JAI-ALAI CORP. OF THE PHIL. VS. BANK OF THE PHIL. IS.

G.R. NO. L-29432

August 6, 1975
(topic: Loan)

FACTS:

Ten checks with a total face value of P8,030.58 were deposited by the petitioner in its
current account with the respondent bank. All checks, which were acquired by the petitioner from
one Ramirez, a sales agent of the Inter-Island Gas and a regular bettor at jai-alai games, were,
upon deposit, temporarily credited to the petitioner’s account in accordance with the clause
printed on the deposit slips issued by the respondent. After Ramirez had resigned from the Inter-
Island Gas and after the checks had been submitted to inter-bank clearing, the Inter-Island Gas
discovered that all the indorsements made on the checks purportedly by its cashiers as well as
the rubber stamp impression thereon reading "Inter-Island Gas Service, Inc." were forgeries. The
drawers demanded reimbursement from the drawee-banks, which in turn demanded from the
respondent, as collecting bank, the return of the amounts they had paid on account thereof. When
the drawee-banks returned the checks to the respondent BPI, the latter paid their value which the
former in turn paid to the Inter-Island Gas.

Repondent BPI debited petitioner’s current account and forwarded to the latter the
checks containing the forged indorsements, which the petitioner refused to accept. Petitioner drew
against its current account with respondent a check for P135,000 payable to the order of Olondriz,
but the same was dishonored for the insufficiency of funds.

ISSUE:

 W/N an agency or a creditor-debtor relationship was created between the parties

HELD:

When the petitioner deposited the checks with the respondent, the nature of the
relationship created at that stage was one of agency, that is, the bank was to collect from the
drawee of the checks the corresponding proceeds. It is true that the respondent had already
collected the proceeds of the checks when it debited the petitioner’s account, so that following
the rule in Gullas vs. Philippine National Bank it might be argued that the relationship between
the parties had become that of creditor and debtor as to preclude the respondent from using the
petitioner’s funds to make payments not authorized by the latter. It is our view nonetheless that
no creditor-debtor relationship was created between the parties.
 Since under the foregoing provision of Section 23 of the Negotiable Instruments Law, a
forged signature in a negotiable instrument is wholly inoperative and no right to discharge it or
enforce its payment can be acquired through or under the forged signature except against a party
who cannot invoke the forgery, it stands to reason, upon the facts of record, that the respondent,
as a collecting bank which indorsed the checks to the drawee-banks for clearing, should be liable
to the latter for reimbursement, for, as found by the court a quo and by the appellate court, the
indorsements on the checks had been forged prior to their delivery to the petitioner. In legal
contemplation, therefore, the payments made by the drawee-banks to the respondent on account
of the said checks were ineffective; and, such being the case, the relationship of creditor and
debtor between petitioner and the respondent had not been validly effected, the checks not having
been properly and legitimately converted into cash. In Great Eastern Life Ins. Co. vs. Hongkong
& Shanghai Bank, the Court ruled that it is the obligation of the collecting bank to reimburse the
drawee-bank the value of the checks subsequently found to contain the forged indorsement of
the payee. The reason is that the bank with which the check was deposited has, no right to pay
the sum stated therein to the forger “or anyone else upon a forged signature.” x x x The petitioner
must in turn shoulder the loss of the amounts which the respondent, as its collecting agent, had
to reimburse to the drawee-banks.
INSULAR DRUG CO., INC., VS. THE PHILIPPINE NATIONAL BANK, ET AL.
G.R. No. L-38816
November 3, 1933
FACTS:

The Insular Drug Co., Inc., is a Philippine corporation with offices in the City of Manila. U.E.
Foerster was formerly a salesman of drug company for Panay and Negros. Foerster also acted
as a collector for the company. He was instructed to take the checks which came to his hands for
the drug company to the Iloilo branch of the Chartered Bank of India, Australia and China and
deposit the amounts to the credit of the drug company. Instead, Foerster deposited checks with
the Iloilo branch of the Philippine National Bank. The checks were in that bank placed in the
personal account of Foerster. Some of the checks were drawn against the Philippine National
Bank. The indorsement on the checks took various forms, some signed by U. Foerster while some
by Carmen Foerster, U. Foerster’s stenographer, but all were made out in the name of “Insular
Drug Co.”. As a consequence of the indorsements on checks the amounts therein stated were
subsequently withdrawn by U. E., Foerster and Carmen E. de Foerster.

Eventually the Manila office of the drug company investigated the transactions of Foerster.
Upon the discovery of anomalies, Foerster committed suicide. But there is no evidence showing
that the bank knew that Foerster was misappropriating the funds of his principal. The Insular Drug
Company claims that it never received the face value of 132 checks here in the question covering
a total of P18,285.92. The CFI ordered PNB to pay to the Insular Drug Co., Inc., the sum of
P18,285.92 with legal interest and costs. PNB appealed contending that Foerster had implied
authority to indorse all checks made out in the name of the Insular Drug Co., Inc.

ISSUE:

Whether or not PNB should be held liable for the checks Foerster had indorsed?

HELD:

Yes. Not only did the bank permit Foerster to indorse checks and then place them to his
personal account, but it went farther and permitted Foerster's wife and clerk to indorse the checks.
The right of an agent to indorse commercial paper is a very responsible power and will not be
lightly inferred. A salesman with authority to collect money belonging to his principal does not
have the implied authority to indorse checks received in payment. Any person taking checks made
payable to a corporation, which can act only by agent, does so at his peril, and must face the
consequences if the agent who indorses the same is without authority.

Further, no trust fund was involved; that the fact that PNB acted in good faith does not relieve
it from responsibility; and, that no proof was adduced, admitting that Foerster had right to indorse
the checks, indicative of right of his wife and clerk to do the same. The bank could tell by the
checks themselves that the money belonged to the Insular Drug Co., Inc., and not to Foerster or
his wife or his clerk. When the bank credited those checks to the personal account of Foerster
and permitted Foerster and his wife to make withdrawals without there being made authority from
the drug company to do so, the bank made itself responsible to the drug company for the amounts
represented by the checks. The bank could relieve itself from responsibility by pleading and
proving that after the money was withdrawn from the bank it passed to the drug company which
thus suffered no loss, but the bank has not done so. Much more could be said about this case,
but it suffices to state in conclusion that bank will have to stand the loss occasioned by the
negligence of its agents.
MANIFESTATION OF ACCEPTANCE-IMPLIED
AMIGO VS TEVES
G. R. No. L-6389 November 29, 1954

FACTS:
Macario Amigo and Anacleto Cagalitan executed in favor of their son, Marcelino Amigo, a power
of attorney granting to the latter, among others, the power "to lease, let, bargain, transfer, convey
and sell, remise, release, mortgage and hypothecate, part or any of the properties . . . upon such
terms and conditions, and under such covenants as he shall think fit."
Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed of sale of a parcel of land
for a price of P3,000 in favor of Serafin Teves stipulating therein that the vendors could repurchase
the land within a period of 18 months from the date of the sale. In the same document, it was also
stipulated that vendors would remain in possession of the land as lessees for a period of 18
months subject to the following terms and conditions: (a) the lessees shall pay P180 as rent every
six months from the date of the agreement; (b) the period of the lease shall terminate on April 30,
1940; (c) in case of litigation, the lessees shall pay P100 as attorney's fees; and (d) in case of
failure to pay any rental as agreed upon, the lease shall automatically terminate and the right of
ownership of vendee shall become absolute.
Spouses Macario Amigo and Anacleta Cagalitan donated to their sons Justino Amigo and Pastor
Amigo several parcels of land including their right to repurchase the land in litigation. The deed of
donation was made in a public instrument, was duly accepted by the donees, and was registered
in the Office of the Register of Deeds. Justino Amigo and Pastor Amigo, as donees of the right to
repurchase the land in question, offered to repurchase the land from Serafin Teves price but the
latter refused on the ground that the ownership had already been consolidated in him as
purchaser a retro.
Petitioners contend that, while the attorney-in-fact, Marcelino Amigo, had the power to execute a
deed of sale with right to repurchase under the power of attorney granted to him, however, the
covenant of lease contained in said deed whereby the vendors agreed to remain in possession
of the land as lessees is not germane to said power of attorney and, therefore, Marcelino Amigo
acted in excess of his powers as such attorney-in-fact.
ISSUE:
Whether or not Amigo acted in excess of his powers as such attorney-in-fact.

HELD:
No. It is clear in the power of attorney that the power granted to the agent is so broad that it
practically covers the celebration of any contract and the conclusion of any covenant or
stipulation. Thus, among the powers granted are: to bargain, contract, agree for, purchase,
receive, and keep lands, tenements, hereditaments, and accept the seizing and possessing of all
lands," or "to lease, let, bargain, transfer, convey and sell, remise, release, mortgage and
hypothecate . . . upon such terms and conditions, and under such covenants as he shall think fit."
When the power of attorney says that the agent can enter into any contract concerning the land,
or can sell the land under any term or condition and covenant he may think fit, it undoubtedly
means that he can act in the same manner and with the same breath and latitude as the principal
could concerning the property. The fact that the agent has acted in accordance with the wish of
his principals can be inferred from their attitude in donating to the herein petitioners the right to
redeem the land under the terms and conditions appearing in the deed of sale executed by their
agent.

DEL ROSARIO V. ABAD

G.R. No. L-10881, September 30, 1958

FACTS:

The plaintiffs are the children and heirs of the late Tiburcio del Rosario who owns a
homestead with an area of 9 hectares, 43 ares and 14 centares is situated in barrio San Mauricio,
municipality of San Jose, province of Nueva Ecija. On 24 February 1937, Tiburcio del Rosario
obtained a loan from Primitivo Abad in the sum of P2,000 with interest at the rate of 12% per
annum, payable on 31 December 1941. As security for the payment thereof he mortgaged the
improvements of the parcel of land in favor of the creditor. On the same day, the mortgagor
executed an "irrevocable special power of attorney coupled with interest" in favor of the
mortgagee, authorizing him, among others, to sell and convey the parcel of land Thereafter the
mortgagor and his family moved to Santiago, Isabela, and there established a new residence.
Sometime in December 1945 the mortgagor died leaving the mortgage debt unpaid. Primitivo
Abad, acting as attorney-in-fact of Tiburcio del Rosario, sold the parcel of land to his son
Teodorico Abad for and in consideration of the token sum of P1.00 and the payment by the vendee
of the mortgage debt of Tiburcio del Rosario to Primitivo Abad. On 29 December 1952 the plaintiffs
brought suit against the defendants to recover possession and ownership of the parcel of land.

ISSUE: Whether or not the power of attorney granted to Del Rosario is irrevocable
HELD:
No. A mere statement in the power of attorney that it is coupled with an interest is not
enough. In what does such interest consist must be stated in the power of attorney. The fact that
Tiburcio del Rosario, the principal, had mortgaged the improvements of the parcel of land to
Primitivo Abad, the agent, is not such an interest as could render irrevocable the power of attorney
executed by the principal in favor of the agent. In fact no mention of it is made in the power of
attorney. The mortgage on the improvements of the parcel of land has nothing to do with the
power of attorney and may be foreclosed by the mortgagee upon failure of the mortgagor to
comply with his obligation. As the agency was not coupled with an interest, it was terminated upon
the death of Tiburcio del Rosario, the principal, sometime in December 1945, and Primitivo Abad,
the agent, could no longer validly convey the parcel of land to Teodorico Abad on 9 June 1947.
The sale, therefore, to the later was null and void.

Tongoy v. CA
123 SCRA 99
G.R. No. L-45645; June 28, 1983
FACTS: This case is an action for reconveyance of the 2 parcels of land in Bacolod City. The 1st
land is Hacienda Pulo which title was registered in the name of Luis D. Tongoy and the 2nd is
Cuaycong property which title was transferred to Luis D. Tongoy. The properties were mortgaged
in the year 1936 by said Luis D. Tongoy for a period of 15 years; that the mortgage obligations to
the PNB were fully paid on April 17, 1956; that the release of mortgage was recorded in the
Registry of Deeds on May 5, 1958; and that the case for reconveyance was filed in the trial court
on June 2, 1966.

ISSUE: 1. WON the rights of herein respondents over subject properties, which were the subjects
of simulated or fictitious transactions, have already prescribed. 2. WON the 10-year prescriptive
period should not be counted from the date of registration in the name of the trustee.

HELD: Evidently, the deeds of transfer executed in favor of Luis Tongoy were from the very
beginning absolutely simulated or fictitious, since the same were made merely for the purpose of
restructuring the mortgage over the subject properties and thus preventing the foreclosure by the
PNB. As stated in Articles 1409 and 1410 of the New Civil Code, the within action for
reconveyance instituted by the respondents which is anchored on the said simulated deeds of
transfer cannot and should not be barred by prescription. There is no implied trust that was
generated by the simulated transfers; because being fictitious or simulated, the transfers were
null and void ab initio-from the very beginning and thus vested no rights whatsoever in favor of
Luis Tongoy or his heirs.

When the mortgages were constituted, respondents Cresenciano Tongoy and Norberto Tongoy
were still minors, while respondent Amado Tongoy became of age on August 19, 1931, and
Ricardo Tongoy attained majority age on August 12, 1935. Still, considering that such transfer of
the properties in the name of Luis D. Tongoy was made in pursuance of the master plan to save
them from foreclosure, the said respondents were precluded from doing anything to assert their
rights. It was only upon failure of the herein petitioner, as administrator and/or successor-in-
interest of Luis D. Tongoy, to return the properties that the prescriptive period should begin to run.
The prescriptive period is ten year-from the date of recording on May 5, 1958 of the release of
mortgage in the Registry of Deeds.
G.R. No. L-56545 January 28, 1983
BERT OSMEÑA & ASSOCIATES, petitioners, vs. THE COURT OF APPEALS and SPOUSES
PEDRO QUIMBO and LEONADIZA QUIMBO, respondents.

FACTS: In 1971, a Contract of Sale over Lots 1 and 2 for a total price of P15, 200 was executed
in favor of the Quimbo spouses; the sellers were Bert Osmeña & Associates, the developer of the
subdivision, and Carmen and Helena Siguenza, owners of the property. Antonio Osmeña signed
the contract on behalf of the company and one C. Siguenza as the witness. On the pretext that a
road would traversed the said lots, Helena Siguenza proposed to exchange the said lots to Lot
409, which the spouses hesitatingly agreed. After a few years, no title was given to the spouses,
and later found out that the said lots were sold to another person. Seeking for damages, the
spouses Quimbo filed a suit for Damages in RTC, which ruled in favor of the spouses. The CA,
likewise, affirmed the judgment, hence this case.

ISSUE: Whether Osmeña & Associates is an agent of the Siguenza in the sale of the said lots?

RULING: No, the Petitioner's plea for exception from liability for damages on the ground that it
was a mere agent of the Siguenzas is untenable. The contract of sale describes petitioner as
seller together with the Siguenzas. In fact, petitioner was the lone signatory for the sellers in said
contract. As held by respondent Court: The contract ... is clear that appellant is one of the Seller-
of the lots in question. We will not allow a variation of the terms of the written contract by parole
evidence, for there is never an allegation in the appellant's answer that Osmeña does not express
the true intent of the parties or that it is suffering from a vice or mistake or imperfection. Further,
appellant never asserted in its Answer that it is a mere agent of its co-defendant Helena. Indeed,
the tenor of its Answer is one which shows its admission that it is a co-seller of all lots in
subdivision which it is developing. We take particular attention to appellant's admission in its
Answer to the allegations of appellees' complaint, which show that appellant was not an agent
but a co-seller of the lots.
G.R. No. L-19060 May 29, 1964
IGNACIO GERONA, MARIA CONCEPCION GERONA, FRANCISCO GERONA and DELFIN
GERONA, petitioners, vs. CARMEN DE GUZMAN, JOSE DE GUZMAN, CLEMENTE DE
GUZMAN,
FRANCISCO DE GUZMAN, RUSTICA DE GUZMAN, PACITA DE GUZMAN and VICTORIA DE
GUZMAN, respondents.

FACTS: Herein petitioners are the legitimate children of Domingo Gerona and Placida De
Guzman. Their mother, Placida De Guzman was the legitimate daughter of Marcelo De Guzman
and his first wife, Teodora dela Cruz. When Teodora died, Marcelo De Guzman remarried and
begot 7 children who are the herein respondents. When Marcelo died in 1945, herein respondents
executed a deed of “extra-judicial settlement of his estate” which the petitioners content that
respondents fraudulently misrepresenting that they were the only surviving heirs of the deceased.
Petitioners contend that the respondents fraudulently caused the transfer of certificates of title to
7 parcels of land, issued in the name of their late father, as such, should be nullified by the court.

The petitioners prayed that judgment be rendered nullifying the deed of extra-judicial settlement
insofar as it deprives them of their participation of 1/8th of the properties in litigation; and that the
ROD be ordered to cancel the transfer certificates of titles secured by the respondents, as well
as to issue new TCTs in the name of all of them according to their entitled shares; that the
respondent siblings be ordered to render accounts of the income of said properties and to deliver
to them their lawful shares therein. In respondents’ Answer, they maintained that petitioners'
action is barred by the statute of limitations.

ISSUE: Whether the Statute of Limitations had already set in, which bars the action of the
petitioners against the respondents?

RULING: Yes, the Statute of Limitations had already set in. Inasmuch as petitioners seek to annul
the aforementioned deed of "extra-judicial settlement" upon the ground of fraud in the execution
thereof, the action therefor may be filed within four (4) years from the discovery of the fraud.
Although, as a general rule, an action for partition among co-heirs does not prescribe, this is true
only as long as the defendants do not hold the property in question under an adverse title. The
statute of limitations operates as in other cases, from the moment such adverse title is asserted
by the possessor of the property.

When respondents executed in June 1948 the aforementioned deed of extra-judicial settlement
stating therein that they are the sole heirs of the late Marcelo de Guzman, and secured new
transfer certificates of title in their own name, they thereby excluded the petitioners from the estate
of the deceased, and, consequently, set up a title adverse to them. And this is why petitioners
have brought this action for the annulment of said deed upon the ground that the same is tainted
with fraud.

The trial court correctly stated the timelines: “it must, therefore, be held that plaintiffs learned, at
least constructively, of the alleged fraud committed against them by defendants on 25 June 1948
when the deed of extra-judicial settlement of the estate of the deceased Marcelo de Guzman was
registered in the registry of deeds of Bulacan. Plaintiffs' complaint in this case was not filed until
4 November 1958, or more than 10 years thereafter. Both plaintiff Ignacio Gerona and Maria
Concepcion Gerona became of age after the registration of the deed of extra-judicial settlement.
They both had ample of time or the remainder of the period of 4 years from the date they became
of age until knowledge of the fraud committed against them, within which to commence her
action.” Thus, Statute of Limitations validly had set in and barred them from instituting such action.
PEARL ISLAND COMMERCIAL CORPORATION vs. LIM TAN TONG and MANILA SURETY
& FIDELITY CO., INC

FACTS: Pearl Island Commercial Corporation, a manufacturer of floor wax, entered into a
contract with Lim Tan Tong, wherein the latter was designated as the sole distributor of the “Bee
Wax” for Visayas and Mindanao. Plaintiff was to ship the supply of floor wax consigned to Tong
and the latter was to send the payment thereof within 60days from the date of shipment. Tong
was to furnish surety bond to cover all the shipments of the floor wax.
Defendant Manila Surety & Fidelity Co filed a surety bond with Tong as the principal by reason of
the appointment of Tong as exclusive agent for plaintiff for the Visayas and Mindanao, the bond
being conditioned on the faithful performance of Tong’s duties in accordance with the agreement.
Plaintiff shipped to Tong cases of Bee Wax, however, Tong failed to remit the payment of these
wax despite demands. Tong claimed that plaintiff owed him a larger amount.
Plaintiff filed an action against Tong and his surety. The trial court held the surety liable; the surety
appealed. The surety argued that the contract entered into between palintiff and Tong was one of
purchase and sale as designated by the title “Contract of Purchase and Sale”; that under the
surety bond, it made itself liable for Tong’s faithful performance as agent of plaintiff ; and since
Tong was not an agent of the plaintiff under the contract both the latter parties entered therefore,
defendant surety was not liable.

ISSUE: Whether the the contract between the Pearl Island Commercial Corporation and Lim Tan
Tong was one of sale and not agency

RULING:
A careful examination of the said contract shows that appellant is only partly right, for the reason
that the terms of the said contract, while providing for sale of Bee Wax from the plaintiff to Tong
and purchase of the same by Tong from the plaintiff, also designates Tong as the sole distributor
of the article within a certain territory. Defendant surety must have understood the contract to be
one, at least partly, of agency because the bond itself states that the bounden principal was
appointed as exclusive agent for the plaintiff. Under the circumstances, the Surety Company is
not now in a position to deny its liability for the shipment of the cases of Bee Wax duly received
by Tong.
Anyway, it seems to have been the sole concern and interest of the plaintiff to be sure that it was
paid the value of all shipments of Bee Wax to Tong and the Surety Company by its bond,
guaranteed in the final analysis said payment by Tong, either as purchaser or as agent.
GERTRUDES F. CUAYCONG, ET AL. vs. LUIS D. CUAYCONG, ET AL.

FACTS: Eduardo Cuaycong, married to Clotilde de Leon, died without issue but with three
brothers and a sister surviving him: Lino, Justo, Meliton and Basilisa. Upon his death, his
properties were distributed to his heirs as he willed except for two haciendas, the titles of which
were in the name of Luis Cuaycong, son of Justo.
Plaintiff, surviving heir of Lino, filed a suit against Justo, Luis and Benjamin (son of Lino who
refused to sue as plaintiff) for conveyance of inheritance ang accounting alleging, among others,
that Luis through clever strategy, fraud, misrepresentation and in disregard of Eduardo’s wishes
caused the issuance in his name the certificates of title of the haciendas. Plaintiffs also claimed
that Eduardo had an arrangement with Justo and Luis that the latter will hold in trust what might
belong to his brothers and sister as a result of the arrangements and deliver to them their share
when the proper time comes. The plaintiffs repeatedly demanded for their share in the property
after Eduardo’s death.
The CFI ruled that the trust alleged refers to an immovable which under Article 1443 of the Civil
Code may not be proved by parole evidence. Later, the court dismissed the case for the
plaintiffs’failure to file an amended complaint mentioning or alleging therein the written evidence
of the alleged trust. Plaintiff thereafter manifested that the claim is based on implied trust as shown
in their complaint. They added that there being no written instrument of trust, they could not amend
the complaint to include such instrument.

ISSUE: Whether the trust is express or implied.

RULING:
The Court ruled that there is an express trust. Our Civil Code defines an express trust as one
created by the intention of the trustor or of the parties, and an implied trust as one that comes into
being by operation of law.2 Express trusts are those created by the direct and positive acts of the
parties, by some writing or deed or will or by words evidencing an intention to create a trust. On
the other hand, implied trusts are those which, without being expressed, are deducible from the
nature of the transaction by operation of law as matters of equity, in dependently of the particular
intention of the parties.3 Thus, if the intention to establish a trust is clear, the trust is express; if
the intent to establish a trust is to be taken from circumstances or other matters indicative of such
intent, then the trust is implied. From these and from the provisions of paragraph 8 of the complaint
itself, We find it clear that the plaintiffs alleged an express trust over an immovable, especially
since it is alleged that the trustor expressly told the defendants of his intention to establish the
trust. Such a situation definitely falls under Article 1443 of the Civil Code.

Germann & Co. vs. Donaldson, Sim & Co. (1 Phil. 63)
FACTS:
This case arises from a question on the personality of the plaintiff’s attorney to recover a sum
claimed to be due for freight under a charter party. Fernando Kamerzell, German & Co.’s lawyer,
by virtue of a general power for suits, executed such action. The power of attorney was executed
as an instrument in Berlin by Max Leonard Tornow, sole owner of Germann and Co., which is
operating in Manila and Berlin, and Kamerzell.

By this instrument Tornow constitutes Kammerzell his “true and lawful attorney with full power to
enter the firm name of Germann & Co. in the Commercial Registry of the city of Manila as a branch
of the house of Germann & Co. in Berlin, it being the purpose of this power to invest said attorney
with full legal powers and authorization to direct and administer in the city of Manila for us and in
our name a branch of our general commercial business of importation and exportation, for which
purpose he may make contracts of lease and employ suitable assistants, as well as sign every
kind of documents, accounts, and obligations connected with the business which may be
necessary, take charge in general of the receipt and delivery of merchandise connected with the
business, sign all receipts for sums of money and collect them and exact their payment by legal
means, and in general execute all the acts and things necessary for the perfect carrying on of the
business committed to his charge in the same manner as we could do ourselves if we were
present in the same place.”

The defendants claimed that the original power is invalid under Article 1280, No. 5 of the Civil
Code, which provides that the power for suits must be contained in a public instrument, Further,
they claimed that the original power cannot be construed as conferring upon Kamerzall’s authority
to institute or defend suits, based on Article 1713 which states “in order to compromise, alienate,
mortgage, or to execute any other act of strict ownership an express commission is required.”.

ISSUE:
Whether Kamerzell, through the instrument executed in Berlin by himself and Tornow, has the
authority to institute suits for the recovery of sums of money.

RULINGS:
Yes. Kamerzell, through the instrument executed in Berlin by himself and Tornow, has the
authority to institute suits for the recovery of sums of money.
The clause referring to the “exact the payment” of sums of money “by legal means” also means
the power to exact the payment of debts through the institution of suits for their recovery. If there
could be any doubt as to the meaning of this language taken by itself, it would be removed by a
consideration of the general scope and purpose of the instrument in which it occurs. (See Civil
Code, art. 1286.) The main object of the instrument is clearly to make Kammerzell the manager
of the Manila branch of the plaintiff’s business, with the same general authority with reference to
its conduct which his principal would himself possess if he were personally directing it. It cannot
be reasonably supposed, in the absence of very clear language to that effect, that it was the
intention of the principal to withhold from his agent a power so essential to the efficient
management of the business entrusted to his control as that to sue for the collection of debts.
Article 1375. “Words which may have different significations shall be understood in that which is
most in keeping with the nature and object of the contract.” (1286)

BARRETTO V SANTA MARINA (ART. 1919)

FACTS:
Santa Marina, owner of the La Insular Cigar and Cigarette Factory, appointed Barretto as agent.
Later on, Barretto sent a letter saying he wants to resign because some Chinaman became
insolvent and disappeared without paying his large debt. Then now, Barretto seeks the payment
of his salary and that the revocation of his agency is in violation of the contract between him and
the principal because there is no specific period for the exercise of the powers of the agent.
ISSUE:
W/N the revocation of agency of Barretto was validly revoked.

RULING: YES. The contract of agency between the plaintiff and the defendant is validly revoked.
Barretto was not really dismissed or removed by Santa Mrina. Rather, Barretto resigned as the
defendants agent and manager as evidenced by the letter he sent to the defendant.
Art.1733 of the Civil Code, applicable to the case at bar, according to the provisions of Article 2
of the Code of Commerce, prescribes: “The principal may, at his will, revoke the power and
compel the agent to return the instrument containing the same in which the authority was given.”
Art. 279 of the Code of Commerce provides: “The principal may revoke the commission entrusted
to an agent at any stage of the transaction, advising him thereof, but always being liable for the
result of the transactions which took place before the latter was informed of the revocation.”
The contract of agency can subsist only so long as the principal has confidence in his agent,
because, from the moment such confidence disappears and although there be a fixed period for
the exercise of the office of agent, the principal has a perfect right to revoke the power that he
had conferred upon the agent owing the confidence he had in him and which for sound reasons
had ceased to exist.
Art. 1732 of the Civil Code, agency is terminated:
1. By revocation.
2. By withdrawal of the agent.
3. By death, interdiction, bankruptcy, or insolvency of the principal or the agent.
Article 300 of the same code prescribes: "The following shall be special reasons for which
principals may discharge their employees, even though the time of service of the contract has not
elapsed: Fraud or breach of trust in the business entrusted to them . . . "
By reason of these legal provisions the defendant, in revoking the authority conferred upon the
plaintiff, acted within his unquestionable powers and did not thereby violate any statute whatever
that may have limited them; consequently, he could not have caused the plaintiff any harm or
detriment to his rights and interests, for not only had Santa Marina a justifiable reason to proceed
as he did, but also no period whatever had been stipulated during which the plaintiff should be
entitled to hold his position; and furthermore, because, in relieving the latter and appointing
another person in his place, the defendant acted in accordance with the renunciation and
resignation which the plaintiff had tendered. If the plaintiff is entitled to any indemnity in
accordance with law, such was awarded to him in the judgment of the lower court by granting him
the right to collect salary for one month and some odd days.
Rallos vs. Yangco.,
GR No. 6906, 20 Phil. 269 , September 27, 1911

ARTICLES 1873-1877

FACTS:
Yangco sent Rallos a letter inviting the latter to be the consignor in buying and selling leaf tobacco
and other native products. Terms and conditions were also contained in the letter.
Accepting the invitation, Rallos proceeded to do a considerable business with Yangco trhough
the said Collantes, as his factor, sending to him as agent for Yangco a good deal of produce to
be sold on commission.
Rallos sent to the said Collantes, as agent for Yangco, 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 1,537.08 belonging to Rallos.
This sum was, apparently, converted to his own use by said agent.
It appears, however, that prior to the sending of said tobacco Yangco had severed his relations
with Collantes and that the latter was no longer acting as his factor. This fact was not known to
Rallos; and it is conceded in the case that no notice of any kind was given by Yangco of the
termination of the relations between Yangco and his agent, Collantes.
Yangco thus refused to pay the said sum upon demand of Rallos, placing such refusal upon the
ground that at the time the said tobacco was received and sold by Collantes, he was acting
personally and not as agent of Yangco.

ISSUE:
W/N Collantes is an agent of Yangco. If so, Yangco as principal must refund to Rallos the said
sum brought by the sale of the produce

RULING:
Yes
Yangco, as principal is liable. Having advertised the fact that Collantes was his agent and having
given special notice to Rallos of that fact, and having given them a special invitation to deal with
such agent, it was the duty of Yangco on the termination of the relationship of the principal and
agent to give due and timely notice thereof to Rallos.
Failing to do so, he is responsible to them for whatever goods may been in good faith and without
negligence sent to the agent without knowledge, actual or constructive, of the termination of such
relationship

BUENO et al vs. MATEO and JUAN REYES

G.R. No. L-22587 April 28, 1969

FACTS:
Francisco Reyes filed an answer in a Cadastral Case claiming lot No. 2857 as property belonging
to himself and to his two brothers, Juan and Mateo. The case was heard without opposition, and
the lot was adjudicated in favor of the claimants in whose names an OCT was issued to.

Twenty-three years thereafter, the plaintiffs filed the action below for reconveyance of the subject
land. They allege in their complaint that the said lot originally belonged to Jorge Bueno, who died
leaving three children, namely, Brigida, Eugenia and Rufino to whom the property descended by
intestate succession; that subsequently Brigida and Eugenia died, leaving their respective
children, who are now the plaintiffs-appellants together with Rufino; that Francisco Reyes was
Eugenia’s husband and the father of the plaintiffs surnamed Reyes, “who [by] agreement among
the heirs of Jorge Bueno was entrusted in filing the answer in the cadastral proceedings and in
obtaining the title thereto for and in behalf of all the heirs of Jorge Bueno, including his wife
Eugenia Bueno.” (Par. V of the complaint.)
That as agreed upon with said Francisco Reyes, said Francisco Reyes declared the said parcel
of land above-described in his name, and either in bad faith or by mistake filed an answer in the
cadastral proceedings and obtained title thereto in his name and those of brothers, Mateo and
Juan, who connived and consented to the malicious or erroneous acts of the late Francisco
Reyes, knowing fully well that said parcel of land was never owned by them and has never been
in their possession, and knowing further that said parcel of land belonged to, and possessed by
the wife of Francisco Reyes in conjunction with her sister and brother, Brigida and Rufino,
respectively;

That the fact that Francisco Reyes, Mateo Reyes and Juan Reyes are declared owners of the has
only been discovered during this year when Mateo Reyes and Juan Reyes, the defendants herein,
including Francisco Reyes who was dead long ago, filed with this Court a petition for the issuance
of a writ of possession against a wrong person by the name of Mateo R. Reyes, who now
admittedly (sic) not the possessor of the lot but plaintiffs herein, and the plaintiffs have demanded
from the defendants the reconveyance and/or the quitclaiming of their undivided shares as
appearing in said Certificate of Title No. but then, they refused, and continue to refuge to do so.

The plaintiffs’ complaint was dismissed, upon motion of the defendants, alleging that there is
already prescription of action. Hence, this petition.

ISSUE:
WON the lower court erred in the dismissal of the complaint on the ground of prescription.

RULLING:
The order appealed from is set aside and the case is remanded for further proceedings
Both the appellees and the court below proceeded on the theory that the action for reconveyance
was predicated on the existence of an implied trust, and that such an action prescribes in 10
years. The appellants counter, in this appeal, that the trust was not implied but express, and that
in any case even an implied trust, according to some decisions of this Court, is imprescriptible.

1. NO. If any trust can be deduced at all from the foregoing facts it was an implied one, arising
by operation of law not from any presumed intention of the parties but to satisfy the demands of
justice and equity and as a protection against unfair dealing or downright fraud. Indeed, in this
kind of implied trust, commonly denominated constructive, as distinguished from resulting, trust,
there exists a certain antagonism between the cestui que trust and the trustee. Thus, for instance,
under Article 1456 of the Civil Code:
“if property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property
comes.” In a number of cases this Court has held that registration of property by one person in
his name, whether by mistake or fraud, the real owner being another person, impresses upon the
title so acquired the character of a constructive trust for the real owner, which would justify an
action for reconveyance.

While there are some decisions which hold that an action upon a trust is imprescriptible, without
distinguishing between express and implied trusts, the better rule, as laid down by this Court in
other decisions, is that prescription does supervene where the trust is merely an implied one. The
reason has been expressed by Justice J.B.L. Reyes as follows:

Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property
prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229,
March 29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated trusts, and did not include
constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee
does not recognize the trust at all.

The foregoing, of course, are not facts already established by evidence. But they are alleged in
the complaint and therefore deemed hypothetically admitted for purposes of the motion to dismiss
filed by the defendants. To be sure, there are contradictory allegations of fact in the answer, but
these are matters of defense that must be sunbstantiated at the trial. At the very least the grounds
upon which the order of dismissal is based do not appear to us to be indubitable; and it would be
more in keeping with justice to afford the plaintiffs as well as the defendants the opportunity to lay
their respective claims and defenses before the Court in a full-blown litigation.
LOURDES VALERIO LIM, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.

FACTS:
The appellant is a businesswoman. The appellant went to the house of Maria Ayroso and
proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of the appellant to sell her
tobacco for which she could sell the tobacco at a markup price. A document evidencing the receipt
was signed by the appellant.
Lim, however, was not able to pay the total value but only a partial thereof. Demands for the
payment of the balance were made upon the appellant by Ayroso . Although the appellant denied
that demands for payment were made upon her, it is a fact proven upon presentation of evidence.
As no further amount was paid, the complainant filed a complaint against the appellant for estafa.
Lim was found guilty of the crime of estafa and was sentenced of imprisonment and
indemnification. CA affirmed the decision of the lower court. On her appeal, petitioner contends
that she was not an agent of Ayroso because their agreement did not say that she would be paid
the commission if the goods were sold. She averred that the contract between them was only that
of a sale.

ISSUE:
Whether or not a contract of agency exist between the parties.

RULING:

Yes, it is clear in the agreement that the proceeds of the sale of the tobacco should be turned
over to the complainant as soon as the same was sold, or, that the obligation was immediately
demandable as soon as the tobacco was disposed of. Aside from the fact that Maria Ayroso
testified that the appellant asked her to be her agent in selling Ayroso's tobacco, the appellant
herself admitted that there was an agreement that upon the sale of the tobacco she would be
given something.

The fact that appellant received the tobacco to be sold at a marked-up price and the proceeds to
be given to complainant as soon as it was sold, strongly negates transfer of ownership of the
goods to the petitioner under a contract of sale. The agreement constituted her as an agent with
the obligation to return the tobacco if the same was not sold.
ESPERANZA FABIAN, BENITA FABIAN and DAMASO PAPA Y FABIAN, plaintiffs-appellants,
vs.
SILBINA FABIAN, FELICIANO LANDRITO, TEODORA FABIAN and FRANCISCO DEL
MONTE, defendants-appellees.

FACTS:

This case traces its origin way back to January 1, 1909 when Pablo Fabian bought from the
Philippine Government lot 164 of the Friar Lands Estate in Muntinlupa, for the sum of P112
payable in installments. By virtue of this purchase, he was issued sale certificate 547. He died on
August 2, 1928, survived by four children, namely, Esperanza, Benita I, Benita II, and Silbina.

On July 18, 1960 the plaintiffs filed the present action for reconveyance against the defendants
spouses, averring that Silbina and Teodora, through fraud perpetrated in their affidavit aforesaid,
made it appear that Silbina was not the only heir of Pablo Fabian and Teodora likewise knew all
along that, as a mere niece of the deceased, she was precluded from inheriting from him. A
reconveyance thereof is prayed for

In their answer, the defendants spouses claim that Pablo Fabian was not the owner of lot 164 at
the time of his death on August 2, 1928 because he had not paid in full the amortizations on the
lot; that they are the absolute owners thereof, having purchased it from the Government for the
sum of P120, and from that year having exercised all the attributes of ownership thereof up to the
present; and that the present action for reconveyance has already prescribed. The dismissal of
the complaint is prayed for.

The lower court rendered judgment declaring that the defendants spouses had acquired a valid
and complete title to the property by acquisitive prescription, and accordingly dismissed the
complaint.

ISSUE:
May laches constitute a bar to an action to enforce a constructive trust?

RULING:
That Pablo Fabian had paid five annual installments to the Government, and in fact been issued
sale certificate 547 in his name, are conceded. He was therefore the owner of lot 164 at the time
of his death. He left four daughters, namely, Esperanza, Benita I, Benita II and Silbina to whom
all his rights and interest over lot 164 passed upon his demise.

The assignment and sale of the lot to the defendants. Silbina and Teodora were therefore null
and void as to that portion sold to Teodora, and as well as to that portion which lawfully devolved
in favor of the appellants. To the extent of the participation of the appellants, application must be
made of the principle that if property is acquired through fraud, the person obtaining it is
considered a trustee of an implied trust for the benefit of the person from whom the property
comes
The Court declared in no uncertain terms that laches may bar an action brought to enforce a
constructive trust
The assignment of sale certificate 547 was effected on October 5, 1928; and the actual transfer
of lot 164 was made on the following November 14. It was only on July 8, 1960, 32 big years later,
that the appellants for the first time came forward with their claim to the land. The record does not
reveal, and it is not seriously asserted, that the appellees concealed the facts giving rise to the
trust.

Upon the undisputed facts in the case at bar, not only had laches set in when the appellants
instituted their action for, reconveyance in 1960, but as well their right to enforce the constructive
trust had already prescribed.

It logically follows from the above disquisition that acquisitive prescription has likewise operated
to vest absolute title in the appellees.
G.R. No. L-29640 June 10, 1971

GUILLERMO AUSTRIA, petitioner,

vs.
THE COURT OF APPEALS (Second Division), PACIFICO ABAD and MARIA G. ABAD,
respondents.

FACTS
Maria G. Abad received from Guillermo Austria a pendant with diamonds valued at P4,500.00, to
be sold on commission basis or to be returned on demand. On 1 February 1961, while walking
home to her residence, Abad was said to have been accosted by two men, snatching her purse
containing the diamond pendant.
As Abad failed to return the jewelry or pay for its value, Austria brought an action in the CFI against
her and her husband for recovery of the pendant or of its value. Defendants spouses set up the
defense that the alleged robbery had extinguished their obligation. While the trial court found for
petitioner, the CA reversed the decision and found for respondents. The CA declared that
respondents are not responsible for the loss of the jewelry on account of a fortuitous event, and
relieved them from liability for damages to the owner

ISSUE:
WON the robbery is considered a fortuitous event that extinguished Abad’s liability under the
contract of agency

HELD:
YES. To constitute a fortuitous event, the following must occur: (1) the event must be independent
of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation
in a normal manner; and that (3) the obligor must be free of participation in or aggravation of the
injury to the creditor. A fortuitous event, therefore, can be produced by nature, e.g., earthquakes,
storms, floods, etc., or by the act of man, such as war, attack by bandits, robbery etc., provided
that the event has all the characteristics enumerated above.

It is not disputed that if respondent Maria Abad were indeed the victim of robbery, and if the
pendant, which she was obliged either to sell on commission or to return to petitioner, were taken
during the robbery, then the occurrence of that fortuitous event would have extinguished her
liability. The point at issue in this proceeding is how the fact of robbery is to be established in
order that a person may avail of the exempting provision of Article 1174 which reads as follows:

ART. 1174. Except in cases expressly specified by law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be foreseen, or which, though foreseen,
were inevitable.

It may be noted that the emphasis of the provision is on the events, not on the agents or factors
responsible for them. To avail of the exemption granted in the law, it is not necessary that the
persons responsible for the occurrence should be found or punished; it would only be sufficient
to establish that the unforeseeable event, the robbery in this case took place without any
concurrent fault on the debtor's part, and this can be done by preponderant evidence. To require
the prior conviction of the culprits in the criminal case, in order to establish the robbery as a fact,
would be to demand proof beyond reasonable doubt to prove a fact in a civil case.

Tocao and Belo vs Court of Appeals and Anay

FACTS:
William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed to form
a joint venture for the sale of cooking wares. Belo was to contribute P2.5 million; Tocao also
contributed some cash and she shall also act as president and general manager; and Anay shall
be in charge of marketing. Belo and Tocao specifically asked Anay because of her experience
and connections as a marketer. They agreed further that Anay shall receive the following: 10%
share of annual net profits, 6% overriding commission for weekly sales, 30% of sales Anay will
make herself and 2% share for her demo services
They operated under the name Geminesse Enterprise, this name was however registered as a
sole proprietorship with the Bureau of Domestic Trade under Tocao. The joint venture agreement
was not reduced to writing because Anay trusted Belo’s assurances.
The venture succeeded under Anay’s marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised one of the
branch managers that Anay was no longer a part of the company. Anay then demanded that the
company be audited and her shares be given to her.
ISSUE:
Whether or not there is a partnership.
HELD:
Yes, even though it was not reduced to writing, for a partnership can be instituted in any form.
The fact that it was registered as a sole proprietorship is of no moment for such registration was
only for the company’s trade name.
Anay was not even an employee because when they ventured into the agreement, they explicitly
agreed to profit sharing this is even though Anay was receiving commissions because this is only
incidental to her efforts as a head marketer.
The Supreme Court also noted that a partner who is excluded wrongfully from a partnership is
an innocent partner. Hence, the guilty partner must give him his due upon the dissolution of the
partnership as well as damages or share in the profits “realized from the appropriation of the
partnership business and goodwill.” An innocent partner thus possesses “pecuniary interest in
every existing contract that was incomplete and in the trade name of the co-partnership and
assets at the time he was wrongfully expelled.”
An unjustified dissolution by a partner can subject him to action for damages because by the
mutual agency that arises in a partnership, the doctrine of delectus personaeallows the partners
to have the power, although not necessarily the right to dissolve the partnership.
Tocao’s unilateral exclusion of Anay from the partnership is shown by her memo to the Cubao
office plainly stating that Anay was, as of October 9, 1987, no longer the vice-president for sales
of Geminesse Enterprise. By that memo, petitioner Tocao effected her own withdrawal from the
partnership and considered herself as having ceased to be associated with the partnership in the
carrying on of the business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business

Rojas v. Maglana
Facts:

Maglana and Rojas executed their Articles of Co-Partnership called Eastcoast Development
Enterprises (EDE). It was a partnership with an indefinite term of existence. Maglana shall
manage the business affairs while Rojas shall be the logging superintendant and shall manage
the logging operation. They shall share in all profits and loss equally. Due to difficulties
encountered they decided to avail of the sources of Pahamatong as industrial partners. They
again executed their Articles of Co-Partnership under EDE. The term is 30 years. After sometime
Pamahatong sold his interest to Maglana and Rojas including equipment contributed. After
withdrawal of Pamahatong, Maglana and Rojas continued the partnership. After 3 months, Rojas
entered into a management contract with another logging enterprise. He left and abandoned the
partnership. He even withdrew his equipment from the partnership and was transferred to CMS.
He never told Maglana that he will not be able to comply with the promised contributions and he
will not work as logging superintendent. Maglana then told Rojas that the latter share will just be
20% of the net profits. Rojas took funds from the partnership more than his contribution. Thus,
Maglana notified Rojas that he dissolved the partnership.

Issue: What is the nature of the partnership and legal relationship of Maglana and Rojas after
Pahamatong retired from the second partnership

Held:

It was not the intention of the partners to dissolve the first partnership, upon the constitution of
the second one, which they unmistakably called “additional agreement.” Otherwise stated even
during the existence of the second partnership, all business transactions were carried out under
the duly registered articles. No rights and obligations accrued in the name of the second
partnership except in favor of Pahamatong which was fully paid by the duly registered partnership.
Gonzales and Gomez vs Haberer

Facts: The plaintiff spouses executed a deed of sale over a tract of land with the defendant. It
was stipulated in their contract that the plaintiffs were found by the court not to be the owners of
the land, they would return any amount that the defendant had paid. It was also stipulated that
Gomez gave his wife Gonzales the marital license to execute the deed. However, after making
initial payment, the defendant found that the land was in adverse possession of many others.
Hence, he stopped making payments. The plaintiffs then filed an action to recover the sum of
unpaid balance. The defendant claimed that when they entered into this contract, the plaintiffs
made false representations and mislead him into thinking they had full ownership of the land.

Issue: WON Gonzales was free of liabilities that her husband incurred from the
misrepresentations in the sale
.
Held: No. As to the plaintiff’s contention that Gonzales cannot be charged by her husband’s
misrepresentation, it is sufficient to say that the latter in negotiating for the sale of the land acted
as an agent and representative of his wife. Having accepted the benefit of the representations of
her agent, he cannot, of course, escape liability for them. The latter cannot accept such benefits
and at the same time deny the responsibility to them.
Director of Public Works vs Juco

Facts: A land covered by Torrens certificate of title no. 1359 was owned, in undivided share, by
de la Rama, Tanboontien, Juco and Bengco. The interest vested to de la Rama was subsequently
transferred to Enchaus. It appears that on November 23, 1020, the owners of the said property
conveyed it by way of mortgage to PNB for the purpose of securing a credit which remain unpaid.
Meanwhile, in 1921, the Government of the Philippine Islands was planning extensive harbor in
the vicinity requiring extensive dredging by the Bureau of Public Works in the mouth of the said
river. As the land referred to was low, the Director of Public Works and the owners entered into a
contract that the materials to be taken out by the dredges should be filled on their land subject to
5 annual installments. The Director of Public Works required a bond to be supplied by the owners
in a penal amount of P150,000. This bond was executed contemporaneously with the main
contract; and in connection therewith it should be noted that one appearing upon said contract
was that of “Casa Viuda de Tan Toco” purporting to be signed by de la Rama. Upon demand of
the first payment, the owners of the land failed to pay as a consequence, an action was instituted
where the Tan Ong Sze, widow of Tan Toco, was also made a defendant by reason of her
supposed liability derived from the act of de la Rama in signing the firm “Casa Viuda de Tan Toco”
as a surety on bond.

Issue: WON Tan Ong Sze, Viuda de Tan Toco, shall be liable upon the contract of suretyship.

Held: The contention of Tan Ong Sze, widow of Tan Toco, to the effect that she was not, and is
not, bound by the contract of suretyship is well-founded. It will be remembered that said contract
purports to have been signed by Mariano de la Rama, acting for this defendant under the power
of attorney. But the Government has exhibited no power of attorney which would authorize the
creation, by the attorney-in-fact, of an obligation in the nature of suretyship binding upon this
principal.

Neither of the evidences officially confers upon Mariano de la Rama the power to bind a principal
by a contract of suretyship. The clauses noted relate more specifically to the execution of
contracts relating to property; and the more general words at the close of the quoted clauses
should be interpreted, under the general rule ejusdem generis, as referring to the contracts of like
character. Power to execute a contract so exceptional a nature as a contract of suretyship or
guaranty cannot be inferred from the general words contained in these powers.

In article 1827 of the Civil Code it is declared that guaranty shall not be presumed; it must be
expressed and cannot be extended beyond its specified limits. By analogy a power of attorney to
execute a contract of guaranty should not be inferred from vague or general words, especially
when such words have their origin and explanation in particular powers of a wholly different
nature. It results that the trial court was in error in giving personal judgment against Tan Ong Sze
upon the bond upon which she was sued in this case.
G.R. No. L-48264 February 21, 1980
SWITZERLAND GENERAL INSURANCE COMPANY, LTD vs. HON. PEDRO A. RAMIREZ,
Presiding Judge of the Court of First Instance of Manila, Branch XXX, OYAMA LINES,
CITADEL LINES and MABUHAY BROKERAGE CO., INC., respondents.

FACTS: 60,000 bags of Urea Nitrogen were shipped from Japan on board the S/S St. Lourdes,
owned and operated by Citadel Lines. The goods were insured by Switzerland General. The
shipment was discharged from the vessel S/S "St. Lourdes" shipside into lighters owned by
Mabuhay Brokerage but when the same was subsequently delivered to and received by the
consignee, it was found to have sustained losses and/or damage amounting to P38.698.94. This
amount was paid by Switzerland General to the consignee/assured, by virtue of which payment it
became subrogated to the rights of the latter. Switzerland made repeated demands against the
respondents for payment of the losses but no payment was made and. Switzerland General filed
an admiralty case, and because it was uncertain in whose custody the goods were damaged, it
impleaded the private respondents as alternative defendants to determine their respective liability.
Citadel Lines denied liabilty alleging that it was merely the civil agent in the Philippines for the
Japanese firm Oyama Shipping Co., Ltd., which was the charterer of the vessel S/S "St. Lourdes".
It was further alleged that the principal agency relationship between the said Oyama Shipping
Co., Ltd. and defendant Citadel Lines, Inc. was terminated when the Tokyo District Court declared
and decreed the insolvency of the said Oyama Shipping Co., Ltd. The lower court rendered a
decision against Oyama Shipping Co., Ltd., but absolving Citadel Lines, Inc. and Mabuhay
Brokerage Co., Inc. from liability. It held that as a mere agent in the Philippines of Oyama Line,
Citadel Line cannot be held liable for the damages recoverable from its principal.

ISSUE: Whether or not Citadel may be held primarily liable for the loss/damage found to
have been sustained by subject shipment while on board and/or still in the custody of the
said vessel?

HELD: Yes.
Considering the relationship of the parties, Citadel cannot be considered as a "mere agent" under
the civil law on agency as distinguished from a ship agent, within the context of the Code of
Commerce. The doctrines having reference to the relations between principal and agent cannot
be applied in the case of ship agents and ship owners. For this reason, Citadel cannot validly
claim that the court made a finding of fact which is conclusive upon the SC. A ship agent,
according to Article 586 of the Code of Commerce, is the person entrusted with the provisioning
of a vessel or who represents her in the port in which she happens to be. It is not disputed by
Citadel that it is the local representative in the Philippines of the Oyama Shipping Co., Ltd. And
upon arrival of the vessel S/S "St. Lourdes" in Manila, it took charge of the unloading of the cargo
and issued cargo receipts (or tally sheets) in its own name, for the purpose of evidencing
discharge of cargoes and the conditions thereof from the vessel to the arrastre operators and/or
unto barges/lighters, and that claims against the vessel S/S "St. Lourdes" for losses/damages
sustained by shipments were in fact filed and processed by Citadel Lines, Inc. These facts point
to the inevitable conclusion that private respondent is the entity that represents the vessel in the
port of Manila and hence is a ship agent within the meaning and context of Article 586 of the Code
of Commerce.
Damages resulting to merchandize in transit due to negligence of the officers of the ship, a cause
of action arises against the owners or agents of the vessels which may be prosecuted by the
shipper or consignor of the damaged goods.
It appearing that the Citadel Lines is the ship agent for the vessel S/S "St. Lourdes" at the port of
Manila, it is, therefore, liable Switzerland General, solidarily with its principal, Oyama Shipping
Co., Ltd., in an amount representing the value of the goods lost and or damaged. The insolvency
of Oyama Lines has no bearing insofar as the liability of Citadel Lines, Inc. is concerned. The law
does does not make the liability of the ship agent dependent upon the solvency or insolvency of
the ship owner.
G.R. No. L-61791 January 28, 1983
PURIFICACION ALARCON and ROSAURO ALARCON vs. HONORABLE ABDULWAHID
BIDIN, District Judge, Court of First Instance, Branch I, Zamboanga City, and FLORENTINO
SERGAS, MOISES SERGAS, ANASTACIO SERGAS, CRESENCIA SERGAS, TOLENTINO
SERGAS, ENGELERTO SERGAS, CARMELITA SERGAS, and DOMINGO ROJAS
FRANCISCO

FACTS: A parcel of land was registered in the names of (1) Roberto Alarcon, married to Basilia
Timpanco, and (2) Guillerma Trinidad, wife of Mariano Daquel, in undivided shares. Roberto
Alarcon leased the property to Esteban Sergas, and later sold a portion of his undivided share to
the latter, evidenced by an Escrituras de Venta. Roberto Alarcon sold another portion of his share
of the land to Adela Alvarez, who, in turn, sold it, to Domingo Rojas Francisco. Denying the
genuineness of the "Escrituras de Venta" under oath, and alleging that the thumbmark in the Deed
of Sale in favor of Esteban Sergas is not Roberto Alarcon's nor is he "Alberto" Alarcon, and that
the document in favor of Adela Alvarez was neither signed by Roberto, petitioners, children of
Roberto, filed suit for recovery of the property. Respondents moved to dismiss the complaint on
the ground that the action is barred by the statute of limitations and that petitioners are guilty of
laches. Petitioners opposed on the ground that no prescription can lie against their father's
recorded title. The court dismissed the complaint for the reason that (it) is barred by laches

ISSUE: Whether or not petitioner’s cause of action has prescribed?

HELD: Yes.
True, land registered under the Torrens System may not be acquired by prescription or adverse
possession. The protection given by law is in favor of registered owners. As it is, although title to
the disputed property is still in the name of Roberto Alarcon, it has been subjected to the
registration in 1963 of the sale made by him to Esteban Sergas. Technically, therefore, the latter
became the owner in 1963 of the portion of the land sold to him. It may also be stated that if
petitioners' cause of action in seeking the nullification of the sales is predicated on fraud,
the same has prescribed for not having been brought within four years from the inscription
of the deed of sale in favor of Esteban Sergas in 1963.
At any rate, laches is invocable by both the Sergas and Domingo Rojas Francisco.
From the date of sale in favor of Esteban Sergas in 1926, the latter had taken possession of the
property and has been in adverse possession under claim of ownership ever since, followed by
his successors-in-interest, the private respondents surnamed Sergas. Similarly, the other vendee,
Adela Alvarez, also took possession from the date of sale in her favor in 1928 until she sold her
portion in 1954 to private respondent Domingo Rojas Francisco, who has also been in
uninterrupted possession since said date. Noteworthy also is the fact that from the dates of the
sales in 1926 and 1928, respectively, up to the time of his death in 1960, or approximately at least
32, and at the most 34 years, the vendor Roberto Alarcon took no steps to rescind the sales nor
reivindicate the property. And as far as petitioners are concerned, more than 50 years had elapsed
since the execution of the deeds of sale in 1926 and 1928 and the date they instituted suit for
recovery of possession in 1978. Clearly, their passivity and inaction and, before them, that of their
father, constituted laches. As held by respondent Judge, their cause of action must be considered
barred for it has been converted into a stale demand. 3 And, although, as petitioners claim, the
defense of laches is not a ground for a motion to dismiss there would be no point to continue
litigating this case in view of the finding that petitioners are guilty thereof.

Aldecoa & Co. v. Warner, Barnes & Co. 16 Phil 423

Facts:
In other paragraphs of the complaint, from the fourth to the twelfth, the plain tiff set forth that,
prior to December 1, 1898, Warner, Barnes and Co. were conducting a business in Albay, the
principal object of which was the purchase of hemp in the pueblos of Legaspi and Tobacco for
the purpose of bringing it to Manila, here to sell if for exportation, and that on the said date of
December 1, 1898, the plaintiff company became interested in the said business of Warner,
Barnes and Co., in Albay and formed therewith a joint-account partnership whereby Aldecoa and
Co., were to share equally in the gains and losses of the business in Albay; that the defendant is
the successor to all the rights and obligations of Warner, Barnes and Co., among which is that of
being manager of the said joint-account partnership with Aldecoa and Co.; It is a recognized fact,
and one admitted by both parties that the partnership herein concerned concluded its transactions
on December 31, 1903; wherefore the firm of Warner, Barnes & Co. Ltd., the manager of the
partnership, in declaring the latter's transactions concluded and in rendering duly verified
accounts of its results, owes the duty to include therein the property and effects belonging to the
partnership in common.

Issue:

Whether Aldecoa is entitled to a writ of mandamus against Warner to render accounting on their
joint account partnership, correct itserrors & omissions on accounts rendered, pay sums not
credited to Aldecoa and to liquidate the business & sell the properties distributing the proceeds
between them?

Held:

No.

Agree w/ CFI that Warner Ltd., did render accounts from June 30, 1899, to Dec. 31, 1902,
inasmuch as the very evidence introduced by Aldecoa showed that the said accounts had been
rendered and were approved by it. Approval seen in the context of its own letters (July 27, 1907
& Feb. 19, 1903). Aldecoa is not entitled and has no right of action to compel Warner Ltd. to
render accounts pertaining to that period, they having already been rendered and duly approved.

It is a rule of law generally observed that he who takes charge of the management of another's
property is bound immediately thereafter to render accounts covering his transactions; and that it
is always to be understood that all accounts rendered must be duly substantiated by vouchers. It
is one of the duties of the manager of a joint-account partnership, to liquidate the assets that form
the common property, and to state the result obtained therefrom in the final renderingof the
accounts which he is to present at the conclusion of the partnership.

When two commercial houses have formed a partnership for the purpose of becoming interested
in each other’s business, each to share equally in the profits or losses in a fixed proportion, and
when one of them acquired real property for itself, in its own name, with its own funds, and without
any intervention on the other’s part, all this being recorded in the instruments executed therefor
by the vendors and where the said house registered the property in the property registry as being
for itself alone, there can be no question that the vendee firm is the sole owner of the realty
purchased, for the mere circumstance that the two houses are in partnership, and the vendee firm
is the manager thereof, does not warrant the finding that the other, which took no part in the
purchase of the realty and cannot invoke any right derived from a private agreement, has acquired
the right of joint-ownership in the realty acquired privately by the other firm.

There is no provision that prohibits one of the firms associated in a partnership, even though it be
the active partner therein, from acquiring realty, a thing completely foreign to the business of the
joint-account partnership; nor is article 137 of the Code of Commerce applicable thereto, for it
must be remembered that the property was acquired by one of said commercial houses on its
own private account and not on a joint account, for a joint-account partnership does not partake
of the nature of a genuine mercantile company or firm, it does not possess the conditions
concurring therein, and it is not in itself a juridical entity like other ordinary partnerships recognized
in law.
JG Summit Holdings vs. CA

Facts:
The National Investment and Development Corporation (NIDC), a government corporation,
entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (KAWASAKI) for the construction, operation and management of the Subic National
Shipyard Inc., (SNS) which subsequently became the Philippine Shipyard and Engineering
Corporation (PHILSECO).
Under the JVA, the NDC and KAWASAKI will contribute P330M for the capitalization of
PHILSECO in the proportion of 60%-40% respectively. One of its salient features is the grant to
the parties of the right of first refusal should either of them decide to sell, assign or transfer its
interest in the joint venture.
NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank
(PNB). Such interests were subsequently transferred to the National Government pursuant to an
Administrative Order.
When the former President Aquino issued Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of,
conserve, manage and dispose of non-performing assets of the National Government, a trust
agreement was entered into between the National Government and the APT wherein the latter
was named the trustee of the National Government’s share in PHILSECO.
In the interest of the national economy and the government, the COP and the APT deemed it best
to sell the National Government’s share in PHILSECO to private entities. After a series of
negotiations between the APT and KAWASAKI , they agreed that the latter’s right of first refusal
under the JVA be “exchanged” for the right to top by 5%, the highest bid for the said shares. They
further agreed that KAWASAKI woul.d be entitled to name a company in which it was a
stockholder, which could exercise the right to top. KAWASAKI then informed APT that Philyards
Holdings, Inc. (PHI) would exercise its right to top.
As petitioner was declared the highest bidder, the COP approved the sale “subject to the right of
Kawasaki Heavy Industries, Inc. / PHILYARDS Holdings Inc. to top JG’s bid by 5% as specified
in the bidding rules.”
On the other hand, the respondent by virtue of right to top by 5%, the highest bid for the said
shares timely exercised the same.
Petitioners, in their motion for reconsideration, raised, inter alia, the issue on the maintenance of
the 60%-40% relationship between the NIDC and KAWASAKI arising from the Constitution
because PHILSECO is a landholding corporation and need not be a public utility to be bound by
the 60%-40% constitutional limitation.

Issue:
Whether under the 1977 Joint Venture Agreement, KAWASAKI can purchase only a maximum of
40% of PHILSECOs total capitalization.

Held:
No.
A careful reading of the 1977 Joint Venture Agreement reveals that there is nothing that
prevents KAWASAKI from acquiring more than 40% of PHILSECOs total capitalization. Section
1 of the 1977 JVA states:
Under section 1.3, the parties agreed to the amount of P330 million as the total capitalization
of their joint venture. There was no mention of the amount of their initial subscription. What is
clear is that they are to infuse the needed capital from time to time until the total subscribed and
paid-up capital reaches P312 million. The phrase maintaining a proportion of 60%-40% refers to
their respective share of the burden each time the Board of Directors decides to increase the
subscription to reach the target paid-up capital of P312 million. It does not bind the parties to
maintain the sharing scheme all throughout the existence of their partnership.
The parties likewise agreed to arm themselves with protective mechanisms to preserve their
respective interests in the partnership in the event that (a) one party decides to sell its shares to
third parties; and (b) new Philseco shares are issued. Anent the first situation, the non-selling
party is given the right of first refusal under section 1.4 to have a preferential right to buy or to
refuse the selling partys shares. The right of first refusal is meant to protect the original or
remaining joint venturer(s) or shareholder(s) from the entry of third persons who are not
acceptable to it as co-venturer(s) or co-shareholder(s). The joint venture between the Philippine
Government and KAWASAKI is in the nature of a partnershipwhich, unlike an ordinary
corporation, is based on delectus personae. No one can become a member of the partnership
association without the consent of all the other associates. The right of first refusal thus ensures
that the parties are given control over who may become a new partner in substitution of or in
addition to the original partners. Should the selling partner decide to dispose all its shares, the
non-selling partner may acquire all these shares and terminate the partnership. No person or
corporation can be compelled to remain or to continue the partnership. Of course, this
presupposes that there are no other restrictions in the maximum allowable share that the non-
selling partner may acquire such as the constitutional restriction on foreign ownership in public
utility. The theory that KAWASAKI can acquire, as a maximum, only 40% of PHILSECOs shares
is correct only if a shipyard is a public utility. In such instance, the non-selling partner who is an
alien can acquire only a maximum of 40% of the total capitalization of a public utility despite the
grant of first refusal. The partners cannot, by mere agreement, avoid the constitutional
proscription. But as afore-discussed, PHILSECO is not a public utility and no other restriction is
present that would limit the right of KAWASAKI to purchase the Governments share to 40% of
Philsecos total capitalization.
Furthermore, the phrase under the same terms in section 1.4 cannot be given an
interpretation that would limit the right of KAWASAKI to purchase PHILSECO shares only to the
extent of its original proportionate contribution of 40% to the total capitalization of the PHILSECO.
Taken together with the whole of section 1.4, the phrase under the same terms means that a
partner to the joint venture that decides to sell its shares to a third party shall make a
similar offer to the non-selling partner. The selling partner cannot make a different or a more
onerous offer to the non-selling partner.
 The exercise of first refusal presupposes that the non-selling partner is aware of the terms of
the conditions attendant to the sale for it to have a guided choice. While the right of first refusal
protects the non-selling partner from the entry of third persons, it cannot also deprive the other
partner the right to sell its shares to third persons if, under the same offer, it does not buy the
shares.
Apart from the right of first refusal, the parties also have preemptive rights under section
1.5 in the unissued shares of Philseco. Unlike the former, this situation does not contemplate
transfer of a partners shares to third parties but the issuance of new Philseco shares. The grant
of preemptive rights preserves the proportionate shares of the original partners so as not to dilute
their respective interests with the issuance of the new shares. Unlike the right of first refusal, a
preemptive right gives a partner a preferential right over the newly issued shares only to the extent
that it retains its original proportionate share in the joint venture.
The case at bar does not concern the issuance of new shares but the transfer of a partners
share in the joint venture. Verily, the operative protective mechanism is the right of first refusal
which does not impose any limitation in the maximum shares that the non-selling partner may
acquire.
Dominion Insurance vs CA, GR No. 129919, February 6 2002
Facts:
 Rodolfo Guevarra filed a civil case for sum of money against Dominion Insurance Corp.
for the amount advanced by Guevarra in his capacity as manager of defendant to satisfy certain
claims filed by defendant’s client. Defendant denied any liability to plaintiff and asserted a
counterclaim, representing premiums that plaintiff allegedly failed to remit.

Thereafter the pre-trial conference was set on several dates, in all of which dates no pre-trial
conference was held. The case was again called for pre-trial conference. Only plaintiff and
counsel were present. Despite due notice, defendant and counsel did not appear, although a
messenger, Roy Gamboa, submitted to the trial court a handwritten note sent to him by
defendants counsel which instructed him to request for postponement. Plaintiffs counsel objected
to the desired postponement and moved to have defendant declared as in default. This was
granted by the trial court.

Dominion filed several Motions to Lift Order of Default but was always denied by the court. The
RTC rendered its decision making Dominion liable to repay Guevarra for the sum advanced and
other damages and fees. The counsel revealed to the trial court that the reason for his
nonappearance at the pre-trial conference was his illness. But the same was denied. Dominion
appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

Issue:
Whether Guevarra acted within his authority as agent for petitioner

Ruling:

NO. Even though the contact entered into by Guevarra and Dominion was with the word
“special” the contents of the document was actually a general agency. A general power permits
the agent to do all acts for which the law does not require a special power and the contents in the
document did not require a special power of attorney.

Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion

The payment of claims is not an act of administration which requires a special power of attorney
before Guevarra could settle the insurance claims of the insured. Also Guevarra was instructed
that the payment for the insured must come from the revolving fund or collection in his possession,
Gueverra should not have paid the insured through his own capacity. Under 1918 of civil code an
agent who acted in contravention of the principal’s instruction the principal will not be liable for
the expenses incurred by the agent.
EUROTECH INDUSTRIAL TECHNOLOGIES, INC. VS. EDWIN CUIZON and ERWIN CUIZON
H. R. No. 167552, April 23, 2007

FACTS:
Impact Systems Sales is owned by Erwin Cuizon (Erwin) and Edwin Cuizon (Edwin) is the sales
manager of the Impact Systems. Eurotech Industrial Technologies, Inc. (Eurotech) sold one unit
of sludge pump to Impact Systems. However, the Impact System failed to pay their obligations,
which prompted the Eurotech to issue a demand letter. Eurotech filed a complaint against Impact
System. Edwin filed an answer and alleged that he is not a real party in interest in the case,
because he was only acting as mere agent of Impact Systems. The lower court dropped Edwin
as a party defendant in the case.

ISSUE: Whether or not Edwin Cuizon, as agent of impact systems, is not personally liable,
because he has neither acted beyond the scope of his agency nor did he participate in the
perpetuation of a fraud.

RULING:
YES, Edwin Cuizon, as agent of impact systems, is not personally liable.
In a contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another with the latters consent. The underlying principle of the
contract of agency is to accomplish results by using the services of others to do a great variety of
things like selling, buying, manufacturing, and transporting.[30]Its purpose is to extend the
personality of the principal or the party for whom another acts and from whom he or she derives
the authority to act. The basis of agency is representation, that is, the agent acts for and on behalf
of the principal on matters within the scope of his authority and said acts have the same legal
effect as if they were personally executed by the principal.
The elements of the contract of agency are: (1) consent, express or implied, of the parties to
establish the relationship; (2) the object is the execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the
scope of his authority.
There are two instances when an agent becomes personally liable to a third person: (1) when the
agent expressly binds himself to the obligation and (2) when the gent exceeds his authority.
In this case, Edwin acted within his authority as an agent, who did not acquire any right nor incur
any liability arising from the Deed of Assignment. It follows that he is not a real party in interest
who should be impleaded in this case.
LIWANAG VS. WORKMEN'S COMPENSATION COMMISSION
May 22, 1959 G.R. No. L-12164

Facts: The Security Guard Balderama of Liwanag Auto Supply owned by Benito Liwanag and
Maria Liwanag Reyes was killed while on duty. His heirs in due time filed a claim for compensation
with the workmen’s Compensation Commission, which was granted. It ordered Benito and Maria
to pay the amount due &jointly and severally.
Appellants appealed the case for the sole reason that according to them the compensation is
divisible as such the responsibility of appellants should only be joint.

Issue: Whether or not the liability of partners arising from compensable injury or death of an
employee should be joint.

Ruling: No. The provisions of the new Civil Code taken together &with those of Section of the
Workmen’s Compensation Act, reasonably indicate that in compensation cases, the liability of
business partners, like appellants, should be solidary; otherwise, the right of the employee may
be defeated, or at least crippled.
If the responsibility of appellants were to be merely joint and solidary, and one of them happens
to be insolvent, the amount awarded to the appellees would only be partially satisfied, &which is
evidently contrary to the intent and purposes of the Act. In the previous cases the SC already held
that the Workmen’s Compensation Act should be construed fairly, reasonably and liberally in favor
of and for the benefit of the employee and his dependents; that all doubts as to the right of
compensation resolved in his favor; and that it should be interpreted to promote its purpose.
Accordingly, the present controversy should be decided in favor of the appellee.
Since the Workmen’s Compensation Act was enacted to give full protection to the employee,
reason demands that the nature of the obligation of the employers to pay compensation to the
heirs of their employee, who died in line of duty, should be solidary; otherwise, the purpose of the
law could not be attained.

Jimenez vs. Rabot

38 Phil. 278 | G.R. No. 12579 | July 27, 1918
Street, J.
Parties:
Plaintiff and appellee: Gregorio Jimenez
Appellant: Pedro Rabot, Nicolasa Jimenez And Her Husband, Emilio Rodriguez, Defendants.
Pedro Rabot

Nature: Appeal from a judgment of the CFI of Pangasinan

Keyword: Agency, Authority to sell, recovery of the land sold by an agent
Summary: The plaintiff, being the owner of three parcels of land, left the same in the care of his
sister as his agent and went to live in another province. While so absent, he wrote her to sell one
of his parcels and to send him the money. The sister found a purchaser and sold one of the
parcels but failed to forward the proceeds to her brother. Afterwards the plaintiff returned and
instituted an action to recover the parcel which had been sold. Held: That the authority to sell was
sufficient and that the plaintiff could not recover.

Facts: Gregorio Jimenez owned three parcel of land situated in Alaminos, Pangasinan which he
inherited from his father. Since he did not live in the area (because at the time, his place of
residence was in Vigan, Ilocos Sur), he confided his property to his sister, Nicolasa Jimenez.

Sometime in July 1911, Gregorio wrote his sister stating that he was in debt and asked her to sell
one of his parcels of land in Alaminos. He further instructed her to send the money once the land
was sold. His letter did not indicate any specification or description of the land to be sold. It only
said, “one of my parcels of land”.

Acting upon the letter, Nicolasa approached defendant Pedro Rabot and he agreed to buy the
land for 500 php. Two hundered and fifty pesos was paid at once, with the understanding that a
deed of conveyance would be executed when the balance should be paid. Nicolasa admits having
received the 250php at the time but no evidence that she sent any of it to her brother.

A year later, Gregorio went to Alaminos and demanded from his sister the surrender of his land
to him as it was in her possession. She refused upon some pretext, and as a result, Gregorio, in
conjunction with his other siblings, whose properties were also with Nicolasa, instituted an action
in the CFI for the recovery of the land under her control.

CFI: decided in favor of the plaintiffs

Issue: Whether or not the authority conferred to Nicolasa by her brother through a letter was
sufficient to enable her to bind her brother.

Held: The SC is of the opinion that the authority expressed in the letter is a sufficient compliance
with both requirements.

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.

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.

'lt 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)

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 has been said it is evident that the lower court should have absolved the defendant
Pedro Rabot f rom the complaint.

Ruling: Judgement reversed.

Jaramil vs. CA
78 SCRA 420 | G.R. No. L-31858 | August 31, 1977
Fernandez, J.
Parties:
Petitioners: Faustino Jaramil And Filomena Cabinar
Respondents: Court Of Appeals, And Sotera Medrana, Regina De La Cruz, Valeriana C.
Prudencio, Et Al

Nature: Appeal from the decision of the CA

Keyword: Period of prescription
Summary:
Facts:
Sotera Medrana, widow of the late Isidor dela Cruz, and their children and grandchildren instituted
in the Court of First Instance of Pangasinan an action to recover possession of a parcel of land,
Lot 1422, embraced in Original Certificate of Title No. 49228 and for damages against the spouses
Faustino Jaramil and Filomena Cabinar.

The complaint alleged that Isidro dela Cruz was in life the owner of Lot 1422 located in Umingan,
Pangasinan, containing an area of 3,226 square meters, more or less, embraced in Original
Certificate of Title No. 49228; that sometime in 1935 the spouses Faustino Jaramil and Filomena
Cabinar were permitted by the registered owners to establish residence on the land with the
understanding that said spouses would vacate the premises upon demand; and that despite a
demand to vacate made on or about August 23, 1958, the defendants refused to leave the land
in question.

The defendants averred in their answer that they are the true owners of the disputed lot and that
if Isidro dela Cruz and Sotera Medrana were able to register the property in their names, the
registration must have been done through fraud and bad faith. The defendants interposed a
counterclaim wherein they asked for damages and for the reconveyance to them of the land in
question.
CFI: rendered decision in favor of the plaintiffs.
CA: Affirmed the decision of the CFI

Issue: Whether or not the action for the reconveyance of title is barred by the statute of limitations

Held: Yes. The preponderance of the evidence is that Isidro dela Cruz and Sotera Medrana did
not perpetrate fraud in having the title to the land in question registered in their names. Granting,
arguendo, that fraud was committed and an implied trust was created, the counterclaim of the
petitioners-appellants for the reconveyance of the title to the land in question to them has
prescribed. It is now settled that an action for the reconveyance of land based on implied or
constructive trust prescribes within ten (10) years.

The cause of action of the petitioners-appellants for the reconveyance to them of the title to the
land in question arose on March 15, 1932 when Original Certificate of Title No. 49228 was issued
by the Office of the Register of Deeds of Pangasinan. The issuance of said original certificate of
title constituted constructive notice to the public including the petitioners-appellants.

Ruling: WHEREFORE, the decision of the Court of Appeals is hereby affirmed.

MACKE ET AL VS CAMPS
GR NO. 2962
FEBRUARY 27, 1907
FACTS:
B. H. Macke and WH Chandlee are business lartners under Macke, Chandler & Compang. They
sold and delivered various bills of goods to Jose Camps who owns the Washington Cafe. This
good were received by a certain Ricardo Flores, who is considered as an agent of the principal,
Camps. Flores also claimed to be the business manager of Camps. The plaintiff also asked for
the payment of the remaining amounting to P177.50, however they refused to pay the said
amount.

ISSUE:
Whether or not Ricardo Flores was the agent of Camps

RULING:

Yes, he is an agent of Camps. The written contract is sufficient to sustain a finding that he is an
agent of Camps in the management of the cafe. He is also considered an agency by estoppel
wherein it clothes with apparent authority as an agent whereby Camps hold him out to the public
as such cannot be permitted to deny the authority of such person to act as his agent.
OLEONGCO VS. CLAPAROLS
GR NO. L-181616
MARCH 31, 1964

FACTS:

Eduardo L. Claparols operated a factory for the manufacture of nails in Talisay, Occidental Negros
under "Claparols Steel & Nail Plant." The nail materials are imported from Belgium. ABCD
Commercial handles the marketing of the nails which is owned by Kho To. However, Claparols
experienced losses which compelled him to find a financier. At first it was Kho To, however, he
endorsed Vicented Coleongco to be the financier instead. The two agreed and Coleongco was
made responsible with the marketing, control of cash etc. of the factory. He was also appointed
as an assistant manager of the factory with special power of attorney to transact credits or letters
of the principal, Claparols. However, in 1956, Claparols was surprised with the writ of executiin to
enforce judgment ontained agajnst him by the PNB. Whereas, Coleongco had also plans to take
over the factory.

ISSUE:

Whether or not Coleongco acted in bad faith as an appointed manager with special power of
attorney

RULING:

Yes. Coleongco acted in bad faith towards his principal, Claparols. Under article 1800, the powers
of a partner appointed as a manager in the articles of co- partnership are irrvocable without just
or lawful cause. However, in the case at bar, Coleongco midhandled the factory and acted in bad
faith.
G.R. No. 76931 May 29, 1991

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner,

vs.
COURT OF APPEALS and AMERICAN AIR-LINES INCORPORATED, respondents.

FACTS
On 15 January 1977, American Airlines, (American Air) Inc and Orient Air Services and Hotel
Representatives (Orient Air) entered into a General Sales Agency Agreement (Agreement)
whereby Orient will serve as the ticketing agent of American Air in the Philippines.
On 11 May 1981, alleging that Orient Air had reneged on its obligations by failing to promptly remit
the net proceeds of sales for the months of January to March 1981, American Air terminated the
Agreement and instituted suit against Orient Air with the Court of First Instance. Orient Air denied
the material allegations and contended that after application of to the commissions due it under
the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions.
The trial and appellate court found for Orient Air. The lower court ordered American Air to
"reinstate defendant as its general sales agent for passenger transportation in the Philippines in
accordance with said GSA Agreement."

ISSUE
WON the reinstatement of Orient Air as American Air’s agent was proper

HELD
NO. By affirming this ruling of the trial court, respondent appellate court, in effect, compels
American Air to extend its personality to Orient Air. Such would be violative of the principles and
essence of agency, defined by law as a contract whereby "a person binds himself to render some
service or to do something in representation or on behalf of another, WITH THE CONSENT OR
AUTHORITY OF THE LATTER .In an agent-principal relationship, the personality of the principal
is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the
principal, authorized to perform all acts which the latter would have him do. Such a relationship
can only be effected with the consent of the principal, which must not, in any way, be compelled
by law or by any court. The Agreement itself between the parties states that "either party may
terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or
cable." We, therefore, set aside the portion of the ruling of the respondent appellate court
reinstating Orient Air as general sales agent of American Air.

Ortega, et al. vs. CA

G.R. No.

Facts:
Atty. Misa wrote a letter to the law firm of Bito, Misa and Lozada that he wants to leave the firm,
he also asked to liquidate the partnership and to get his part of the equity. In another letter Atty.
Misa stated that the partnership has ceased to be mutually satisfactory because of the working
conditions. He then filed with the Commission's Securities Investigation and Clearing Department
a petition for dissolution and liquidation of partnership. The hearing officer dismissed the petition,
ruling that the withdrawal of Atty. Misa did not dissolve the partnership. On appeal SEC en banc
reversed the decision of the hearing officer, and remanded the case to the hearing officer. Both
asked for reconsideration but both motions were dismissed. During the pendency of the case Atty.
Bito, and Atty. Lozada both died. The Court of Appeals affirmed the decision in toto.

Issue: Whether or not the partnership is dissolved by Atty. Misa's withdrawal from the firm.

Ruling: Yes, because the partnership is a partnership at will. The Supreme Court states that “The
birth and life of a partnership at will is predicated on the mutual desire and consent of the partners.
The right to choose with whom a person wishes to associate himself is the very foundation and
essence of that partnership. Its continued existence is, in turn, dependent on the constancy of
that mutual resolve, along with each partner's capability to give it, and the absence of a cause for
dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure,
dictate a dissolution of the partnership at will. He must, however, act in good faith, not that the
attendance of bad faith can prevent the dissolution of the partnership but that it can result in a
liability for damages.”
THE BANK OF THE PHILIPPINE ISLANDS vs. DE COSTER

FACTS:

Defendant Gabriela Andrea de Coster y Roxas, having the consent and permission of her
husband, and he acting as her agent, made to the plaintiff a certain promissory note for P292,000,
payable one year after date. The note in question was a joint and several note. To secure the
payment thereof, the defendants Jean M. Poizat and J.M. Poizat and Co. executed a chattel
mortgage to the plaintiff. At the same time and for the same purpose, the defendant, having the
consent and permission of her husband, and he acting as her agent, acknowledged and delivered
to this plaintiff a mortgage on certain real property lying and being situated in the City of Manila,
which is specifically described in the mortgage. The note in question is long past due and owing.
The plaintiff brought action against the defendants on the note in the CFI Manila. In such case
the court rendered judgment against the defendants Gabriela Andrea de Coster y Roxas, Jean
M. Poizat and J. M. Poizat and Co. jointly and severally. Said defendants have not paid the
judgment or any part thereof, and that the full amount of the debt secured by the mortgaged on
the property described in the complaint is now due and owing.

ISSUE:
Whether or not the making of the note was a valid exercise of the power of attorney
conferred by the wife upon the husband.

RULING:
NO. The power of attorney authorizes the husband for in the name of his wife to “loan or
borrow any sums of money or fungible things, etc.”; This should be construed to mean that the
husband had power only to loan his wife money and to borrow money for or on account of his wife
as her agent and attorney in fact. That does not carry with it or imply that he had the legal right to
make his wife liable as a surety for the preexisting debt of a third person. The clauses in the power
of attorney upon which the bank relies for the authority of the husband to execute promissory
notes for and on behalf of his wife and as her agent, no provision authorizes or empowers him to
sign anything or to do anything which would make his wife liable as a surety for a preexisting debt.
The fact that an agent failed and neglected to perform his duties and to represent the interests of
his principal is not a bar to the principal obtaining legal relief for the negligence of her agent,
provided that the application for such a relief is duly and properly made under the provisions of
section 113, Code of Civil Procedure. It is very apparent from the face of the instrument that the
whole purpose and intent of the power of attorney was to empower and authorize the husband to
look after and protect the interests of the wife and for her and in her name to transact any and all
of her business. But nowhere does it provide or authorize him to make her liable as a surety for
the payment of the preexisting debt of a third person. Hence, it follows that the husband was not
authorized or empowered to sign the note in question for and on behalf of the wife as her act and
deed, and that as to her the note is void for want of power of her husband to execute it.

ALBALADEJO Y CIA. V. The PHILIPPINE REFINING CO

G.R. No. L-20726, December 20, 1923

FACTS:

Albaladejo y Cia. is a limited partnership engaged in the buying and selling of the products
of the country, especially copra, and in the conduct of a general mercantile business in Legaspi
while the Visayan Refining Co. is a corporation organized under the laws of the Philippine Islands
engaged in operating its extensive plant at Opon, Cebu, for the manufacture of coconut oil. In
1918, plaintiff made a contract with the Visayan Refining Co wherein the latter shall purchase
copra to the plaintiff for one year. It was further agreed that during the continuance of contract,
Visayan Refining will not appoint any other agent for the purchase of copra in Legaspi, nor buy
copra from any vendor in Legaspi. At the end of said year both parties found themselves satisfied
with the existing arrangement until July 9, 1920, when the Visayan Refining Co. closed down its
factory at Opon and withdrew from the copra market. Visayas Refining rendered its last account.
to the plaintiff was for the month of April, 1921, and it showed a balance of P288 in favor of the
defendant.
ISSUE:
Whether or not a contract of agency existed between the parties.

HELD:
No. The Court ruled that the relation between the parties was not that of principal and
agent in so far as relates to the purchase of copra by the plaintiff. It is true that the Visayan
Refining Co. made the plaintiff one of its instruments for the collection of copra; but it is clear that
in making its purchases from the producers the plaintiff was buying upon its own account and that
when it turned over the copra to the Visayan Refining Co., pursuant to that agreement, a second
sale was effected. In paragraph three of the contract it is declared that during the continuance of
this contract the Visayan Refining Co. would not appoint any other agent for the purchase of copra
in Legaspi; and this gives rise indirectly to the inference that the plaintiff was considered its buying
agent. But the use of this term in one clause of the contract cannot dominate the real nature of
the agreement as revealed in other clauses, no less than in the caption of the agreement itself. In
some of the trade letters also the various instrumentalities used by the Visayan
Refining Co. for the collection of copra are spoken of as agents. But this designation was evidently
used for convenience; and it is very clear that in its activities as a buyer the plaintiff was acting
upon its own account and not as agents, in the legal sense, of the Visayan Refining Co. The title
to all of the copra purchased by the plaintiff undoubtedly remained in it until it was delivered by
way of subsequent sale to said company.

Sy vs. CA
G.R. Nos. 94285
Facts: Sy Yong Su & Sons is a partnership among Yong Hu, Jose, Jayme, Marciano, Willie,
Vicente, and Jesus, registered with the SEC. Jose was the managing partner.

Sometime in 1977 Keng Sian filed a civil action against the partnership for accounting all
properties she allegedly own with Yong Su, and for the delivery of half of the properties and the
fruits thereof. She alleged that she was the common law wife of Yong Su and that they have
children and that the partnership has deprived her share of the properties. Yong Su and the other
partners countered that Keng Sian was only a house helper of Yong Su and his wife, and that the
partnership has ownership over the said properties, and she had no interest in any properties.

Yong Su died on May 1978 Jose died on August 1978, on September 1978 Marciano filed a
petition for declaratory relief for against Vicente, Jesus and Jayme and prayed for his appointment
as the managing partner in lieu of the deceased Jose. While the three countered by asking for
the dissolution of the partnership. And for the appointment of Vicente as the managing partner.
Vicente died on December 1979

Hearing Officer Sison ruled in favor of Vicente and dismissed the petition, and approving the
dissolution of the partnership with Jesus as the managing partner of the winding up of the
partnership. The decision was affirmed by the SEC En Banc, June 1982. That the dissolution of
the partnership was not because of the death of the partner but rather because of the will of the
partners. Appealed to the

Keng Sian's children filed for the revocation of the partnership certificate of Sy Yong Su & Sons,
and have its assets reverted to the estate of Yong Su. This was denied by Hearing Officer Espejo
on January 1984. After its dismissal they wanted to intervene with the dissolution case but it was
not allowed in an order issues 1985.

Meanwhile RTC Negros Occidental appointed Ferrer as the administrator of the estate of Yong
Su, he then intervened with the partition and distribution case. Also on 1985 he joined Keng Sian
in the civil case as plaintiff saying that the properties were wrongfully diverted to the other
partners.

Sison dismissed a intervetion from Ferrer, who was representing the estate of Yong Su. SEC en
banc reversed the decision. In the same decision SEC en banc reiterated the decision of
dissolution was already final without any appeal initiated. Using the 1982 SEC En Banc decision
Sison approved a partial partition of the properties of the partnership in 1986, meanwhile Marciano
died on August 1987.
Tongco replaced Sison as hearing officer for the case, Tongco placed the partnership under
receivership. A joint appeal was filed by the partners against the then intervenor and now
respondent. The SEC en banc affirmed the said order and denied the motion for reconsideration
of the petitioners. Then they appealed to the Court of Appeals, which remanded the decisions for
execution and order of receivership to the SEC for the formation of the receivership committee.

Issue: Whether or not dissolution is the same as winding up the partnership.

Ruling: No, the petitioners aver that there was no other choice for hearing officer Tongco after
taking over the case from Sison but to continue with the partition and distribution but the Supreme
Court ruled otherwise. The Court ruled that the petitioners failed to distinguish dissolution from
winding up, and partition or distribution. In dissolution there is a change in the relation of the
parties caused by any partner ceasing to be associated in carrying on, as might be distinguished
form winding up, of its business. Upon dissolution the partnership continues and its legal
personality retains until the complete winding up of its business culminating in its termination.

Dissolution does not mean that the juridical entity was immediately terminated and the distribution
of the assets to its partners should perfunctorily follow. Dissolution simply effected a change in
the relationship among the partners. The partnership continues to exist until the termination, at
which time the winding up of its affairs should have been completed and the net partnership assets
are partitioned and distributed to the partners.

This means that the finality of the dissolution of the partnership, although final and executory, did
not pose any obstacle to the hearing officer to issue orders not consistent therewith.
Yu Chuck v. Kong Li Po
Facts
The defendant is a domestic corporation engaged in the business of news printing. Under its by-
laws, all contract in writing must be signed by the President. Chen was appointed as general
manager of the corporation which later on entered an employment contract for a term of 3 years
with the plaintiff with a provision that in case of breach, they were to receive full pay for the
remaining portion of the term. Later on, the plaintiff was discharged by Hong, the OIC manager
when Chen left for China. Consequently, the plaintiff instituted an action for illegal dismissal. The
defendant contended that Chen has no authority to enter into such employment contract and that
dismissal was justified.

ISSUE: W/N Chen had the power to bind the corporation by a contract it entered with the plaintiff.

HELD:
No. The general rule is that the power to bind a corporation by contract lies with its board of
directors or trustees, but this power may either expressly or impliedly be delegated to other
officers or agents of the corporation, and it is well settled that except where the authority of
employing servants and agent is expressly vested in the board of directors or trustees, an officer
or agent who has general control and management of the corporation's business, or a specific
part thereof, may bind the corporation by the employment of such agent and employees as are
usual and necessary in the conduct of such business. But the contracts of employment must be
reasonable.
Chen, as general manager of the Kong Li Po, had implied authority to bind the defendant
corporation by a reasonable and usual contract of employment with the plaintiffs, but the Court
did not think that the contract here in question can be so considered. Not only is the term of
employment unusually long, but the conditions are otherwise so onerous to the defendant that
the possibility of the corporation being thrown into insolvency thereby is expressly contemplated
in the same contract.
YULO V. YANG CHIAO SENG
August 28, 1959 G.R. No. L-12541

Facts: Yang Chiao Seng proposed to form a partnership with Rosario Yulo to run and operate a
theatre on the premises occupied by Cine Oro, Plaza Sta. Cruz, Manila, the principal conditions
of the offer being (1) Yang guarantees Yulo a monthly participation of P3,000 (2) partnership shall
be for a period of 2 years and 6 months with the condition that if the land is expropriated, rendered
impracticable for business, owner constructs a permanent building, then Yulo’s right to lease and
partnership even if period agreed upon has not yet expired; (3) Yulo is authorized to personally
conduct business in the lobby of the building; and (4) after Dec 31, 1947, all improvements placed
by partnership shall belong to Yulo but if partnership is terminated before lapse of 1 and ½ years,
Yang shall have right to remove improvements. Parties established, “Yang and Co. Ltd.”, to exist
from July 1, 1945 – Dec 31, 1947.
In June 1946, they executed a supplementary agreement extending the partnership for 3 years
beginning Jan 1, 1948 to Dec 31, 1950.
The land on which the theater was constructed was leased by Yulo from owners, Emilia Carrion
and Maria Carrion Santa Marina for an indefinite period but that after 1 year, such lease may be
cancelled by either party upon 90-day notice. In Apr 1949, the owners notified Yulo of their desire
to cancel the lease contract come July. Yulo and husband brought a civil action to declare the
lease for a indefinite period. Owners brought their own civil action for ejectment upon Yulo and
Yang.

Issue: Was the agreement a contract a lease or a partnership?

Ruling: No. The agreement was a sublease not a partnership. The following are the requisites of
partnership: (1) two or more persons who bind themselves to contribute money, property or
industry to a common fund; (2) the intention on the part of the partners to divide the profits among
themselves (Article 1761, CC).
Plaintiff did not furnish the supposed P20,000 capital nor did she furnish any help or intervention
in the management of the theatre. Neither has she demanded from defendant any accounting of
the expenses and earnings of the business. She was absolutely silent with respect to any of the
acts that a partner should have done; all she did was to receive her share of P3,000 a month
which cannot be interpreted in any manner than a payment for the use of premises which she had
leased from the owners.