Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-15568 November 8, 1919

Section 222 of our Code of Civil Procedure is taken from the California Code, and a decision of the California Supreme Court Barber vs. Mulford (117 Cal., 356) is quite clear upon the point that both the corporation and its officers may be joined as defendants. The real controversy which has brought these litigants into court is upon the question argued in connection with the second ground of demurrer, namely, whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by the stockholder in person. There is no pretense that the respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petition prays for a peremptory order commanding the respondents to place the records of all business transactions of the company, during a specified period, at the disposal of the plaintiff or his duly authorized agent or attorney, it being evident that the petitioner desires to exercise said right through an agent or attorney. In the argument in support of the demurrer it is conceded by counsel for the respondents that there is a right of examination in the stockholder granted under section 51 of the Corporation Law, but it is insisted that this right must be exercised in person. The pertinent provision of our law is found in the second paragraph of section 51 of Act No. 1459, which reads as follows: "The record of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member or stockholder of the corporation at reasonable hours." This provision is to be read of course in connecting with the related provisions of sections 51 and 52, defining the duty of the corporation in respect to the keeping of its records. Now it is our opinion, and we accordingly hold, that the right of inspection given to a stockholder in the provision above quoted can be exercised either by himself or by any proper representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another; and we find nothing in the statute that would justify us in qualifying the right in the manner suggested by the respondents. This conclusion is supported by the undoubted weight of authority in the United States, where it is generally held that the provisions of law conceding the right of inspection to stockholders of corporations are to be liberally construed and that said right may be exercised through any other properly authorized person. As was said in Foster vs. White (86 Ala., 467), "The right may be regarded as personal, in the sense that only a stockholder may enjoy it; but the inspection and examination may be made by another. Otherwise it would be unavailing in many instances." An observation to the same effect is contained in Martin vs. Bienville Oil Works Co. (28 La., 204), where it is said: "The possession of the right in question would be futile if the possessor of it, through lack of knowledge necessary to exercise it, were debarred the right of procuring in his behalf the services of one who could exercise it." In Deadreck vs. Wilson (8 Baxt. [Tenn.], 108), the court said: "That stockholders have the right to inspect the books of the corporation, taking minutes from the same, at all reasonable times, and may be aided in this by experts and counsel, so as to make the inspection valuable to them, is a principle too well settled to need discussion." Authorities on this point could be accumulated in great abundance, but as they may be found cited in any legal encyclopedia or treaties devoted to the subject of
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W. G. PHILPOTTS, petitioner, vs. PHILIPPINE MANUFACTURING COMPANY and F. N. BERRY, respondents. Lawrence and Ross for petitioner. Crossfield and O'Brien for defendants.

STREET, J.: The petitioner, W. G. Philpotts, a stockholder in the Philippine Manufacturing Company, one of the respondents herein, seeks by this proceeding to obtain a writ of mandamus to compel the respondents to permit the plaintiff, in person or by some authorized agent or attorney, to inspect and examine the records of the business transacted by said company since January 1, 1918. The petition is filed originally in this court under the authority of section 515 of the Code of Civil Procedure, which gives to this tribunal concurrent jurisdiction with the Court of First Instance in cases, among others, where any corporation or person unlawfully excludes the plaintiff from the use and enjoyment of some right to which he is entitled. The respondents interposed a demurrer, and the controversy is now before us for the determination of the questions thus presented. The first point made has reference to a supposed defect of parties, and it is said that the action can not be maintained jointly against the corporation and its secretary without the addition of the allegation that the latter is the custodian of the business records of the respondent company. By the plain language of sections 515 and 222 of our Code of Civil Procedure, the right of action in such a proceeding as this is given against the corporation; and the respondent corporation in this case was the only absolutely necessary party. In the Ohio case of Cincinnati Volksblatt Co. vs. Hoffmister (61 Ohio St., 432; 48 L. R. A., 735), only the corporation was named as defendant, while the complaint, in language almost identical with that in the case at bar, alleged a demand upon and refusal by the corporation. Nevertheless the propriety of naming the secretary of the corporation as a codefendant cannot be questioned, since such official is customarily charged with the custody of all documents, correspondence, and records of a corporation, and he is presumably the person against whom the personal orders of the court would be made effective in case the relief sought should be granted. Certainly there is nothing in the complaint to indicate that the secretary is an improper person to be joined. The petitioner might have named the president of the corporation as a respondent also; and this official might be brought in later, even after judgment rendered, if necessary to the effectuation of the order of the court.

corporations, it is unnecessary here to refer to other cases announcing the same rule. In order that the rule above stated may not be taken in too sweeping a sense, we deem it advisable to say that there are some things which a corporation may undoubtedly keep secret, notwithstanding the right of inspection given by law to the stockholder; as for instance, where a corporation, engaged in the business of manufacture, has acquired a formula or process, not generally known, which has proved of utility to it in the manufacture of its products. It is not our intention to declare that the authorities of the corporation, and more particularly the Board of Directors, might not adopt measures for the protection of such process form publicity. There is, however, nothing in the petition which would indicate that the petitioner in this case is seeking to discover anything which the corporation is entitled to keep secret; and if anything of the sort is involved in the case it may be brought out at a more advanced stage of the proceedings.lawphil.net The demurrer is overruled; and it is ordered that the writ of mandamus shall issue as prayed, unless within 5 days from notification hereof the respondents answer to the merits. So ordered. Arellano, C.J., Torres, Johnson, Araullo, Malcolm and Avancea, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-39050 February 24, 1981 CARLOS GELANO and GUILLERMINA MENDOZA DE GELANO, petitioners, vs. THE HONORABLE COURT OF APPEALS and INSULAR SAWMILL, INC., respondents.

advances in the total sum of P25,950.00, petitioner Carlos Gelano was able to pay only P5,950.00 thereby leaving an unpaid balance of P20,000.00 which he refused to pay despite repeated demands by private respondent. Petitioner Guillermina M. Gelano refused to pay on the ground that said amount was for the personal account of her husband asked for by, and given to him, without her knowledge and consent and did not benefit the family. On various occasions from May 4, 1948 to September 11, 1949 petitioners husband and wife also made credit purchases of lumber materials from private respondent with a total price of P1,120.46 in connection with the repair and improvement of petitioners' residence. On November 9, 1949 partial payment was made by petitioners in the amount of P91.00 and in view of the cash discount in favor of petitioners in the amount of P83.00, the amount due private respondent on account of credit purchases of lumber materials is P946.46 which petitioners failed to pay. On July 14, 1952, in order to accommodate and help petitioners renew previous loans obtained by them from the China Banking Corporation, private respondent, through Joseph Tan Yoc Su, executed a joint and several promissory note with Carlos Gelano in favor of said bank in the amount of P8,000.00 payable in sixty (60) days. For failure of Carlos Gelano to pay the promissory note upon maturity, the bank collected from the respondent corporation the amount of P9,106.00 including interests, by debiting it from the corporation's current account with the bank. Petitioner Carlos Gelano was able to pay private respondent the amount of P5,000.00 but the balance of P4,106.00 remained unsettled. Guillermina M. Gelano refused to pay on the ground that she had no knowledge about the accommodation made by the corporation in favor of her husband. On May 29, 1959 the corporation, thru Atty. German Lee, filed a complaint for collection against herein petitioners before the Court of First Instance of Manila. Trial was held and when the case was at the stage of submitting memorandum, Atty. Lee retired from active law practice and Atty. Eduardo F. Elizalde took over and prepared the memorandum. In the meantime, private respondent amended its Articles of Incorporation to shorten its term of existence up to December 31, 1960 only. The amended Articles of Incorporation was filed with, and approved by the Securities and Exchange Commission, but the trial court was not notified of the amendment shortening the corporate existence and no substitution of party was ever made. On November 20, 1964 and almost four (4) years after the dissolution of the corporation, the trial court rendered a decision in favor of private respondent the dispositive portion of which reads as follows: WHEREFORE, judgment is rendered, ordering: 1. Defendant Carlos Gelano to pay plaintiff the sum of: (a) P19,650.00 with interest thereon at the legal rate from the date of the filing of the complaint on May 29, 1959, until said sum is fully paid; (b) P4,106.00, with interest thereon at the legal rate from the date of the filing of the
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DE CASTRO, J.: Private respondent Insular Sawmill, Inc. is a corporation organized on September 17, 1945 with a corporate life of fifty (50) years, or up to September 17, 1995, with the primary purpose of carrying on a general lumber and sawmill business. To carry on this business, private respondent leased the paraphernal property of petitioner-wife Guillermina M. Gelano at the corner of Canonigo and Otis, Paco, Manila for P1,200.00 a month. It was while private respondent was leasing the aforesaid property that its officers and directors had come to know petitioner-husband Carlos Gelano who received from the corporation cash advances on account of rentals to be paid by the corporation on the land. Between November 19, 1947 to December 26, 1950 petitioner Carlos Gelano obtained from private respondent cash advances of P25,950.00. The said sum was taken and received by petitioner Carlos Gelano on the agreement that private respondent could deduct the same from the monthly rentals of the leased premises until said cash advances are fully paid. Out of the aforementioned cash

complaint until said sum is fully paid; 2. Defendants Carlos Gelano and Guillermina Mendoza to pay jointly and severally the sum of: (a) P946.46, with interest thereon, at the agreed rate of 12% per annum from October 6, 1946, until said sum is fully paid; (b) P550.00, with interest thereon at the legal rate from the date of the filing of the complaint until the said sum is fully paid; (c) Costs of the suit; and 3. Defendant Carlos Gelano to pay the plaintiff the sum of P2,000.00 attorney's fees. The Countered of defendants are dismissed. SO ORDERED. 1 Both parties appealed to the Court of Appeals, private respondent also appealing because it insisted that both Carlos Gelano and Guillermina Gelano should be held liable for the substantial portion of the claim. On August 23, 1973, the Court of Appeals rendered a decision modifying the judgment of the trial court by holding petitioner spouses jointly and severally liable on private respondent's claim and increasing the award of P4,106.00. The dispositive portion of the decision reads as follows: WHEREFORE, modified in the sense that the amount of P4,160.00 under paragraph 1 (b) is raised to P8,160.00 and the clarification that the conjugal partnership of the spouses is jointly and severally liable for the obligations adjudged against defendant Carlos Gelano, the judgment appealed from is affirmed in all other respects. 2 After petitioners received a copy of the decision on August 24, 1973, they came to know that the Insular Sawmill Inc. was dissolved way back on December 31, 1960. Hence, petitioners filed a motion to dismiss the case and/or reconsideration of the decision of the Court of Appeals on grounds that the case was prosecuted even after dissolution of private respondent as a corporation and that a defunct corporation cannot maintain any suit for or against it without first complying with the requirements of the winding up of the affairs of the corporation and the assignment of its property rights within the required period. Incidentally, after receipt of petitioners' motion to dismiss and/or reconsideration or on October 28, 1973, private respondent thru its former directors filed a Petition for Receivership before the Court of First Instance of Manila, docketed as Special Proceedings No. 92303, 3 which petition is still pending before said court.

On November 5, 1973, private respondent filed comment on the motion to dismiss and or reconsideration and after the parties have filed reply and rejoinder, the Court of Appeals on July 5, 1974 issued a resolution 4 denying the aforesaid motion. Hence, the present petition for review, petitioners assigning the following errors: I THE "RESPONDENT COURT" ERRED IN DENYING PETlTIONERS MOTION TO DISMISS THIS CASE DESPITE THE CLEAR FINDING THAT "RESPONDENT" HAD ALREADY CEASED TO EXIST AS A CORPORATION SINCE DECEMBER 31, 1960 YET. II THE "RESPONDENT COURT" ERRED IN NOT HOLDING THAT ACTIONS PENDING FOR OR AGAINST A DEFUNCT CORPORATION ARE DEEMED ABATED. III THE "RESPONDENT COURT" ERRED IN HOLDING INSTEAD THAT EVEN IF THERE WAS NO COMPLIANCE WITH SECTIONS 77 AND 78 OF THE CORPORATION LAW FOR THE WINDING UP OF THE AFFAIRS OF THE CORPORATION BY THE CONVEYANCE OF CORPORATE PROPERTY AND PROPERTY RIGHTS TO AN ASSIGNEE, OR TRUSTEE OR THE APPOINTMENT OF A RECEIVER WITHIN THREE YEARS FROM THE DISSOLUTION OF SUCH CORPORATION, ANY LITIGATION FILED BY OR AGAINST THE DISSOLVED CORPORATION, INSTITUTED WITHIN THREE YEARS AFTER SUCH DISSOLUTION BUT WHICH COULD NOT BE TERMINATED WITHIN SAID PERIOD, MAY STILL BE CONTINUED AS IT IS NOT DEEMED ABATED. IV THE "RESPONDENT COURT" ERRED IN THE APPLICATION TO THIS CASE OF ITS RULING IN PASAY CREDIT AND FINANCE CORPORATION, VERSUS LAZARO, ET AL., 46 O.G. (11) 5528, AND IN OVERLOOKING THE DISTINCTION LAID DOWN BY THIS HONORABLE COURT IN NUMEROUS DECIDED CASES THAT ONLY CASES FILED IN THE NAME OF ASSIGNEES, TRUSTEES OR RECEIVERS (FOR A DEFUNCT CORPORATION), AI)POINTED WITHIN THREE YEARS FROM ITS DISSOLUTION, MAY BE PROSECUTED BEYOND THE SAID THREE YEAR PERIOD,
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AND THAT, ALL OTHERS ARE DEEMED ABATED. V THE "RESPONDENT COURT" ERRED IN HOLDING THAT WITH THE FILING OF SPECIAL PROCEEDINGS NO. 92303 IN THE COURT OF FIRST INSTANCE OF MANILA BY FORMER DIRECTORS OF "PRIVATE RESPONDENT" ON OCTOBER 23,1973, OR, THIRTEEN YEARS AFTER ITS DISSOLUTION, A LEGAL, PERSONALITY WILL BE APPOINTED TO REPRESENT THE CORPORATION. VI THE "RESPONDENT COURT" ERRED IN PRACTICALLY RULING THAT THE THREEYEAR PERIOD PROVIDED FOR BY THE CORPORATION LAW WITHIN WHICH ASSIGNEES, TRUSTEES FOR RECEIVERS MAY BE APPOINTED MAY BE EXTENDED. VII THE "RESPONDENT COURT" ERRED IN NOT HOLDING THAT THE FAILURE OF "PRIVATE RESPONDENT" OR ITS AUTHORIZED COUNSEL TO NOTIFY THE TRIAL COURT OF ITS DISSOLUTION OR OF ITS "CIVIL DEATH" MAY BE CONSIDERED AS AN ABANDONMENT OF ITS CAUSE OF ACTION AMOUNTING TO A FAILURE TO PROSECUTE AND RESULTING IN THE ABATEMENT OF THE SUIT. VIII THE "RESPONDENT COURT" ERRED IN RECOGNIZING THE PERSONALITY OF COUNSEL APPEARING FOR PRIVATE RESPONDENT' DESPITE HIS ADMISSION THAT HE DOES NOT KNOW THE "PRIVATE RESPONDENT" NOR HAS HE MET ANY OF ITS DIRECTORS AND OFFICERS. IX THE "RESPONDENT COURT" ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT HOLDING IN FAVOR OF "PRIVATE RESPONDENT". X THE "RESPONDENT COURT" ERRED IN MODIFYING THE TRIAL COURT'S DECISION AND HOLDING EVEN THE CONJUGAL PARTNERSHIP OF PETITIONERS JOINTLY AND SEVERALLY

LIABLE FOR THE OBLIGATION ADJUDGED AGAINST PETITIONER-HUSBAND, CARLOS GELANO. The main issue raised by petitioner is whether a corporation, whose corporate life had ceased by the expiration of its term of existence, could still continue prosecuting and defending suits after its dissolution and beyond the period of three years provided for under Act No. 1459, otherwise known as the Corporation law, to wind up its affairs, without having undertaken any step to transfer its assets to a trustee or assignee. The complaint in this case was filed on May 29, 1959 when private respondent Insular Sawmill, Inc. was still existing. While the case was being tried, the stockholders amended its Articles of Incorporation by shortening the term of its existence from December 31, 1995 to December 31, 1960, which was approved by the Securities and Exchange Commission. In American corporate law, upon which our Corporation Law was patterned, it is well settled that, unless the statutes otherwise provide, all pending suits and actions by and against a corporation are abated by a dissolution of the corporation. 5 Section 77 of the Corporation Law provides that the corporation shall "be continued as a body corporate for three (3) years after the time when it would have been ... dissolved, for the purpose of prosecuting and defending suits By or against it ...," so that, thereafter, it shall no longer enjoy corporate existence for such purpose. For this reason, Section 78 of the same law authorizes the corporation, "at any time during said three years ... to convey all of its property to trustees for the benefit of members, Stockholders, creditors and other interested," evidently for the purpose, among others, of enabling said trustees to prosecute and defend suits by or against the corporation begun before the expiration of said period. 6 Commenting on said sections, Justice Fisher said: It is to be noted that the time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences; but that there is no time limited within which the trustees must complete a liquidation placed in their hands. It is provided only (Corp. Law, Sec. 78) that the conveyance to the trustees must be made within the three-year period. It may be found impossible to complete the work of liquidation within the three-year period or to reduce disputed claims to judgment. The authorities are to the effect that suits by or against a corporation abate when it ceased to be an entity capable of suing or being sued (7 R.C.L. Corps., Par. 750); but trustees to whom the corporate assets have been conveyed pursuant to the authority of Section 78 may sue and be sued as such in all matters connected with the liquidation. By the terms of the statute the effect of the conveyance is to make the trustees the legal owners of the property conveyed, subject to the beneficial interest therein of creditors and stockholders. 7 When Insular Sawmill, Inc. was dissolved on December 31, 1960, under Section 77 of the Corporation Law, it stin has the right until December 31, 1963 to prosecute in its name the present case. After
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the expiration of said period, the corporation ceased to exist for all purposes and it can no longer sue or be sued. 8 However, a corporation that has a pending action and which cannot be terminated within the three-year period after its dissolution is authorized under Section 78 to convey all its property to trustees to enable it to prosecute and defend suits by or against the corporation beyond the Three-year period although private respondent (did not appoint any trustee, yet the counsel who prosecuted and defended the interest of the corporation in the instant case and who in fact appeared in behalf of the corporation may be considered a trustee of the corporation at least with respect to the matter in litigation only. Said counsel had been handling the case when the same was pending before the trial court until it was appealed before the Court of Appeals and finally to this Court. We therefore hold that there was a substantial compliance with Section 78 of the Corporation Law and as such, private respondent Insular Sawmill, Inc. could still continue prosecuting the present case even beyond the period of three (3) years from the time of its dissolution. From the above quoted commentary of Justice Fisher, the trustee may commence a suit which can proceed to final judgment even beyond the three-year period. No reason can be conceived why a suit already commenced By the corporation itself during its existence, not by a mere trustee who, by fiction, merely continues the legal personality of the dissolved corporation should not be accorded similar treatment allowed to proceed to final judgment and execution thereof. The word "trustee" as sued in the corporation statute must be understood in its general concept which could include the counsel to whom was entrusted in the instant case, the prosecution of the suit filed by the corporation. The purpose in the transfer of the assets of the corporation to a trustee upon its dissolution is more for the protection of its creditor and stockholders. Debtors like the petitioners herein may not take advantage of the failure of the corporation to transfer its assets to a trustee, assuming it has any to transfer which petitioner has failed to show, in the first place. To sustain petitioners' contention would be to allow them to enrich themselves at the expense of another, which all enlightened legal systems condemn. The observation of the Court of Appeals on the issue now before Us that: Under Section 77 of the Corporation Law, when the corporate existence is terminated in any legal manner, the corporation shall nevertheless continue as a body corporate for three (3) years after the time when it would have been dissolved, for the purpose of prosecuting and defending suits by or against it. According to authorities, the corporation "becomes incapable of making contracts or receiving a grant. It does not, however, cease to be a body corporate for all purposes." In the case ofPasay Credit and Finance Corp. vs. Isidro Lazaro and others, 46 OG (11) 5528, this Court held that "a corporation may continue a pending 'litigation even after the lapse of the 3-year period granted by Section 77 of Act 1459 to corporation subsequent to their dissolution to continue its corporate existence for the purpose of winding up their affairs and settling all the claims by and against same." We note that the plaintiff Insular Sawmill, Inc. ceased as a corporation on December 30, 1960 but the

case at bar was instituted on May 29, 1959, during the time when the corporation was still very much alive. Accordingly, it is our view that "any litigation filed by or against it instituted within the period, but which could not be terminated, must necessarily prolong that period until the final termination of said litigation as otherwise corporations in liquidation would lose what should justly belong to them or would be exempt from the payment of just obligations through a mere technicality, something that courts should prevent" (Philippine Commercial Laws by Martin, 1962 Ed., Vol. 2, p. 1716). merits the approval of this Court. The last two assigned errors refer to the disposition of the main case. Petitioners contend that the obligations contracted by petitioner Carlos Gelano from November 19, 1947 until August 18, 1950 (before the effectivity of the New Civil Code) and from December 26, 1950 until July 14, 1952 (during the effectivity of the New Civil Code) were his personal obligations, hence, petitioners should not be held jointly and severally liable. As regards the said issues, suffice it to say that with the findings of the Court of Appeals that the obligation contracted by petitioner-husband Carlos Gelano redounded to the benefit of the family, the inevitable conclusion is that the conjugal property is liable for his debt pursuant to paragraph 1, Article 1408, Civil Code of 1889 9 which provision incidentally can still be found in paragraph 1, Article 161 of the New Civil Code. 10 Only the conjugal partnership is liable, not joint and several as erroneously described by the Court of Appeals, the conjugal partnership being only a single entity. WHEREFORE, with the modification that only the conjugal partnership is liable, the appealed decision is hereby affirmed in all other respects. Without pronouncement as to costs. SO ORDERED. Makasiar, Fernandez, and Guerrero, JJ., concur. Teehankee, J., concur in the result. Mr. Justice de Castro was designated to sit with the First Division under Special Order No. 225. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-8169 January 29, 1957

THE SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner, vs. FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY COMMERCIAL CASUALTY INSURANCE CO., SALVADOR SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS (First Division),respondents.
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Ross, Selph, Carrascoso & Janda for petitioner. J. A. Wolfson and Manuel Y. Macias for respondents. PADILLA, J.: Appeal by certiorari under Rule 46 to review a judgment of the Court of Appeals which reversed that of the Court of First Instance of Manila and sentenced ". . . the defendants-appellees to pay, jointly and severally, the plaintiffs-appellants the sum of P1,651.38, with legal interest from December 6, 1947 (Gutierrez vs. Gutierrez, 56 Phil., 177, 180), and the costs in both instances." The Court of Appeals found the following: Inasmuch as both the Plaintiffs-Appellants and the Defendant-Appellee, the Shell Company of the Philippine Islands, Ltd. accept the statement of facts made by the trial court in its decision and appearing on pages 23 to 37 of the Record on Appeal, we quote hereunder such statement: This is an action for recovery of sum of money, based on alleged negligence of the defendants. It is a fact that a Plymounth car owned by Salvador R. Sison was brought, on September 3, 1947 to the Shell Gasoline and Service Station, located at the corner of Marques de Comillas and Isaac Peral Streets, Manila, for washing, greasing and spraying. The operator of the station, having agreed to do service upon payment of P8.00, the car was placed on a hydraulic lifter under the direction of the personnel of the station. What happened to the car is recounted by Perlito Sison, as follows: Q. Will you please describe how they proceeded to do the work? A. Yes, sir. The first thing that was done, as I saw, was to drive the car over the lifter. Then by the aid of the two grease men they raised up my car up to six feet high, and then washing was done. After washing, the next step was greasing. Before greasing was finished, there is a part near the shelf of the right fender, right front fender, of my car to be greased, but the the grease men cannot reached that part, so the next thing to be done was to loosen the lifter just a few feet lower. Then upon releasing the valve to make the car lower, a little bit lower . . . Q. Who released the valve? A. The greasemen, for the escape of the air. As the escape of the air is too strong for my ear I faced backward. I faced toward Isaac Peral Street, and covered my ear. After the escaped of the air has been finished, the air coming out from the valve, I turned to face the car and I saw the car swaying at that time, and just for a few second the car fell., (t.s.n. pp. 22-23.)

The case was immediately reported to the Manila Adjustor Company, the adjustor of the firemen's Insurance Company and the Commercial Casualty Insurance Company, as the car was insured with these insurance companies. After having been inspected by one Mr. Baylon, representative of the Manila Adjustor Company, the damaged car was taken to the shops of the Philippine Motors, Incorporated, for repair upon order of the Firemen's Insurance Company and the Commercial Casualty Company, with the consent of Salvador R. Sison. The car was restored to running condition after repairs amounting to P1,651.38, and was delivered to Salvador R. Sison, who, in turn made assignments of his rights to recover damages in favor of the Firemen's Insurance Company and the Commercial Casualty Insurance Company. On the other hand, the fall of the car from the hydraulic lifter has been explained by Alfonso M. Adriano, a greaseman in the Shell Gasoline and Service Station, as follows: Q. Were you able to lift the car on the hydraulic lifter on the occasion, September 3, 1947? A. Yes, sir. Q. To what height did you raise more or less? A. More or less five feet, sir. Q. After lifting that car that height, what did you do with the car? A. I also washed it, sir. Q. And after washing? A. I greased it. Q. On that occasion, have you been able to finish greasing and washing the car? A. There is one point which I could not reach. Q. And what did you do then? A. I lowered the lifter in order to reach that point. Q. After lowering it a little, what did you do then? A. I pushed and pressed the valve in its gradual pressure. Q. Were you able to reach the portion which you were not able to reach while it was lower? A. No more, sir. Q. Why?

A. Because when I was lowering the lifter I saw that the car was swinging and it fell. THE COURT. Why did the car swing and fall? WITNESS: 'That is what I do not know, sir'. (t.s.n., p.67.) The position of Defendant Porfirio de la Fuente is stated in his counter-statement of facts which is hereunder also reproduced: In the afternoon of September 3, 1947, an automobile belonging to the plaintiff Salvador Sison was brought by his son, Perlito Sison, to the gasoline and service station at the corner of Marques de Comillas and Isaac Peral Streets, City of Manila, Philippines, owned by the defendant The Shell Company of the Philippine Islands, Limited, but operated by the defendant Porfirio de la Fuente, for the purpose of having said car washed and greased for a consideration of P8.00 (t.s.n., pp. 19-20.) Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000 (Exhibits "A', "B", and "D"). The job of washing and greasing was undertaken by defendant Porfirio de la Fuente through his two employees, Alfonso M. Adriano, as greaseman and one surnamed de los Reyes, a helper and washer (t.s.n., pp. 65-67). To perform the job the car was carefully and centrally placed on the platform of the lifter in the gasoline and service station aforementioned before raising up said platform to a height of about 5 feet and then the servicing job was started. After more than one hour of washing and greasing, the job was about to be completed except for an ungreased portion underneath the vehicle which could not be reached by the greasemen. So, the lifter was lowered a little by Alfonso M. Adriano and while doing so, the car for unknown reason accidentally fell and suffered damage to the value of P1, 651.38 (t.s.n., pp. 65-67). The insurance companies after paying the sum of P1,651.38 for the damage and charging the balance of P100.00 to Salvador Sison in accordance with the terms of the insurance contract, have filed this action together with said Salvador Sison for the recovery of the total amount of the damage from the defendants on the ground of negligence (Record on Appeal, pp. 1-6). The defendant Porfirio de la Fuente denied negligence in the operation of the lifter in his separate answer and contended further that the accidental fall of the car was caused by unforseen event (Record on Appeal, pp. 17-19). The owner of the car forthwith notified the insurers who ordered their adjustor, the Manila Adjustor Company, to investigate the incident and after such investigation the damaged car, upon order of the insures and with the consent of the owner, was brought to the shop of the Philippine Motors, Inc. The car was restored to running condition after thereon which amounted to P1,651.38 and returned to the owner who assigned his right to collect the aforesaid amount to the Firemen's Insurance Company and the Commercial Casualty Insurance Company.

On 6 December 1947 the insures and the owner of the car brought an action in the Court of First Instance of Manila against the Shell Company of the Philippines, Ltd. and Porfirio de la Fuente to recover from them, jointly and severally, the sum of P1,651.38, interest thereon at the legal rate from the filing of the complaint until fully paid, the costs. After trial the Court dismissed the complaint. The plaintiffs appealed. The Court of Appeals reversed the judgment and sentenced the defendant to pay the amount sought to be recovered, legal interest and costs, as stated at the beginning of this opinion. In arriving at the conclusion that on 3 September 1947 when the car was brought to the station for servicing Profirio de la Fuente, the operator of the gasoline and service station, was an agent of the Shell Company of the Philippines, Ltd., the Court of Appeals found that . . . De la Fuente owned his position to the Shell Company which could remove him terminate his services at any time from the said Company, and he undertook to sell the Shell Company's products exculusively at the said Station. For this purpose, De la Fuente was placed in possession of the gasoline and service station under consideration, and was provided with all the equipments needed to operate it, by the said Company, such as the tools and articles listed on Exhibit 2 which the hydraulic lifter (hoist) and accessories, from which Sison's automobile fell on the date in question (Exhibit 1 and 2). These equipments were delivered to De la Fuente on a so-called loan basis. The Shell Company took charge of its care and maintenance and rendered to the public or its customers at that station for the proper functioning of the equipment. Witness Antonio Tiongson, who was sales superintendent of the Shell Company, and witness Augusto Sawyer, foreman of the same Company, supervised the operators and conducted periodic inspection of the Company's gasoline and service station, the service station in question inclusive. Explaining his duties and responsibilities and the reason for the loan, Tiongson said: "mainly of the supervision of sales or (of) our dealers and rountinary inspection of the equipment loaned by the Company" (t.s.n., 107); "we merely inquire about how the equipments are, whether they have complaints, and whether if said equipments are in proper order . . .", (t.s.n., 110); station equipments are "loaned for the exclusive use of the dealer on condition that all supplies to be sold by said dealer should be exclusively Shell, so as a concession we loan equipments for their use . . .," "for the proper functioning of the equipments, we answer and see to it that the equipments are in good running order usable condition . . .," "with respect to the public." (t.s.n., 111-112). De la Fuente, as operator, was given special prices by the Company for the gasoline products sold therein. Exhibit 1 Shell, which was a receipt by Antonio Tiongson and signed by the De la Fuente, acknowledging the delivery of equipments of the gasoline and service station in question was subsequently replaced by Exhibit 2 Shell, an official from of the inventory of the equipment which De la Fuente signed above the words: "Agent's signature" And the service station in question had been marked "SHELL", and all advertisements therein bore the same sign. . . . . . . De la Fuente was the operator of the station "by grace" of the Defendant Company which could and did remove him as it pleased; that all the equipments needed to operate the station was owned by the Defendant Company which took charge of their proper care and maintenance, despite the fact that they were loaned to him; that the Defendant
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company did not leave the fixing of price for gasoline to De la Fuente; on the other hand, the Defendant company had complete control thereof; and that Tiongson, the sales representative of the Defendant Company, had supervision over De la Fuente in the operation of the station, and in the sale of Defendant Company's products therein. . . . Taking into consideration the fact that the operator owed his position to the company and the latter could remove him or terminate his services at will; that the service station belonged to the company and bore its tradename and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance; that an employee of the company supervised the operator and conducted periodic inspection of the company's gasoline and service station; that the price of the products sold by the operator was fixed by the company and not by the operator; and that the receipt signed by the operator indicated that he was a mere agent, the finding of the Court of Appeals that the operator was an agent of the company and not an independent contractor should not be disturbed. To determine the nature of a contract courts do not have or are not bound to rely upon the name or title given it by the contracting parties, should there be a controversy as to what they really had intended to enter into, but the way the contracting parties do or perform their respective obligation stipulated or agreed upon may be shown and inquired into, and should such performance conflict with the name or title given the contract by the parties, the former must prevail over the latter. It was admitted by the operator of the gasoline and service station that "the car was carefully and centrally placed on the platform of the lifter . . ." and the Court of Appeals found that . . . the fall of Appellant Sison's car from the hydraulic lift and the damage caused therefor, were the result of the jerking and swaying of the lift when the valve was released, and that the jerking was due to some accident and unforeseen shortcoming of the mechanism itself, which caused its faulty or defective operation or functioning, . . . the servicing job on Appellant Sison's automobile was accepted by De la Fuente in the normal and ordinary conduct of his business as operator of his co-appellee's service station, and that the jerking and swaying of the hydraulic lift which caused the fall of the subject car were due to its defective condition, resulting in its faulty operation. . . . As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is one for which the principal is answerable. Moreover, the company undertook to "answer and see to it that the equipments are in good running order and usable condition;" and the Court of Appeals found that the Company's mechanic failed to make a thorough check up of the hydraulic lifter and the check up made by its mechanic was "merely routine" by raising "the lifter once or twice and after observing that the operator was satisfactory, he (the mechanic) left the place." The latter was negligent and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car from the hydraulic lifter.

The judgment under review is affirmed, with costs against the petitioner. Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-11491 August 23, 1918

ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee. Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant. Crossfield & O'Brien for appellee. AVANCEA, J.: On January 24, 1911, in this city of manila, a contract in the following tenor was entered into by and between the plaintiff, as party of the first part, and J. Parsons (to whose rights and obligations the present defendant later subrogated itself), as party of the second part: CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J. PARSONS, BOTH MERCHANTS ESTABLISHED IN MANILA, FOR THE EXCLUSIVE SALE OF "QUIROGA" BEDS IN THE VISAYAN ISLANDS. ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J. Parsons under the following conditions: (A) Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's establishment in Iloilo, and shall invoice them at the same price he has fixed for sales, in Manila, and, in the invoices, shall make and allowance of a discount of 25 per cent of the invoiced prices, as commission on the sale; and Mr. Parsons shall order the beds by the dozen, whether of the same or of different styles. (B) Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within a period of sixty days from the date of their shipment. (C) The expenses for transportation and shipment shall be borne by M. Quiroga, and the freight, insurance, and cost of unloading from the vessel at the point where the beds are received, shall be paid by Mr. Parsons. (D) If, before an invoice falls due, Mr. Quiroga should request its payment, said payment when made shall be
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considered as a prompt payment, and as such a deduction of 2 per cent shall be made from the amount of the invoice. The same discount shall be made on the amount of any invoice which Mr. Parsons may deem convenient to pay in cash. (E) Mr. Quiroga binds himself to give notice at least fifteen days before hand of any alteration in price which he may plan to make in respect to his beds, and agrees that if on the date when such alteration takes effect he should have any order pending to be served to Mr. Parsons, such order shall enjoy the advantage of the alteration if the price thereby be lowered, but shall not be affected by said alteration if the price thereby be increased, for, in this latter case, Mr. Quiroga assumed the obligation to invoice the beds at the price at which the order was given. (F) Mr. Parsons binds himself not to sell any other kind except the "Quiroga" beds. ART. 2. In compensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr. Parsons may find himself obliged to make, Mr. Quiroga assumes the obligation to offer and give the preference to Mr. Parsons in case anyone should apply for the exclusive agency for any island not comprised with the Visayan group. ART. 3. Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and shall immediately report such action to Mr. Quiroga for his approval. ART. 4. This contract is made for an unlimited period, and may be terminated by either of the contracting parties on a previous notice of ninety days to the other party. Of the three causes of action alleged by the plaintiff in his complaint, only two of them constitute the subject matter of this appeal and both substantially amount to the averment that the defendant violated the following obligations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. As may be seen, with the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds. In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. The price agreed upon was the one determined by the plaintiff for the sale of these beds in Manila, with a discount of

from 20 to 25 per cent, according to their class. Payment was to be made at the end of sixty days, or before, at the plaintiff's request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. It would be enough to hold, as we do, that the contract by and between the defendant and the plaintiff is one of purchase and sale, in order to show that it was not one made on the basis of a commission on sales, as the plaintiff claims it was, for these contracts are incompatible with each other. But, besides, examining the clauses of this contract, none of them is found that substantially supports the plaintiff's contention. Not a single one of these clauses necessarily conveys the idea of an agency. The words commission on sales used in clause (A) of article 1 mean nothing else, as stated in the contract itself, than a mere discount on the invoice price. The word agency, also used in articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiff's beds in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that they are not incompatible with the contract of purchase and sale. The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-president of the defendant corporation and who established and managed the latter's business in Iloilo. It appears that this witness, prior to the time of his testimony, had serious trouble with the defendant, had maintained a civil suit against it, and had even accused one of its partners, Guillermo Parsons, of falsification. He testified that it was he who drafted the contract Exhibit A, and, when questioned as to what was his purpose in contracting with the plaintiff, replied that it was to be an agent for his beds and to collect a commission on sales. However, according to the defendant's evidence, it was Mariano Lopez Santos, a director of the corporation, who prepared Exhibit A. But, even supposing that Ernesto Vidal has stated the truth, his statement as to what was his idea in contracting with the plaintiff is of no importance, inasmuch as the agreements contained in Exhibit A which he claims to have drafted, constitute, as we have said, a contract of purchase and sale, and not one of commercial agency. This only means that Ernesto Vidal was mistaken in his classification of the contract. But it must be understood that a contract is what the law defines it to be, and not what it is called by the contracting parties. The plaintiff also endeavored to prove that the defendant had returned beds that it could not sell; that, without previous notice, it forwarded to the defendant the beds that it wanted; and that the defendant received its commission for the beds sold by the plaintiff directly to persons in Iloilo. But all this, at the most only shows that, on the part of both of them, there was mutual tolerance in the performance of the contract in disregard of its terms; and it gives no right to have the contract considered, not as the parties stipulated it, but as they performed it. Only the acts of the contracting parties, subsequent to, and in connection with, the execution of the contract, must be considered for the purpose of interpreting the contract, when such interpretation is necessary, but not when, as in the instant case, its
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essential agreements are clearly set forth and plainly show that the contract belongs to a certain kind and not to another. Furthermore, the return made was of certain brass beds, and was not effected in exchange for the price paid for them, but was for other beds of another kind; and for the letter Exhibit L-1, requested the plaintiff's prior consent with respect to said beds, which shows that it was not considered that the defendant had a right, by virtue of the contract, to make this return. As regards the shipment of beds without previous notice, it is insinuated in the record that these brass beds were precisely the ones so shipped, and that, for this very reason, the plaintiff agreed to their return. And with respect to the so-called commissions, we have said that they merely constituted a discount on the invoice price, and the reason for applying this benefit to the beds sold directly by the plaintiff to persons in Iloilo was because, as the defendant obligated itself in the contract to incur the expenses of advertisement of the plaintiff's beds, such sales were to be considered as a result of that advertisement. In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. The judgment appealed from is affirmed, with costs against the appellant. So ordered. Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-47538 June 20, 1941

account of the purchase price of sound reproducing equipment and machinery ordered by the petitioner from the Starr Piano Company of Richmond, Indiana, U.S.A. The facts of the case as found by the trial court and confirmed by the appellate court, which are admitted by the respondent, are as follows: In the year 1929, the "Teatro Arco", a corporation duly organized under the laws of the Philippine Islands, with its office in Manila, was engaged in the business of operating cinematographs. In 1930, its name was changed to Arco Amusement Company. C. S. Salmon was the president, while A. B. Coulette was the business manager. About the same time, Gonzalo Puyat & Sons, Inc., another corporation doing business in the Philippine Islands, with office in Manila, in addition to its other business, was acting as exclusive agents in the Philippines for the Starr Piano Company of Richmond, Indiana, U.S. A. It would seem that this last company dealt in cinematographer equipment and machinery, and the Arco Amusement Company desiring to equipt its cinematograph with sound reproducing devices, approached Gonzalo Puyat & Sons, Inc., thru its then president and acting manager, Gil Puyat, and an employee named Santos. After some negotiations, it was agreed between the parties, that is to say, Salmon and Coulette on one side, representing the plaintiff, and Gil Puyat on the other, representing the defendant, that the latter would, on behalf of the plaintiff, order sound reproducing equipment from the Starr Piano Company and that the plaintiff would pay the defendant, in addition to the price of the equipment, a 10 per cent commission, plus all expenses, such as, freight, insurance, banking charges, cables, etc. At the expense of the plaintiff, the defendant sent a cable, Exhibit "3", to the Starr Piano Company, inquiring about the equipment desired and making the said company to quote its price without discount. A reply was received by Gonzalo Puyat & Sons, Inc., with the price, evidently the list price of $1,700 f.o.b. factory Richmond, Indiana. The defendant did not show the plaintiff the cable of inquiry nor the reply but merely informed the plaintiff of the price of $1,700. Being agreeable to this price, the plaintiff, by means of Exhibit "1", which is a letter signed by C. S. Salmon dated November 19, 1929, formally authorized the order. The equipment arrived about the end of the year 1929, and upon delivery of the same to the plaintiff and the presentation of necessary papers, the price of $1.700, plus the 10 per cent commission agreed upon and plus all the expenses and charges, was duly paid by the plaintiff to the defendant. Sometime the following year, and after some negotiations between the same parties, plaintiff and defendants, another order for sound reproducing equipment was placed by the plaintiff with the defendant, on the same terms as the first order. This agreement or order was confirmed by the plaintiff by its letter Exhibit "2", without date, that is to say, that the plaintiff would pay for the equipment the amount of $1,600, which was supposed to be the price quoted by the Starr Piano Company, plus 10 per cent commission, plus all expenses incurred. The equipment under the second order arrived in due time, and the defendant was duly paid the price of $1,600 with its 10 per cent commission, and $160, for all expenses and charges. This amount of $160 does not represent actual out-of-pocket expenses paid by the defendant, but a mere flat charge and rough estimate made by the defendant equivalent to 10 per cent of the price of $1,600 of the equipment.
10

GONZALO PUYAT & SONS, INC., petitioner, vs. ARCO AMUSEMENT COMPANY (formerly known as Teatro Arco), respondent. Feria & Lao for petitioner. J. W. Ferrier and Daniel Me. Gomez for respondent. LAUREL, J.: This is a petition for the issuance of a writ of certiorari to the Court of Appeals for the purpose of reviewing its Amusement Company (formerly known as Teatro Arco), plaintiff-appellant, vs. Gonzalo Puyat and Sons. Inc., defendant-appellee." It appears that the respondent herein brought an action against the herein petitioner in the Court of First Instance of Manila to secure a reimbursement of certain amounts allegedly overpaid by it on

About three years later, in connection with a civil case in Vigan, filed by one Fidel Reyes against the defendant herein Gonzalo Puyat & Sons, Inc., the officials of the Arco Amusement Company discovered that the price quoted to them by the defendant with regard to their two orders mentioned was not the net price but rather the list price, and that the defendants had obtained a discount from the Starr Piano Company. Moreover, by reading reviews and literature on prices of machinery and cinematograph equipment, said officials of the plaintiff were convinced that the prices charged them by the defendant were much too high including the charges for out-of-pocket expense. For these reasons, they sought to obtain a reduction from the defendant or rather a reimbursement, and failing in this they brought the present action. The trial court held that the contract between the petitioner and the respondent was one of outright purchase and sale, and absolved that petitioner from the complaint. The appellate court, however, by a division of four, with one justice dissenting held that the relation between petitioner and respondent was that of agent and principal, the petitioner acting as agent of the respondent in the purchase of the equipment in question, and sentenced the petitioner to pay the respondent alleged overpayments in the total sum of $1,335.52 or P2,671.04, together with legal interest thereon from the date of the filing of the complaint until said amount is fully paid, as well as to pay the costs of the suit in both instances. The appellate court further argued that even if the contract between the petitioner and the respondent was one of purchase and sale, the petitioner was guilty of fraud in concealing the true price and hence would still be liable to reimburse the respondent for the overpayments made by the latter. The petitioner now claims that the following errors have been incurred by the appellate court: I. El Tribunal de Apelaciones incurrio en error de derecho al declarar que, segun hechos, entre la recurrente y la recurrida existia una relacion implicita de mandataria a mandante en la transaccion de que se trata, en vez de la de vendedora a compradora como ha declarado el Juzgado de Primera Instncia de Manila, presidido entonces por el hoy Magistrado Honorable Marcelino Montemayor. II. El Tribunal de Apelaciones incurrio en error de derecho al declarar que, suponiendo que dicha relacion fuerra de vendedora a compradora, la recurrente obtuvo, mediante dolo, el consentimiento de la recurrida en cuanto al precio de $1,700 y $1,600 de las maquinarias y equipos en cuestion, y condenar a la recurrente ha obtenido de la Starr Piano Company of Richmond, Indiana. We sustain the theory of the trial court that the contract between the petitioner and the respondent was one of purchase and sale, and not one of agency, for the reasons now to be stated. In the first place, the contract is the law between the parties and should include all the things they are supposed to have been agreed upon. What does not appear on the face of the contract should be regarded merely as "dealer's" or "trader's talk", which can not bind either party. (Nolbrook v. Conner, 56 So., 576, 11 Am. Rep., 212; Bank v. Brosscell, 120 III., 161; Bank v. Palmer, 47 III., 92; Hosser v. Copper, 8 Allen, 334; Doles v. Merrill, 173 Mass., 411.) The letters, Exhibits 1 and 2, by which the respondent accepted the prices of $1,700 and $1,600, respectively, for the sound reproducing

equipment subject of its contract with the petitioner, are clear in their terms and admit no other interpretation that the respondent in question at the prices indicated which are fixed and determinate. The respondent admitted in its complaint filed with the Court of First Instance of Manila that the petitioner agreed to sell to it the first sound reproducing equipment and machinery. The third paragraph of the respondent's cause of action states: 3. That on or about November 19, 1929, the herein plaintiff (respondent) and defendant (petitioner) entered into an agreement, under and by virtue of which the herein defendant was to secure from the United States, and sell and deliver to the herein plaintiff, certain sound reproducing equipment and machinery, for which the said defendant, under and by virtue of said agreement, was to receive the actual cost price plus ten per cent (10%), and was also to be reimbursed for all out of pocket expenses in connection with the purchase and delivery of such equipment, such as costs of telegrams, freight, and similar expenses. (Emphasis ours.) We agree with the trial judge that "whatever unforseen events might have taken place unfavorable to the defendant (petitioner), such as change in prices, mistake in their quotation, loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the orders as per specifications, the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices fixed of $1,700 and $1,600." This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions received from his principal (section 254, Code of Commerce), and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part (article 1729, Civil Code). While the latters, Exhibits 1 and 2, state that the petitioner was to receive ten per cent (10%) commission, this does not necessarily make the petitioner an agent of the respondent, as this provision is only an additional price which the respondent bound itself to pay, and which stipulation is not incompatible with the contract of purchase and sale. (See Quiroga vs. Parsons Hardware Co., 38 Phil., 501.) In the second place, to hold the petitioner an agent of the respondent in the purchase of equipment and machinery from the Starr Piano Company of Richmond, Indiana, is incompatible with the admitted fact that the petitioner is the exclusive agent of the same company in the Philippines. It is out of the ordinary for one to be the agent of both the vendor and the purchaser. The facts and circumstances indicated do not point to anything but plain ordinary transaction where the respondent enters into a contract of purchase and sale with the petitioner, the latter as exclusive agent of the Starr Piano Company in the United States. It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction. This is the very essence of commerce without which merchants or middleman would not exist. The respondents contends that it merely agreed to pay the cost price as distinguished from the list price, plus ten per cent (10%) commission and all out-of-pocket expenses incurred by the petitioner. The distinction which the respondents seeks to draw between the cost
11

price and the list price we consider to be spacious. It is to be observed that the twenty-five per cent (25%) discount granted by the Starr piano Company to the petitioner is available only to the latter as the former's exclusive agent in the Philippines. The respondent could not have secured this discount from the Starr Piano Company and neither was the petitioner willing to waive that discount in favor of the respondent. As a matter of fact, no reason is advanced by the respondent why the petitioner should waive the 25 per cent discount granted it by the Starr Piano Company in exchange for the 10 percent commission offered by the respondent. Moreover, the petitioner was not duty bound to reveal the private arrangement it had with the Starr Piano Company relative to such discount to its prospective customers, and the respondent was not even aware of such an arrangement. The respondent, therefore, could not have offered to pay a 10 per cent commission to the petitioner provided it was given the benefit of the 25 per cent discount enjoyed by the petitioner. It is well known that local dealers acting as agents of foreign manufacturers, aside from obtaining a discount from the home office, sometimes add to the list price when they resell to local purchasers. It was apparently to guard against an exhorbitant additional price that the respondent sought to limit it to 10 per cent, and the respondent is estopped from questioning that additional price. If the respondent later on discovers itself at the short end of a bad bargain, it alone must bear the blame, and it cannot rescind the contract, much less compel a reimbursement of the excess price, on that ground alone. The respondent could not secure equipment and machinery manufactured by the Starr Piano Company except from the petitioner alone; it willingly paid the price quoted; it received the equipment and machinery as represented; and that was the end of the matter as far as the respondent was concerned. The fact that the petitioner obtained more or less profit than the respondent calculated before entering into the contract or reducing the price agreed upon between the petitioner and the respondent. Not every concealment is fraud; and short of fraud, it were better that, within certain limits, business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world. The writ of certiorari should be, as it is hereby, granted. The decision of the appellate court is accordingly reversed and the petitioner is absolved from the respondent's complaint in G. R. No. 1023, entitled "Arco Amusement Company (formerly known as Teatro Arco), plaintiff-appellant, vs. Gonzalo Puyat & Sons, Inc., defendantsappellee," without pronouncement regarding costs. So ordered. Avancea, C.J., Diaz, Moran and Horrilleno, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-6626 October 6, 1911

TORRES, J.: This decision concerns the appeals entered under respective bills of exception by counsel for Jose de la Pea y de Ramon, the administrator of the estate of the deceased Jose de la Pea y Gomiz, from the order of the 18th of the same month, directing that the amount deposited as bond, by counsel for the intervening attorneys, Chicote & Miranda, Frederick G. Waite, and C. W. O'Brien, from the said order of October 18, in so far as it declares that the counterclaim by the said Hidalgo against de la Pea was presented in his capacity as administrator of the aforementioned estate and that the intervener's lien could not avail to prevent the set-off decreed in the said first order appealed from. After a regular trial in the Court of First Instance of this city of the case of Jose de la Pea y de Ramon, as administrator of the estate of his deceased father, Jose de la Pea y Gomiz, vs. Federico Hidalgo, for the payment of a sum of money, the record of the proceedings was forwarded to this court on appeal. By the decision rendered Hidalgo to pay to Jose de la Pea y de Ramon, as administrator, the sum of P6,774.50 with legal interest from May 23, 1906, and, likewise, sentenced the said Jose de la Pea y de Ramon to pay to Federico Hidalgo, as a counterclaim, the sum of P9,000, with legal interest thereon from May 21, 1907, the date of the counterclaim; and affirmed the judgment appealed from in so far as it was in agreement with the said decision, and reversed it in so far as it was not in accordance therewith. That decision became final. The record of proceedings having been remanded for execution to the Court of First Instance whence it originated, the judge, by order of October 14, 1910, decreed that both amounts for which the defendant Hidalgo and the administrator Pea were mutually liable in concurrent sums, should off-set each other, and that, consequently, the plaintiff, Pea y de Ramon, in conformity with the final decision of this court, was liable for the payment of the difference between such amounts, or P2,274.93, together with the interests at 6 per cent from the said date. At this stage of the proceedings for the execution of the judgment that had become final, the attorneys for the said plaintiff, Messrs. Chicote & Miranda, Frederick Garfield Waite, and C. W. O'Brien represented by C. A. DeWitt, asked that they be permitted to intervene in the proceedings, as they held a lien upon the amount awarded in the said decision of this court, rendered in favor of the plaintiff and against the defendant, and alleged that the lien which they held was upon the judgment entered in favor of the plaintiff in his capacity as administrator, against the defendant; that the defendant was entitled to the judgment awarded him by virtue of his counterclaim, yet, in consideration of the fact that their lien affected the judgment of the lower court, which was in no wise reversed, the said lien was valid with respect to any judgment that the plaintiff had obtained against the defendant, notwithstanding such counterclaim. In spite of the defendant's opposition, the court, ruling on this incidental question raised, issued the aforecited order of October 18, 1910. Counsel for the administrator Pea did not file a brief calculated to prove the soundness of his appeal from the order of October 14, 1910, whereby there was declared a set-off between the amounts for which the plaintiff and the defendant were liable, up to the sum where the liability of the one equaled that of the other, then latter to pay to the former the difference, together with the interest. This order is pursuant to the law and in perfect harmony with the decision rendered in the case by this court, and, though it was not duly impugned, its legality and correctness will be considered in this
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JOSE DE LA PEA Y DE RAMON, administrator of the estate of the deceased Jose de la Pea y Gomiz; F. GARFIELD WAIT, ET AL., interveners-appellants, vs. FEDERICO HIDALGO, defendant-appellant. C. A. DeWitt, for interveners and appellants. Eduardo Gutierrez Repide, for defendant and appellant.

decision in demonstrating that of the other order of the 18th of the same month, appealed from by the intervening attorneys and by the counsel for Federico Hidalgo. With respect to the said order of the 18th of October, the second of those appealed from in this incidental issue, it must be borne in mind, for the proper determination of the pending appeals, that the main action, from which the said incidental issue proceeded, was prosecuted in the Court of First Instance of this city by Jose de la Pea y de Ramon, in his capacity as judicial administrator of the estate of his deceased father, Jose de la Pea y Gomiz, against Federico Hidalgo, for the payment of various sums which the later was owing, with interest, to the estate; and that the defendant, in answering the complaint with the costs against the plaintiff and that the latter be sentenced to the payment of P9,000 which the testator, Jose de la Pea y Gomiz, owed to Hidalgo. So that if the complaint in the main action was filed by the administrator of the estate of the deceased Pea y Gomiz, the counterclaim presented in the same suit by the defendant, Federico Hidalgo, in answering the complaint of the administrator, during his lifetime, owed the said defendant. The defendant may, pursuant to section 95 of the Code of Procedure in Civil Actions, set forth by answer as many defenses and counterclaims as he may have, whatever their nature. Section 96 of the same code provides that a counterclaim, to be available as a defense in an answer, must be one in favor of all the substantial defendants and against all the substantial plaintiffs in the action. A counterclaim is termed a mutual petition, because both parties sue each other mutually in the same action, each of them assuming the double role of plaintiff and defendant, before the trial judge, and the two suits are brought under a single proceedings where both actions are tried at the same time and finally determined in one and the same judgment. The different amounts sought to be recovered by Jose de la Pea y de Ramon, as the administrator of the estate of the deceased Jose de la Pea y Gomiz, from the defendant, Federico Hidalgo, constitute various separate obligations contracted by the later, according to the complaint, in favor of the deceased, testator, Pea y Gomiz; and the amount of the counterclaim was likewise a debt which the said testator at his death left unpaid and owing the defendant Hidalgo; therefore, Jose de la Pea y de Ramon, as administrator, and Federico Hidalgo are the substantial plaintiffs and defendants, reciprocally, in the aforementioned main action. It is evident, by a simple perusal of the finding of facts an of the grounds of law of the final decision rendered in that action, that the same was instituted by Jose de la Pea y de Ramon, not by himself and in his own representation, but in his capacity as administrator of the estate of his deceased father, Jose de la Pea y Gomiz, demanding payment of certain amounts which, according to his third mended complaint, the defendant Federico Hidalgo owed the latter; and it is none the less evident that the counterclaim presented by the defendant Federico Hidalgo had for its sole object the collection of a certain sum which was owing to him by the deceased testator, Jose de la Pea y Gomiz, and that the plaintiff, Jose de la Pea y de Ramon, per se and personally, had nothing to do with this debt of the estate, which concerned him only as such administrator. This is shown by the record and clearly appears in the said decision which disposed of the plaintiff-administrator's complaint and the defendant-debtor's counterclaim. that decision, from the beginning to the end, evidence without contradiction or proofs to the contrary, all that has been hereinbefore stated; it shows who were the contending parties, the nature of the questions raised by complaint and

counterclaim and the respective purposes sought by the one and the other; it is therefore unreasonable to affirm that the counterclaim was made against Pea y de Ramon personally, apart from his position as administrator. If in any place or in any line of said decision mention was made of the name of the plaintiff Pea y de Ramon without the title of his office as administrator of the estate, it probably was because the complaint was filed and the action was brought by him in his capacity of administrator, and the counterclaim, also, was directed him as such administrator; and if in any paragraph the said title of his office was omitted in designating him, such omission can not serve as a ground for concluding that the counterclaim allowed and the sentence imposed in the said decision were against Jose de la Pea y de Ramon as a private individual and not as the administrator of the aforementioned estate; and the sentence contained in the decision referred to can in no wise be understood to have been made against Jose de la Pea y de Ramon personally, but in his capacity of administrator of the estate, which alone was liable for the debt owing to the defendant; if mention was therein made of the plaintiff by name, it is because he was the representative of the debtor estate. The intervening attorneys allege that, in the aforesaid suit between the administrator Pea y de Ramon and Hidalgo, two judgments were rendered, one against the defendant Hidalgo and the other against the administrator Pea y de Ramon. This averment is incorrect, because, as has been seen and is obvious to all who intervened in the said suit, there was but one judgment appealed from and but one decision rendered in second instance by this court, which in part modified the prior judgment in first instance. A complaint and a counterclaim having been entered in the said suit, it logically follows that the decision should contain a finding relative to the demand contained in the complaint and another finding concerning the counterclaim. This separation of findings in one decision does not denote distinct judgments, but different disposals of the several questions raised in the suit and comprised within a single decision, which alone terminated the double litigation. Reason and justice will not support the claim that the sentence therein contained, directing Jose de la Pea y de Ramon to pay to the defendant Hidalgo the sum of P9,000 and interest by virtue of the counterclaim, was pronounced against the plaintiff in his personal capacity and not as administrator of the estate, inasmuch as Pea y de Ramon did not initiate or prosecute his suit, in the said main action on his own account, but in his capacity as administrator; and the debt demanded in the counterclaim was one owing by the estate, which he represented in that action, and by his father, the testator Pea y Gomiz, as the judge of First Instance, in directing in his order of October 14, 1910, in fulfillment and execution of the decision of this court, so recognized such debt and declared in an unmistakable manner that Hidalgo was entitled, as a result of the set-off between the two amounts specified in the decision of the Supreme Court and which the administrator Pea y de Ramon and the defendant Hidalgo were mutually owing to each other, to collect the sum of P2,274.93 with interest thereon at the rate of 6 per cent per annum, this amount being the difference between the two debts set off against each other and which is owing to the defendant from the estate. In the aforementioned decision of this court, by which the complaint and the counterclaim presented by the parties to the said suit were disposed of, the amount which the defendant Hidalgo should pay to the administrator of the estate of the deceased Pea y Gomiz and the sum which the said administrator, designated by his name of Jose de la Pea y de Ramon, should, by virtue of the counterclaim, pay to the defendant, Federico Hidalgo, alone were specified; the resultant difference, after the set-off should have been
13

made, was not stated, as it was considered that this merely arithmetical operation would necessarily be performed in the course of the execution proceedings by the judge of the Court of First Instance charged with carrying out the final decision rendered in the case. This, in fact, he did do in his order of October 14, by directing that the plaintiff should pay the said sum, that it, the difference which was found to exist, after making the set-off between the respective amounts the litigating parties were sentenced to pay. The failure to state in the said decision that both debts were set off against each other up to a concurrent sum, can not avail as a ground for alleging that the attorneys of the administrator Pea y de Ramon have acquired a lien on the amount which Hidalgo should pay to the administrator Pea y de Ramon in preference to the creditor of the amount that is the subject of the counterclaim. It is to be observed that, although counsel for the plaintiff Pea excepted to the order of October 14, 1910, by which the judge of the Court of First Instance, following the final decisions of this court, declared a set-off between the amounts that were owing reciprocally by both parties and directed the said plaintiff to pay to the defendant the difference of P2,274.93 with interest at the rate of 6 per cent per annum, he did not present any bill of exceptions nor any brief with the required assignment of errors, doubtless because he was convinced that the appeal which we would have to maintained was directed against a final decision of this court. It is lawful and proper to allow the set-off between the two amounts specified in the said decision, in accordance with the provisions of articles 1195, 1196, and 1202 of the Civil Code, because the credit of P6,774.50, together with the legal interest thereon, to the payment of which the defendant Hidalgo was sentenced, belongs to the estate of the deceased Pea y Gomiz, represented by the plaintiff, Pea y de Ramon, and the P9,000, with interest, which, in turn, the plaintiff-administrator was sentenced to pay to the said defendant, was a debt of the testator which it is now incumbent upon his estate to repay to his creditor; therefore, as the trial judge very well says in the order of October 18, appealed from, the lien of the intervening attorneys can not serve to prevent the setoff, for the reason that interveners rendered their services to Jose de la Pea y de Ramon as administrator of the said estate, and the credit by which the debt owing to this estate by the defendant Hidalgo appears to be set-off consists of a debt of the estate in favor of its debtor, Hidalgo. If it just be that the estate of the deceased Pea y Gomiz should collect the amount owing it by Hidalgo, as determined by final decision, it is equally just that Hidalgo should have the same right to collect the sum which the said estate owes him, according to the same decision; therefore, in order to comply with such decision, determining the two liabilities directly opposed to each other, it consequently and logically follows that a set-off of both credits, up to a concurrent amount, must be affected; and if the lien or the right to collect professional fees on the part of the attorneys were superior to the right of the creditor of the estate, the result would be that the executory decision would not be complied with; there would then be no set-off and the defendant would be compelled to pay to the said administrator his debt to the estate, through the aforementioned lien of the intervening attorneys, but could not collect, nor apply to the payment of the credit owing him by the same estate, the amount of his debt to the latter; this would be illegal and opposed to the most rudimentary principles of justice and, furthermore, would be an absurdity and contrary to common sense. Section 37 of the Code of Procedure in Civil Actions prescribes, among other provisions, that a lawyer shall have a lien

upon all judgments and decrees for the payment of money, and executions issued in pursuance of such judgments and decrees which he has secured in a litigation of his client, from and after, but not before, the time when he shall have caused to be entered upon the records of the court, . . . and shall have the same right and power over such judgments, decrees and execution to enforce his lien as his client had or may have, to the extent that may be necessary for the payment of his just fees and disbursements. If it be taken into account that, while the administrator Pea y de Ramon is entitled to collect from Hidalgo the P6,774.50 which the later is owing to the estate left by the said Pea's father, this estate must, in turn, pay to the said Hidalgo P9,000; and that, on comparing these two amounts with each other, in proceeding with the execution of the final judgment, it would be necessarily be disclosed by the operation that the said estate or its administrator, far from collecting any sum or whatever from its or his credit, would have to pay Hidalgo the difference resulting from the set-off between the one amount and the other, up to a concurrent sum, it will be understood at once that the attorneys for the representative of that estate can not collect any part whatever of the amount awarded in the executory decision, because tat sum was intended to cover a large part of the debt of the testator and the later's testate succession will still have to pay the difference. The lien or right to collect fees for professional service, which the appellant attorneys possess to the sum awarded in the final decision, is equal to the right of their client, to that of the administrator Pea y de Ramon, recognized in the said decision, pursuant to the provisions of the aforecited section 37 of the Code of Civil Procedure. The preference claimed by these interveners over the creditors right, by virtue of the later's counterclaim, does not appear to be established by this section; and if the estate of the deceased Pea is obliged to pay to Hidalgo P9,000, it is not entitled to collect from the latter the said P6,774.50 by way of a set-off, unless it shall previously have satisfied the whole amount of its debt, which it has done; therefore the attorneys of the representative of the said estate are not entitled to collect their fees out of the said amount recognized by decision to being to their client, but subject to a set-off by virtue of a counterclaim, as their rights are no better than those of the creditor Hidalgo. The judgment appealed from having been reversed with respect to that portion thereof relative to the liability asked by the administrator of the estate to be laid against Federico Hidalgo, the sole judgment to be executed is that contained in the decision rendered in second instance and in this decision, as has been shown; and the result, in short, has been in no wise favorable to the plaintiff because, instead of being able to collect the amount of his credit owing by Hidalgo to the estate, he still finds himself obliged to pay the defendant the difference resulting from the set-off to which the counterclaim, made by the latter for a greater sum, gave rise; and therefore, the right claimed by the appellant attorneys to collect their fees out of the amount awarded to the said administrator, is in all respects unsustainable, inasmuch as, in consequence of the counterclaim, there was a set-off against that amount and the plaintiff has nothing to collect, but, on the contrary, is still liable for the difference which was found to exist after the reciprocal debts of both parties had been set off against each other. The right of attorneys for the administrator Pea y de Ramon, to collect fees for professional service, under section 37 of the Code of Civil Procedure, is restricted to the personal founds of their client, to amounts awarded to the latter by final decision, but does not comprise sums of money which, according to the same decision, must
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be applied to be made in such decision by virtue of a prior counterclaim.1awphil.net We know of no legal provision which grants to the attorneys for the losing party in a suit, or who has not obtained a judgment authorizing him to collect money from the adverse party, the privilege of collecting their professional fees with preference over, and better right then, the said adverse party, the legitimate creditor of the said attorneys' client. The suit was prosecuted for the collection of amounts which both parties reciprocally were owing each other, and a decision was rendered deciding the complaint and the counterclaim and determining the sums which the litigating parties must mutually pay; therefore, the final judgment must be executed, as provided by the trial judge, pursuant to its terms, and no impediment to such execution can be had in the improper contention made by the appellant attorneys, who can invoke no law or just reason which authorizes them to collect their professional fees out of the bond given by Hidalgo, once the same was not deposited as security for the payment of the said fees. For the foregoing reasons, whereby the errors attributed by the appellant attorneys to the trial judge have been duly refuted, it is our opinion and we hold that we should and hereby do affirm the order of October 14, 1910, and also the order of the 18th of the same month, with the exception of the final provision of this last order, of October 18, which we reversed and direct tat return be made to Federico Hidalgo of the sum of P8,500 retained by the clerk of the court below as a result of the motion of intervention herein concerned. No special finding is made as to the costs. So ordered. Mapa, Johnson and Moreland, JJ., concur. epublic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9188 December 4, 1914 GUTIERREZ HERMANOS, plaintiff-appellee, vs. ENGRACIO ORENSE, defendant-appellant. William A. Kincaid, Thos. L. Hartigan, and Ceferino M. Villareal for appellant. Rafael de la Sierra for appellee.

On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards amended, in the Court of First Instance of Albay against Engacio Orense, in which he set forth that on and before February 14, 1907, the defendant Orense had been the owner of a parcel of land, with the buildings and improvements thereon, situated in the pueblo of Guinobatan, Albay, the location, area and boundaries of which were specified in the complaint; that the said property has up to date been recorded in the new property registry in the name of the said Orense, according to certificate No. 5, with the boundaries therein given; that, on February 14, 1907, Jose Duran, a nephew of the defendant, with the latter's knowledge and consent, executed before a notary a public instrument whereby he sold and conveyed to the plaintiff company, for P1,500, the aforementioned property, the vendor Duran reserving to himself the right to repurchase it for the same price within a period of four years from the date of the said instrument; that the plaintiff company had not entered into possession of the purchased property, owing to its continued occupancy by the defendant and his nephew, Jose Duran, by virtue of a contract of lease executed by the plaintiff to Duran, which contract was in force up to February 14, 1911; that the said instrument of sale of the property, executed by Jose Duran, was publicly and freely confirmed and ratified by the defendant Orense; that, in order to perfect the title to the said property, but that the defendant Orense refused to do so, without any justifiable cause or reason, wherefore he should be compelled to execute the said deed by an express order of the court, for Jose Duran is notoriously insolvent and cannot reimburse the plaintiff company for the price of the sale which he received, nor pay any sum whatever for the losses and damages occasioned by the said sale, aside from the fact that the plaintiff had suffered damage by losing the present value of the property, which was worth P3,000; that, unless such deed of final conveyance were executed in behalf of the plaintiff company, it would be injured by the fraud perpetrated by the vendor, Duran, in connivance with the defendant; that the latter had been occupying the said property since February 14, 1911, and refused to pay the rental thereof, notwithstanding the demand made upon him for its payment at the rate of P30 per month, the just and reasonable value for the occupancy of the said property, the possession of which the defendant likewise refused to deliver to the plaintiff company, in spite of the continuous demands made upon him, the defendant, with bad faith and to the prejudice of the firm of Gutierrez Hermanos, claiming to have rights of ownership and possession in the said property. Therefore it was prayed that judgment be rendered by holding that the land and improvements in question belong legitimately and exclusively to the plaintiff, and ordering the defendant to execute in the plaintiff's behalf the said instrument of transfer and conveyance of the property and of all the right, interest, title and share which the defendant has therein; that the defendant be sentenced to pay P30 per month for damages and rental of the property from February 14, 1911, and that, in case these remedies were not granted to the plaintiff, the defendant be sentenced to pay to it the sum of P3,000 as damages, together with interest thereon since the date of the institution of this suit, and to pay the costs and other legal expenses. The demurrer filed to the amended complaint was overruled, with exception on the part of the defendant, whose counsel made a general denial of the allegations contained in the complaint, excepting those that were admitted, and specifically denied paragraph 4 thereof to the effect that on February 14, 1907, Jose Duran executed the deed of sale of the property in favor of the plaintiff with the defendant's knowledge and consent.1awphil.net As the first special defense, counsel for the defendant alleged that the facts set forth in the complaint with respect to the execution of the deed did not constitute a cause of action, nor did those alleged in the
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TORRES, J.: Appeal through bill of exceptions filed by counsel for the appellant from the judgment on April 14, 1913, by the Honorable P. M. Moir, judge, wherein he sentenced the defendant to make immediate delivery of the property in question, through a public instrument, by transferring and conveying to the plaintiff all his rights in the property described in the complaint and to pay it the sum of P780, as damages, and the costs of the suit.

other form of action for the collection of P3,000, the value of the realty. As the second special defense, he alleged that the defendant was the lawful owner of the property claimed in the complaint, as his ownership was recorded in the property registry, and that, since his title had been registered under the proceedings in rem prescribed by Act No. 496, it was conclusive against the plaintiff and the pretended rights alleged to have been acquired by Jose Duran prior to such registration could not now prevail; that the defendant had not executed any written power of attorney nor given any verbal authority to Jose Duran in order that the latter might, in his name and representation, sell the said property to the plaintiff company; that the defendant's knowledge of the said sale was acquired long after the execution of the contract of sale between Duran and Gutierrez Hermanos, and that prior thereto the defendant did not intentionally and deliberately perform any act such as might have induced the plaintiff to believe that Duran was empowered and authorized by the defendant and which would warrant him in acting to his own detriment, under the influence of that belief. Counsel therefore prayed that the defendant be absolved from the complaint and that the plaintiff be sentenced to pay the costs and to hold his peace forever. After the hearing of the case and an examination of the evidence introduced by both parties, the court rendered the judgment aforementioned, to which counsel for the defendant excepted and moved for a new trial. This motion was denied, an exception was taken by the defendant and, upon presentation of the proper bill of exceptions, the same was approved, certified and forwarded to the clerk of his court. This suit involves the validity and efficacy of the sale under right of redemption of a parcel of land and a masonry house with the nipa roof erected thereon, effected by Jose Duran, a nephew of the owner of the property, Engracio Orense, for the sum of P1,500 by means of a notarial instrument executed and ratified on February 14, 1907. After the lapse of the four years stipulated for the redemption, the defendant refused to deliver the property to the purchaser, the firm of Gutierrez Hermanos, and to pay the rental thereof at the rate of P30 per month for its use and occupation since February 14, 1911, when the period for its repurchase terminated. His refusal was based on the allegations that he had been and was then the owner of the said property, which was registered in his name in the property registry; that he had not executed any written power of attorney to Jose Duran, nor had he given the latter any verbal authorization to sell the said property to the plaintiff firm in his name; and that, prior to the execution of the deed of sale, the defendant performed no act such as might have induced the plaintiff to believe that Jose Duran was empowered and authorized by the defendant to effect the said sale. The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said province, with estafa, for having represented himself in the said deed of sale to be the absolute owner of the aforesaid land and improvements, whereas in reality they did not belong to him, but to the defendant Orense. However, at the trial of the case Engracio Orense, called as a witness, being interrogated by the fiscal as to whether he and consented to Duran's selling the said property under right of redemption to the firm of Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the court acquitted Jose Duran of the charge of estafa.

As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle, Engacio Orense, the owner of the property, to the effect that he had consented to his nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos, counsel for this firm filed a complainant praying, among other remedies, that the defendant Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff company of all the right, title and interest with Orense had in the property sold, and to pay to the same the rental of the property due from February 14, 1911.itc-alf Notwithstanding the allegations of the defendant, the record in this case shows that he did give his consent in order that his nephew, Jose Duran, might sell the property in question to Gutierrez Hermanos, and that he did thereafter confirm and ratify the sale by means of a public instrument executed before a notary. It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who acted within the scope of his authority. (Civil Code, arts. 1709, 1710 and 1727.) Even should it be held that the said consent was granted subsequently to the sale, it is unquestionable that the defendant, the owner of the property, approved the action of his nephew, who in this case acted as the manager of his uncle's business, and Orense'r ratification produced the effect of an express authorization to make the said sale. (Civil Code, arts. 1888 and 1892.) Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or without his legal representation according to law. A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless it should be ratified by the person in whose name it was executed before being revoked by the other contracting party. The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by his nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects which the contract may have contained from the moment of its execution. The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void in the beginning, but afterwards became perfectly valid and cured of the defect of nullity it bore at its execution by the confirmation solemnly made by the said owner upon his stating under oath to the judge that he himself consented to his nephew Jose Duran's making the said sale. Moreover, pursuant to article 1309 of the Code, the right of action for nullification that could have been brought became legally extinguished from the moment the contract was validly confirmed and ratified, and, in the present case, it is unquestionable that the defendant did confirm the said contract of sale and consent to its execution. On the testimony given by Engacio Orense at the trial of Duran for estafa, the latter was acquitted, and it would not be just that the said testimony, expressive of his consent to the sale of his property, which determined the acquittal of his nephew, Jose Duran, who then acted as his business manager, and which testimony wiped out the
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deception that in the beginning appeared to have been practiced by the said Duran, should not now serve in passing upon the conduct of Engracio Orense in relation to the firm of Gutierrez Hermanos in order to prove his consent to the sale of his property, for, had it not been for the consent admitted by the defendant Orense, the plaintiff would have been the victim of estafa. If the defendant Orense acknowledged and admitted under oath that he had consented to Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it permissible for him afterward to deny that admission, to the prejudice of the purchaser, who gave P1,500 for the said property. The contract of sale of the said property contained in the notarial instrument of February 14, 1907, is alleged to be invalid, null and void under the provisions of paragraph 5 of section 335 of the Code of Civil Procedure, because the authority which Orense may have given to Duran to make the said contract of sale is not shown to have been in writing and signed by Orense, but the record discloses satisfactory and conclusive proof that the defendant Orense gave his consent to the contract of sale executed in a public instrument by his nephew Jose Duran. Such consent was proven in a criminal action by the sworn testimony of the principal and presented in this civil suit by other sworn testimony of the same principal and by other evidence to which the defendant made no objection. Therefore the principal is bound to abide by the consequences of his agency as though it had actually been given in writing (Conlu vs. Araneta and Guanko, 15 Phil. Rep., 387; Gallemit vs. Tabiliran, 20 Phil. Rep., 241; Kuenzle & Streiff vs. Jiongco, 22 Phil. Rep., 110.) The repeated and successive statements made by the defendant Orense in two actions, wherein he affirmed that he had given his consent to the sale of his property, meet the requirements of the law and legally excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an express power of agency. The judgment appealed from in harmony with the law and the merits of the case, and the errors assigned thereto have been duly refuted by the foregoing considerations, so it should be affirmed. The judgment appealed from is hereby affirmed, with the costs against the appellant. Arellano, C.J., Johnson, Carson, Moreland and Araullo, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-12579 July 27, 1918

STREET, J.: This action was instituted by the plaintiff, Gregorio Jimenez, to recover from the defendant, Pedro Rabot, a parcel of land situated in the municipality of Alaminos, in the Province of Pangasinan, and described in the complaint as follows: Approximate area of three hectares; bounded on the north and west with land of Pedro Reynoso, on the south with land of Nicolasa Jimenez, and on the east with land of Calixta Apostol before, at present with that of Juan Montemayor and Simon del Barrio. It is situated in Dinmayat Tancaran, barrio of Alos of this same municipality of Alaminos, Pangasinan. From a judgment rendered in favor of the plaintiff, Pedro Rabot has appealed; but his co-defendants, Nicolasa Jimenez and her husband, who were cited by the defendant for the purpose of holding her liable upon her warranty in case of his eviction, have not appealed. It is admitted that the parcel of land in question, together with two other parcels in the same locality originally belonged of the heirs in the division of the estate of his father. It is further appears that while Gregorio was staying at Vigan, in the Province of Ilocos Sur, during the year 1911, his property in Alaminos was confided by him to the care of his elder sister Nicolasa Jimenez. On February 7 of that year he wrote this sister a letter from Vigan in which he informed her that he was pressed for money and requested her to sell one of his parcels of land and send him the money in order that he might pay his debts. This letter contains no description of the land to be sold other than is indicated in the words "one of my parcels of land" ("uno de mis terrenos"). Acting upon this letter Nicolasa approached the defendant Pedro Rabot, and the latter agreed to buy the parcel in question for the sum of P500. Two hundred and fifty peso were paid at once, with the understanding that a deed of conveyance would be executed when the balance should be paid. Nicolasa admits having received this payment of P250 at the time stated; but there is no evidence that she sent any of it to her brother. About one year later Gregorio came down to Alaminos and demanded that his sister should surrender this piece of land to him, it being then in her possession. She refused upon some pretext or other to do so; and as a result Gregorio, in conjunction with others of his brothers and sisters, whose properties were also in the hands of Nicolasa, instituted an action in the Court of First Instance for the purpose of recovering their land from her control. This action was decided favorably to the plaintiffs upon August 12, 1913; and no appeal was taken from the judgment. Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and delivered to Pedro Rabot a deed purporting to convey to him the parcel of land which is the subject of this controversy. The deed recites that the sale was made in consideration of the sum of P500, the payment of which is acknowledged. Pedro Rabot went into possession, and the property was found in his hands at the time when final judgment was entered in favor of the plaintiffs in the action above mentioned. It will thus be seen that Pedro Rabot acquired possession under the deed from Nicolasa during the pendency of the litigation appear that he was at the time cognizant of that circumstance.

GREGORIO JIMENEZ, plaintiff-appellee, vs. PEDRO RABOT, NICOLASA JIMENEZ and her husband EMILIO RODRIGUEZ, defendants. PEDRO RABOT, appellant. Antonio Bengson for appellant. Jose Rivera for appellee.

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In considering the questions presented by this appeal one or two preliminary observations may be made. The first is that, as a matter of formality, a power of attorney to convey real property ought to appear in a public document, just as any other instrument intended to transmit or convey an interest in such property ought to appear in a public document. (Art. 1280, Civil Code.) But inasmuch as it is an established doctrine that a private document is competent to create, transmit, modify, or extinguish a right in real property (Thunga Chui vs. Que Bentec, 2 Phil. Rep., 561; Couto Soriano vs. Cortes, 8 Phil. Rep., 459), it follows that a power of attorney to convey such property, even though in the form of a private document, will operate with effect. Again, supposing that the letter contained adequate authority for Nicolasa to sell the property in question, her action in conveying the property in her own name, without showing the capacity in which she acted, was doubtless irregular. Nevertheless, such deed would in any event operate to bind her brother, the plaintiff in its character as a contract (Lyon vs. Pollock, 99 U.S., 668; 25 L. ed., 265), and supposing that the authority was sufficient, he could be compelled by a proper judicial proceeding to execute a document to carry such contract into effect. (Art. 1279, Civil Code.) The principal question for consideration therefore in the end resolves itself into this, whether the authority conferred on Nicolasa by the letter of February 7, 1911, was sufficient to enable her to bind her brother. The only provisions of law bearing on this point are contained in article 1713 of the Civil Code and in section 335 of the Code of Civil Procedure. Article 1713 of the Civil Code requires that the authority to alienate land shall be contained in an express mandate; while subsection 5 of section 335 of the Code of Civil Procedure says that the authority of the agent must be in writing and subscribed by the party to be charged. We are of the opinion that the authority expressed in the letter is a sufficient compliance with both requirements. It has been urged here that in order for the authority to be sufficient under section 335 of the Code of Civil Procedure the authorization must contain a particular description of the property which the agent is to be permitted to sell. There is no such requirement in subsection 5 of section 335; and we do not believe that it would be legitimate to read such a requirement into it. The purpose in giving a power of attorney is to substitute the mind and hand of the agent for the mind and hand of the principal; and if the character and extent of the power is so far defined as to leave no doubt as to the limits within which the agent is authorized to act, and he acts within those limits, the principal cannot question the validity of his act. It is not necessary that the particular act to be accomplished should be predestinated by the language of the power. The question to be answered always, after the power has been exercised, is rather this: Was the act which the agent performed within the scope of his authority? In the case before us, if the question is asked whether the act performed by Nicolasa Jimenez was within the scope of the authority which had been conferred upon her, the answer must be obviously in the affirmative. It should not escape observation that the problem with which we are here concerned relates to the sufficiency of the power of attorney under subsection 5 of section 335 of the Code of Civil Procedure and not to the sufficiency of the note or memorandum of the contract, or agreement of sale, required by the same subsection, in connection with the first paragraph of the same section. It is well-settled in the jurisprudence of England and the United States that when the owner, or his agent, comes to make a contract to sell, or a conveyance to effect a transfer, there must be a description of the property which is the subject of the sale or conveyance. This is necessary of course to define the object of the contract. (Brockway vs. Frost, 40 Minn., 155; Carr vs. Passaic Land etc. Co., 19 N. J. Eq., 424;

Lippincott vs. Bridgewater, 55 N. J. Eq., 208; Craig vs. Zelian, 137 Cal., 105; 20 Cyc., 271.) The general rule here applicable is that the description must be sufficiently definite to identify the land either from the recitals of the contract or deed or from external facts referred to in the document, thereby enabling one to determine the identity of the land and if the description is uncertain on its face or is shown to be applicable with equal plausibility to more than one tract, it is insufficient. The principle embodied in these decisions is not, in our opinion, applicable to the present case, which relates to the sufficiency of the authorization, not to the sufficiency of the contract or conveyance. It is unquestionable that the deed which Nicolasa executed contains a proper description of the property which she purported to convey. There is ample authority to the effect that a person may by a general power of attorney an agent to sell "all" the land possessed by the principal, or all that he possesses in a particular city, county, or state. (Roper vs.McFadden, 48 Cal., 346; Rownd vs. Davidson, 113 La., 1047; Carson vs. Ray, 52 N. C., 609; 78 Am. Dec., 267; 31 Cyc., 1229.) It is also held that where a person authorizes an agent to sell a farm ("my farm") in a certain county, this is sufficient, if it be shown that such party has only one farm in that country. (Marriner vs. Dennison, 78 Cal., 202.) In Linton vs. Moorhead (209 Pa. St., 646), the power authorized the agent to sell or convey "any or all tracts, lots, or parcels" of land belonging to the plaintiff. It was held that this was adequate. In Lyon vs. Pollock (99 U.S., 668), the owner in effect authorized an agent to sell everything he had in San Antonio Texas. The authority was held sufficient. In Linan vs. Puno (31 Phil. Rep., 259), the authority granted was to the effect that the agent might administer "the interests" possessed by the principal in the municipality of Tarlac and to that end he was authorized to purchase, sell, collect, and pay, etc. It was held that this was a sufficient power. In the present case the agent was given the power to sell either of the parcels of land belonging to the plaintiff. We can see no reason why the performance of an act within the scope of this authority should not bind the plaintiff to the same extent as if he had given the agent authority to sell "any or all" and she had conveyed only one. From what have been said it is evident that the lower court should have absolved the defendant Pedro Rabot from the complaint. Judgment will accordingly be reversed, without any express adjudication of costs this instance. So ordered. Torres, Johnson, Malcolm, Avancea and Fisher, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 6906 September 27, 1911

FLORENTINO RALLOS, ET AL., plaintiff-appellee, vs. TEODORO R. YANGCO, defendant-appellant. Mariano Escueta, for appellant. Martin M. Levering, for appellees.
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MORELAND, J.: This is an appeal from a judgment of the Court of First Instance of the Province of Cebu, the Hon. Adolph Wislizenus presiding, in favor of the plaintiffs, in the sum of P1,537.08, with interest at 6 per cent per annum from the month of July, 1909, with costs. The defendant in this case on the 27th day of November, 1907, sent to the plaintiff Florentino Rallos, among others, the following letter: CIRCULAR NO. 1. MANILA, November 27, 1907 MR. FLORENTINO RALLOS, Cebu. DEAR SIR: I have the honor to inform you that I have on this date opened in my steamship office at No. 163 Muelle de la Reina, Binondo, Manila, P. I., a shipping and commission department for buying and selling leaf tobacco and other native products, under the following conditions: 1. When the consignment has been received, the consignor thereof will be credited with a sum not to exceed two-thirds of the value of the goods shipped, which may be made available by acceptance of a draft or written order of the consignor on five to ten day's sight, or by his ordering at his option a bill of goods. In the latter case he must pay a commission of 2 per cent. 2. No draft or written order will be accepted without previous notice forwarding the consignment of goods to guarantee the same. 3. Expenses of freight, hauling and everything necessary for duly executing the commission will be charged in the commission. 4. All advances made under sections (1) and (3) shall bear interest at 10 per cent a year, counting by the sale of the goods shipped or remittance of the amount thereof. 5. A commission of 2 per cent will be collected on the amount realized from the sale of the goods shipped. 6. A Payment will be made immediately after collection of the price of the goods shipped. 7. Orders will be taken for the purchase of general merchandise, ship-stores, cloths, etc., upon remittance of the amount with the commission of 2 per cent on the total value of the goods bought. Expenses of freight, hauling, and everything necessary for properly executing the commission will be charged to the consignor. 8. The consignor of the good may not fix upon the consignee a longer period than four months, counting from the date of receipt, for selling the same; with the understanding that after such period the consignee is authorized to make the sale, so as to prevent the advance

and cost of storage from amounting to more than the actual value of said goods, as has often happened. 9. The shipment to the consignors of the goods ordered on account of the amount realized from the sale of the goods consigned and of the goods bought on remittance of the value thereof, under sections (1) and (3), will not be insured against risk by sea and land except on written order of the interested parties. 10. On all consignments of goods not insured according to the next preceding section, the consignors will bear the risk. 11. All the foregoing conditions will take effect only after this office has acknowledged the consignor's previous notice. 12. All other conditions and details will be furnished at the office of the undersigned. If you care to favor me with your patronage, my office is at No. 163 Muelle de la Reinna, Binondo, Manila, P. I., under the name of "Teodoro R. Yangco." In this connection it gives me great pleasure to introduce to you Mr. Florentino Collantes, upon whom I have conferred public power of attorney before the notary, Mr. Perfecto Salas Rodriguez, dated November 16, 1907, to perform in my name and on my behalf all acts necessary for carrying out my plans, in the belief that through his knowledge and long experience in the business, along with my commercial connections with the merchants of this city and of the provinces, I may hope to secure the most advantageous prices for my patrons. Mr. Collantes will sign by power of attorney, so I beg that you make due note of his signature hereto affixed. Very respectfully, (Sgd.) T. R. YANGCO. (Sgd.) F. COLLANTES. Accepting this invitation, the plaintiffs proceeded to do a considerable business with the defendant through the said Collantes, as his factor, sending to him as agent for the defendant a good deal of produce to be sold on commission. Later, and in the month of February, 1909, the plaintiffs sent to the said Collantes, as agent for the defendant, 218 bundles of tobacco in the leaf to be sold on commission, as had been other produce previously. The said Collantes received said tobacco and sold it for the sum of P1,744. The charges for such sale were P206.96. leaving in the hands of said Collantes the sum of P1,537.08 belonging to the plaintiffs. This sum was, apparently, converted to his own use by said agent. It appears, however, that prior to the sending of said tobacco the defendant had severed his relations with Collantes and that the latter was no longer acting as his factor. This fact was not known to the plaintiffs; and it is conceded in the case that no notice of any kind was given by the defendant to the plaintiffs of the termination of the relations between the defendant and his agent. The defendant refused to pay the said sum upon demand of the plaintiffs, placing such refusal upon the ground that at the time the said tobacco was received
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and sold by Collantes he was acting personally and not as agent of the defendant. This action was brought to recover said sum. As is seen, the only question for our decision is whether or not the plaintiffs, acting in good faith and without knowledge, having sent produce to sell on commission to the former agent of the defendant, can recover of the defendant under the circumstances above set forth. We are of the opinion that the defendant is liable. Having advertised the fact that Collantes was his agent and having given them a special invitation to deal with such agent, it was the duty of the defendant on the termination of the relationship of principal and agent to give due and timely notice thereof to the plaintiffs. Failing to do so, he is responsible to them for whatever goods may have been in good faith and without negligence sent to the agent without knowledge, actual or constructive, of the termination of such relationship. For these reasons the judgment appealed from is confirmed, without special finding as to costs. Torres, Mapa, Johnson and Carson, JJ., concur.

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