
the latter the full amount of said judgment against Mindoro Sugar Co.
together with all its rights thereto and the latter offered satisfactory
consideration thereto. The agreement further stipulated that upon signing
of the agreement, Phil Trust shall pay Tan Sen the sum of P5000; should the
Mindoro Sugar be sold or its ownership be transferred, an additional
P10,000pesos will be paid to Tan Sen upon perfection of the sale; in case any
other creditor of Mindoro Sugar obtains in the payment of his credit a
greater proportion than the price paid to Tan Sen, the Phil Trust shall pay to
the latter whatever sum may be necessary to be proportioned the claim
of the creditor. However, if the Mindoro Sugar is sold to any person who
does not pay anything to the creditors or pay them equal or less than 70
percent of their claim, or should the creditors obtain from other sources
the payment of their claim equal to or less than 70 percent, the Phil Trust
will only pay to Tan Sen the additional sum of P10,000 upon the sale or
transfer of the Mindoro Sugar as above stated. The properties of Mindoro
Sugar were later on sold at public auction to the Roman Catholic Archbishop
of Manila and base on the agreement plaintiff Tan Sen brought suit against
defendant Phil Trust for the sum of P10,000.

Defendant’s argument: Only a portion of the Mindoro Sugar’s properties

were sold.

CFI: Absolved the defendant on two grounds: (a) in the contract, it was only
bound as a trustee and not as an individual; (b) that it has not been proved
that all the properties of the Mindoro Sugar had been sold.

Issues:
(1)W/N the defendant is not personally responsible for the claim of
the plaintiff based on the deed of assignment because of having executed
the same in its capacity as trustee of the properties of the Mindoro Sugar.
(2)W/N all the properties of the Mindoro Sugar were sold at public
auction to the Roman Catholic Archbishop of Manila.

Held: SC reversed CFI’s ruling.(1)The Phil Trust Company in its

individual capacity is responsible for the contract as there was no express
stipulation that the trust estate and not the trustee should be held liable
on the contract in question. Not only is there no express stipulation that the
trustee should not be held responsible but the ‘Wherefore’ clause of the
contract states the judgment was expressly assigned in favor of Phil Trust
Company and not Phil Trust Company, the trustee. It therefore follows that
appellant had a right to proceed directly against the Phil Trust on its
contract and has no claim against either Mindoro Sugar or the trust
estate.(2)Exhibit D (the certificate of sale to Roman Catholic
Archbishop) shows that all properties to Phil Trust as Trustee were included
in the sale. The only thing reserved from the sale was the standing crops,
and it is reasonable to presume that they had also been sold between the
date of the sale and the institution of this action. Where the real estate,
the personal property including animals, and all the bills receivable are sold, it
would be a forced construction of the contract of agreement to hold that
the assets of the Mindoro Sugar Company had not been sold.