Documente Academic
Documente Profesional
Documente Cultură
SUBMITTED TO:
ATTY. AGUSTIN P. LABAN III
SUBMITTED BY:
III-C
Addatu, Ian
Addatu, Kristine
Aquisan, Wynster
Bahillo, Bryan Christopher
Balajadia, Celinna
Balajadia, Julius
Balderas, Danika
Baez, Rochelle
Bangliten, Miraldine
Basto, Allan Patrick
Basungit, Waylan
Boyongan, Joyce
Bragas, Noreen
Bucang, Rizza
Cagan, Jenalyn
Calsiyao,Walter
Claver, Ayangwa Francis
Cruz, Kristine
Cupatan, Eugene Francis
Distor, Lilibeth
Dizon, Clarisse
Dizon, Katherine
Domingo, Patricia Immaya
Dulnuan, Kenneth
Dumayag, Germa
Estioko, Mary Therese
Eugenio, Precious
Flores, Richard Francis
Ilagan, Angelyn
Ingson, Jefftee
Laguinday, Mae
Lawagan, Joseph Jr.
Malaga, Sam Boy
Mandiit, Concepcion
Marquez, Princess
Nabunat, Alda
Olivar, Karl Thomas
Palsiw, Edward Raymond
Panganiban, Bren Dayanara
Patingan, Eastan Lee
Puyoc, Miracquel
Reyes, Carla
Robles, Amarra
Siblagan, Roger
Sokoken, Quennie
I. INTRODUCTION
II. PARTNERSHIP
FACTS:
On March 1979, said branch office applied with the Central Bank for
authority to remit to its parent company abroad, branch profit
amounting to P7, 647,058.00. On March 14, 1979, it paid the 15%
branch profit remittance tax, pursuant to Sec. 24 (b) (2) (ii) and
remitted to its head office the amount of P6,499,999.30 claiming that
the 15% profit remittance tax should have been computed on the basis
of the amount actually remitted which is P6,499,999.30 and not on the
amount before profit remittance tax which is P7,647,058.00, private
respondent filed on December 24, 1980, a written claim for the refund
or tax credit of the amount of P172,058.90 representing alleged
overpaid branch profit remittance tax
ISSUE:
Whether the tax base upon which the 15% branch profit remittance tax
shall be imposed is the amount applied for remittance on the profit
actually remitted after deducting the 15% profit remittance tax.
RULING:
Under Section 24 (b) (2) of the Tax Code the 15% branch profit
remittance tax shall be imposed on the profit actually remitted abroad
and not on the total branch profit out of which the remittance is to be
made. Based on such ruling petitioner should have paid only the
amount of P974,999.89 in remittance tax computed by taking the 15%
of the profits of P6,499,999.89 in remittance tax actually remitted to its
head office in the United States, instead of Pl,147,058.70, on its net
profits of P7,647,058.00. Undoubtedly, petitioner has overpaid its
branch profit remittance tax in the amount of P172, 058.90.
FACTS:
In 1948, general partner Suter and limited partner Spirig got married
and, thereafter, on December 18, 1948, limited partner Carlson sold his
share in the partnership to Suter and his wife. The sale was recorded
with the SEC on December 20, 1948.
The limited partnership had been filing its income tax returns as a
corporation, without objection, Commissioner of Internal Revenue, until
in 1959 when the latter, in an assessment, consolidated the income of
the firm and the individual incomes of Suter and Spirig resulting in a
determination of a deficiency income tax against respondent Suter in
the amount of P2, 678.06 for 1954 and P4, 567.00 for 1955.
ISSUE:
Whether or not the partnership was dissolved after the marriage of the
partners William J. Suter and Julia Spirig Suter.
RULING:
The limited partnership, William J. Suter "Morcoin" Co., Ltd., has been
dissolved by operation of law because of the marriage of the only
general partner, William J. Suter to the originally limited partner, Julia
Spirig one year after the partnership was organized.
A husband and a wife may not enter into a contract of general co-
partnership, because under the Civil Code, which applies in the
absence of express provision in the Code of Commerce, persons
prohibited from making donations to each other are prohibited from
entering into universal partnerships. It follows that the marriage of
partners necessarily brings about the dissolution of a pre-existing
partnership.
FACTS:
Two separate Petitions were filed before the Court 1) by the surviving
partners of Atty. Alexander Sycip, who died on May 5, 1975, and 2) by
the surviving partners of Atty. Herminio Ozaeta, who died on February
14, 1976, praying that they be allowed to continue using, in the names
of their firms, the names of partners who had passed away.
ISSUE:
Whether the law firm may be allowed to continue using, in the names
of their firms, the names of partners who had passed away.
RULING:
FACTS:
On March 31, 1989, the hearing officer rendered a decision ruling that
the withdrawal of the petitioner has not dissolved the partnership. The
hearing officer opined that the partnership is one for a specific
undertaking and hence not a partnership at will, citing paragraph 2 of
the Amended Articles of Partnership (19 August 1948):
RULING:
1. A partnership that does not fix its term is a partnership at will. That
the law firm "Bito, Misa & Lozada," and now "Bito, Lozada, Ortega and
Castillo," is indeed such a partnership need not be unduly belabored.
The partnership agreement does not provide for a specified period or
undertaking. The "DURATION" clause simply states:
5. DURATION. The partnership shall continue so long as
mutually satisfactory and upon the death or legal
incapacity of one of the partners, shall be continued by the
surviving partners."
FACTS:
Petitioner and private respondents are brothers and sisters who are co-
owners of certain lots which were then being leased to the Shell
Company of the Philippines Limited (SHELL). They agreed to open and
operate a gas station thereat to be known as Estanislao Shell Service
Station with an initial investment of P15, 000.00 to be taken from the
advance rentals due them from SHELL. They agreed to help their
brother, petitioner herein, by allowing him to operate and manage the
gasoline service station of the family. They negotiated with SHELL. It
was agreed that petitioner would apply for the dealership. Respondent
Remedios helped in managing the business with petitioner. Later the
parties herein entered into an Additional Cash Pledge Agreement with
SHELL wherein it was reiterated that the P15, 000.00 advance rental
shall be deposited with SHELL to cover advances of fuel to petitioner as
dealer with a provision that said agreement cancels and supersedes
the Joint Affidavit executed by the co-owners.
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
Ang Pue and Tan Siong who are Chinese citizens organized the
partnership Ang Pue & Company for a term of five years from May 1,
1953, extendible by their mutual consent. It was for maintaining a
business of general merchandising, buying and selling at wholesale
and retail construction materials for commerce, either native or
foreign. On June 16, 1953, the articles of partnership were registered in
the Office of the Securities & Exchange Commission.
R.A. No. 1180 was passed which provides that a partnership not wholly
formed by Filipinos could continue to engage in the retail business until
the expiration of its term. The partners agreed to extend the
partnership for another five years. However, the Securities & Exchange
Commission refused registration because it violates R.A. No. 1180.
ISSUE:
RULING:
FACTS:
On June 22, 1965, petitioners bought two (2) parcels of land from
Santiago Bernardino, et al. and on May 28, 1966, they bought another
three (3) parcels of land from Juan Roque. The first two parcels of land
were sold by petitioners in 1968 to Marenir Development Corporation,
while the three parcels of land were sold by petitioners to Erlinda
Reyes and Maria Samson on March 19, 1970.
Petitioners filed a petition for review with the respondent Court of Tax
Appeals but the latter only affirmed the decision of the Commissioner.
The basis of the CTA is the ruling in Evangelista.
ISSUE:
RULING:
No. The Supreme Court cited the concurring opinion of Mr. Justice
Angelo Bautista in Evangelista wherein the latter argued that under
Article 1769 of the new Civil Code, paragraphs 1 and 2, those who
agree to form a co- ownership share or do not share any profits made
by the use of the property held in common does not convert their
venture into a partnership. Or the sharing of the gross returns does not
of itself establish a partnership whether or not the persons sharing
therein have a joint or common right or interest in the property.
FACTS:
On March 23, 1944, Julia Buales died, leaving as heirs her surviving
spouse, Lorenzo T. Oa and her five children. In 1948, a civil case was
instituted before the CFI Manila for the settlement of Julias estate. Mr.
Oa was appointed administrator of the estate of the deceased, who
then submitted a project of partition which was approved by the Court
on May 1949. Since the three heirs were still minors when the project
of partition was approved, Mr. Lorenzo Oa, being their father and
administrator of the estate, filed a petition for appointment as guardian
of the three. Come November 1949, the Court appointed Mr. Oa as
guardian of the persons and property of the minors.
The project of partition shows that the three heirs have undivided one-
half (1/2) interest in ten (10) parcels of land, six houses, and an
undetermined amount to be collected from the War Damage
Commission. Later on, they received from the Commission the amount
of P50, 000 which, instead of dividing it among themselves, they used
said amount in the rehabilitation of properties owned by them in
common. Moreover, said project of partition discloses that the estate
shares equally with Mr. Lorenzo Oa, the administrator thereof. Despite
the approval of the Court concerning the project of partition, no
attempt was done to divide the properties listed. The properties
remained under the management of Mr. Oa who utilized said
properties in business by leasing or selling those and investing the
income generated and the proceeds from the sales in real properties
and securities. In consequence, their properties and investments
gradually increased.
ISSUE:
Whether the petitioners be considered as co-owners of the properties
inherited or be deemed as unregistered co-partners.
RULING:
The Supreme Court pronounced that from the time petitioners allowed
not only the incomes from their respective shares of the inheritance
but also the inherited properties to be used by Mr. Lorenzo T. Oa as a
common fund in engaging various transactions or business, with the
intention of generating profits to be shared by them proportionally,
such act was tantamount to contributing said incomes to a common
fund, and in effect forming an unregistered partnership within the
purview of the Tax Code. It is incontrovertible that the petitioners did
not merely limit themselves to holding the properties inherited by
them. During the material years, 1955 and 1956, some of the
properties were sold at considerable profits.
Moreover, the Supreme Court averred that in cases of inheritance,
there should be a period when the heirs can be deemed as co-owners
rather than unregistered co-partners within the contemplation of the
Corporate Tax Laws. Prior to partition and distribution of the estate of
the deceased, all the income thereof belong commonly to all the heirs,
without them becoming unregistered co-partners. However, this does
not necessarily follow that such status as co-owners continues until the
inheritance is actually and physically distributed among the heirs, for it
is easily conceivable that after knowing their respective shares in the
partition, they might decide to continue holding said shares under the
common management of the administrator or executor or of anyone
chosen by them and engage in business on that basis. Withal, if this
were to be allowed, it would be the easiest thing for heirs in any
inheritance to circumvent the law.
The moment the respective known shares are used as part of the
common assets of the heirs to be used in generating profits, it is but
proper that the income of such shares should be considered as part of
the taxable income of an unregistered partnership.
FACTS:
Such being the case, the plaintiff formally protested against the
payment of the sum of P602.51, the defendant, however, overruled the
protest and denied the request for refund. For the second time, the
collector issued another warrant of distraint and levy for failure to pay
monthly installments. Again, to avoid embarrassment arising from the
levy of their property, the plaintiff through Gatchalian paid under
protest the sum of P1, 260.93 representing the unpaid balance of the
income tax and penalties. A month after payment, the plaintiff officially
complained and entreated the refund of the total sum of P1, 863.44
paid under protest. Despite continual requests for refund, the
defendant still, repudiated.
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
The approval was an event which made it unlawful for the members to
carry it on in partnership. Furthermore, subsequent events likewise
reveal the intent of both parties to terminate the partnership because
each refused to share the fishpond with the other.
ALBERT F. KIEL V. ESTATE OF P. SABERT
G.R. No. 21639
FACTS:
Albert F. Kiel and William Milfiel established the Parang Plantation
Company over certain private lands in the province of Cotabato. Kiel
subsequently took over the interest of Milfiel.
In 1910, Kiel and P.S. Sabert entered into an agreement to develop the
Parang Plantation Company. Sabert was to furnish capital to run the
plantation while Kiel was to manage it. They were to share and share
alike in the property. This contract was formed so that the land could
be acquired in the name of Sabert, Kiel being a German citizen is not
eligible to acquire public lands in the Philippines. Kiel was subsequently
deported from the Philippines at the onset of World War II.
While Kiel was away, Sabert with five other people organized the
Nituan Plantation Company, where Sabert transferred all his rights over
the parcels of land originally owned under the Parang plantation.
Sabert wrote Kiel that he had offered to sell the property for Php
40,000 or to find a partner to manage the parcels of land, either way
he will straiten or recompense Kiel. Sabert died before such amicable
arrangement was realized; thus Kiel proceeds against the estate of
Sabert.
ISSUES:
RULING:
Kiel has clearly shown his right to one-half of the value of the
improvements and personal property on the land as to the date upon
which he left the plantation. Such improvements and personal property
include buildings, coconut palms, and other plantings, cattle and other
animals, implements, fences, and other constructions, as well as
outstanding collectible credits, if any, belonging to the partnership. The
value of these improvements and of the personal property cannot be
ascertained from the record and the case must therefore be remanded
for further proceedings.
TECK SEING & CO., LTD. AND SANTIAGO JO CHUNG ET. AL
(PARTNERS) V.
PACIFIC COMMERCIAL COMPANY, ET. AL.
G.R. No. 19892
FACTS:
ISSUE:
RULING:
The legal intention deducible from the acts of the parties controls in
determining the existence of a partnership. If they intend to do a thing
which in law constitutes a partnership, they are partners, although
their purpose was to avoid the creation of such relation. Here, the
intention of the persons making up Teck Seing & co., Ltd. was to
establish a partnership which they erroneously denominated a limited
partnership. If this was their purpose, all subterfuges resorted to in
order to evade liability for possible losses, while assuming their
enjoyment of the advantages to be derived from the relation, must be
disregarded. The partners who have disguised their identity under a
designation distinct from that of any of the members of the firm should
be penalized, and not the creditors who presumably have dealt with
the partnership in good faith.
Articles 127 and 237 of the Code of Commerce make all the members
of the general copartnership liable personally and in solidum with all
their property for the results of the transactions made in the name and
for the account of the partnership. Section 51 of the Insolvency Law,
likewise, makes all the property of the partnership and also all the
separate property of each of the partners liable. If a firm is insolvent,
but one or more partners thereof are solvent, the creditors may
proceed both against the firm and against the solvent partner or
partners, first exhausting the assets of the firm before seizing the
property of the partners. We reach the conclusion that the contract of
partnership found in the document hereinbefore quoted established a
general partnership or, to be more exact, a partnership as this word is
used in the Insolvency Law.
MAURICIO AGAD vs. SEVERINO MABATO and MABATO and AGAD
COMPANY
23 SCRA 1223
FACTS:
ISSUE:
Whether or not "immovable property or real rights" have been
contributed to the partnership under consideration, thus the
partnership is void due to the violation of Art. 1773.
RULING:
Here, only capital of money was contributed. The case was remanded
to the lower court for further proceeding.
J. M. TUASON & CO., INC., represented by it Managing
PARTNER, GREGORIA ARANETA, INC. vs. QUIRINO BOLAOS
G.R. No. L-4935 May 28, 1954
FACTS:
After trial, the lower court rendered judgment for plaintiff, declaring
defendant to be without any right to the land in question and ordering
him to restore possession thereof to plaintiff and to pay the latter a
monthly rent. Defendant appealed directly to the Supreme Court and
contended, among others, that Gregorio Araneta, Inc. cannot act as
managing partner for plaintiff on the theory that it is illegal for two
corporations to enter into a partnership
ISSUE:
RULING:
FACTS:
Later, the 30% capital stock of ASI was increased to 40%. The
corporation was also registered with the Board of Investments to avail
of incentives with the condition that at least 60% of the capital stock of
the corporation shall be owned by Philippine nationals.
The joint enterprise thus entered into by the Filipino investors and the
American corporation prospered. Unfortunately, with the business
successes, there came a deterioration of the initially harmonious
relations between the two groups. According to the Filipino group, a
basic disagreement was due to their desire to expand the export
operations of the company to which ASI objected as it apparently had
other subsidiaries of joint venture groups in the countries where
Philippine exports were contemplated. On March 8, 1983, the annual
stockholders' meeting was held. The meeting was presided by Baldwin
Young.
The SEC decision led to the filing of two separate appeals with the
Intermediate Appellate Court by Wolfgang Aurbach, John Griffin, David
Whittingham and Charles Chamsay and by Luciano E. Salazar. The
petitions were consolidated and the appellate court ordered the case
be remanded to the SEC with the directive that a new stockholders'
meeting of Saniwares be ordered convoked as soon as possible, under
the supervision of the Commission.
Upon a motion for reconsideration filed by the Lagdameo Group the
Court of Appeals directed that in all subsequent elections for directors
of Sanitary Wares Manufacturing Corporation, American Standard Inc.
(ASI) cannot nominate more than three (3) directors; that the Filipino
stockholders shall not interfere in ASI's choice of its three (3)
nominees; that, on the other hand, the Filipino stockholders can
nominate only six (6) candidates and in the event they cannot agree
on the six (6) nominees, they shall vote only among themselves to
determine who the six (6) nominees will be, with cumulative voting to
be allowed but without interference from ASI.
ISSUES:
RULING:
(1) The rule is that whether the parties to a particular contract have
thereby established among themselves a joint venture or some other
relation depends upon their actual intention which is determined in
accordance with the rules governing the interpretation and
construction of contracts.
If the Filipino stockholders cannot agree who their six nominees will be,
a vote would have to be taken among the Filipino stockholders only.
During this voting, each Filipino stockholder can cumulate his votes.
ASI, however, should not be allowed to interfere in the voting within
the Filipino group. Otherwise, ASI would be able to designate more
than the three directors it is allowed to designate under the
Agreement, and may even be able to get a majority of the board seats,
a result which is clearly contrary to the contractual intent of the
parties.
To allow the ASI Group to vote their additional equity to help elect even
a Filipino director who would be beholden to them would obliterate
their minority status as agreed upon by the parties.
B) OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES
ARTICLES 1784-1809
FACTS:
ISSUE:
Whether or not the partnership agreement is void.
RULING:
The judgment appealed from as well as the order of the court for the
taking of the property into custody by the sheriff must be, as they
hereby are set aside and the case remanded to the court below for
further proceedings in accordance with law.
MAXIMILIANO SANCHO v. SEVERIANO LIZARRAGA
G.R. No. L-33580 February 6, 1931
FACTS:
ISSUE:
RULING:
FACTS:
Puzon had a contract with the Republic of the Philippines for the
construction of the Ganyangan Bato Section of the Pagadian
Zamboanga City Road, and of five bridges in the Malangas-Ganyangan
Road. Puzon and Uy agreed to enter into partnership with the capital of
P100, 000 of which each partner shall contribute P50, 000.00. Uy was
able to give P40, 000 wherein P10, 000 was his advance contribution of
the share and P30, 000 as his partial contribution until it reached P115,
453.39 including his capital.
On the other hand, Puzon failed to contribute his share in the capital of
the partnership. The record showed that the loan which amounted to
P150, 000 was divided to paying Uy the amount of P60, 000, P40, 000
was a reimbursement of Uys contribution to partnership and the
balance of P20, 000 as Puzons contribution to the partnership. Then
later on, Puzon failed to make any contributions to the partnership
funds.
ISSUE:
RULING:
Yes. If the appellant gave to the partnership all that were earned and
due it under the subcontract agreements, the money would have been
used as a safe reserve for the discharge of all obligations of the firm
and the partnership would have been able to successfully and
profitably prosecute the projects it subcontracted.
In the case at bar, the Bureau of Public Highways paid P1, 047,181.01
which should have belonged to the partnership. However, Puzon only
deposited P27, 820 in the current account of the partnership.
THE UNITED STATES VS. EUSEBIO CLARIN
G.R. No. 5840 (1910)
FACTS:
Pedro Larin delivered to Pedro Tarug P172, in order that the latter, in
company with Eusebio Clarin and Carlos de Guzman, might buy and
sell mangoes. Larin made an agreement with the three men by which
the profits were to be divided equally between him and them. Tarug,
Clarin, and de Guzman traded the mangoes and obtained P203.
However, they did not give Larin his half of the profits; neither did they
render him any account of the capital. Larin charged them with the
crime of estafa, but the provincial fiscal filed an information only
against Clarin in which he accused him of appropriating to himself not
only the P172 but also the share of the profits that belonged to Larin,
amounting to P15.50. Tarug and de Guzman appeared in the case as
witnesses.
ISSUE:
RULING:
When Larin put the P172 into the partnership which he formed with
Tarug, Clarin, and Guzman, he invested his capital in the risks or
benefits of the business of the purchase and sale of mangoes, and,
even though he had reserved the capital and conveyed only the
usufruct of his money, it would not devolve upon of his three partners
to return his capital to him, but upon the partnership of which he
himself formed part, or if it were to be done by one of the three
specifically, it would be Tarug, who, according to the evidence, was the
person who received the money directly from Larin.
No. 5 of article 535 of the Penal Code, according to which those are
guilty of estafa "who, to the prejudice of another, shall appropriate or
misapply any money, goods, or any kind of personal property which
they may have received as a deposit on commission for administration
or in any other character producing the obligation to deliver or return
the same," (as, for example, in commodatum, precarium, and other
unilateral contracts which require the return of the same thing
received) does not include money received for a partnership; otherwise
the result would be that, if the partnership, instead of obtaining profits,
suffered losses, as it could not be held liable civilly for the share of the
capitalist partner who reserved the ownership of the money brought in
by him, it would have to answer to the charge of estafa, for which it
would be sufficient to argue that the partnership had received the
money under obligation to return it.
We therefore freely acquit Eusebio Clarin, with the costs de oficio. The
complaint for estafa is dismissed without prejudice to the institution of
a civil action.
FACTS:
The complainant and the accused were partners in the farming of a 47-
hectare land leased by the complainant from one Juan Alonzo for the
agreed rental of 75 cavans of palay. When the palay had been
harvested from the land and was ready for threshing, the accused
informed the complainant. The complainant sent his nephew, Manuel
Matias, to observe the threshing with specific instructions to give the
share of the tenants and the partners' respective shares, and then
segregate the 75 cavans of palay for the rentals. After the division of
the produce, the share of the complainant was deposited at the
warehouse in Cabiao, while the share of the accused was deposited in
his house. Matias, as instructed by the complainant, delivered the 75
cavans of palay set aside for the rentals (valued at P750) to the
accused for the purpose of delivering the same to the landowner,
Alonzo. Instead of making the delivery, the accused misappropriated
the 75 cavans of palay.
ISSUE:
RULING:
No. The appellate court held that there was a liquidation of the
partnership as far as the harvest in question was concerned; "for it is
improbable that the shares of the partners were set aside, without
taking into account their obligations to each other; and it is not very
likely also that the 75 cavans of palay for the rentals were segregated
without some sort of accounting. Granting for the purposes of
argument that the partnership had not been liquidated, still we hold
that appellant is responsible for estafa. The 75 cavans of palay were
segregated from the partnership, and delivered to the appellant for the
express purpose of delivering or paying the same to Alonzo. The said
palay no longer belonged to the partnership. Instead of complying with
his duty, the appellant converted and misappropriated the said goods
to his own personal use and benefit. A partner is guilty of estafa if he
fraudulently appropriates partnership property delivered to him, with
specific directions to apply it to uses of the partnership."
Whether these rulings still obtain under the new Civil Code is a
legitimate matter for inquiry. It is to be noted that the Supreme Court
made its rulings before the new Civil Code took effect. At that time the
concept of partners' co-ownership of partnership property was
unknown to Philippine law. And while the Court of Appeals cases were
decided after the effectivity of the new Civil Code, it does not seem
that the court took account of the concept of co-ownership introduced
by the Code. When account is taken of this concept the difficulties
pointed out with respect to theft also present themselves with respect
to estafa.
FACTS:
ISSUE:
RULING:
Yes. The fact that the defendants received certain capital from the
plaintiff for the purpose of organizing a company; they, according to
the agreement, were to handle the said money and invest it in a store
which was the object of the association; they, in the absence of a
special agreement vesting in one sole person the management of the
business, were the actual administrators thereof; as such
administrators they were the agent of the company and incurred the
liabilities peculiar to every agent, among which is that of rendering
account to the principal of their transactions, and paying him
everything they may have received by virtue of the mandatum. Neither
of them has rendered such account; they are therefore obliged to
refund the money that they received for the purpose of establishing
the said store the object of the association. This was the principal
pronouncement of the judgment.
On February 1, 1966 and on May 16, 1966, Choithram entered into two
agreements for the purchase of two parcels of land located in Barrio
Ugong, Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. A
building was constructed thereon by Choithram in 1966. Three other
buildings were built thereon by Choithram through a loan of P100,
000.00 obtained from the Merchants Bank as well as the income
derived from the first building.
Sometime in 1970 Ishwar asked Choithram to account for the income
and expenses relative to these properties during the period 1967 to
1970. Choithram failed and refused to render such accounting.
Thereafter, Ishwar revoked the general power of attorney. Choithram
and Ortigas were duly notified of such revocation on April 1, 1971 and
May 24, 1971, respectively. Said notice was also registered with the
Securities and Exchange Commission on March 29, 1971 and was
published in the April 2, 1971 issue of The Manila Times for the
information of the general public.
ISSUE:
RULING:
The Court held that there was a partnership formed. Even without a
written agreement, the scenario is clear. Spouses Ishwar supplied the
capital of $150,000.00 for the business. They entrusted the money to
Choithram to invest in a profitable business venture in the Philippines.
For this purpose they appointed Choithram as their attorney-in-fact. We
have a situation where two brothers engaged in a business venture.
One furnished the capital, the other contributed his industry and talent.
Justice and equity dictate that the two share equally the fruit of their
joint investment and efforts.
MORAN, JR. v. CA
G.R. No. L-59956 Oct. 31, 1984
FACTS:
The trial court held that each party is entitled to rescind the contract
since both failed to fulfill their respective promises (Moran the printing
of the 95k posters; Pecson the P15k contribution).
The Court of Appeals held that Moran must pay Pecson, among others,
the amount of expected profits and the latters commission in the
partnership.
ISSUE:
RULING:
NG YA v. SU COMMERCIAL CO.
50 O.G. 4913
FACTS:
Ng Ya is a Chinese merchant based in Surigao. Ng Ya ordered from Sugbu
Commercial (based in Cebu) 1,000 galvanized iron and aluminium sheets. It was
agreed that the goods would be delivered in a weeks time, or on or
before January 5, 1950. The amount of these goods is P5, 400, which
appears to have been paid by Ng Ya in full. However, the said goods were not
delivered on the said date. Sugbu kept promising to deliver it at some future
time.
Sugbu Commercial later found out that Ng Ya is also in need of cigarettes for
retail. The former then offered the latter cigarettes. Ng Ya was enticed
by the offer and then entered into another contract of sale with Sugbu.
She paid the amount of the cigarettes worth P4, 000 with the help of Lana
Bakery. However, after a couple of months, neither the cigarettes nor the
galvanized iron and aluminium sheets reached Ng Ya.
Consequently, Lana Bakery, from whom Ng Ya obtained the P4, 000 got angry
with her and, for this reason, Ng Ya was forced to reimburse the amount.
She then kept coming back to Sugbu to demand either the delivery of the goods
she ordered or the payment of P 9,400 to no avail.
Ng Ya finally filed a complaint with the CFI Cebu. Sugbu Commercial filed a
third party complaint against Pow Sun Gee, alleging that the latter received the
amounts of P5,400 and P4,000 in his capacity as manager of Sugbu
Commercial when he was not authorized to issue official receipts and
that only his co-partner Shih Tiong Chu, who was most of the time in Manila,
could do so. In this regard, Sugbu Commercial prayed that Pow Sun Gee be
ordered to indemnify Sugbu Commercial for whatever is adjudged against
the latter in favor of plaintiff Ng Ya.
The Trial Court decided in favor of Ng Ya and sentenced Sugbu to pay plaintiff the
sum of P9, 400 and condemning Pow Sun Gee to reimburse Sugbu Commercial
Company.
ISSUE:
RULING:
Yes, a manager of a partnership is presumed to have all the incidental
powers to carry out the object of the partnership in the transaction of
the business. There is of course an exception to the general rule; when
the powers of a manager are specifically restricted, he could not
exercise the powers expressly limited of him.
But when the articles of association do not specify the powers of the
manager, it is admitted on principle that a manager has the powers of
a general agent, and even more when the object of the company is
determined, the manager has all the powers necessary for the
attainment of such object.
FACTS:
ISSUE:
RULING:
The partnership had the use and benefit of the vessel in its business
and that the partnership has never paid anything for its use. Teague
should be compensated for the value of the time which the partnership
made use of the vessel.
SANTOS V. VILLANUEVA, E. DEL ROSARIO AND C. DEL ROSARIO.
No. 8876-R. September 7, 1953. Official Gazette, Volume 50,
No. 1 (January 1954)
FACTS:
Santos and the del Rosarios formed a partnership for the purpose of
operating a tailoring business. Thereafter, E. del Rosario executed a
sale in favor of Villanueva of the entire partnership assets without the
knowledge and consent of Santos. Santos filed for rescission of the sale
with the lower court. The court found the sale void for want of consent
from Santos. Thus, this appeal from Villanueva.
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
It appears from the partnership agreement that each one of them had
advanced money to the preexisting partnership, which advances were
assumed or accounts-current aggregated, represented the advances
from the Chuidians and the balance that balance that from D. Mariano
Buenaventura.
ISSUE:
The construction of this clause is that it establishes a basis for the final
adjustment of the affairs of the partnership; that that basis is that the
liabilities to non-co-partners are to be first discharged; that the claims
of the Chuidian minors are to be next satisfied; and that what is due to
the respective partners on account of their advances to the firm is to
be paid last of all, leaving the ultimate residue, of course, if there be
any, to be distributed, among the partners in the proportions in which
they may be entitled thereto.
The plaintiff having acquired no rights under the assignment which are
now enforceable against the defendant, this action cannot be
maintained. The liquidator of the defendant having been notified of the
assignment, the plaintiff will be entitled to receive from the assets of
the partnership, if any remain, at the termination of the liquidation, 25
per cent of D. Vicente's resulting interest, both as partner and creditor
FUE LEUNG V. INTERMEDIATE APPELLATE COURT
169 SCRA 746
FACTS:
ISSUE:
RULING:
In essence, the complainant alleged that when Sun Wah Panciteria was
established, he gave P4, 000.00 to the respondent with the
understanding that he would be entitled to twenty-two percent (22%)
of the annual profit derived from the operation of the said panciteria.
These allegations, which were proved, make the private respondent
and the petitioner partners in the establishment of Sun Wah Panciteria
because Article 1767 of the Civil Code provides that "By the contract of
partnership two or more persons bind themselves to contribute money,
property or industry to a common fund, with the intention of dividing
the profits among themselves".
SISON V. MC QUIAD
94 Phil. 201
FACTS:
Plaintiff during the year 1938 lent to the respondent various sums of
money, aggregating P2, 210, to enable her to pay her obligation to the
Bureau of Forestry and to add to her capital in her lumber business.
Defendant was not able to pay the loan in 1938, as she had promised,
she proposed to take in plaintiff as a partner in her lumber business,
plaintiff to contribute to the partnership the said sum of P2,210 due
him from defendant in addition to his personal services; that plaintiff
agreed to defendants proposal and, as a result, there was formed
between them, under the provisions of the Civil Code, a partnership in
which they were to share alike in the income or profits of the business,
each to get one-half thereof. Before the last World War, the partnership
sold to the United States Army 230,000 board feet of lumber for P13,
800, for the collection of which sum defendant, as manager of the
partnership, filed the corresponding claim with the said army after the
war.
ISSUE:
RULING:
FACTS:
After 20 years, the business has a total value of PhP 44, 618.67. After
some time, the respondents had announced their desire to dissolve the
partnership. Consequently, the petitioners gave a last and final
statement of accounts to the respondents dated May 27, 1932.
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
No. The mortgage was not proper. In the first place, the machines were
originally from the defendant which was transferred to the partnership.
Thus, the machines belong to the partnership and not to the plaintiff.
The machines shall remain to be a property of the partnership until a
partition is effected according to the result of the liquidation.
FACTS:
RULING:
No. On June 9, 1951 when the sale was effected of the properties of
FELCO, Lastilla was already a partner of FELCO. If he was a creditor of
the FELCO, perhaps or maybe. But he was not. The partner of a
partnership is not a creditor of such partnership for the amount of his
shares.
Granting that the auction sale did not included the interest or portion
of the FELCO properties corresponding to the shares of Lastrilla in the
same partnership, the other purchasers will have to recognize
dominion of Lastrillas over 17 per cent of the properties awarded to
them. So Lastrilla acquired no right to demand any part of the money
paid by the purchaser to the sheriff for the benefit of FELCO and
Tomassi for the reason that, his shares could not have been and were
not auctioned off.
Supposing that the shares have been actually sold the owner of
property wrongfully sold may not voluntarily come to court, and insist
he approve the sale and claim proceed as owner. The reason is that the
sale was made for the judgment creditor and not for anybody else.
FACTS:
Lo, as his defense, claimed that Tai Sing & Co was not a general
partnership and that the credit in the current account of the
partnership was not approved by the Board of Directors of the
partnership nor the person for whom the loan was contracted.
ISSUES:
Whether or not the death of the general manager would not justify the
reversal of the judgment?
RULING:
No, it does not affect the liability of the general partners to third
parties under article 127 of the Code of Commerce. The Supreme Court
held in the case of Jo Chung Cang vs. Pacific Commercial Co., (45 Phil.,
142), in which it said that the object of article 126 of the Code of
Commerce in requiring a general partnership to transact business
under the name of all its members, of several of them, or of one only,
is to protect the public from imposition and fraud; and that the
provision of said article 126 is for the protection of the creditors rather
than of the partners themselves. The doctrine was enunciated that the
law must be unlawful and unenforceable except the sense of depriving
innocent parties of their rights who may have dealt with the offenders
in ignorance of the latter having violated the law; and that contracts
entered into by commercial associations defectively organized are
valid when voluntarily executed by the parties, and the only question is
whether or not they complied with the agreement. Therefore, the
defendants cannot invoke in their defense the anomaly in the firm
name which they themselves adopted.
No, for two reasons: (1) Because Ou Yong Kelam was a partner who
contracted in the name of the partnership, without any objection of the
other partners; and (2) because it appears in the record that the
appellant-partners Severo Eugenio Lo, Ng Khey Ling and Yap Seng,
appointed Sy Tit as manager, and he obtained from the plaintiff bank
the credit in current account, the debit balance of which is sought to be
recovered in this action.
FACTS:
ISSUE:
RULING:
NOTE: The case does not mention who Co-pitco is, but he may either
be the lower court judge or a creditor. The former may be inferred
because he 'ordered' judgment, unless during those times, the terms
ordered and 'prayed for' were used interchangeably by the court. The
latter may also be inferred because the SC held that Yulo is
"responsible to plaintiff for only one-half of the debt." Obviously, the
debtor can only be liable to his creditor and not to the judge, unless
the judge is also the creditor. Whether he be the judge, creditor, or
both, what matters is the doctrine of this case.
FACTS:
United Pioneers General Construction Company is a general
partnership which purchased a motor vehicle by installment from
Island Sales, Inc., with the condition that upon failure to pay any of the
installments as they fall due would render the whole unpaid balance
immediately due and demandable.
United Pioneers defaulted in its payment hence it was sued and the
partners were impleaded as co-defendants.
United Pioneers lost the civil case and the trial court rendered
judgment ordering United Pioneers to pay the outstanding balance plus
interest and costs. It further decreed that the remaining co-defendants
shall pay Island Sales in case United Pioneers property will not be
enough to satisfy its indebtedness to Island Sales.
ISSUE:
RULING:
Their liability is pro-rata pursuant to Article 1816 of the Civil Code. But
is should be noted that since there were 5 partners when the purchase
was made in behalf of the partnership, the liability of each partner
should be 1/5 (of the companys obligation) each. The fact that the
complaint against Lumauig was dismissed, upon motion of the Island
Sales, does not unmake Lumauig as a general partner in the company.
In so moving to dismiss the complaint, Island Sales merely condoned
Lumauigs individual liability to them.
ISSUES:
Whether or not the other partners (EMILIO and NAVAL) should be held
liable. Otherwise stated, are industrial partners in a general
partnership liable to third persons for the debts and obligations
contracted by the partnership?
RULING:
Art 127 of the Code of Commerce is however explicit in saying that all
the members of the general co- partnership are liable personally and
in solidum with all their property for the results of the transactions
made in the name and for the account of the partnership, under the
signature of the latter, and by a person authorized to make use
thereof.
Do the words "all the partners" found in Art 127 include industrial
partners?
The Court cited many other provisions of the Code which used the
phrase all the partners and concluded that in all of them, the
industrial partners must be included It cannot have been intended that,
in a general partnership like in the case at bar where there were two
industrial and only one capitalist partner, the industrial partners should
have no voice in business at all. Going one by one with the cited
provisions of the Code using the phrase all the partners, it could not
have been the intention that industrial partners are to have no power
in determining who the managing partner shall be; or that when the
manager appointed mismanages the business the industrial partners
should have no right to appoint a co-manager; that they should have
no right to examine the books; that they might use the firm name in
their private business; or that they have no voice in the liquidation of
the business after dissolution, etc.
FACTS:
This action was brought against O.K. Freeman, James L. Pierce, and
Burton Whitcomb, as owners and operators of the Manila Steam
Laundry, to recover the sum of P952 alleged to be the balance due the
plaintiff for services performed during the period from January 9, 1907,
to December 31, 1908. Judgment was rendered in favor of the plaintiff
and against Freeman and Whitcomb, jointly and severally, for the sum
of P752, with interest at the rate of 6 per cent per annum from the
27th day of August, 1909, and the costs of the cause. The complaint as
to Pierce was dismissed, Whitcomb alone appealing.
When the plaintiff was first employed on the 9th of January, 1907, this
steam laundry was owned and operated by Freeman and Pierce. Pierce,
on the 18th of January, 1907, sold all of his right, title, and interest in
the said laundry to Whitcomb, who, together with Freeman, then
became the owners of this laundry and continued to operate the same
as long as the plaintiff was employed.
The trial court found that the balance due the plaintiff for services
performed amounted to the sum of P752. This finding is fully supported
by the evidence of record.
ISSUES:
It appears from the record that Whitcomb never knew the plaintiff,
never had anything to do with personally, and that the plaintiffs
contract was with Freeman, the managing partner of the laundry. It
further appears from the record that Pierce, after he sold his interest in
this laundry to Whitcomb, continued to look after Whitcombs interest
by authority of the latter.
RULING:
"Art. 17. The record in the commercial registry shall be optional for
private merchants and compulsory for associations established in
accordance with this code or with special laws, and for vessels.
"Partners cannot make private agreements, but all must appear in the
articles of copartnership."
The purpose for which this partnership was entered into by Freeman
and Whitcomb show clearly that such partnership was not a
commercial one; hence the provisions of the Civil Code and not the
Code of Commerce must govern in determining the liability of the
partners. (Manresa, vol. 1, p. 184; Aramburo, Civil Capacity, 407, 432;
Prautch v. Hernandez, 1 Phil. Rep., 705; and Co Pitco v. Yulo, 8 Phil.
Rep., 544.)
The plaintiff was employed by and performed services for the Manila
Steam Laundry and was not employed by nor did he perform services
for Freeman alone. The public did not deal with Freeman and Whitcomb
personally, but with the Manila Steam Laundry. These two partners
were doing business under this name and, as we have said, it was not
a commercial partnership. Therefore, by the express provisions of
articles 1698 and 1137 of the Civil Code the partners are not liable
individually for the entire amount due the plaintiff. The liability is pro
rata and in this case the appellant is responsible to the plaintiff for only
one-half of the debt.
For these reasons the judgment of the court below is reversed and
judgment entered in favor of the plaintiff and against the defendant
Whitcomb for the sum of P376, with interest as fixed by the court
below. No costs will be allowed either party in this court.
A motion was filed on the 22d of August, 1910, by OBrien and De Witt,
asking this court to strike from the record certain allegations in the
printed brief of counsel for the appellee. These allegations are as
follows: "Does the receipt bear the earmarks of newly discovered
evidence? Or of newly manufactured evidence?" These questions were
directed against OBrien, one of the counsel for appellant in this case,
and were intended to have the court believe that OBrien had
manufactured the receipt referred to. There is nothing in this record
which shows that OBrien did falsify or manufacture the receipt. These
questions are clearly impertinent. It is our duty to keep our records
clean and free from such unwarranted statements. It is, therefore,
ordered that the same be stricken from the record. So ordered.
SANTIAGO SYJUCO, INC. vs. HON. JOSE P. CASTRO
G.R. No. 70403 July 7, 1989
FACTS:
This case stems from year 1964 when private respondents Eugenio
Lim, together with his other brothers borrowed from petitioner
Santiago Syjuco, Inc. the sum of 800,000.00. The loan was given on
the security of the first mortgage on property registered in the names
of said borrowers as owners in common under a Transfer Certificate of
Title of the Registry of Deeds Manila. Additional loan was made secured
by the same property so that as of May 8, 1967, the aggregate of the
loans stood at P2, 460,000.00, exclusive of interest, and the security
had been augmented by bringing into the mortgage other property,
also registered as owned pro indiviso by the Lims under two titles.
Comes November 8, 1967 and the obligation matured, the Lims
however failed to pay it despite demands. Consequently, petitioner
Syjuco caused extra-judicial proceedings for the foreclosure of the
mortgage and the sheriff scheduled the auction sale of the mortgaged
property on December 27, 1968. This Attempt to foreclose led to more
than 20 years of legal battle with the Supreme Court disposing of this
case. One of the cases commenced by private respondents Lims
through their partnership was presided by respondent Judge Castro as
regards the validity of the mortgage executed way back in 1964. This
case however followed one case with regard to the foreclosure of the
subject property mortgage which had already become final and
executor affirming the right of petitioner to foreclose the mortgage.
Lims in their effort to stop the foreclosure, argued that the mortgage
was void because the property already belonged to the partnership
named Heirs of Hugo Lim and it did not grant any authority to any of
them to execute said mortgage. Further it asserted the claim that the
mortgaged property had been contributed to the plaintiff partnership
long before the execution of the Syjuco's mortgage.
ISSUE:
RULING:
FACTS:
Petitioners in this case are co-owners of Liwanag Auto Supply. One time
the commercial guard on duty was skilled by criminals hence his widow
Ciriaca Vda. de Balderama and minor children Genara, Carlos and
Leogardo, all surnamed Balderama, in due time filed a claim for
compensation with the Workmen's Compensation Commission, which
was granted. The petitioners appealed the order claiming that the
Commission erred in ordering them to pay jointly and severally the
amount awarded. They argue that there is nothing in the compensation
Act which provides that the obligation of an employer arising from
compensable injury or death of an employee should be solidary
obligation, the same should have been specifically provided, and that,
in absence of such clear provision, the responsibility of appellants
should not be solidary but merely joint.
ISSUE:
RULING:
FACTS:
Stasikinocey is a partnership formed by Alan W. Gocey, Louis F. da
Costa, Jr., William Kusik, and Emma Badong Gavino. This partnership
was denied registration by the Securities and Exchange Commission
due to the confusion between this partnership and the business
Cardinal Rattan, which is treated as a co-partnership where Gocey and
da Costa are considered general partners. It appears from record that
such Cardinal Rattan is merely the business style and name used by
the partnership Stasikinocey.
ISSUE:
RULING:
FACTS:
Jacob Lim was the owner of Southern Air Lines, a single proprietorship.
In 1965, Lim convinced Constancio Maglana, Modesto Cervantes,
Francisco Cervantes, and Border Machinery and Heavy Equipment
Company (BORMAHECO) to contribute funds and to buy two aircrafts
which would form part a corporation which will be the expansion of
Southern Air Lines. Maglana et. Al. then contributed and delivered
money to Lim.
Instead of using the money given to him to pay in full the aircrafts,
Lim, without the knowledge of Maglana et. Al., made an agreement
with Pioneer Insurance for the latter to insure the two aircrafts which
were bought in installments from Japan Domestic Airlines (JDA) using
said aircrafts as security. So when Lim defaulted from paying JDA, the
two aircrafts were foreclosed by Pioneer Insurance. It was established
that no corporation was formally formed between Lim and Magalana.
ISSUE:
RULING:
FACTS:
San Miguel Brewery, Porta Pueco & Co., and Ruiz & Rementaria S. en C.
instituted insolvency proceedings against Leoncia Vda. de Chan Diaco,
alleged to be the owner of a grocery store. In their petition for the
declaration of the insolvency, Leoncia was indebted to them in the sum
of P26, 234.47. Judge Simplicio del Rosario declared her insolvent and
ordered the sheriff to take possession of her property consisting of
some merchandise.
Leoncia filed a motion asking the court to dismiss the proceedings
against her on the ground that they should have been brought against
the partnership "Lao Liong Naw & Co.," of which she was only a
member.
ISSUE:
Whether or not Leoncia is liable for the debt contracted by the Lao
Liong Naw & Co.
RULING:
FACTS:
Yus monthly salary was P4, 000.00 but received only half since he had
accepted the promise of the partners that the balance would be paid
when the firm shall have secured additional operating funds from
abroad.
Later, without Yus knowledge, the general and limited partners sold
and transferred their interest to Willy Co and Zapanta. The actual
operations of the business enterprise continued as before. All the
employees of the partnership continued working in the business,
except for Yu, who was not allowed to work anymore. His unpaid
salaries remained unpaid. He then filed a complaint for illegal dismissal
and recovery of unpaid salaries.
ISSUE:
RUULING:
FACTS:
ISSUES:
RULING:
FACTS:
In the year 1903, Balbino Dequilla, the herein defendant, and Perpetua
Bearneza formed a partnership for the purpose of exploiting a fish
pond with Perpetua obligating herself to contribute to the payment
of the expenses of the business, which obligation she made good, and
both agreeing to divide the profits between themselves, which they
had been doing until the death of the said Perpetua in the year 1912-The
deceased left a will in one of the clauses of which she
appointed Domingo Bearnez, the herein plaintiff, as her heir to
succeed to all her rights and interests in the fish pond in question-
Domingo Bearnez then instituted an action to recover a part of
the fi sh pond belonging to the decedent, including of the profits
received by the defendant from the years 1913-1919. The defendant
alleges that "the formation of the supposed partnership between the
plaintiff and the defendant for the exploitation of the aforesaid fish
pond was not carried into effect, on account of the plaintiff having
refused to defray the expenses of reconstruction and exploitation of
said fishpond." and further averred that the right of the plaintiff had
already prescribed. Judgment was then rendered declaring the plaintiff
owner of one-half of the fish pond but without may awarding him any
damages-
ISSUE:
RULING:
FACTS:
ISSUE:
RULING:
FACTS:
In 1940, Goquiolay and Tan Sin An were partners who owned 3 parcels
of land. On the same date that the partnership acquired these, Tan Sin
An purchased 46 parcels of land. For the partnership, it was P25, 000
while for Tan Sin An, it was P35, 000. A few months later, the two
mortgage obligations were consolidated and transferred to the Banco
Hipotecario de Filipinas and as a result, Tan Sin An, in his individual
capacity, and the partnership bound themselves to pay jointly and
severally the total amount of P52, 282.20, with 8% annual interest
thereon within a period of eight years mortgaging in favor of said
entity the 3 parcels of land belonging to the partnership and the 46
parcels of land belonging individually to Tan Sin An. While in 1942, Tan
Sin An died, his widow, Kong Chai Pin was made Administratrix of his
estates in 1944. In 1949, she executed a sale of these lands. She sold
these to respondents Washington Sycip and Betty Lee. The properties
sold were not part of the contributed capital but land precisely
acquired to be sold, although subject to a mortgage in favor of the
original owners, from whom the partnership had acquired them.
ISSUE:
Whether or not Tan Sin Ans widow, Kong Chai Pin, became partner
when her husband died, allowing her to validly sell the property that
belongs to the partnership.
RULING:
Yes. Goquiolay insists that Kong Chai Pin never became more than a
limited partner, incapacitated by law to manage the affairs of
partnership; that the testimony of Kongs witnesses belie that she took
over the administration of the partnership property; and that, in any
event, the sale should be set aside because it was executed with the
intent to defraud Goquiolay of his share in the properties sold.
Goquiolay tried to argue that Kong Chai Pin only had the authority to
manage the property and did not include the power to alienate, citing
Art. 1713 of the Civil Code of 1889. What this argument overlooks is
that the widow was not a mere agent because she had become partner
upon her husbands death, which was expressly stipulated in the
articles of co-partnership. The stipulation in the articles of co-
partnership imply that there is a general partnership, and not merely a
limited one, because since the copartnershipwill have to be
continued with the heirs and assigns, it cannot continue if the
partnership would be converted to a limited one upon death of one of
the partners.
There is no fraud: first of all, the price was already approved by the
Court in the previous case, even if the petitioners claim it to be much
too low. The relationship between the buyers of the lands and Kong
Chai Pin alone cannot be a badge of fraud. There is no proof that the
buyers were without independent means to purchase the property.
Goquiolay has no proof that he was a victim of a conspiracy because
he has no proof management, even if proven, could not give Kong Chai
Pin the character of general manager for the same contrary to law and
well-known authorities;
The law says that an agency created in general terms includes only
acts of administrations, but with regard to the power to compromise,
sell mortgage, and other acts of strict ownership, an express power of
attorney is required. Here Kong Chai Pin did not have such power when
she sold the properties of the partnership.
GOQUIOLAY VS. SYCIP
9 SCRA 663
FACTS:
ISSUES:
Whether or not the widow succeeded her husband Tan Sin An in the
sole management of the partnership upon Tans death.
Whether or not the sale, covering the entire firm realty, results to the
dissolution of the partnership
RULING:
1. There is a merit in the contention that the lower court erred in holding
that the widow, Kong Chai Pin, succeeded her husband, Tan Sin An, in
the sole management of the partnership, upon the latter's death. While
the Articles of Co-Partnership and the power of attorney executed by
Antonio Goquiolay, conferred upon Tan Sin An the exclusive
management of the business, such power, premised as it is upon trust
and confidence, was a mere personal right that terminated upon Tan's
demise. The provision in the articles stating that "in the event of death
of any one of the partners within the 10-year term of the partnership,
the deceased partner shall be represented by his heirs", could not have
referred to the managerial right given to Tan Sin An; more
appropriately, it related to the succession in the proprietary interest of
each partner. The covenant that Antonio Goquiolay shall have no voice
or participation in the management of the partnership, being a
limitation upon his right as a general partner, must be held
coextensive only with Tan's right to manage the affairs, the contrary
not being clearly apparent.
3. That the partnership was left without the real property it originally had
will not work its dissolution, since the firm was not organized to exploit
these precise lots but to engage in buying and selling real estate, and
"in general real estate agency and brokerage business".
FACTS:
The partnership obtained from the National Loan and Investment Board
loans and to guarantee its payment it executed in its favor a mortgage
on lots of the cadastral survey of Iloilo.
The partnership was declared insolvent upon petition of its creditors
and Crispino Melocoton was elected as assignee. The Agricultural and
Industrial Bank which had succeeded the National Loan and Investment
Board assigned its rights and interests in the loans obtained from it by
the partnership in the aggregate amount of P80, 000.00 in favor of C.N.
Hodges, together with the right and interest in the mortgage executed
to secure the loans. Since said loans became due and no payment was
forthcoming, Hodges asked permission from the insolvency court to file
a complaint against the assignee to foreclose the mortgage executed
to secure the same in a separate proceeding, and permission having
been granted, Hodges filed a complaint for that purpose. Meanwhile,
war broke out and nothing appears to have been done in the
insolvency proceedings. The court records were destroyed. However,
they were reconstituted later and given due course.
ISSUE:
Whether or not the manager may still execute the sale of its properties
to C. N. Hodges as was done by Ng Diong.
RULING:
LICHAUCO VS LICHAUCO
33 PHIL 350
FACTS:
ISSUE:
RULING:
Yes. The firm was already dissolved in 1904 when its machineries were
dismantled this was a sign that the firm abandoned and concluded
the purpose for it was formed (rice cleaning business). Upon said
dissolution, it was the duty of Faustino to liquidate the assets and
inform his partners. The provision which requires a 2/3 votes of all the
partners to dissolve the firm cannot be given effect because the same
denied the right of a less number of partners to effect the dissolution
especially where the firm has already sustained huge losses. It would
be absurd and unreasonable to hold that such an association could
never be dissolved and liquidated without the consent and agreement
of two-thirds of its partners, notwithstanding that it had lost all its
capital, or had become bankrupt, or that the enterprise for which it had
been organized had been concluded or utterly abandoned.
SONCUYA V. DE LUNA
G.R. No. L-45464, April 28, 1939
FACTS:
ISSUE:
RULING:
FACTS:
In 1951, the defendants Leon Garibay, Margarita G. Saldejeno, and
Timoteo Tubungbanua entered into a Contract of Partnership under the
firm name Isabela Sawmill. In 1956, Oppen, Esteban, Inc. sold a
Motor Truck and two Tractors to the partnership Isabela Sawmill for the
sum of P20, 500.00. In order to pay the said purchase price, the
partnership agreed to make arrangements with the International
Harvester Company at Bacolod City so that the latter would sell farm
machinery to Oppen, Esteban, Inc. with the understanding that the
price was to be paid by the partnership. The International Harvester
Company has been paid a total of P19, 211.11, leaving an unpaid
balance of P1, 288.89. Margarita Saldejeno withdrew from the
partnership.
Now, plaintiff Manuel Singsong, who is just one of the various creditors
of Isabela Sawmill, proved by his own testimony that he sold on credit
to the defendant "Isabela Sawmill" rice and bran, on account of which
business transaction there remains an unpaid balance of P3,580.50.
The same plaintiff also proved that the partnership owes him the sum
of P143.00 for nipa shingles bought from him on credit and unpaid for.
Manuel Singson, as creditors of the defendant partnership, is now
claiming the payment of said balance and also asking for the nullity of
the assignment of right with chattel mortgage entered into by and
between Margarita G. Saldajeno and her former partners Leon Garibay
and Timoteo Tubungbanua.
ISSUE:
The court also held that a person, who is not a party obliged principally
or subsidiarily under a contract, may exercise an action for nullity of
the contract if he is prejudiced in his rights with respect to one of the
contracting parties, and can show detriment which would positively
result to him from the contract in which he has no intervention. The
plaintiffs-appellees were prejudiced in their rights by the execution of
the chattel mortgage over the properties of the partnership "Isabela
Sawmill" in favor of Margarita G. Saldajeno by the remaining partners,
Leon Garibay and Timoteo Tubungbanua. Hence, said appellees have a
right to file the action to nullify the chattel mortgage in question.
FACTS:
The plaintiff, Po Yeng Cheo, is the sole heir of one Po Gui Yao,
deceased, and he inherited the interest left by Po Gui Yao in a business
conducted in Manila under the style of Kwong Cheong Tay which is a
mercantile partnership engaged in the import and export trade. After
the death of Po Gui Yao, seven persons also became partners in said
partnership. The manager of Kwong Cheong Tay, for many years prior
of its complete cessation from business in 1910, was Lim Ka Yam, the
original defendant herein.
In view of the facts, the trial judge rendered judgment in favor of the
plaintiff, Po Yeng Cheo, to recover of the defendant Lim Yock Tock, as
administrator of Lim Ka Yam, the sum of sixty thousand pesos,
constituting the interest of the plaintiff in the capital of Kwong Cheong
Tay, plus the plaintiff's proportional interest in shares of the Yut Siong
Chyip Konski and Manila Electric Railroad and Light Company,
estimated at P11, 000, together with the costs. From this judgment the
defendant appealed. But the Court of Appeals found that the plaintiff
was entitled to an accounting from Lim Ka Yam, the original defendant,
as manager of the business already referred to, and he accordingly
required Lim Yock Tock, as administrator, to present a liquidation of
said business within a stated time. Since Lim Yock Tock cannot be held
to make an accounting since he personally knew nothing about the
said and was apparently unable to find any books or documents that
could shed any real light on its transaction. However, he did submit to
the court a paper written by Lim Ka Yam in life purporting to give, with
vague and uncertain details, a history of the formation of the Kwong
Cheong Tay and some account of its disruption and cessation from
business in 1910. To this narrative was appended a statement of assets
and liabilities, purporting to show that after the business was liquidate,
it was actually a debtor to Lim Ka Yam to the extent of several
thousand pesos. Appreciating the worthlessness of this so-called
statement, and all parties apparently realizing that nothing more was
likely to be discovered by further insisting on an accounting, the court
proceeded, on December 27, 1921, to render final judgment in favor of
the plaintiff.
ISSUE:
RULING:
Again, from the facts, the only property pertaining to Kwong Cheong
Tay at the time the action was brought consisted of shares in the two
concerns already mentioned of the total par value of P11, 000. Of
course, if these shares had been sold and converted into money, the
proceeds, if not needed to pay debts, would have been distributable
among the various persons in interest, that is, among the various
shareholders, in their respective proportions. But under the
circumstances revealed in this case, it was erroneous to give judgment
in favor of the plaintiff for his aliquot part of the par value of said
shares. It is elementary that one partner, suing alone, cannot recover
of the managing partner the value of such partner's individual interest
and a liquidation of the business is an essential prerequisite. It is true
that in Lichauco vs. Lichauco, the court permitted one partner to
recover of the manager the plaintiff's aliquot part of the proceeds of
the business but in that case the affairs of the defunct concern had
been actually liquidate by the manager to the extent that he had
apparently converted all its properties into money and had pocketed
the same and nothing remained to be done except to compel him to
pay over the money to the persons in interest. In this case, the shares
referred to, constituting the only assets of Kwong Cheong Tay, have not
been converted into money and doubtless still remain in the name of
Kwong Cheong Tay as owner. Under these circumstances it is
impossible to sustain a judgment in favor of the plaintiff for his aliquot
part of the par value of said shares, which would be equivalent to
allowing one of several co-owners to recover from another, without
process of division, a part of an undivided property.
Also, the trial court committed an error when it allowed the action to
proceed against Lim Yock Tock, as administrator, and entered judgment
for a sum of money against said administrator as the accounting party.
In the first place, it is well settled that when a member of a mercantile
partnership dies, the duty of liquidating its affair devolves upon the
surviving member, or members, of the firm, not upon the legal
representative of the deceased partner. The same rule must be equally
applicable to a civil partnership clothed with the form of a commercial
association. Upon the death of Lim Ka Yam it therefore became the
duty of his surviving associates to take the proper steps to settle the
affairs of the firm, and any claim against him, or his estate, for a sum
of money due to the partnership by reason of any misappropriation of
its funds by him, or for damages resulting from his wrongful acts as
manager, should be prosecuted against his estate in administration.
Moreover, when it appears, as here, that the property pertaining to
Kwong Cheong Tay, like the shares in the Yut Siong Chyip Konski and
the Manila Electric Railroad and Light Company, are in the possession
of the deceased partner, the proper step for the surviving associates to
take would be to make application to the court having charge to the
administration to require the administrator to surrender such property.
Hence, the judgment must be reversed, and the defendant will be
absolved from the complaint but it will be without prejudice to any
proceeding which may be undertaken by the proper person or persons
in interest to settle the affairs of Kwong Cheong Tay and in connection
therewith to recover from the administrator of Lim Ka Yam the shares
in the two concerns mentioned above.
LAGUNA TRANSPORTATION CO., INC vs. SOCIAL SECURITY
SYSTEM
107 PHIL 833
FACTS:
ISSUE:
RULING:
Yes. The Supreme Court held that a corporation will be looked upon as
a legal entity as a general rule, and until sufficient reason to the
contrary appears; but, when the motion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime, the
law will regard the corporation as an association of persons. However,
where a corporation was formed by, and consisted of members of a
partnership whose business and property was conveyed and
transferred to the corporation for the purpose of continuing its
business, in payment for which corporate capital stock was issued,
such corporation is presumed to have assumed partnership debts, and
is prima facie liable therefore. The reason for the rule is that the
members of the partnership may be said to have simply put on a new
coat, or taken on a corporate cloak, and the corporation is a mere
continuation of the partnership.
FACTS:
Before the last World War, the partnership sold to the United States
Army 230,000 board feet of lumber for P13, 800, defendant has
persistently refused to deliver one-half of it, or P6, 900, to plaintiff
notwithstanding repeated demands, investing the whole sum of P13,
800 for her own benefit. Plaintiff, therefore, prays for judgment
declaring the existence of the alleged partnership and requiring
defendant to pay him the said sum of P6, 900, in addition to damages
and costs.
ISSUE:
RULING:
No. The Supreme Court held that the plaintiff seeks to recover from
defendant one-half of the purchase price of lumber sold by the
partnership to the United States Army. But his complaint does not show
why he should be entitled to the sum he claims. It does not allege that
there has been a liquidation of the partnership business and the said
sum has been found to be due him as his share of the profits. The
proceeds from the sale of a certain amount of lumber cannot be
considered profits until costs and expenses have been deducted.
Moreover, the profits of a business cannot be determined by taking
into account the result of one particular transaction instead of all the
transactions had. Hence, the need for a general liquidation before a
member of a partnership may claim a specific sum as his share of the
profits. In view of the foregoing, the order of dismissal is affirmed; on
the ground that the complaint states no cause of action and without
prejudice to the filing of an action for accounting or liquidation should
that be what plaintiff really wants.
FACTS:
Go Lio and Vicente GoSengco formed a society for the purchase and
sale of articles of commerce and opened a store in San Isidro, Nueva
Ecija. Go Lio went to China and died there leaving a widow and 3
children, one of whom came to the Philippines and filed a petition for
the appointment of Ildefonso de la Rosa (PLAINTIFF) as administrator of
the intestate estate of his deceased father. The petition was granted by
the CFI of Nueva Ecija. Vicente GoSengco also died and his son
Enrique Ortega Go Catay (DEFENDANT) took charge of the business.
Enrique Ortega refused to wind up the business and deliver to De la
Rosa the portion corresponding to the deceased Go Lio. He alleged that
the business is his exclusively. This prompted De La Rosa to file a
complaint against Enrique Ortega. De La Rosa also prayed that he be
appointed as receiver for the property of the partnership. Defendant
opposed the prayer. The CFI appointed 3 commissioners to make an
inventory, liquidate and determine the half belonging to the plaintiff.
The commissioners submitted a report showing that the business
showed net profits from 19131917 amounting to P25, 038.70. August
3, 1918: In order to prevent Justo CaboChan (one of the
commissioners) from assuming the position of receiver pursuant to the
order of the court, the defendant filed a bond in the sum of P10, 000.
In view of the appeal taken by defendant, the parties agreed to
suspend the liquidation ordered by the lower court and the defendant
was authorized to continue in the possession of the property in
litigation after giving a P25, 000 bond cancelling the P10, 000 bond.
After trial, the lower court adopted the report made by Justo Cabo
Chan which showed that the business suffered a net loss amounting to
P89, 099.22 and rejected the report of the two other commissioners.
Because of the loss, the plaintiff had nothing to recover from defendant
as there was no profit to divide. The reports showed the status of the
business from 19191922 (Loses were incurred 1918 onwards)
ISSUE:
Whether or not the loss should be borne by the partnership NO. The
defendant alone should bear the loss.
RULING:
Defendant should pay the plaintiff P30, 299.14 as his share before
August 3, 1918. In August 3, 1918, the defendant assumed complete
responsibility for the business when he objected to the appointment of
a receiver and even giving a bond.
FACTS:
ISSUE:
RULING:
FACTS:
Tan alleged that she "is the widow of Tee Hoon Lim Po Chuan, who was
a partner in the commercial partnership, Glory Commercial Company,
with Antonio Lim Tanhu and Alfonso Ng Sua. Accordingly, Antonio Lim
Tanhu, Alfonso Leonardo Ng Sua, Lim Teck Chuan, and Eng Chong
Leonardo, through fraud and machination, took actual and active
management of the partnership and although Tee Hoon Lim Po Chuan
was the manager of Glory Commercial Company, they managed to use
the funds of the partnership to purchase lands and building's in the
cities of Cebu, Lapulapu, Mandaue, and the municipalities of Talisay
and Minglanilla, some of which were hidden.
Tan alleged in her complaint that after the death of Tee Hoon Lim Po
Chuan, his partners, without liquidation, continued the business of
Glory Commercial Company, by purportedly organizing a corporation
known as the Glory Commercial Company, Incorporated with paid up
capital in the sum of P125, 000.00, which money and other assets are
actually the assets of the defunct Glory Commercial Company
partnership.
Tanhu and the other partners who had earlier promised to liquidate the
properties and assets of Glory Commercial Company in favor among
others of Tan refused to do so and until the middle of the year 1970
when the latter formally demanded from the defendants the
accounting of real and personal properties of the Glory Commercial
Company, they still refused and stated that they would not give the
share of the plaintiff.
ISSUE:
Whether or not Tan has a right over the liquidated properties of the
partnership.
RULING:
No, Tan has no right over the liquidated properties of the partnership.
The Supreme Court held that there is no alternative but to hold that
Tan Put's allegation that she is the widow of Tee Hoon Lim Po Chuan
has not been satisfactorily established and that, on the contrary, the
evidence on record convincingly shows that her relation with said
deceased was that of a common-law wife.
Moreover, the Supreme Court said that the lower courts committed an
error by awarding 1/3 of the partnership properties to Tan because
there has been no liquidation proceedings yet. And if there has not yet
been any liquidation of the partnership, the only right plaintiff could
have would be to what might result after much liquidation to belong to
the deceased partner (her alleged husband) and before this is finished,
it is impossible to determine, what rights or interest, if any the
deceased had.
About the latter half of the following month, the members of the
partnership proceeded with the formation of the proposed corporation,
apportioning among themselves its shares of stock in proportion to
their respective contributions to the capital of the partnership and their
individual efforts in bringing about the acquisition of the Meralco
properties. But before the incorporation papers could be perfected,
several partners, not satisfied with the way matters were being run
and fearful that the venture might prove a failure because the business
was not going well expressed their desire to withdraw from the
partnership and get back the money they had invested therein. A
resolution was approved, with the herein plaintiffs voting affirmatively,
and on that same day plaintiffs and Judge Reyes withdrew from the
partnership, and, as admitted by both parties, the partnership was
then dissolved. In accordance with the terms of the resolution, the
withdrawing partners were, on the following day, reimbursed their
respective contributions to the partnership fund.
Two years from their withdrawal from the partnership, when the
corporate business was already in a prosperous condition, plaintiffs
brought the present suit against Jaime Hernandez, claiming a share in
the profit the latter is supposed to have made from the assignment of
the Meralco properties to the corporation, estimated by plaintiffs to be
P225, 000 and their share of it to be P115, 312.50.
Defendant's answer denies that he has made any profit out of the
assignment in question and alleges that in any event plaintiffs, after
their withdrawal from the partnership, ceased to have any further
interest in the subsequent transactions of the remaining members.
ISSUES:
RULING:
As to the first issue, the Supreme Court held that no, the profit alleged
to have been realized from the assignment of the Meralco properties to
the new corporation, the Bicol Electric Company, is more apparent than
real. It is true that the value set for those properties in the deed of
assignment was P365, 000 when the acquisition price was only P122,
000. But one should not jump to the conclusion that a profit, consisting
of the difference between the two sums was really made out of the
transaction, for the assignment was not made for cash but in payment
for subscriptions to shares of stock in the assignee, and while those
shares had a total face value of P225, 000, this is not necessarily their
real worth. Needless to say, the real value of the shares of stock of a
corporation depends upon the value of its assets over and above its
liabilities. It does not appear that the Bicol Electric Company had any
assets other than those acquired from the Meralco, and according to
the evidence the company, aside from owing the Meralco, P82,000
was, in the language of the court below, actually "in the red."
On the second issue, the Supreme Court ruled that assuming that the
assignment actually brought profit to the partnership, it is hard to see
how defendant could be made to answer for plaintiffs' alleged share
thereof.
III. AGENCY
A) GENERAL ARTICLES 1868-1883
FACTS:
ISSUE:
RULING:
FACTS:
ISSUE:
Whether or not the sale fell within the exception to the general rule
that death extinguishes the authority of the agent.
RULING:
The sale is void. The court held that no one may contract in the name
of another without being authorized by the latter, or unless he has by
law a right to represent him (Article 1317, New Civil Code). Simons
authority as agent was extinguished upon Concepcions death. The
sale did not fall under the exceptions to the general rule that death
ipso jure extinguishes the authority of the agent. Article 1930 is
inapplicable since the SPA in favor of Simon was not coupled with
interest and Article 1931 is inapplicable because he knew of principal
Concepcions death. For Art. 1931 to apply, both requirements must be
present. The laws on agency, where the terms of which are clear and
unmistakable leaving no room for an interpretation contrary to its
tenor, should apply. The law provides that the death of the principal
ipso jure extinguishes the authority of the agent to sell rendering the
sale to a third person in good faith unenforceable unless the agent had
no knowledge of the principals death at that time.
AIR FRANCE vs. HONORABLE COURT OF APPEALS
G.R No. L-57339 December 29, 1983
FACTS:
Sometime in February, 1970, the late Jose G. Gana and his family,
numbering nine (the GANAS), purchased from AIR FRANCE through
Imperial Travels, Incorporated, a duly authorized travel agent, nine (9)
"open-dated" air passage tickets for the Manila/Osaka/Tokyo/Manila
route. On 24 April 1970, AIR FRANCE exchanged or substituted the
aforementioned tickets with other tickets for the same route. At this
time, the GANAS were booked for the Manila/Osaka segment on AIR
FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip
on AIR FRANCE Flight 187 on 22 May 1970. The aforesaid tickets were
valid until 8 May 1971, the date written under the printed words "Non
valuable apres de (meaning, "not valid after the").however, the GANAS
did not depart on 8 May 1970. In January, 1971, Jose Gana sought the
assistance of Teresita Manucdoc and Lee Ella Manager of the Philippine
Travel but the extension was impossible.
ISSUE:
RULING:
The GANAS brought upon themselves the predicament they were in for
having insisted on using tickets that were due to expire in an effort,
perhaps, to beat the deadline and in the thought that by commencing
the trip the day before the expiry date, they could complete the trip
even thereafter. It should be recalled that AIR FRANCE was even
unaware of the validating SAS and JAL. stickers that Ella had affixed
spuriously. Consequently, Japan Air Lines and AIR FRANCE merely acted
within their contractual rights when they dishonored the tickets on the
remaining segments of the trip and when AIR FRANCE demanded
payment of the adjusted fare rates and travel taxes for the
Tokyo/Manila flight.
SANTOS vs. BUENCONSEJO
G.R. No. L-20136 June 23, 1965
FACTS:
ISSUE:
RULING:
No. The petitioner's claim is clearly untenable, for: (1) said special
power of attorney authorized him to act on behalf of the children of
Anatolio Buenconsejo, and, hence, it could not have possibly vested in
him any property right in his own name; (2) the children of Anatolio
Buenconsejo had no authority to execute said power of attorney,
because their father is still alive and, in fact, he and his wife opposed
the petition of Santos; (3) in consequence of said power of attorney (if
valid) and redemption, Santos could have acquired no more than the
share pro indiviso of Anatolio Buenconsejo in Lot No. 1917, so that
petitioner cannot without the conformity of the other co-owners
(Lorenzo and Santiago Bon), or a judicial decree of partition issued
pursuant to the provisions of Rule 69 of the new Rules of Court (Rule 71
of the old Rules of Court) which have not been followed By Santos
adjudicate to himself in fee simple a determinate portion of said Lot
No. 1917, as his share therein, to the exclusion of the other co-owners.
FACTS:
Upon the liquidation of their accounts, VRC rendered the last account
to Albaladejo y Cia amounting to a balance of P288 in favor of VRC as
of April 1921. This account was approved by Albaladejo. This time,
Philippine Refining Co. (PRC) succeeded to the rights and liabilities of
VRC. Six weeks after, Albaladejo alleged that VRC negligently failed to
provide opportune transportation for the copra it collected and
deposited for shipment at various places, pursuant to their agreement
that VRC obligated itself to provide transportation by sea to Opon,
Cebu. Due to VRCs failure, the copra diminished in weight and value
due to its shrinkage through excessive drying. The total value of these
copra was P201, 599.53, in which amount Albaladejo y Cia was
damaged and injured. However, the lower court ruled that VRC was not
negligent in the delay of the transportation but the occasional
irregularities were due at times to the condition of the weather as to
the transportation by sea. Albaladejo also sought to recover P110, 000,
the amount it expended in maintaining and extending its organization,
on the basis that VRC requested such, with repeated assurances that it
would resume its activity as a purchaser of copra.
ISSUE:
RULING:
No. Albaladejo y Cia presented several trade letters of VRC and PRC as
evidence that PRC hoped that it would soon re-enter the copra market.
But nothing in these letters held PRC liable for the expenses incurred
by Albaladejo y Cia in keeping its organization intact. The contract
between VRC/PRC and Albaladejo y Cia is one of purchase, and not of
agency. Although VRC/PRC used agents in its trade letters to refer to
Albaladejo y Cia and other suppliers, it was only used for convenience
and it is very clear that in its activities as a buyer, Albaladejo y Cia was
acting upon its own account and not as agent of VRC. When it turned
over the copra to VRC, a second sale was effected. Not having a
contract of agency with VRC, Albaladejo y Cia is not entitled to
reimbursement, as contemplated under Article 1913, for the
damages/expenses it incurred in maintaining and extending VRCs
organization.
DAVID THOMAS vs HERMOGENES S. PINEDA
89 PHIL 312
FACTS:
Thomas was interned at Santo Tomas during the greater part of the
war, and his business was operated by Pineda exclusively. On February
3, 1945, the building was destroyed by fire but the defendant had been
able to remove some of its furniture, the cash register, the piano, the
safe, and a considerable quantity of stocks to a place of safety.
According to the defendant, all of these goods were accounted for and
turned over to the plaintiff after the City of Manila had been retaken by
the American Forces. On May 8, 1945, a bar was opened on Calle
Bambang, district of Sta. Cruz, under the old name of Silver Dollar
Cafe. Housed in a makeshift structure, which was erected on a lot
belonging to Pineda, the Bambang shop was conducted for about four
months, i.e., until September of the same year, when it was transferred
to the original location of the Silver Dollar Cafe at No. 15 Plaza Sta.
Cruz. It is asserted and denied that the plaintiff as well as the
defendant took a more or less active part in the management of the
post-liberation business until about the middle of September of the
following year, when, it is also alleged, the plaintiff brought a certified
public accountant to the establishment in Sta. Cruz for the purpose of
examining the books of the business and the defendant threatened the
plaintiff and his companion with a gun if they persisted in their
purpose. As a result of that incident, the plaintiff forthwith filed the
present action, and set up a separate business under the same trade
name, Silver Dollar Cafe, on Echague Street. The defendant remained
with the Silver Dollar Cafe at Plaza Sta. Cruz, which was burned down
on December 15, 1946.
ISSUE:
FACTS:
After Palmas wife death in 1922, a new certificate of title was issued in
1923 only in the name of Palma.
The CFI dismissed the case and brought to CA and similarly dismissed
the case.
The Court of Appeals, upon the evidence, concluded with the Court of
First Instance of Manila that the parcel of land in question is a
community property held by petitioner in trust for the real owners (the
respondent being an heir of one of them), the registration having been
made in accordance with an understanding between the co-owners, by
reason of the confidence they had in petitioner and his wife.
This confidence, close relationship, and the fact that the co-owners
were receiving their shares in the rentals, were the reasons why no
step had been taken for partition.
The CA, in dismissing the case, invoked SCs rulings which declared
that the registration of the property in the name of the trustees in
possession must be deemed to have been effected for the benefit of
the principal/cestui que trust.
ISSUE:
Whether or not CA erred in dismissing the case.
RULING:
No, the CA did not err. Palma contends that if he did not commit fraud,
Cristobal was in fact a part of it, but the SC held the fact that Cristobal
has been a party to the deception which resulted in Palmas securing in
his name the title to the property not belonging to him, is not a valid
reason for changing the legal relationship between the latter and its
true owners to such extent as to let them lose their ownership to a
person trying to usurp it.
Palma then avers that even granting the property was owned by
several co-owners he now owns it due to prescription. This theory
holds no water because, according to the pronouncement of the Court
of Appeals, upon the evidence, petitioner held the property and
secured its registration in his name in a fiduciary capacity, and it is
elementary that a trustee cannot acquire by prescription the ownership
of the property entrusted to him. The position of a trustee is of
representative nature. His position is the position of a cestui que trust.
It is logical that all benefits derived by the possession and acts of the
agent, as such agent, should accrue to the benefit of his principal.
FEDERICO VALERA VS. MIGUEL VELASCO
51 PHIL 695
FACTS:
The liquidation of accounts revealed that Valera owed the Velasco P1,
100, and as misunderstanding arose between them, the Velasco
brought suit against Valera. Judgment was rendered in Velascos
favour.
Writ of execution was issued, the sheriff levied upon the Valera's right
of usufruct, sold it at public auction and adjudicated it to Velasco in
payment of all of his claim.
Velasco avers that the purchase was valid for the agency relationship
was extinguished when he brought the suit against Valera.
ISSUE:
RULING:
Yes, In the case of De la Pea vs. Hidalgo (16 Phil., 450), this court said
laid down the following rule:
DOCTRINE:
The fact that an agent institutes an action against his principal for the
recovery of the balance in his favor resulting from the liquidation of the
accounts between them arising from the agency, and renders and final
account of his operations, is equivalent to an express renunciation of
the agency, and terminates the juridical relation between them.
FACTS:
Jesus and Antonio are the legitimate children of Don Mariano Cui and
Doa Antonia Perales who died intestate in 1939. Jesus alleged that
during the marriage of Don Mariano and Dona Antonia, their parents
acquired certain properties in the City of Cebu, namely, Lots Nos. 2312,
2313 and 2319. Upon the death of their mother, the properties were
placed under the administration of their dad that while the latter was
84 years of age, Antonio by means of deceit, secured the transfer to
themselves the said lots without any pecuniary consideration; that in
the deed of sale executed on March 8, 1946, Rosario Cui appeared
as one of the vendees, but on learning of this fact she subsequently
renounced her rights under the sale and returned her portion to Don
Mariano Cui by executing a deed of resale in his favor on October 11,
1946; that defendants, fraudulently and with the desire of enriching
themselves unjustly at the expense of their father, Don Mariano Cui,
and of their brothers and co-heirs secured a loan of P130,000 from the
Rehabilitation properties, and with the loan thus obtained, defendants
constructed thereon an apartment building of strong materials
consisting of 14 doors, valued at approximately P130,000 and
another building on the same parcels of land, which buildings were
leased to some Chinese commercial firms a monthly rental of P7,600,
which defendants have collected and will continue to collect to the
prejudice of the plaintiffs.
Jesus alleged that the sale should be invalidated so far as the portion
of the property sold to Antonio Cui is concerned, for the reason that
when that sale was effected, Antonio was then acting as the agent or
administrator of the properties of Don Mariano Cui. Jesus lays stress on
the power of attorney Exhibit L which was executed by Don Mariano in
favor of Antonio Cui on March 2, 1946 wherein the former has
constituted the latter as his "true and lawful attorney" to perform in his
name and that of the intestate heirs of Doa Antonia Perales.
ISSUE:
RULING:
Yes. While under article 1459 of the old Civil Code an agent or
administrator is disqualified from purchasing property in his hands for
sale or management, and, in this case, the property in question was
sold to Antonio Cui while he was already the agent or administrator of
the properties of Don Mariano Cui, we however believe that this
question cannot now be raised or invoked.
The prohibition of the law is contained in article 1459 of the old Civil
Code, but this prohibition has already been removed.
Under the provisions of article 1491, section 2, of the new Civil Code,
an agent may now buy property placed in his hands for sale or
administration, provided that the principal gives his consent thereto.
While the new Code came into effect only on August 30, 1950,
however, since this is a right that is declared for the first time, the
same may be given retroactive effect if no vested or acquired right is
impaired (Article 2253, new Civil Code). During the lifetime Don
Mariano and particularly on March 8, 1946, the herein appellants could
not claim any vested or acquired right in these properties, for as heirs,
the most they had was a mere expectancy. We may therefore, invoke
now this practical and liberal provision of our new Civil Code even if the
sale had taken place before its affectivity.
ALLIED FREE WORKERS UNION (PLUM) vs. COMPANIA
MARITIMA
19 SCRA 258
FACTS:
AFWU sued MARITIMA for unfair labor practice saying that MARITIMA
refused to bargain collectively. CIR dismissed the case on the ground
that it has no jurisdiction over the case.
ISSUE:
RULING:
It is true that MARITIMA admits that it did not answer AFWU's proposal
for a collective bargaining agreement. From this it does not necessarily
follow that it is guilty of unfair labor practice. Under the law the duty to
bargain collectively arises only between the "employer" and its
"employees". Where neither party is an ''employer" nor an "employee"
of the other, no such duty would exist. Needless to add, where there is
no duty to bargain collectively the refusal to bargain violates no right.
The facts as found by the court a quo strongly indicate that it is AFWU
itself who is the "employer" of those laborers. The facts very succinctly
show that it was AFWU, through its officers, which selected and hired
the laborers, (2) paid their wages, (3) exercised control and supervision
over them, and (4) had the power to discipline and dismiss them.
FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK SUAN
G.R. No. L-7144 May 31, 1955
FACTS:
The textile arrived and was received by Suan, but complained to Far
Eastern of the inferior quality of the textile.
ISSUE:
Was the transaction one of agency that will exonerate Far Eastern from
liability, or one of purchase and sale?
RULING:
One of purchase and sale. SC agreed with the CA that the facts in this
case are very similar to those in the Velasco case. In the Velasco case,
Universal Trading contends that it merely acted as agent for Velasco
and could not be held responsible for the substitution of Blended
Whisky for Bourbon Whisky.
The Court held that the transaction was purchase and sale and ordered
the defendant to refund his deposit with legal interest.
Where a foreign company has an agent here selling its goods and
merchandise, that same agent could not very well act as agent for
local buyers, because the interests of his foreign principal and those of
the buyer would be in direct conflict. He could not serve two masters at
the same time.
Nielson & Company, Inc. and Lepanto Consolidated Mining Company entered
into a management contract. Nielson had agreed, for a period of five
years, with the right to renew for a like period, to explore, develop and
operate the mining claims of Lepanto, and to mine, or mine and mill,
such pay ore as may be found and to market the metallic products
recovered there from which may prove to be marketable, as well as to
render for Lepanto other services specified in the contract.
ISSUE:
Was the management contract entered into by and between Nielson and
Lepanto a contract of agency such that it has the right to revoke and terminate
the contract at will, or a contract of lease of services?
RULING:
FACTS:
ISSUE:
RULING:
The SC ruled that taking into consideration the fact that the operator
owed his position to the company and the latter could remove him or
terminate his services at will; that the service station belonged to the
company and bore its trade name and the operator sold only the
products of the company; that the equipment used by the operator
belonged to the company and were just loaned to the operator and the
company took charge of their repair and maintenance; that an
employee of the company supervised the operator and conducted
periodic inspection of the company's gasoline and service station; that
the price of the products sold by the operator was fixed by the
company and not by the operator; and that the receipt signed by the
operator indicated that he was a mere agent, Porfirio de la Fuente was
merely an agent of the company and not an independent contractor.
As the act of the agent or his employees acting within the scope of his
authority is the act of the principal, the breach of the undertaking by
the agent is one for which the principal is answerable. Moreover, the
company undertook to "answer and see to it that the equipment are in
good running order and usable condition;" and the Court of Appeals
found that the Company's mechanic failed to make a thorough check
up of the hydraulic lifter and the checkup made by its mechanic was
"merely routine" by raising "the lifter once or twice and after observing
that the operator was satisfactory, he (the mechanic) left the place."
The latter was negligent and the company must answer for the
negligent act of its mechanic which was the cause of the fall of the car
from the hydraulic lifter.
In sum, since Porfirio de la Fuente as an agent of Shell Company was
negligent in performing his job and such negligence caused a damage
on Sisons car, the Shell Company therefore as the principal is also
liable for the simple reason that an act of an agent is the act of his
principal.
FACTS:
On November 24, 1961, Tourist World Service, Inc was informed that
Sevilla was connected to a rival firm, Philippine Travel Bureau, and
since the branch office run by Sevilla was losing, Tourist World Service,
Inc considered closing it down. Indeed Tourist World Service, Inc
padlocked the premises of the branch office. In response, a complaint
was filed by Sevilla. Tourist World Service, Inc and Noguera answered
with counterclaims. For lack of interest of the parties, the case was
dismissed without prejudice. However it was later refiled by Sevilla.
The trial court later dismissed the case for lack of merit.
On appeal, the Court of Appeals ruled that Tourist World Service, Inc.,
being the true lessee, has the prerogative to terminate the lease and
padlock the premises. It likewise found Lina Sevilla, to be a mere
employee of Tourist World Service, Inc. and as such, she was bound by
the acts of her employer.
ISSUE:
RULING:
Sevilla argued that her relationship with Tourist World Service, Inc is of
a joint venture. The respondent however countered that Sevilla is just
their employee. The Supreme Court ruled that the relationship
between the two parties was not of a joint venture or a partnership and
likewise ruled that Sevilla is not an employee of the respondent.
The Supreme Court also in ruling that the relationship of the parties is
not a joint venture nor a partnership reasoned that from the facts
given, the contract is one of agency. It is the essence of this contract
that the agent renders services in representation or on behalf of
another. In the case at bar, Sevilla solicited airline fares, but she did so
for and on behalf of her principal, Tourist World Service, Inc. As
compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of
November 28, 1961, pre-assumed her principal's authority as owner of
the business undertaking. We are convinced, considering the
circumstances and from the respondent Court's recital of facts, that the
ties had contemplated a principal agent relationship, rather than a joint
management or a partnership.
In sum, the contract between Sevilla and Tourist World Service, Inc.
was one of agency and as discussed above, its arbitrary revocation
entitles the aggrieved party for damages.
FACTS:
On January 10, 1966, Lourdes Valerio Lim went to the house of Maria
Ayroso and proposed to sell Ayroso's tobacco. Ayroso agreed to the
proposition to sell her tobacco consisting of 615 kilos at P1.30 a kilo. In
the contract drawn by Salvador Bantug, the proceeds in the amount of
Seven Hundred Ninety Nine Pesos and 50/100 (P 799.50) will be given
to Aryoso as soon as it was sold and in return Lim will receive the
overprice for which she could sell the tobacco.
This was signed by the appellant and witnessed by the complainant's
sister, Salud Bantug, and the latter's maid, Genoveva Ruiz. Lim at that
time brought a jeep, where the tobacco was. Of the total value of
P799.50, Lim had paid to Ayroso only P240.00, and this was paid on
three different times. Demands for the payment of the balance of the
value of the tobacco were made upon him by Ayroso, and particularly
by her sister, Salud Bantug. Salud Bantug further testified that she had
gone to the house of the appellant several times, but the appellant
often eluded her; it was only on October 24, 1967 that Lim sent a
money order for P100.00.
For this reason, the trial court found Lourdes Valerio Lim guilty of the
crime of estafa and was sentenced "to suffer an imprisonment of four
(4) months and one (1) day as minimum to two (2) years and four (4)
months as maximum, to indemnify the offended party in the amount of
P559.50, with subsidize imprisonment in case of insolvency, and to pay
the costs. From this judgment, appeal was taken to the then Court of
Appeals which affirmed the decision of the lower court but modified the
penalty imposed by sentencing her "to suffer an indeterminate penalty
of one (1) month and one (1) day of arresto mayor as minimum to one
(1) year and one (1) day of prision correccional as maximum .
ISSUE:
Whether or not the contract that exist between the parties is a contract
of agency to sell or a contract of sale.
RULING:
The fact that Lim received the tobacco to be sold at P1.30 per kilo and
the proceeds to be given to complainant as soon as it was sold,
strongly negates transfer of ownership of the goods to the petitioner.
The agreement constituted her as an agent with the obligation to
return the tobacco if the same was not sold.
FACTS:
On May 1, 1960, Adelo Nombre as the duly constituted judicial
administrator in Special Proceedings No. 7279 of the CFI of Negros
Occidental, in his capacity was judicial administrator of the intestate
estate, leased one of the properties of the estate (a fishpond identified
as Lot No. 1617 of the cadastral survey of Kabankaban, Negros
Occidental), to Pedro Escanlar. The terms of the lease was for three (3)
years, with a yearly rental of P3, 000.00 to expire on May 1, 1963, the
transaction having been done, admittedly, without previous authority
or approval of the Court where the proceedings was pending.
ISSUES:
RULING:
A) This contention is without merit. It has been held that even in the
absence of such special powers, a contract or lease for more
than 6 years is not entirely invalid; it is invalid only in so far as it
exceeds the six-year limit (Enrique v. Watson Company, et al., 6
Phil. 84).
No such limitation on the power of a judicial administrator to
grant a lease of property placed under his custody is provided for
in the present law. Under Article 1647 of the present Civil Code, it
is only when the lease is to be recorded in the Registry of
Property that it cannot be instituted without special authority.
Thus, regardless of the period of lease, there is no need of
special authority unless the contract is to be recorded in the
Registry of Property.
B) NO, the provisions of the New Civil Code on Agency do not apply
to judicial administrators.
While it may be admitted that the duties of a judicial
administrator and an agent (petitioner alleges that both act in
representative capacity), are in some respects, identical, the
provisions on agency (Art. 1878, C.C.), should not apply to a
judicial administrator. A judicial administrator is appointed by the
Court. He is not only the representative of said Court, but also
the heirs and creditors of the estate (Chua Tan v. Del Rosario, 57
Phil. 411). A judicial administrator before entering into his duties,
is required to file a bond. These circumstances are not true in
case of agency. The agent is only answerable to his principal. The
protection which the law gives the principal, in limiting the
powers and rights of an agent, stems from the fact that control
by the principal can only be thru agreements, whereas the acts
of a judicial administrator are subject to specific provisions of law
and orders of the appointing court
JOSE DE LA PEA Y DE RAMON v. FEDERICO HIDALGO
GR No. No. L-5486 August 17, 1910
FACTS:
The parties to the case are Jose dela Pea y de Ramon, and Vicenta de
Ramon, in her own behalf and as the legal guardian of her son Roberto
de la Pea as plaintiff and Federico Hidalgo, an agent of Jose dela Pea
y Gomiz as the defendant.
Dela Pea did not answer the letter nor was there any approval,
objection or response to the request of appointing another person to
be a substitute of Federico. Due to the problems in Federicos health,
he decided to go to Spain, but before he departed, he sent a summary
of accounts to dela Pea which was then coupled with the information
that he will be leaving the Philippines and that he turned over to his
cousin Antonio the administration of dela Peas properties, thus being
the principal dela Pea must execute a new special power of attorney
designating Antonio as his new agent.
Now, the plaintiffs would like to collect and recover from Federico
Hidalgo all of the amount collected from the rents of dela Peas
property. However, Federico averred that they should no longer be held
liable on the ground that he has renounced his rights and obligations
as an agent of dela Pea y Gomiz.
ISSUE:
RULING:
Yes, Federico had definitely renounced his agency was duly terminated,
according to the provisions of article 1732 of the Civil Code, because,
although the word "renounce" was not employed in connection with
the agency or power of attorney executed in his favor, yet when the
agent informs his principal that for reasons of health and by medical
advice he is about to depart from the place where he is exercising his
trust and where the property subject to his administration is situated,
abandons the property, turns it over a third party, without stating when
he may return to take charge of the administration, renders accounts
of its revenues up to a certain date, December 31, 1893, and transmits
to his principal a general statement which summarizes and embraces
all the balances of his accounts since he began to exercise his agency
to the date when he ceased to hold his trust, and asks that a power of
attorney in due form in due form be executed and transmitted to
another person who substituted him and took charge of the
administration of the principal's property, it is then reasonable and just
to conclude that the said agent expressly and definitely renounced his
agency, and it may not be alleged that the designation of Antonio
Hidalgo to take charge of the said administration was that of a mere
proceed lasted for more than fifteen years, for such an allegation
would be in conflict with the nature of the agency.
In permitting Antonio Hidalgo to administer his property for years, it is
inferred that the deceased consented to have Antonio Hidalgo
administer his property, and in fact created in his favor an implied
agency, as the true and legitimate administrator.
Antonio Hidalgo administered the aforementioned property of dela
Pea y Gomiz, not in the character of business manager, but as agent
by virtue of an implied agency vested in him by its owner who was not
unaware of the fact, who knew perfectly well that the said Antonio
Hidalgo took charge of the administration of that property on account
of the obligatory absence of his previous agent for whom it was an
impossibility to continue in the discharge of his duties.
DOMINGA CONDE v. THE HONORABLE COURT OF APPEALS
G.R. No. L-40242 December 15, 1982
FACTS:
Dominga Conde, together with her siblings sold a parcel of land located
in Buarauen Leyte, to Casimira Pasagui - the wife of Pio Altera, with a
right of repurchase within a span of ten (10) years from April 7, 1938.
The said sale with right to repurchase or pact de retro sale provided
that within ten years and the said parcel of land is not reacquired or
repurchased, a new agreement shall be made between the parties and
in no case shall title and ownership be vested in the hand of Alteras.
On June 1965 Pio Altera sold the disputed lot to the spouses Ramon
Conde and Catalina T. Conde, whose relationship to Dominga Conde
did not appear from the records. Nor has the document of sale been
exhibited.
After 24 years, Dominga Conde filed with the CFI of Leyte a civil case
for quieting of title against the spouses Casimira and Pio Alteras
together spouses Ramon and Catalina Conde. Dominga contended that
Paciente Cordero signed the Memorandum in representation of the Pio
Aletra, who was very ill on that occasion.
The Alteras, on the other hand, contended that Pio was not their agent
and Pio signed because he has no objection to the repurchase.
The Court of First Instance (now, the Regional Trial Court) dismissed the
complaint which was affirmed by the Court of Appeals. Hence, this
petition.
ISSUE:
RULING:
Furthermore, the court also averred that the Alteras were guilty of
laches on the ground that for 24 years, they slept on their right to
institute an action for quieting of title against petitioner, Dominga
Conde. Lastly, the court also ruled that the spouses Conde were not
purchasers in good faith. They bought the disputed property despite
the notice of the condition in the title that the property was subject to
repurchase.
HARRY E. KEELER ELECTRIC CO., INC vs. DOMINGO RODRIGUEZ
G.R. No. L-19001 November 11, 1922
FACTS:
The plaintiff is a domestic corporation with its principal office in the city
of Manila and engaged in the electrical business, and among other
things in the sale of what is known as the "Matthews" electric plant,
and the defendant is a resident of Occidental Negros, and A. C.
Montelibano was a resident of Iloilo.
For answer, the defendant admits the corporation of the plaintiff, and
denies all other material allegations of the complaint, and, as an
affirmative defense, alleges "that on or about the 18th of August,
1920, the plaintiff sold and delivered to the defendant a certain electric
plant and that the defendant paid the plaintiff the value of said electric
plant, to wit: P2, 513.55."
Upon such issues the testimony was taken, and the lower court
rendered judgment for the defendant, from which the plaintiff appeals,
claiming that the court erred in holding that the payment to A. C.
Montelibano would discharge the debt of defendant, and in holding
that the bill was given to Montelibano for collection purposes, and that
the plaintiff had held out Montelibano to the defendant as an agent
authorized to collect, and in rendering judgment for the defendant, and
in not rendering judgment for the plaintiff.
In the final analysis, the plant was sold by the plaintiff to the
defendant, and was consigned by the plaintiff to the plaintiff at Iloilo
where it was installed by Cenar, acting for, and representing, the
plaintiff, whose expense for the trip is included in, and made a part of,
the bill which was receipted by Montelibano.
ISSUE:
RULING:
No, the plaintiff had never its authority to Montelibano. The Court
ruled:
The person dealing with the agent must also act with
ordinary prudence and reasonable diligence. Obviously, if
he knows or has good reason to believe that the agent is
exceeding his authority, he cannot claim protection. So if
the suggestions of probable limitations be of such a clear
and reasonable quality, or if the character assumed by the
agent is of such a suspicious or unreasonable nature, or if
the authority which he seeks to exercise is of such an
unusual or improbable character, as would suffice to put an
ordinarily prudent man upon his guard, the party dealing
with him may not shut his eyes to the real state of the
case, but should either refuse to deal with the agent at all,
or should ascertain from the principal the true condition of
affairs. (Mechem on Agency, vol. I, sec 752.)
And not only must the person dealing with the agent
ascertain the existence of the conditions, but he must also,
as in other cases, be able to trace the source of his reliance
to some word or act of the principal himself if the latter is
to be held responsible. As has often been pointed out, the
agent alone cannot enlarge or extend his authority by his
own acts or statements, nor can he alone remove
limitations or waive conditions imposed by his principal. To
charge the principal in such a case, the principal's consent
or concurrence must be shown. (Mechem on Agency, vol. I,
section 757.)
Applying the above rules, the testimony is conclusive that the plaintiff
never authorized Montelibano to receive or receipt for money in its
behalf, and that the defendant had no right to assume by any act or
deed of the plaintiff that Montelibano was authorized to receive the
money, and that the defendant made the payment at his own risk and
on the sole representations of Montelibano that he was authorized to
receipt for the money.
FLORENTINO RALLOS, ET AL. vs. TEODORO R. YANGCO
G.R. No. 6906 September 27, 1911
FACTS:
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 P1, 537.08 belonging to Rallos. This sum was,
apparently converted to his own use by said agent.
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 in his personal
capacity and not an agent by Yangco.
ISSUE:
RULING:
Yes, Yangco is liable. Having advertised the fact that Collantes was his
agent and having given special notice to Rallos of the 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 to Rallos. In addition, having
advertised the fact that Collantes was his agent and having given them
a special invitation to deal with such agent, it was the duty of the
defendant on the termination of the relationship of principal and agent
to give due and timely notice thereof to the plaintiffs. Failing to do so,
he is responsible to them for whatever goods may have been in good
faith and without negligence sent to the agent without knowledge,
actual or constructive, of the termination of such relationship.
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