spa cases

G.R. Nos. L-36811, 36827, 36840, 36872 March 31, 1934

ANTONIO MA. BARRETTO Y ROCHA, ET AL., plaintiffs-appellees, vs.AUGUSTO H. TUASON Y DE LA PAZ, ET AL., defendants-appellants; BENITO LEGARDA Y ROCES, administrator of the estate of the deceased Benito Legarda y de la Paz, ET AL., ESTANISLAOA ARENAS, ET AL., and ANA BARCINAS TORRES, (alias ANA BARCINAS PEREZ) ET AL., intervenors-appellants; ERIBERTO TUASON, ET AL., intervenors-appellees.

Araneta, De Joya, Zaragoza and Araneta and Jose Yulo for defendants-appellants.Eusebio Orense and Nicolas Belmonte for intervenors- appellants Legarda de la Paz et al.Feria and La O for intervenors-appellees Arenas et al.J.A. Wolfson for intervenors-appellants Barcinas Torres et al.Antonio Sanz and Courtney Whitney for plaintiffs-appellees.Duran, Lim and Tuason for intervenors-appellees G. Maga et al.No appearance for the other intervenors-appellees.

IMPERIAL, J.:

For the third time, there is presented for our consideration the mayorazgo founded by the deceased Don Antonio Tuason. The first occasion was when both plaintiffs and defendants appealed from a decision of the Court of First Instance of Manila, dismissing the complaint and the counterclaim filed, without costs. The appeals thus interposed were docketed under No. 23923, and the decision promulgated on March 23, 1926, is published in full in volume 50 Philippine Reports, page 888 et seq. the second occasion was when some of the defendants instituted a certiorari proceeding against the Court of First Instance of Manila, some of the plaintiffs, and other intervenors, because of the appointment, at the latter's instance, of the Bank of the Philippine Islands as receiver of all the properties constituting the mayorazgo. Said proceeding was docketed under No. 32423, and the decision promulgated on February 7, 1930, is published in full in volume 54 Philippine Reports, page 408 et seq.1 And the third is brought about by four appeals taken by the defendants and some intervenors from certain portions of the decision and order rendered by the court during the new trial held pursuant to our resolution of which we shall hereafter have occasion to speak.

The four appeals now before us were docketed separately, but for a better understanding of the questions which we propose to resolve, we have thought it convenient to render a single decision wherein each appeal will be discussed individually.

PRELIMINARY CONSIDERATIONS

Before entering upon a consideration of the appeals, it is convenient to set out some fundamental facts which have been submitted, discussed, and resolved in the decision rendered in the original and principal case, and which are of the utmost importance to bear in mind in resolving the questions raised anew in the appeals. These facts are:

The mayorazgo was founded by Don Antonio Tuason on February 25, 1794.

On June 4 of the same year the founder died in the City of Manila.

The mayorazgo was approved by Royal Cedula of August 20, 1795.

On October 11, 1820, the Statute of Civil Disentailments was promulgated in Spain, was extended to the Philippine Islands, and took effect therein on March 1, 1864, by virtue of a Royal Decree of October 31, 1863.

The properties of the mayorazgo consist of the Haciendas de Santa

Mesa y Diliman, Hacienda de Mariquina, and two urban properties situated on Rosario Street, Manila. By agreement of

the parties, the assessed value of the said properties is:

Haciendas de Santa Mesa y Diliman P3,550,646.00

Hacienda de Mariquina 1,507,140.00

Properties on Rosario Street 542,382.00

Total . . . . . . . . . . . . . . . . . . 5,600,168.00

After the promulgation of the decision in the principal case, the defendants filed a motion of reconsideration and various persons filed motions of intervention asking at the same time that they be admitted as intervenors for the purpose of participating in one-fifth of the properties. The resolution published in volume 50 Philippine Reports, page 959 et seq., was adopted, wherein (page 963) the following fundamental conclusions, established in the decision, were reiterated:

Resolving, therefore, said motion for reconsideration, we reiterate the following conclusions, declaring finally:

(1) That the first-born possessor of this mayorazgo was a mere usufructuary of the entailed properties.

(2) That this mayorazgo was a fideicomiso.

(3) That the charge to distribute the fifth of the revenues from said properties was a family trust.

(4) That article 4 of the Disentailing Law of October 11, 1820 is applicable to the present case.

(5) That the fifth of the properties into which, by virtue of said law, the fifth of the revenue was converted on March 1, 1864, when the Disentailing Law became effective in the Philippines, has remained and subsists as a fideicomiso up to the present date.

(6) That the plaintiffs' right of action has not prescribed.

(7) That the registration of the entailed properties under Act No. 496 must, with respect to the fifth of the said properties conserved up to the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.

(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law.

The motion of reconsideration was denied in so far as it was incompatible with the final and fundamental conclusions arrived at in the decision and in the resolution, but the motion for a new trial of the intervenors — who appeared in order that they or any other person entitled to participate in one-fifth of the properties may intervene, either by filing other complaints of intervention or by amending the complaint filed — was granted. The dispositive part of said resolution reads literally as follows:

ORDER

In view of the foregoing, it is ordered:

(a) That the motion for reconsideration filed by counsel for the defendants is denied in so far as it is incompatible with

the fundamental conclusions we have arrived at in the present cause and enumerated in the preceding resolution.

(b) That the dispositive part of our decision in this cause be set aside.

(c) That the record in the present case, together with the petitions of intervention mentioned, be returned to the Court of First Instance of Manila in order that the new parties may intervene in this cause and prove their alleged rights, and that the original plaintiffs may, if they so desire, amend their complaint.

(d) That the plaintiffs take the necessary steps to include as parties to this cause all such known and unknown persons who may have the right to participate in the said fifth part of the properties of this foundation, requiring them to appear and prove their rights.

(e) That said Court of First Instance proceed to try this cause and render judgment as to the amount to which the original parties and those who may intervene may be entitled as their participation in the fifth of the properties of this mayorazgo.

(f) That the stipulation of facts subscribed on August 30, 1924 by Attorneys Sanz and Blanco on behalf of the plaintiffs and Araneta & Zaragoza on behalf of the defendants, for all intents and purposes and with respect to the parties affected, is held as subsisting, as well as the oral and documentary evidence presented by the parties during the original trial of the cause, the original parties as well as o hereafter may intervene, being entitled to introduce such additional evidence as they may desire upon the subject matter of the trial herein ordered. (Barretto vs.Tuason, 50 Phil., 888, 966, 967.)

The case was remanded to the court of origin for the purpose above-mentioned, and after the filing of many complaints of intervention by a number of persons claiming to be relatives of the founder and of his younger children and, therefore, entitled to participate in one-fifth of the properties, on suggestion of counsel for the parties the court appointed Modesto Reyes as referee, and upon his death, Attorney Crispin Oben. Both referees filed their written reports, although that of the former does not resolve the major portion of the questions raised due to his premature death, and at the trial various objections were interposed which were resolved by the court. In its decision the court approved most of the findings and recommendations of the last referee, but modified others which in its opinion were not supported either by the proven facts or the applicable law. The defendants and some of the intervenors, not being likewise agreeable to certain portions of the decision and order thus promulgated, have taken the four appeals now before us.

G.R. No. L-36811

APPEAL OF THE INTERVENORS SURNAMED LEGARDA Y DE LA PAZ

The appellants in this case are the brother and sisters Benito, Consuelo. Rita, surnamed Legarda y de la Paz. These intervenors claim participations in one-fifth of the properties in two capacities: First. is descendants of the younger son Pablo Tuason, and, second, for having inherited from their parents the participations in one-fifth of the properties which were sold to the latter by certain relatives of the founder. They likewise claim the share to which they would be entitled in the participations of certain relatives of the younger daughter, Eustaquia Ma. Tuason, who sold said participations to the defendants. We will hereafter have occasion to pass on this contention in discussing the four assigned error.

The following is an enumeration of the names of the vendors of their participations in favor of the parents of the appellants, giving the dates of the respective deeds:

1. DOROTEA TUASON, by a deed of absolute sale executed by her in favor of Benito Legarda and Teresa de la Paz.dated September 13, 1881. (Exhibit A-Legarda.)

2. ISABEL ARENAS, by a deed of absolute sale executed by her and her husband Francisco Esteban, in favor of the spouses Benito Legarda and de la Paz, dated October 2, 1884 Exhibit B-Legarda.)

3. The brothers ENRIQUE. SEVERINO, and DOMINGO, surnamed FRANCO, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa de la Paz, dated November 7, 1884. (Exhibit C-Legarda.)

4. The sisters BALBINA SANTOS TUASON and MAGDALENA SANTOS TUASON, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa de la Paz, dated January 23, 1885. (Exhibit D-Legarda.)

5. APOLINARIA TUASON, by a deed of absolute sale, executed by her in favor of the spouses Benito Legarda and Teresa de la Paz, dates February 17, 1885. (Exhibit F-Legarda.)

6. ESTEBAN DUARTE, ISIDRA MARIA DUARTE, and ALEJANDRO DUARTE, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa de la Paz, dated February 17, 1885. (Exhibit F-Legarda.)

7. TOMASA TUASON DE TOBIAS, who was then a widow, by a deed of absolute sale executed by her in favor of the spouses Benito Legarda and Teresa de la Paz, dated October 3, 1888. (Exhibit G-Legarda.)

8. LUIS TUASON and PEDRO TUASON, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa de la Paz, dated April 7, 1886. (Exhibit H-Legarda.)

9. ALEJANDRO, ANACLETO, TEODORICO, MARIA, AND DIONISIA, surnamed CAMACHO y TUASON, and TOMAS, ENCARNACION, MARIA, and MERCEDES, surnamed MACARANAS y TUASON, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa de la Paz, dated August 11, 1886. (Exhibit I-Legarda.)

10. FELIPE G. ALCALDE, by a deed of absolute sale executed by him in favor of the said spouses, dated October 27, 1886. (Exhibit J-Legarda.)

11. QUINTINA CASTILLO VIUDA DE JUAN N. C. REYES, by a deed of absolute sale executed by her in favor of the spouses Benito Legarda and Teresa de la Paz, dated April 25, 1888. (Exhibit K-Legarda.)

The vendor, Quintina Castillo Viuda de Juan N. C. Reyes, who had a participation in the entailed properties as descendant in the direct line of the founder, acquired the participation of the latter, the said vendor Quintina Castillo having been declared the sole and universal heir by will of the said Juan N. C. Reyes, as evidenced by Exhibit K-1-Legarda.

12. TEODORA EIZMENDI, by a deed of absolute sale executed by her in favor of the spouses Benito Legarda and Teresa de la Pam, dated October 3, 1888. (Exhibit L-Legarda.)

13. PETRONA MARIA DUARTE, by a deed of absolute sale executed by her in favor of the said spouses Benito Legarda

and Teresa de la Paz, dated October 8, 1888. (Exhibit L-1-Legarda.)

14. AVELINO TUASON alias ANDRES AVELINO TUASON, by a deed of absolute sale executed by him in favor of the father of the herein intervenors, Benito Legarda, dated March 5, 1883. (Exhibit M-Legarda.)

Of the said sales, only those executed by the following were impugned: (1) Isabel Arenas; (2) Tomasa Tuason de Tobias; (3) Luis Tuason and Pedro Tuason; (4) Alejandro, Anacleto, Teodorico, Maria, and Dionisia, surnamed Camacho y Tuason, and Tomas, Encarnacion, Maria, and Mercedes, surnamed Macaranas y Tuason; (5) Felipe G. Alcalde, and (6) Teodora Eizmendi. The impugners of the sales are relatives of the vendors who would be entitled to succeed there in their respective participations.

The appellants impute the following errors to the appealed decision:

I. In finding that Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason, who sold their participations in the properties in litigation to the father and mother of the intervenors Legarda y de la Paz, were already receiving the revenue on the date the Disentailing Statute took effect.

II. In declaring null and void as to one-half of the participations sold, instead of valid in their entirety, the sale made by Tomasa de Tobias (Exhibit G-Legarda) and that executed by Luis and Pedro Tuason (Exhibit H- Legarda), and in not adjudicating to the intervenors Legarda y de la Paz the entire participations corresponding to said vendors.

III. In excluding from the sales the participations corresponding to the vendors in the portions belonging to the younger children without succession of the founder, and in not adjudicating said participations to the intervenors Legarda y de la Paz.

IV. In not adjudicating to the intervenors Legarda y de la Paz the participations sold by some descendants of the founder's daughter, Eustaquia Maria Tuason, and in the event of the distribution of said participations among the descendants, in general, of the founder, in not adjudicating to said intervenors the participations which would, therefore, correspond to the vendors of the Legardas.

V. In not adjudicating to the intervenors Legarda y de la Paz the participation corresponding to the vendor Dorotea Tuason as descendant of Santos Luciano Tuason.

VI. In not ordering the defendants to pay legal interest.

VII. In denying the motion for a new trial.

The first two assigned errors are intimately related, as they refer to the sales of their participations executed by Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason. Referee Oben held in his report that the sales made by said vendors did not transfer more than one-half of their participations, because on the dates of the sales they were the ones who received the revenue and they could not dispose of more than one-half of their participations, reserving the other half in favor of their immediate successors, in accordance with the provisions of article 4, in connection with articles 2 and 3, of the Disentailing Statute. The court entertained the same opinion.

In support of their contention, the appellants advance the following reasons: (1) That the said vendors were not the ones who received the revenue on March 1, 1864, when the Disentailing Statute took effect; consequently, the reservation of one-half is not applicable to the sales in question; (2) that the present action of the impugners to invalidate the sales as to one-half thereof has already prescribed; (3) that the appellants have acquired by prescription of owner ship the entire participations sold; and (4) that the inaction of the impugners of the sales

for a period of years without exercising their alleged right estops them from claiming the participations sold, under the doctrine known as estoppel by laches.

Although we have examined the oral and documentary evidence adduced, to ascertain whether Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason were in fact the ones who received the revenue when the Disentailing Statute took effect — and we are in a position to state that the first of said vendors was not in fact the one who received the revenue on said date but the Tuason brothers — nevertheless, we do not make any pronouncement on this question in view of the fact that the first two assigned errors under consideration should be resolved in connection with the other arguments relative to prescription of action and ownership and estoppel by laches.

It will be recalled that the deed of sale of the participation of Tomasa Tuason de Tobias was executed on October 3, 1888, and the sale of those of the brothers Luis and Pedro Tuason on April 7, 1886; the complaints of intervention which assailed the validity of the sales of said participations for the first time were filed in 1927, hence, approximately forty-one years have elapsed from the first sale to the date its validity was impugned for the first time, and about thirty years from the execution of the second sale to the said date.

The right now exercised by the impugners of the sales is a personal action whose prescription should be governed by the laws in force at the time of the execution of the deeds of sale, that is, April 7, 1886, and October 3, 1888, namely, Law 5, Title 8, Book 11, of the Novisima Recopilacion, and Law 21, Title 29, Partida 3, which provide for the period of ten years (Crusado vs. Bustos and Escaler, 34 Phil., 17).

Article 1939 of the present Civil Code provides:

ART. 1939. Prescription which began to run before the publication of this Code shall be governed by the prior law; but if, after this Code took effect, all the time required by the same for prescription bas elapsed, it shall be sufficient even if according to such prior law a longer period of time would have been required.

And article 1301 of the same Code provides:

ART. 1301. The action of annulment shall last four years.

The term shall commence to run —

In cases of intimidation or violence from the day on which it has ceased;

In those of error or deceit or falsity of consideration., from the date of the consummation of the contract;

When the purpose of the action is to invalidate the un authorized contracts of a married woman, from the date of the dissolution of the marriage;

With respect to contracts made by minors or incapacitated persons, from the date they were released from guardianship.

According to these provisions, the action of annulment, admitting that it had not yet prescribed when the Civil Code took effect in these Islands on December 7, 1889 (Mijares vs. Nery, 3 Phil., 195), should have commenced by the impugners of the sales within the four (4) years following the taking effect of the Civil Code, which was not done.

The rules of prescription found in the Code of Civil Procedure, Act No. 190, are not applicable to the action of annulment under consideration, because according to section 38 thereof, the prescriptive period provided in former statutes should be applied to rights of action which have already accrued before it went into effect.

From the foregoing it clearly follows that the action of annulment instituted and relied upon by the impugners of the said sales has already prescribed, both under the Laws of the Partidas and the Novisima Recopilacion and under the provisions of the Civil Code, and in the latter case, even the supposition that the prescriptive period for an action of annulment of contracts had been extended to ten years, instead of four, in accordance with the provisions of section 43, No. 1, of the Code of Civil Procedure. (Willard, Notes on Civil Code; Brillantes vs. Margarejo and Belmonte, 36 Phil. 202.)

But the impugners of the sales argue that they do not in fact institute an action of annulment, but merely use the same as a defense, hence, they are not affected by the laws of prescription. In the able report of referee Oben, this phase of the question was discussed at length, and he came to conclusion, as did the court, that the impugners of the sales have in fact brought an action of annulment. Without going into another extended discussion, we believe it will suffice to state, to demonstrate the same conclusion, that in the instant case those in the enjoyment of the participations sold as well as the ownership thereof are the appellants and not the impugners of the sales, and that to recover the rights lost under the deeds of sale they executed, the latter have to avail themselves of an action of annulment. In this sense, at least, they should be under stood as bringing the action instead of simply defending themselves, aside from the indisputable fact that, to recover the participations which they sold, they found it necessary to file complaints of intervention, which are really complaints under the letter and spirit of section 121 of the Code of Civil Procedure.

As to the question of acquisitive prescription, likewise invoked by the appellants, we hold that due to the long lapse of time they have acquired by prescription whatever rights the impugners of the sales had in the participations which they sold.

Addressing ourselves to appellants' last argument, it should again be stated that they and their predecessors have enjoyed the revenue corresponding to the participations which they have acquired and that during the period that has elapsed, the vendors and impugners of the sales have done nothing to recover their alleged rights. Such conduct insurmountably bars the instant action of annulment under the doctrine of estoppel by laches. In the case of Buenaventura vs. David (37 Phil., 435), speaking of the said doctrine, we said:

. . . The assertion of doubtful claims, after long delay, cannot be favored by the courts. Time inevitably tends to obliterate occurrences from the memory of witnesses, and even where the recollection appears to be entirely clear, the true clue to the resolution of a case may be hopelessly lost. These considerations constitute one of the pillars of the doctrine long familiar in equity jurisprudence to the effect that laches or unreasonable delay on the part of a plaintiff in seeking to enforce a right is not only persuasive of a want of merit but may, according to the circumstances, be destructive of the right itself. Vigilantibus non dormientibus equitas subvenit.

And in the case of Tuason vs. Marquez (45 Phil., 381), the same principle was again applied as follows:

The equitable doctrine termed with questionable propriety "estoppel by laches," has particular applicability to the fact before us. Inexcusable delay in asserting a right and acquiescence in existing conditions are a bar to legal action. . . .

We see no good reason why the said equitable doctrine should not be applied to the case at bar. The impugners of said sales have let pass a number of years from the accrual of their right of action to annul the sales without exercising such right, and have voluntarily permitted appellants' predecessors in interest to enjoy the participations sold; in which circumstances it is the duty of the courts to restrict, instead of encourage, the granting of a right already lost.

The third assigned error refer to the sales executed by some descendants of the founder who sold the participations that would come to them as descendants likewise of the younger children of the founder. The court at first approved the report of referee Oben declaring valid the sales of the participations coming from the younger children with

succession as well as from those without succession. But the court, in its order of April 8, 1931, modified its decision declaring invalid the sales of the participations coming from the younger children without succession. From this latter resolution the appeal was taken. The reason alleged by the court in support of its last order was, that the said sales were illegal because they conveyed rights not known and determined at the time of the execution of the deeds of sale. We do not see the force of this argument. If the sales were valid as to the participations coming from the younger children with succession, with more reason should the sales of the participations coming from the younger children who died without succession be declared equally valid, as in both cases the sale of existing rights, known and determinable, was involved, as said participations, so far as the vendors were concerned, arose and were acquired by the latter from the death of their predecessors in interest, the younger children. (Article 657 of the Civil Code.) For this reason we find the third error tenable and sustain the validity of the sales of said participations.

The plaintiffs and the defendants had stipulated when the original case was heard that the younger daughter, Eustaquia Ma. Tuason, died without succession, but it developed that the said deceased in fact left descendants some of whom sold their participations to the defendants. The referee stated in his report that such participations have neither been sold nor legally acquired by the defendants because they were estopped by their stipulation with the plaintiffs to the effect that said younger daughter died without descendants. The court differed from this and held in its decision that there was no such estoppel, and that the defendants validly acquired the participations sold to them. The herein appellants, Legarda brothers and sisters, by their fourth assigned error, now attempt to reverse the finding of the court that the defendants are not thus estopped. And appellants' purpose is obvious: if the sales are invalidated, the participations, subject matter thereof, would be distributed among all the relatives of the said younger daughter, and appellants will naturally receive a certain aliquot part thereof.

We agree with the court that the defendants are not estopped just because they stipulated that Eustaquia Ma. Tuason left no succession. And this proposition is clear by simply taking into account that the defendants never agreed that they had not purchased the participations of the descendants of the said younger daughter. The stipulation referred only and exclusively to the succession or descendants of the said younger daughter and cannot be logically extended to the sales made by several of her descendants. Moreover, as properly observed by the court, to sustain appellants' theory would result in the absurd case of the other descendants of said younger daughter who did not sell their participations being deprived thereof just because the original parties stipulated that their predecessor in interest left no succession. We, therefore, rule that the fourth assigned error is untenable.

The fifth error relates to the participations of Dorotea Tuason which she sold to the appellants. This vendor was entitled to a double participation coming from two sources, to wit, from the younger children Santos Luciano Tuason and Felix Bolois Tuason. In amendatory report of referee Oben the participation of this vendor as descendants of Santos Luciano Tuason was overlooked. The appellants filed a motion of reconsideration asking, among other things, that the participation of said vendor as descendant of Santos Luciano Tuason be likewise adjudicated to them. The court granted the motion, but in its order it was stated that the participation of Dorotea Tuason coming from Felix Bolois Tuason will be adjudicated to the appellants, instead of that coming from Santos Luciano Tuason. In other words there was a transposition of names, hence, appellants state in their brief that this involves a mere correction of a clerical error.

In view of the foregoing we find the fifth assigned error well-founded.

In their sixth assigned error the appellants contend that the defendants are bound to pay them legal interest on the amounts of money to be adjudicated to them as their participations in the one-fifth, alleging as a reason therefor that the defendants were guilty of delay from the taking effect of the Disentailing Statute ordering the distribution and delivery of the fifth to the persons entitled to it, among whom were said appellants.

The contention is without merit in view of the fact that in the decision rendered in the original case, it was held that the plaintiffs, whose position was like that of the herein appellants, were entitled to an accounting of the expenses and revenues of said properties and to

receive that corresponding revenues, from January 1, 1923, until the defend ants deliver to them their participations in the properties of the foundation. The revenues thus adjudicated were in lieu of legal interest claimed by the plaintiffs. For these reasons, the sixth assigned error is untenable.

The seventh and last assigned error need not be discussed being a corollary of the preceding ones.

Recapitulating all that has been said so far, it results:

1. That the sales of their participations made by Tomasa Tuason de Tobias, Luis Tuason and Pedro Tuason in favor of the appellants, are valid in their entirety and should, therefore, be adjudicated to the latter; thus resolving favorably the first two errors assigned;

2. That the sales made by some descendants of the founder, of their participations coming from the younger children without succession, are likewise valid, and said participations should be adjudicated to the appellants. This also resolves favorably the third assigned error;

3. That the participation of Dorotea Tuason as descendant of Santos Luciano Tuason should be adjudicated to the appellants; thereby resolving favorably the fifth assigned error; and

4. That the fourth and sixth assigned errors are overruled as untenable.

G. R. No. 36827

APPEAL OF THE INTERVENOR ANA BARCINAS TORRES (alias ANA BARCINAS PEREZ) AND OTHERS

It will be recalled, from what has been said in connection with the first appeal, that Eustaquia Ma. Tuason died leaving succession, notwithstanding the stipulation to the contrary by the plaintiffs and the defendants at the trial of the principal case. The herein appellants are descendants of the younger daughter Eustaquia Ma. Tuason. All of them, with the exemption of Tomas Barcinas y Reyes, are descendants of Tomas Barcinas, who, with the said Tomas Barcinas y Reyes, sold all their rights, interest, and participation in one-fifth of the revenue of the mayorazgo through their attorney-in-fact Manuel de los Reyes, in favor of the estate of Teresa de la Paz.

Said appellants attribute to the appealed decision the following errors:

I. We hereby adopt as our own all of the pertinent assignments of errors of the other intervenors in G.R. Nos. 36811 and 36840, which are applicable to the intervenors here and, by reference, hereby incorporate their arguments in support of said errors.

II. The lower court erred in holding the sale executed by Manuel de los Reyes, pretending to act under and by virtue of aforesaid void power of attorney, valid, and in failing to hold same null and void.

III. The lower court erred in holding the sale executed by Manuel de los Reyes, pretending to act under and by virtue of aforesaid void power of attorney, valid, and in failing to hold same null and void.

IV. The lower court erred in interpreting aforesaid sale executed by Manuel de los Reyes, pretending to act under aforesaid void power of attorney, and in so interpreting said sale as to deprive these intervenors of their true rights under the mayorazgo founded by Don Antonio Tuason.

Exhibit Tuason-1 shows that on June 8, 1894, the said Tomas Barcinas y Cruz, Tomas Barcinas y Reyes, Benita Barcinas y Cruz, and Maria Manibusan y Barcinas, through their attorney-in-fact Manuel de los Reyes, sold all their participations in one-fifth of the revenue of the mayorazgo which they had in possession as descendants of the younger daughter Eustaquia Ma Tuason, including all their rights and interest in the said one-fifth of the revenue, for the sum of P5,000. In the said deed of sale there was reproduced in full the power of attorney which said vendors had conferred on their attorney-in-fact Manuel de los Reyes, executed on July 4, 1893, in the City of Agaña, capital of Marianas Islands, before the judge of first instance acting as notary in the absence of the notary of said district.

The appellants contend that the sale is null and void because the power of attorney which the vendors conferred on their agent was not ratified before a notary but before a judge of first instance. The referee, in passing upon the legal point involved, said:

In order that the sale made by Manuel de los Reyes behalf of the Barcinas may be valid, a written power of attorney was sufficient, without the necessity of converting said power of attorney into a public document. (Section 335, No. 5, Code of Civil Procedure; article 1278, Civil Code. Without dis therefore, whether or not under the laws in force in the Marianas Islands in 1893, the judge of first instance could act as notary public, the indisputable fact remains that those named as grantors in the instrument in question executed said power of attorney; and this execution of the written power of attorney was sufficient to authorize the attorney-in-fact Manuel de los Reyes to execute a valid sale of the property of his principals.

The undersigned is of the opinion, therefore, that the deed Exhibit Tuason-1 legally transferred to the estate of Doña Teresa de la Paz what appears in said deed, belonging to the grantors therein named:

The court affirmed the conclusion of the referee in the following language:

The court agrees with the referee that, notwithstanding the execution of the power of attorney in the City of Agaña before the judge of first instance of the Marianas Islands the sale was valid, because according to the said Exhibit Tuason-1, the judge of first instance of said Islands, "Acted with the witnesses then present, Don Manuel Aflague and Don Juan del Rosario, in the capacity of notary public" in the absence of this official in that district (emphasis ours). The intervenors Barcinas, represented by Attorney Wolfson, have not shown that on the date of the execution of the power of attorney, June 8, 1894, there was a notary in the City of Agaña; on the contrary, said Exhibit Tuason-1 shows that there was no such notary in the district, hence, the judge of first instance acted in that capacity. There being no notary, we cannot insist that the power of attorney be executed before a notary. It was sufficient that it be executed before the judge of first instance acting in the capacity of notary public. Wherefore, the court is of the same opinion as the referee, that the sale executed by the intervenors Barcinas, Exhibit Tuason-1, in favor of the estate of Doña Teresa de la Paz is valid.

The appellants have not cited any law especially applicable to the Marianas Islands at the time the power of attorney in question was executed, whereby the intervention of a notary in the execution of said kind of document was made absolutely necessary. In 1893 the present Civil Code was already in force in the country, and the provisions thereof applicable to the subject are as follows:

ART. 1710. An agency may be express or implied.

An express agency may be created by a public or private instrument or even orally.

The acceptance may also be express or implied, the latter being inferred from the acts of the agent.

ART. 1713. An agency created in general terms only includes acts of administration.

In order to compromise, alienate, mortgage, or to execute any other act of strict ownership, an express power is required.

The power to compromise does not give authority to submit the matter to arbitrators or friendly adjusters.

The pertinent portion of section 335 of the Code of Civil Procedure, provides:

SEC. 335. Agreements invalid unless made in writing. — In the following cases an agreement hereafter made shall be unenforceable by action unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence of its contents:

x x x x x x x x x

5. An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein, and such agreement, if made by the agent of the party sought to be charged, is invalid unless the authority of the agent be in writing and subscribed by the party sought to be charged.

It, therefore, follows that under the legal provisions above quoted, the power conferred upon Manuel de los Reyes is valid although no notary public intervened in its execution. And the sale executed by said attorney-in-fact is likewise valid because in the execution of the corresponding deed the essential requisites provided by law were complied with.

The above refuses appellants second, third, fourth assigned errors relating to the validity of the power of attorney and the deed of sale of the participations already referred to.

The first assignment does not specify any error committed by the court and the appellants only make and re produce therein, as their own, the assignments of error of the intervenors-appellants in G.R. Nos. 36811 and 36840. It is not incumbent upon us to consider seriously an assignment of error of this nature, although the assignments of error made by the other appellants will be considered and resolved in due time.

In resume, we find the four assigned errors of these appellants untenable.

G.R. No. 36840

APPEAL OF ESTANISLAOA ARENAS AND OTHERS

The herein appellants are likewise descendants of the founder of the mayorazgo, Some of them directly sold to the defendants their participations in one-fifth of the revenue and all their rights and interest in the mayorazgo; the others are descendants of other relatives of the founder who likewise sold their participations in one-fifth of the revenue and all their rights and interest in the mayorazgo in favor of the same defendants. The deeds evidencing the sales have been marked as Exhibits 2, 3, 4, 5, 6, 7, 10, 11 12, 13, 14, 16, and 17.

The appellants impugn all the sales as null and void and in their brief assign the following errors:

I. The court erred in holding that, by the deeds of sale executed by the intervenors-appellants, or their predecessors in interest, in favor of the defendants and the predecessors in interest of the intervenors Legarda and sisters, the participations of the former in the ownership and dominion of one-fifth of the properties of the mayorazgo were sold and in not declaring said sales null and void.

II. The court erred in finding that on the date of the execution of the sale made by Israel Arenas the latter had no immediate successor and in disapproving the report of the referee on this question.

III. The court erred in finding that Camila Tuason died after the year 1864, when the Disentailing Statute took effect in the Philippines, and not in 1863 as found by the referee."

In support of the first assigned error, the following propositions are advanced: (1) That the vendors intended to sell only their participations in one-fifth of the revenue and, not the ownership or other rights which they had in the mayorazgo, consequently, the sales were null and void for lack of said vendors' consent; (2) that the purchasers were administrators or trustees of the properties of the mayorazgo, and, therefore, fall under the prohibition found in article 1459 of the Civil Code; (3) that the purchasers the spouses Legarda, at the time they purchased the participations of some of the intervenors, were legal administrators of the properties of the mayorazgo, and, therefore, lacked the capacity to buy in accordance with the provisions of the Novisima Recopilacion then applicable; (4) that the purchasers obtained the vendors' consent through fraud, and (5) that the said are moreover null and void under the express provisions of article 4, in connection with article 3, of the Disentailing Matute, for lack of prior formal appraisal and partition of the properties constituting the fifth of the mayorazgo.

Considering the view we have taken in respect of the first assigned error, a view which we will hereafter set forth, it would seem unnecessary to answer the arguments advanced by the appellants. However, we will briefly state the following:

After a careful examination of all the deeds of sale, we hold. as did the referee and the court, that the vendors sold not only their participations in the revenue but also all their rights and interest in the properties of the mayorazgo. In other words, said vendors in fact sold their participations and rights in the ownership of the mayorazgo, to which the one-fifth of the revenue was converted in view of the enforcement of the Disentailing Statute in the Islands.

The purchasers, strictly speaking, were not legal administrators or fiduciaries of the rights sold to them by the vendors, at least in the sense in which the prohibition then existing was expressed and established. As the court correctly stated, the purchasers, in connection with the transactions, acted as mere coproprietors or tenants in common, and the right to buy which they then exercised was expressly recognized by law.

The fraud imputed to the purchasers has not been proved; the evidence shows that the vendors had full knowledge of the rights which they sold and that thereby they conveyed to the vendees all the interest which they could have in the mayorazgo.

And with respect to the lack of formal appraisal and partition of one-fifth of the properties of the mayorazgo, prior to the sales, requisites found in article 4, in connection with article 3, of the Disentailing Statute, it is sufficient to state our opinion that non-compliance therewith should not produce either the effect or the meaning attributed to them by the appellants. It seems to us that the court was right in interpreting that the appraisal, partition, and intervention of the immediate successor are required only in cases in which the actual possessor of properties or the one who receives the revenue desires to dispose of his participations in a specific and particular form, but not when, as in the case under consideration, undivided and indeterminate rights or participations were sold. In case of an hereditary estate, for instance, a coheir may sell his successory right, although undetermined, without the necessity either of a prior appraisal or partition of said estate or notice to or intervention by the other coheirs.

We will now briefly state the view we have taken of the first assigned error. The most recent sales impugned were made between the year 1905 and 1910; the oldest deeds were executed between the years 1891 and 1898. On the other hand, the appellants challenged the validity of said sales for the first time in January and February, 1929. Theretofore, at least, nineteen years had elapsed as to the sale effected in 1910. We hold that the lapse of the period of nineteen years is more than that required for the prescription of the action of annulment began by the appellants through their complaints of intervention, and in support of this holding we recur here to all that we said on the subject in resolving the appeal interposed by the intervenors Legarda. We are likewise of the opinion that the appellants are now barred from claiming any right in connection with said sales under the doctrine of estoppel by laches. We repeat what we said on this point in the appeal of the Legardas, to the effect that the validity of sales may not be questioned anew after the purchasers have enjoyed the participations sold and the fruits thereof for many years.

The second and third assigned errors refer to the sales made by Isabel Arenas and Alejandro Camacho and brothers, respectively. The intervenor-appellant Rafael Arenas contends that the sale executed by his mother Isabel Arenas is null and void as to one-half because said vendor had an immediate successor at the time of the sale. The Camachos, in turn, allege that the sale they executed is likewise null and void as to one-half because, contrary to the finding of the court, they were the ones who received the revenue at the time the Disentailing Statute took effect, and they contend in this connection that their mother Camila Tuason died in 1863 and not after 1873, as found by the court. We do not find it necessary to discuss the question of fact thus raised, because in both cases prescription and the rule of estoppel by laches are applicable against the appellants. On both grounds we rule that the appellants may not now question the validity of the aforesaid sales.

It follows from what has been said that the three errors assigned by the appellants are overruled as not well-founded.

G.R. No. 36872

APPEAL OF THE DEFENDANTS AUGUSTO H. TUASON Y DELA PAZ AND OTHERS

This appeal is interposed by the defendants who were the possessors of all the properties of the mayorazgo at the time the principal case was instituted and before the Bank of the Philippine Islands was appointed receiver. Said appellants impute to the appealed decision and order the following error:

FIRST ERROR

The lower court erred in not passing upon certain vital issues on the ground that they had been definitely concluded.

SECOND ERROR

The trial court erred in not finding that the fifth part of the mayorazgo belongs in fee simple to the defendants.

THIRD ERROR

The trial court erred in distributing the fifth part as follows: three-eighths thereof among all the descendants of the founder (including those of the first possessor of the mayorazgo) per stirps of great grandchildren, including those who have already died; and the remaining five eighths among the descendants of the five younger children of the founder who died leaving succession, distributing the same per stirps of said children.

FOURTH ERROR

The trial court erred in not finding that the plan of distribution more in conformity with the provisions of article 4 of the

Disentailing Law, would be to assign to each recipient (whether plaintiff or intervenor) a portion of the one-fifth of the entail in the proportion that the pension which he used to receive bears to the net income of the fifth on the entail.

FIFTH ERROR

The trial court erred in not distributing the three-eights exclusively among the defendants.

SIXTH ERROR

In case the preceding assignment of error be over ruled, we respectfully submit that the trial court erred in distributing the three-eights in equal portions per stirps of the great great grandchildren (tataranietos), including those who have already died, instead of distributing the same only among those that are living, or, more properly, instead of distributing the same per stirps of the children of the founder.

SEVENTH ERROR

The trial court erred in not finding what is the value in pesos of the different participations assigned to the different parties in this case.

EIGHT ERROR

The trial court erred in not finding that the plaintiffs having filed a personal action against the defendants asking judgment in the sum of five hundred thousand pesos (P500,000), for damages which the said parties agreed were the value of the one-half of the so-called family trust are now barred to claim participation in the properties themselves thereby converting the action into one in rem.

NINTH ERROR

The trial court erred in finding that the sales executed by Mariano Arenas, Estanislaoa Arenas, Julio Tuason, Severino, Tuason, Encarnacion Rojo and Candelaria Rojo were null and void as to one-half thereof.

TENTH ERROR

Assuming that the said sales as to one-half thereof should be declared null and void, the trial court erred in not condemning the sellers or their successors in interest to return one-half of the price received by them from the purchasers, plus the legal interest thereof the time of the sale.

ELEVENTH ERROR

The trial court erred in finding that the sales executed by the intervenors or their predecessors in interest of any rights that they might have had in the fifth of the mayorazgo in question, did not cover the right that they had to participate in the three eighths which originally correspond to the three younger children of the founder who died without leaving succession.

TWELVE ERROR

The trial court erred in not requiring the referee to file an amended report in conformity with the order of the trial court dated April 9, 1931.

By way of preliminary observation we will state that it is not our intention to hold that the questions raised by the appellants in their first, second, third, fourth, fifth, sixth, and eighth assigned errors are res judicata because they have been submitted, discussed at length, and resolved in the decision rendered in the principal case, because we believe this to be unnecessary; but we understand, and so decide, that unless it is shown that said questions have been erroneously resolved and that there exist sufficient reasons justifying that we renounce the conclusions already reached, it is our duty to adhere to them and to apply the principles laid down in the aforesaid decision in so far as they are applicable to the same points raised anew in the instant appeal.

The first assignment does not specify any error committed by the court, hence, we are not bound to resolve any specific question; but in the development of the idea which the appellants have apparently attempted to bring out, they argue in synthesis that in the resolution granting a new trial this court again left open for discussion the same points already considered and resolved as well as the new ones which the parties may desire to raise in the aforesaid new trial. An examination of said resolution, however, shows just the contrary. In the said resolution the following language was employed.

Counsel for defendants insist upon their contentions maintained from the beginning and disposed of in our decision. They raise some points in their briefs, however which require a few brief-remarks. (Baretto vs. Tuason, 50 Phil., 888, 959.)

x x x x x x x x x


(1) That the first-born possessor of this mayorazgo was a mere usufructuary of the entailed properties.

(2) That this mayorazgo was a fideicamiso.

(3) That the charge to distribute the fifth of the revenues from said properties was a family trust.

(4) That article 4 of the Disentailing Law of October 11, 1820 is applicable to the present case.


(6) That the plaintiffs' right of action has not prescribed.

(7) That the registration of the entailed properties under Act No. 496 must, with respect to the fifth of the said properties conserved up to the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.

(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law.

(9) The pronouncements made in our decision with respect as to the amount of the participation of each claimant shall be set aside in view of the motions of the intervenors which we about to examine. (Ibid., pp. 963, 964.)

No clearer and more categorical language could have been employed to express the intention of the court to adhere to and reiterate the conclusions and principles already established in the decision originally

rendered, notwithstanding the motion of reconsideration and new trial. Neither can there be any doubt as to the questions which the court considered definitely resolved and which should not be the subject of further discussion.

That this court did not intend to allow the parties to raise anew the fundamental questions already resolved, and that the new trial should be limited exclusively to a determination of the amount to which the intervenors could be entitled in the fifth of the properties, is clearly shown by the following quoted paragraphs which form a part of the order found in the aforesaid resolution:

(a) That the motion for reconsideration filed by counsel for the defendants is denied in so far as it is incompatible with the fundamental conclusions we have arrived at in the present cause and enumerated in the preceding resolution.

x x x x x x x x x

(e) That said Court of First Instance proceed to try this cause and render judgment as to the amount to which the original parties and those who may intervene may be en titled as their participation in the fifth of the properties of this mayorazgo. (Ibid p. 966.)

Defendants-appellants intimate that the said resolution is without legal force because it was not concurred in by a sufficient majority of the members then composing this court. A sufficient answer to this is, that the aforesaid resolution was authorized and concurred in by eight of the nine members then composing this court.

In the second assigned error, the appellants again insist that the naked ownership of the fifth of the properties of the mayorazgo belongs to them. This question was already definitely resolved in the decision as well as in the resolution on the motions of reconsideration and new trial wherein was stated:

Counsel for defendants allege that the properties of this foundation passed into the hands of the heir, Jose Victoriano Tuason, completely free, one-half by testamentary inheritance and the other half by virtue of article 2 of the Disentailing Law. This, however, was not the will of the testator, Don Jose Severino Tuason, nor the will of his successors, all of whom respected the mayorazgo and held it as subsisting de facto. In no event could the properties pass into the hands of the heir Jose Victoriano Tuason completely free. It was necessary to preserve them intact until they were appraised and the fifth part thereof had been segregated for distribution among the recipients of the revenues and their immediate successors, in accordance with the provisions of article 4 of the statute.

It is a fact that the trust subsisted and still subsists. The successive possessors of the entail have preserved and preserve the properties of themayorazgo respecting and distributing the fifth of the revenue among the descendants of the younger children of the founder.

But the entail could not and cannot continue perpetually. Its abolition was decreed by the statute as of the 1st day of March, 1864. Its perpetual survival would be contrary, not only to the Disentailing Law of October 11, 1820, but also the Civil Code in force which, under articles 781 and 785, paragraph 2, positively prohibits perpetual entails.

If up to the present time the entail in question subsists, this has been because the interested parties have been maintaining it without proceeding to the appraisal and distribution of the entailed properties, as required by articles 2 and 4 of the Disentailing Law; and in accordance with the doctrine announced by the Supreme Court of Spain on October 29, 1857, above cited, the properties of this mayorazgo, pre served de facto by the interested parties as entailed, legally retain this character for the

purposes of their partition which must be effected in accordance with the statute of October 11, 1820.

From what has been said it follows that since March 1, 1864, the date upon which the said Disentailing Law came into force in the Philippine Islands, the successive possessors of the properties of this mayorazgo constituted themselves trustees, charged with the administration and preservation of the said properties and the distribution of the fifth of the revenue among the descendants of the younger children of the founder. Consequently, after the entail was abolished, one-half of the four-fifths of the proof Asgo continued subject to the trust in favor of its beneficiaries, the heirs of Jose Victoriano Tuason, who was the one called to succeed immediately to the mayorazgo on the date of its disentailment (article 2, Statute), and the fifth of the said properties in favor of the beneficiaries, the recipients of the fifth of the revenue in accordance with the foundation.

Summing up the effects produced with respect to this mayorazgo by the Disentailing Law on the one hand, and the conduct of the interested parties on the other, we may say first, that the trust of the naked ownership instituted in favor of the descendants of the founder indefinitely was abolished, in consequence of the disentailment; and second, that the trust of the usufruct of the properties became converted into a trust of the properties themselves, the beneficiaries being the same, but as owners; that is to say, the first-born successor as to one-half of four-fifths of the said properties, and the descendants of the younger children of the founder with respect to the remaining fifth. (Ibid., pp. 936-938.)


x x x x x x x x x


x x x x x x x x x

(7) That the registration of the entailed properties under Art No. 496 must, with respect to the fifth of the said properties conserved up to the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.

(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law. (Ibid., pp. 963, 964.)

The arguments now advanced by the appellants in sup port of their second assigned error are not entirely new because they were already brought out when the question was submitted and discussed in the principal case and we do not find therein any weighty reasons justifying our repudiation of the conclusions and principles established in the decision rendered in the original case.

The third, fourth, fifth, and sixth assigned errors may be jointly considered because they all refer to the distribution of the one-fifth of the properties. In the paragraphs here after quoted of the original decision, it will be seen that the distribution of the fifth and those entitled to it under the instrument of foundation were already dealt with and resolved:

PERSONS ENTITLED TO THE REMEDY

The recipients of the fifth of the revenues are indicated in the sixth clause of the instrument of foundation, the text of which we again transcribe:

"It shall be his duty to set apart one-fifth of the net revenue derived from the entail each year, and that one-fifth part shall be divided into eight parts, giving one to each of my eight children, and in their absence, to my grandchildren, but upon the understanding that if one or more of my children should die without succession, the part belonging to them shall be distributed among my children and other descendants of mine according to their needs and as prudence may dictate to him, so that, when the time arrives that none of my children are alive, it shall then be always understood that said fifth part shall be applied to all those of my descendants who are poor, the apportionment to be made by him prudently according to their needs and therefore the possessor of the entail is hereby charged to discharge this duty with conscientious scruple." (Ibid., pp. 941, 942.)

x x x x x x x x x

If the descendants of the younger children, subsequent to the grandchildren of the founder, are granted under certain circumstances the right to possess the mayorazgo itself, with all its properties, we do not see how it can be said that these descendants, subsequent to grandchildren, the sons of sons, were prohibited from receiving a fifth of the revenues of said properties.

It is our understanding that the intention of the founder was not to restrict the grant of the usufruct of the fifth of the revenue by limiting it to a certain number of generations of the younger children, but that he intended to extend it to all of the descendants of the latter. If this is so we should apply to the case the rule of law of the Partidas (Rule 28, Title 34, 7th Partido), which says: "Privilegia recipiunt largum interpretationem voluntati consonan concedentis." (Privileges are to be interpreted with liberality in accordance with the will of him who grants them.)

Furthermore, that the present plaintiffs are entitled to receive the fifth of the revenues has been repeatedly recognized by the defendants when they purchased, in 1905, from Don Jose Rocha y Ruiz, and in 1916 from Doña Remedios Aragon y Rocha their respective participations in the fifth of the revenue, according to paragraph 16 of the stipulation of facts, and while in the years 1917 to 1921 the said defendants delivered to Don Antonio Maria Barretto y Rocha, and to Don Santiago, Don Julio and Don Andres Rocha y Ruiz Delgado, and their sister, Doña Rosario; and in the years 1917 to 1922, to Doña Isabel, Doña Enriqueta, Doña Carmen, Don Antonio, Don Alfredo and Don Clodoaldo Rocha y Pereyra, Don Francisco Beech y Rojo, Don Ciriaco, Don Cayetano, Don Pablo Leon and Don Tomas Tuason, and to the minors Doña Consuelo, Don Juan, Doña Rosario and Doña Carmen Tuason, and Doña Victoria Rufina, Doña Ana Consolacion Tuason, and Doña Asuncion Romana Tuason widow of Caballero, their respective participations in the fifth of the revenue, as appears from the cross-complaint of the defendants, admitted in para graph 8 of the stipulation of facts.

And it appears that the said Don Jose Rocha y Ruiz was the son of Don Lorenzo Rocha, a grandson, in turn, of Doña Gregoria N. Tuason (Exhibit 6 and paragraphs 2 and 16 of the stipulation of facts): that Doña Remedios Aragon y Rocha is a relative of the founder (Exhibit 7, admitted in paragraph 16 of the stipulation of facts) ; and that the said recipients of the fifth of the revenue from the year 1917 to 1921 and from the year 1917 to 1922, are all descendants of grandchildren of the younger children of the founder. (Paragraphs 2 to 30, admitted in paragraph 1 of the stipulation of facts.) (Ibid., pp. 944, 945.)

x x x x x x x x x

Passing to the amount of the Participation which is due them respectively, for the purpose of determining this point we must have regard to the intention of the founder, as it is expressed in the instrument creating the mayorazgo. It was his will that the fifth of the revenue should he divided into eight parts, and that to each of his children, other than his first born, one part should be given. Upon the death of each of these children, by virtue of the provisions of the instrument of foundation, and by operation of law, their right to an eighth part of the revenue which they received during their lifetime was transmitted to their heirs. That is, each of these eight portions of the fifth of the revenue was transmitted from succession to succession, within the stirps of each of the eight younger children who died leaving succession. The heirs of a younger son or daughter could legally participate in the eight part corresponding to another stirps, as long " heirs in the direct line of this stirps survived; that is to say, each of the eight portions of the fifth, except those corresponding to young children born without succession. The heirs of a younger child could not legally participate in the eight corresponding to another stirps, while heirs of this stirps in, the direct line survive. That is to say, each one of the said eight parts of the fifth, except those corresponding to the younger children dying without succession, was preserved and transmitted from generation to generation within each respective stirps.

This plan of division of participation, based upon the will of the founder and the precepts of the law, is that which in our judgment must continue to prevail, and is that which we shall follow in determining the proportion which corresponds to the plaintiffs in the half of the fifth of the properties of this foundation.

Of the eight younger children four died without sucession and the other four are the descendants of the plaintiffs in this cause. Hence, four of the eight portions, that is, one-half of the fifth of the properties of this foundation, belong to the plaintiffs herein under the plan of division which has just been indicated. The other four portions, that is, the one-half of the said fifth, which would have corresponded to the stirps of the other four younger children, if they had died leaving succession, accrue, so to speak, both to the defendants of the younger children leaving succession and to the other descendants of the founder.

The distribution of this accretion is made in obedience to a plan distinct from that above indicated, because the founder, foreseeing the contingency, did not prescribe a quota for each stirps of his younger children, but ordered that it he delivered to descendants of both classes without distinction of line or stirps. Consequently, this one-half in accretion should be distributed among the descendants of the founder in general, who are the plaintiffs and some of the defendants, but bearing in mind the different rights with which each heir participates, by reason of the greater or lesser proximity of his relationship to the founder, for the purpose of determining if he is to inherit per capita or per stirpes. We say some of the defendants, because with the exception of the ten mentioned in paragraph 5 of the complaint, the other defendants are either persons whose relationship has not been determined (paragraph 6 of the complaint) or have refused to become parties to this action (paragraph 30 of the complaint).

From what has been said it follows that one-half of the fifth of the properties corresponding to the younger sons leaving succession, four-fortieth parts (4/40) of the whole of the properties of this foundation must be divided into four equal portions, because one portion, or one-fortieth part (1/40) corresponds to each stirps of the said four younger children. The other one-half of the said fifth, that is to say, the other four-fortieth parts (4/40) of the whole of the properties of this foundation must be distributed in general among the plaintiffs and some of the defendants, taking into consideration the circumstances of their respective heirships. (Ibid., pp. 946-948.)

The foregoing paragraphs contain conclusions of fact and of law established after a careful study of the provisions found in the foundation and of the laws applicable to the case, and are squarely applicable to the facts recently proved at the new trial, except that five-eighths of the fifth should be divided among the descendants of the five (5) younger children with succession and the remaining three-eighths of the fifth among the relatives in general of the founder, because it developed that the younger daughter Eustaquia Ma. Tuason had left heirs, contrary to the stipulation of the plaintiffs and the defendants.

The arguments advanced by the appellants in support of said assignments of error do not justify, in our opinion, a different result from that already reached; in truth they are merely repetitions of the same arguments already brought out by counsel for the same appellants.

In the seventh assigned error, it is contended that the court erred in not reducing the respective participations of the parties to figures or pesos. It is true that the court did not undertake the arithmetical operations involved there in. but we cannot conceive of this as an error subject to modification or reversal, in view of the fact that there was then no necessity therefor, and that such work could be easily entrusted to the referee after this decision has become final and the records remanded to the court.

By their eighth assigned error the defendants-appellants again reproduce their original special defense to the effect that the plaintiffs could not convert the personal action for damages which they had originally commenced into an action in rem, and that said plaintiffs are barred from claiming any participation in the properties of the mayorazgo.

This point was likewise considered and resolved in the decision in the principal case, wherein it was said:

In addition to the arguments mentioned heretofore, counsel for defendants interpose as obstacles to the action of plaintiffs the registration of the title to the properties of the mayorazgo in favor of the defendants, mentioned in paragraph 11 of the first special defense, under Act No. 496, and the prescription of this action. The defendants Doña Paz Tuason de Gonzales, Doña Consuelo Tuason de Quimson, Don Juan Tuason and Doña Albina Tuason inter pose as a defense to this action the contention that the plaintiffs filed no claim whatever in the proceedings had upon the testamentary estate of Don Juan Jose Tuason de la Paz, the father of the said defendants. which testamentary proceedings were finally disposed of and filed June 25, 1920.

If, as we have found and decided, the successive possessors of the properties of this mayorazgo were and have been mere trustees of the said properties, holding them in trust for the benefit of the beneficiaries, part of whom are the recipients of the fifth of the revenues, and their descendants, the registration of the title to said properties under Act No. 496 in favor of the said defendant must be deemed to have been effected for the benefit of the beneficiaries of said properties, part of whom are the present plaintiffs. The doctrine established by this court in the case of Severino vs. Severino(44 Phil., 343), is applicable to this feature of the case.

Although the plaintiffs endeavored to demonstrate that the said defendants registered the title by fraud, it is our opinion that the alleged fraud has not been proven in this action. Nevertheless, the existence of fraud is unnecessary to arrant the declaration that registration of the Title under Act No. 496 is not a legal obstacle to this action brought by plaintiffs, and the adjudication in favor of those among them who are entitled thereto of the portion pertaining to them of the properties so registered. It was said in the case of Gilbert vs. Hewetson (79 Minn., 326), cited with approval in the case ofSeverino vs. Severino, supra:

"A receiver, trustee attorney, agent, or any other person occupying fiduciary relations respecting property or per

sons, is utterly disabled from acquiring for his own benefit the property committed to his custody for management. This rule is entirely independent of the fact whether any fraud has intervened. No fraud in fact need be shown, and no excuse will be heard from the trustee." (Emphasis ours.)

With respect to the plea of prescription, counsel for defendants contend that inasmuch as plaintiffs, prior to the filing of the present complaint, had made no effort to enforce their rights since the 1st day of March, 1864, their action is barred. But from the records it that up to the year 1922 the defendant have been recognizing in the entries in their books, and in deeds, such as Exhibits 6 and 7, signed by Don Augusto Tuason de la Paz, as grantee, the right of the descendants of the younger children of the founder to the fifth of the revenue, and therefore the trust which this charge implies; furthermore, said defendants made payments on account of the fifth of the revenue. These acts of recognition and payments, made during the said period of time, prevent the operation of prescription. Section 50, Code of Civil Procedure.)

Furthermore, this being a case which deals with a trust which subsisted from the time of its foundation and by virtue thereof up to March 1, 1864, and thereafter down to the present time by the express will of the present parties, the defense of prescription cannot be entertained. By virtue of the said trust the possession of the said defendants could not be regarded as a basis for an acquisitive prescription in their favor against the plaintiffs because such possession has not been nor is it under claim of ownership, but a title held in the name and on behalf of the beneficiaries, some of whom are the plaintiffs in general. For this reason the defense of prescription cannot be enforced between the trustee and the beneficiaries while the trust relations continue, as was impliedly held in the case of the Government of the Philippine Islands vs. Abadilla (46 Phil., 642.) (Ibid., pp. 938-940.)

Strictly speaking there was no alteration in the nature of the action then commenced by the plaintiffs. They claimed indemnity for damages in the amount of half a million pesos believing that the registration of the real properties of the mayorazgo in favor of the defendants and the issuance of the corresponding certificates of title, made the latter the exclusive owners thereof; but this court held that a trust being involved, the titles should be under stood as issued in favor of all the co-proprietors, among them the plaintiffs, and in view of this ruling the plaintiffs were declared entitled, not to an indemnity, but to a participation in one-fifth of the aforesaid properties. From this it follows that, although the plaintiffs were granted a relief different from that they had asked for, the rights which they invoked from the very beginning and upon which they based the action which they began, were, nevertheless, the same to wit, their rights as relatives or descendants of the founder of the mayorazgo. They erred in the choice of the remedy to which they were entitled, but they did not change the essential ground of the action. In either case the right which they wanted to enforce was the same, but it developed that the adequate remedy was not the, one they asked for but that granted to them by the court.

In their ninth assigned error the appellants contend that the court erred in declaring null and void as to one-half the sales of their participations executed by the intervenors Mariano Arenas, Estanislaoa Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo, and Candelaria Rojo in favor of the said defendants-appellants.

The referee in fact declared said sales null and void as to one-half, either because the vendors were the ones who received the revenue or because they had immediate successors at the time the Disentailing Statute took effect in the Islands. The court sustained the referee.

Without going into an extended discussion, we rule that the said intervenors-vendors cannot now question the validity of the aforesaid sales because their action has pre scribed and they are now in estoppel by laches. All that we said in this connection in the appeal of the Legardas may be taken as reproduced herein. The most recent sale was made in 1916 and the first complaint of intervention questioning the validity of the sales was filed in 1926, that is, after the lapse of more than

ten years. During all this time the defendants were in the enjoyment of the said participations without any protest or claim of any kind from any of the vendors. The time that has elapsed is more than that required for the prescription of the action to annul the sales, and estops the intervenors-vendors from questioning their validity.

We find the error assigned tenable.

The tenth assigned error requires no discussion because it was made conditionally, that is, in the event that the preceding one is not well-founded and is not sustained.

Various intervenors or their predecessors sold their participations in the fifth of the mayorazgo which came from the younger children with succession as well as from those without succession, favor of the defendants. The referee last appointed was of the opinion that the sales of the participations which came from the younger children with succession, were valid, but not those which came from the younger children who died without succession. In its decision the court disapproved this conclusion and held that all the sales were valid. But in its order of April 8, 1931, in passing upon different motions of reconsideration, it concurred in the opinion of the referee and ruled that the sales of the participations coming from the younger children without succession were null and void because undetermined rights were transmitted thereby.

We rule that the eleventh assigned error is well founded and that the sales in question are as valid as those made of the participations coming. from the younger children with succession. And on this point we repeat what we already said in the appeal of the Legardas, in resolving a similar case, that pursuant to the provisions of article 657 of the Civil Code, successory rights are transmitted from the death of the person leaving the hereditary estate, where fore. it cannot be said that in the aforementioned sales undetermined rights were conveyed. It is true that on the dates of the sales, the amount of the participations sold were not yet determined, but doubtless it could be fixed and reduced to figures through the appraisal and liquidation provided for by the Disentailing Statute.

The twelve and last assigned error states that the court should have required the referee to file an amended report pursuant to the order of April 8, 1931. The error, if any is no ground for either modification or reversal. There is no doubt that the referee should file his amended and final report, but this may be prepared and submitted for approval after the appeals have been disposed of and the present decision has become final. We find no merit in this assigned error.

Summarizing what has been said in connection with this appeal we have:

1. That the first, second, third, fourth, fifth, sixth, seventh, eight, tenth and twelfth assigned error are without merit and must be as they are hereby overruled;

2. That the sales executed by Mariano Arenas, Estanislao Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo and Candelaria Rojo in favor of the defendants are valid in their entirety; thereby sustaining the ninth assigned error; and

3. That the sales executed by certain intervenors or their predecessors of their participations coming from the younger children without succession, in favor of the defendants, are valid; thereby sustaining likewise the eleventh assigned error.

JUDGMENT

In view of all the foregoing considerations, and disposing finally of all the appeals interposed, it is ordered:

In case G.R. No. 36811

1. That the appealed decision and order be amended, in the sense that the sales executed by Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason, in favor of the intervenors Legarda, are valid, and that the participations sold thereby should be adjudicated in favor of said purchasers;

2. That the appealed decision and order be modified, in the sense that the sales executed in favor of the intervenors Legarda of the participations coming from the younger children without succession, are valid, and, consequently, said participations should be adjudicated in favor of the said intervenors;

3. That the appealed decision and order be modified, in the ant of Santos Luciano Tuason, should be adjudicated in favor of the intervenors-appellants, and

4. That the appealed decision and order, in so far as they have been affected by the appeal interposed but have not been modified, are hereby affirmed;


1. That the aforesaid appealed decision, in so far as it has been affected by the appeal interposed by the intervenors-appellants in this case, is hereby affirmed;


1. That the decision of the court is hereby affirmed in so far as it has been affected by the appeal interposed in this case by the intervenors-appellants Estanislaoa Arenas and others;


1. That the appealed decision and order are hereby amended, in the sense that the sales executed by Mariano Arenas, Estanislaoa Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo, and Candelaria Rojo, in favor of the defendants-appellants, are valid in their entirety, and consequently. the participations transferred thereby should be adjudicated to the said purchasers.

2. That the said appealed decision and order be amended in the sense that the sales executed in favor of the defend ants-appellants of the participations coming from the younger children without succession, are valid in their entirety, and therefore, said participations should be adjudicated in favor of said defendants-appellants; and

3. That the said decision and order in so far as they have been affected by the appeal interposed in this case but have not been modified. are hereby affirmed.

It is likewise ordered that the court of origin take the necessary steps looking to the adjudication and distribution among the parties entitled thereto of their respective participations, to the end that this mayorazgo case may be definitely closed.

Without costs in this instance. So ordered.

G.R. No. 2962 February 27, 1907

B. H. MACKE, ET AL., plaintiffs-appellees, vs.JOSE CAMPS, defendant-appellant.

Manuel G. Gavieres for appellant.Gibbs & Gale for appellees.

CARSON, J.:

The plaintiffs in this action, B. H. Macke and W. H. Chandler, partners doing business under the firm name of Macke, Chandler & Company, allege that during the months of February and March, 1905, they sold to the defendant and delivered at his place of business, known as the "Washington Cafe," various bills of goods amounting to P351.50; that the defendant has only paid on account of said accounts the sum of P174; that there is still due them on account of said goods the sum of P177.50; that before instituting this action they made demand for the payment thereof; and that defendant had failed and refused to pay the said balance or any part of it up to the time of the filing of the complaint.

B. H. Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be agent of the defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later acknowledged the receipt of said goods and made various payments thereon amounting in all to P174; that on demand for payment of balance of the account Flores informed him that he did not have the necessary funds on hand, and that he would have to wait the return of his principal, the defendant, who was at that time visiting in the provinces; that Flores acknowledged the bill for the goods furnished and the credits being the amount set out in the complaint; that when the goods were ordered they were ordered on the credit of the defendant and that they were shipped by the plaintiffs after inquiry which satisfied the witness as to the credit of the defendant and as to the authority of Flores to act as his agent; that the witness always believed and still believes that Flores was the agent of the defendant; and that when he went to the Washington Cafe for the purpose of collecting his bill he found Flores, in the absence of the defendant in the provinces, apparently in charge of the business and claiming to be the business manager of the defendant, said business being that of a hotel with a bar and restaurant annexed.

A written contract dated May 25, 1904, was introduced in evidence, from which it appears that one Galmes, the former owner of the business now know as the "Washington Cafe," subrented the building wherein the business was conducted, to the defendant for a period of one year, for the purpose of carrying on that business, the defendant obligating himself not to sublet or subrent the building or the business without the consent of the said Galmes. This contract was signed by the defendant and the name of Ricardo Flores appears thereon as a witness, and attached thereto is an inventory of the furniture and fittings which also is signed by the defendant with the word "sublessee" (subarrendatario) below the name, and at the foot of this inventory the word "received" (recibo) followed by the name "Ricardo Flores," with the words "managing agent" (el manejante encargado) immediately following his name.

Galmes was called to the stand and identified the above- described document as the contract and inventory delivered to him by the defendant, and further stated that he could not tell whether Flores was working for himself or for some one else — that it to say, whether Flores was managing the business as agent or sublessee.

The defendant did not go on the stand nor call any witnesses, and relies wholly on his contention that the foregoing facts are not sufficient to establish the fact that he received the goods for which payment is demanded.

In the absence of proof of the contrary we think that this evidence is sufficient to sustain a finding that Flores was the agent of the defendant in the management of the bar of the Washington Cafe with authority to bind the defendant, his principal, for the payment of the goods mentioned in the complaint.

The contract introduced in evidence sufficiently establishes the fact that the defendant was the owner of business and of the bar, and the title of "managing agent" attached to the signature of Flores which appears on that contract, together with the fact that, at the time the purchases in question were made, Flores was apparently in charge of the business, performing the duties usually entrusted to managing agent, leave little room for doubt that he was there as authorized agent of the defendant.

One who clothes another apparent authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith and in the following preassumptions or deductions, which the law expressly directs to be made from particular facts, are deemed conclusive:

(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out such declaration, act, or omission, be permitted to falsify it" (subsec. 1, sec. 333, Act no. 190); and unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying his agency into effect. (15 Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87 Ind., 187.)

That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable quantities of supplies as might from time to time be necessary in carrying on the business of hotel bar may fairly be presumed from the nature of the business, especially in view of the fact that his principal appears to have left him in charge during more or less prolonged periods of absence; from an examination of the items of the account attached to the complaint, we are of opinion that he was acting within the scope of his authority in ordering these goods are binding on his principal, and in the absence of evidence to the contrary, furnish satisfactory proof of their delivery as alleged in the complaint.

The judgment of the trial court is affirmed with the costs of his instance against the appellant. After expiration of twenty days judgment will be rendered in accordance herewith, and ten days thereafter the case remanded to the lower court for proper action. So ordered.

G.R. No. L-30181 July 12, 1929

THE DIRECTOR OF PUBLIC WORKS, Plaintiff-Appellee, vs. SING JUCO, ET AL., defendants.

SING JUCO, SING BENGCO and PHILIPPINE NATIONAL BANK, appellants.

STREET, J.:chanrobles virtual law library

From Torrens certificate of title No. 1359 relating to land in the municipality of Iloilo, it appears that on September 28, 1920, the title of the property described therein was owned, in undivided shares, by Mariano de la Rama, Gonzalo Mariano Tanboontien, Sing Juco and Sing Bengco. The interest vested by said certificate in Mariano de la Rama was subsequently transferred to sale to Enrique Enchaus. It further appears that on November 23, 1020, the owners of the property covered by the said certificate conveyed it by way of a mortgage to the Philippine National Bank for the purpose of securing a credit in current account in a mount not in excess of P170,000, with interest at a rate of 12 percent per annum. The indebtedness covered by this mortgage has not been satisfied, and upon the date of the decision of the court below it amounted to the sum of P170,000, plus interest at 12 percent per annum from November 24, 1920.chanroblesvirtualawlibrarychanrobles virtual law library

The land above referred to contains an area of nearly 16 hectares, or to be exact, 158,589.44 square meters according to the certificate. It is located on "Point Llorente" at the mouth of Iloilo river, near the City of Iloilo, and it is of so low a level that, prior to the improvement to which reference is to be made, it was subject to frequent flooding. In 1921, the Government of the Philippine Islands was planning extensive harbor improvements in this vicinity, requiring extensive dredging by the Bureau of Public Works in the mouth of said river. The conduct of these dredging operations made it necessary for the Director of Public Works to find a place of deposit for the dirt and mud taken from the place, or places, dredged. As the land already referred to was low and easily accessible to the spot where dredging was to be conducted, it was obviously for the interest of the Government and the said owners of the land that the material taken out by the dredges should be deposited on the said property. Accordingly, after preliminary negotiations to this effect have been conducted, a contract was made between the Director of Public Works, representing the Government of the Philippine Islands, and the four owners, M. de la Rama, Sing Juco, G. M. Tanboontien, and Seng Bengco, of which, as modified by some respects by subsequent

agreement, the following features are noteworthy.chanroblesvirtualawlibrarychanrobles virtual law library

(1) The Bureau of Public Works agreed to deposit the material to be dredged by it from the Iloilo River, in connection with the contempted improvement, upon the lot of the land, already described as covered by certificate No. 1359, at a price to be determined at the actual cost of the filling, with certain surcharges to be determined by the Director of Public Works. It was contemplated in the original draft of the contract that the Bureau would be able to furnish some 250,000 cubic meters of dredged material for filling in the land, was limited to the material which should be dredged from the river as a result of the proposed improvement. To this stipulation the four owners of the property assented on March 14, 1921.chanroblesvirtualawlibrarychanrobles virtual law library

(2) With respect to the compensation it was agreed that the amount due should be determined by the Director of Public Works, under certain conditions mentioned in the contract, of an amount of not less that 20 nor more than 75 centavos per cubic meter. It was further agreed that, when the work should be finished, the cost thereof should be paid by the owners in 5 annual installments and that for failure to pay such installment the whole of the amount thereafter to accrue should become at once due. This contract was noted in the Torrens certificate of title on January 8, 1924.chanroblesvirtualawlibrarychanrobles virtual law library

In connection with the making of the contract abovementioned, the, Director of Public Works required a bond to be supplied by the owners in the penal amount of P150,000, approximately twice the estimated cost of the filling, conditioned for the payment of the amount due from the owners. This bond was executed contemporaneously with the main contract; and in connection therewith it should be noted that one of the names appearing upon said contract was that of "Casa Viuda de Tan Toco," purporting to be signed by M. de la Rama.chanroblesvirtualawlibrarychanrobles virtual law library

The dredging operation were conducted by the Bureau of Public Works in substantial accomplice, we find, with the terms of said agreement; and after the account with the owners were liquidated and the amount due from them determined, demand was made upon them for the payment of the first installment. No such payment was, however, made as a consequence this action was instituted by the Director of Public Works on October 14, 1926, for the purpose of recovering the amount due to the Government under the contract from the original owners of the property from the sureties whose names were signed to the contract of suretyship, and to enforce the obligation as a real lien upon the property. In said action the Philippine National Bank was made a party defendant, as having an interest under its prior mortgage upon the property, while Enrique Enchaus was made defendant as successor in interest of M. de la Rama, and Tan Ong Sze widow of Tan Toco, was also made defendant by reason of her supposed liability derived from the act of De la Rama in signing the firm "Casa Viuda de Tan Toco" as a surety on bond. It was noteworthy that in the complaint it was asked that, in the enforcement of the government's lien, the property should be sold "subject to the first mortgage in favor of the Philippine National Bank."chanrobles virtual law library

To this complaint different defenses were set up, as follows: On behalf of the owners of the property, it was contended that the government has not complied with that contract, in that dredged material deposited on the land had not been sufficient in quantity to raise the level of the land above high water, and that, as a consequence, the land had not been much benefited. It is therefore asserted that the owners of the property are not obligated to pay the filling operation. These defendants sought to recover further damages by way of cross-complaint for the same supposed breach of contract on the part of the Government. On the part of Viuda de Tan Toco the defense was interposed that the name "Casa Viuda de Tan Toco" signed to the contract of suretyship by Mariano de la Rama was signed without authority; while on the part of the Philippine National Bank was asserted that the mortgage credit pertaining to the bank is superior to the Governments lien for improvement, and by way of counterclaim the bank asked that its mortgage be foreclosed for the amount of its mortgage credit, and that the four mortgagors, Sing Juco, Sing Bengco, M. de la Rama and G.M. Tanboontien, be required to pay the amount due to the bank, and that in case of their failure to do so the mortgaged property should be sold and the proceeds paid preferentially to the bank upon its mortgage.chanroblesvirtualawlibrarychanrobles virtual law library

Upon hearing the cause the trial court, ignoring that part of the original complaint wherein the Government seeks to enforce its lien in subordination to its first mortgage, made pronouncements:

(1) Declaring Sing Juco, Sing Bengco, M. de la Rama and G. M. Tanboontien indebted to the Government in the amount of P70, 938, with interest from the date of the filing of the complaint, and requiring them to pay the said sum to the plaintiff;chanrobles virtual law library

(2) Declaring, in effect, that the lien of the Government for the filing improvement was superior to the mortgage of the Philippine National Bank; and finallychanrobles virtual law library

(3) Declaring the defendant Tan Ong Sze, Viuda de Tan Toco, personally liable upon the contract of suretyship, in case the four principal obligors should not satisfy their indebtedness to the Government, or if the land should not sell enough to satisfy the same.

From this judgment various parties defendant appealed as follows: All of the defendants, except the Philippine National Bank, appealed from so much of the decision as held that the defendant owners and signatories to the contract of suretyship has not been released by non-performance of the contract on the part of the Bureau of Public Works, and from the refusal of the court to give to the defendant owners damages for breach of contract on the part of the Government. On the part of Tan Ong Sze, Viuda de Tan Toco, error is assigned to the action of the court in holding said defendant liable upon the contract of suretyship. Finally, the Philippine National Bank appealed from so much of the decision as gave the lien of the Government for improvement priority over the mortgagee executed in favor of the bank.chanroblesvirtualawlibrarychanrobles virtual law libraryDealing with these contentions in the order indicated, we find the contention of the appellants (except the Philippine National Bank), to the effect that the Director of Public Works has failed to comply with the obligations imposed upon the government by the contract, is wholly untenable. By said contract, the Government was not obligated to raise the land on which the dredged material was deposited to any specified level. The Government only obligated itself upon said land the material should be dredged from the mouth of the Iloilo River in the course of the improvement undertaken by the Government in and near that place. Under the original contract as originally drafted, the Government agreed to furnish 250,000 cubic meters, more or less, of dredged material; but on Mar. 14, 1921, the owners of the property indicated their acceptance of a modification of the contract effected by the Director of Public Works and the Secretary of Commerce and Communications, in which it was made clear that the material to be supplied would be such only as should be dredged from the river as a result of the proposed improvement. In the endorsement of the Director of Public Works, thus accepted by the owners, it was made clear that the Bureau of Public Works did not undertake to furnish material to complete the filling of the land to any specified level. Proof submitted on the part of the owners tends to show that parts of the filled land are still subject to inundation in rainy weather; and it is contended, that the owners have, for this reason, been able to sell in lots the property to individual occupants. the sum of P15,000, which is claimed upon this account, as damages by the owners, is the amount of interest alleged to have been accrued upon their investment, owing to their inability to place the land advantageously upon the market. The claim is, as already suggested, untenable. There has been no breach on the part of the Government in fulfilling the contract. In fact it appears that the Government deposited in the period covered by the contract 236,460 cubic meters, and after the amount thus deposited had been reduced by 21,840 cubic meters, owing to the natural process of drying, the Bureau of Public Works further deposited 53,000 cubic meters on the same land. In this connection, the district engineer testified that the filling which has been charged to the owners at P70,938 actually cost the Government the amount of P88,297.85. The charge made for the work was evidently computed on a very moderate basis; and the owners of the property have no just ground of complaint whatever.chanroblesvirtualawlibrarychanrobles virtual law libraryThe contention of Tan Ong Sze, widow of Tan Toco, to the effect that she was not, and is not, bound by the contract of suretyship, is our pinion, well-founded. It will be remembered that said contract purports to have been signed by Mariano de la Rama, acting for this defendant

under the power of attorney. But the Government has exhibited no power of attorney which would authorize the creation, by the attorney-in-fact, of an obligation in the nature of suretyship binding upon this principal.chanroblesvirtualawlibrarychanrobles virtual law libraryIt is true that the Government introduced in evidence 2 documents exhibiting powers of attorney, conferred by these documents (Exhibit K, identical with Exhibit 5) Mariano de la Rama was given the power which reads as follows:

. . . and also for me and in my name to sign, seal and execute, and as my act and deed deliver, any lease or any other deed for the conveying any real or personal property or the other matter or thing wherein I am or may be personally interested or concerned. And I do hereby further authorize and empower my said attorney to substitute and point any other attorney or attorneys under him for the purposes aforesaid, and the same again and pleasure to revoke; and generally for me and in my name to do, perform, and execute all and any other lawful and reasonable acts and things whatsoever as fully and effectually as I, the said Tan Ong Sze might or could do if personally present.

In another document, (Exhibits L and M), executed in favor of the same Mariano de la Rama by his uncle Tan Lien Co, attorney-in-fact of Tan Ong Sze, with power of substitution, there appears the following:

. . . and also for her and for her name to sign, seal and execute, and as her act and deed deliver, any lease, release, bargain, sale, assignment, conveyance or assurance, any other deed for the conveying any real or personal property or other matter or thing wherein she or may be personally interested or concerned.

Neither of these powers officially confers upon Mariano de la Rama the power to bind a principal by a contract of suretyship. The clauses noted relate more specifically to the execution of contracts relating to property; and the more general words at the close of the quoted clauses should be interpreted, under the general rule ejusdem generis, as referring to the contracts of like character. Power to execute a contract so exceptional a nature as a contract of suretyship or guaranty cannot be inferred from the general words contained in these powers.chanroblesvirtualawlibrarychanrobles virtual law libraryIn article 1827 of the Civil Code it is declared that guaranty shall not be presumed; it must be expressed and cannot be extended beyond its specified limits. By analogy a power of attorney to execute a contract of guaranty should not be inferred from vague or general words, especially when such words have their origin and explanation in particular powers of a wholly different nature. It results that the trial court was in error in giving personal judgment against Tan Ong Sze upon the bond upon which she was sued in this case.chanroblesvirtualawlibrarychanrobles virtual law libraryWe now proceed to consider the last important disputed question involved in this case, which is, whether the indebtedness owing to the Government under the contract for filling the parcel of land already mentioned is entitled to preference over the mortgage credit due to the Philippine National Bank, as the trial judge held, or whether on the contrary, the latter claim is entitled to priority over the claim of the Government Upon entering into the discussion of the feature of the case it is well to recall the fact that the bank's mortgage was registered in the office of the Register of Deeds of the province of Iloilo on November 26, 1920, while the filing contract was registered on January 8, 1924, that is to say, there is a priority of more than three years, in point of time, in the inscription of the mortgage credit under the filling contract was made an express lien upon the property which was the subject of improvement.chanroblesvirtualawlibrarychanrobles virtual law libraryIn the brief submitted in behalf of the bank it appears to be assumed that the Government credit under the filling contract is a true refectionary credit (credito refacionario) under subsection 2 of Article 1923 of the Civil Code. It may be observed, however, that in a precise and technical sense, this credit is not exactly of the nature of the refectionary credit as known to the civil law. In the civil law the refectionary credit is primarily an indebtedness incurred in the repair or reconstruction of something previously made, such repair or reconstruction being made necessary by

the deterioration or destruction as it formerly existed. The conception does not ordinarily include an entirely new work, though Spanish jurisprudence appears to have sanctioned this broader conception in certain cases as may be gathered from the decision in the Enciclopedia Juridica Espanola (vol. 26, pp. 888-890) s. v. Refaccionario. The question whether the credit we are considering falls precisely under the conception of the refectionary credit in the civil law is in this case academic rather than practical, for the reason that by the express terms of the filling contract the credit was constituted a lien upon the improved property. But assuming, as might be tenable in the state of jurisprudence, that said credit is a refectionary credit enjoying preference under subsection 3 or article 1923 of the Civil code , then the mortgage credit must be given priority under subsection 2 of the article 1927 of the same code, for the reason that the mortgage was registered first.chanroblesvirtualawlibrarychanrobles virtual law libraryPossibly the simpler view of the situation is to consider the Government's right under the stipulation expressly making the credit a lien upon the property, for it was certainly lawful for the parties to the filling contract to declare the credit a lien upon the property to be improved - to the extent hereinafter define - whether the credit precisely fulfills the conception of refectionary credit or not. In this aspect we have before us a competition between the real lien created by the filling contract of the later registration. The true solution to the problem is, in our opinion, not open to doubt; and again the result is that priority must be conceded to the mortgage. The mortgage was created by the lawful owners at a time when no other competing interest existed in the property. The lien of the mortgage therefore attached to the fee, or unlimited interest of the owners in the property. On the other hand, the lien created by the filling contract was created after the mortgage had been made and registered, and therefore, after the owners of the property had parted with the interest created by the mortgage. The Government's lien owes its origin to the contract, and derives its efficacy from the volition of the contracting parties. But no party can by contract create a right in another intrinsically greater than that which he himself possess. The owners, at the time this contract was made, were owners of the equity of redemption only and not of the entire interest in the property, and the lien created by the contract could only operate upon the equity of redemption.chanroblesvirtualawlibrarychanrobles virtual law libraryIn this connection, we observed that, as the new material was deposited from the Government dredges upon the property in question, it became an integral part of the soil and an irremovable fixture; and the deposit having been made under contract between the Government and the owners of the equity of redemption, without the concurrence of the mortgage creditor in said contract the latter could not be prejudiced thereby. The trial court, in declaring that the Government's lien should have preference over the mortgage, seems to have proceeded upon the idea that, at the time the mortgage was created, the new soil had yet been deposited under the filling contract and that as a consequence the mortgage lien should not been considered as attaching to the value added by deposit of the additional material. This proposition, however, overlooks the fact that the deposited material became an irremovable fixture, by the act and intention of the parties to the filling contract, and the lien of the mortgage undoubtedly attached to the increment thus spread over and affixed to the mortgaged land. If the idea which prevailed in the trial court should be accepted as law upon this point, the result would be that a mortgage creditor could, by the act of strangers, be entirely proved out of his property by making of improvements to which he has not assented. This cannot be accepted as good law.chanroblesvirtualawlibrarychanrobles virtual law libraryWe may add that the case cannot, on this point, be resolved favorably to the contention of the Director of Public Works, upon the authority of Unson vs. Urquijo, Zuluoaga and Escubi (50 Phil., 160), for the reason that upon the deposit of the dredged material on the land such material lost its identity. In the case cited the machinery in respect to which the vendor's preference was upheld by this court retained its separate existence and remained perfectly capable of identification at all times.chanroblesvirtualawlibrarychanrobles virtual law libraryFrom what it has been said it results that the appealed judgment must be affirmed, and the same is hereby affirmed, in dismissing, in effect, the cross-complaint filed by some of the defendants against the plaintiff, the Director of Public Works. Such judgment is further affirmed in its findings, which are not dispute, with respect to the amount of the Government's claim under the filling contract and the amount of mortgage credit of the bank, as it is also affirmed in respect to the joint and several judgment entered in favor of the plaintiff against Sing Juco, Sing Bengco, Tanboontien and Mariano de la Rama Tanbunco (alias Mariano de la Rama) for the amount due to the Governmentchanrobles virtual law librarySaid judgment, however, must be reversed and the same is being reversed in so far as it holds that Tan Ong Sze, Viuda de Tan Toco, is liable upon the contract of suretyship, and she is hereby absolved from

the complaint. The judgment must also be reversed in so far as it declares that the Government's lien under the filling contract is entitled to priority over the bank's mortgage. On the contrary it is hereby declared that the bank's credit is entitled to priority out of the proceeds of the foreclosure sale, the residue, if any, to be applied to the Government's lien created by the filling contract and otherwise in accordance with law. For further proceedings in conformity with this opinion, the cause is hereby remanded to the cause of origin, without pronouncements as to costs. So ordered.

G.R. No. 16492 March 9, 1922

E. MACIAS & CO., importers and exporters, plaintiff-appellant, vs.WARNER, BARNES & CO., in its capacity as agents of "The China Fire Insurance Co.," of "The Yang-Tsze" and of "The State Assurance Co., Ltd.," defendant-appellant.

Ramon Sotelo for plaintiff-appellant.Cohn, Fisher & DeWitt for defendant-appellant.

STATEMENT

The plaintiff is a corporation duly registered and domiciled in Manila. The defendant is a corporation duly licensed to do business in the Philippine Islands, and is the resident agent of insurance companies "The China Fire Insurance Company, Limited, of Hongkong," "The Yang-Tsze Insurance Association Limited, of Shanghai," and "The State Assurance Company, Limited, of Liverpool. The plaintiff is an importer of textures and commercial articles for wholesale.

In the ordinary course of business, it applied for, and obtained, the following policies against loss by fire:

Policy No. 4143, issued by The China Fire Insurance Co., Ltd., for ....................................................................... P12,000

Policy No. 4382, issued by The China Fire Insurance Co., Ltd., for .......................................................................... 15,000

Policy No. 326, issued by The Yang-Tsze Insurance Ass'n., Ltd., for ..................................................................... 10,000

Policy No. 796111, issued by The State Assurance Co., Ltd., for ............................................................................ 8,000

Policy No. 4143, of P12,000, recites that Mrs. Rosario Vizcarra, having paid to the China Fire Insurance Company, Limited, P102 for insuring against or damage by fire certain merchandise the description of which follows, "the company agrees with the insured that, if the property above described, or any party thereof, shall be destroyed or damaged by fire between September 16, 1918, and September 16, 1919," etc., "The company will, out of its capital, stock and funds, pay or make good all such loss or damage, not exceeding" the amount of the policy. This policy was later duly assigned to the plaintiff.

Policy No. 4382, for P15,000, was issued by the same company to, and in the name of, plaintiff.

Policy No. 326, for P10,000, was issued to, and in the name of policy No. 326, for P10,000, was issued to, and in the name of the plaintiff by The Yang-Tsze Insurance Association, Limited, and recites that the premium of P125 was paid by the plaintiff to the association, and that, in the event of loss by fire between certain dates, "the funds and property of the said association shall be subject and liable to pay, reinstate, or make good to the said assured, their heirs, executors, or administrators, such loss or damage as shall be occasioned by fire to the property

above-mentioned and hereby insured," not exceeding the amount of the policy.

Policy No. 796111, for P8,000, was issued by The States Assurance Company, Limited, to the plaintiff for a premium of P100, which was paid to the Assurance Company through the defendant, its authorized agent, and recites that "the company agrees with the insured that in the event of loss by fire between certain dates, the company will, out of its capital, stock and funds, pay the amount of such loss or damage," not exceeding the amount of the policy, and it is attested by the defendant, through its "Cashier and Accountant and Manager, Agents, State Assurance Co., Ltd.," authorized agents of the Assurance Company.

Policy No. 4143 is attested "on behalf of The China Fire Insurance Company, Limited," by the cashier and accountant and manager of the defendant, as agents of The China Fire Insurance Company, Limited. The same is true as to policy no. 4382.

Policy No. 326 recites the payment of a premium of P125 by the plaintiff to The Yang-Tsze Insurance Association, Limited, and that, in the event of loss, "the funds and property of the said association shall be subject and liable to pay, reinstate, or make good to the said assured, their heirs, executors, or administrators, such loss or damage as shall be occasioned by fire or lightning to the property" insured, not exceeding the amount of the policy, and it is attested by the defendant, through its cashier and accountant and manager, as agents of the association "under the authority of a Power of Attorney from The Yang-Tsze Insurance Association, Limited," "to sign, for and on behalf of the said Association, etc."

March 25, 1919, and while the policies were in force, a loss occurred in which the insured property was more or less damaged by fire and the use of water resulting from the fire.

The plaintiff made a claim for damages under its policies, but could not agree as to the amount of loss sustained. It sold the insured property in its then damaged condition, and brought this action against Warner, Barnes & Co., in its capacity as agents, to recover the difference between the amount of the policies and the amount realized from the sale of the property, and in the first cause of action, it prayed for judgment for P23,052.99, and in the second cause of action P9,857.15.

The numbers and amounts of the policies and the names of the insurance companies are set forth and alleged in the complaint.

The answer admits that the defendants is the resident agent of the insurance companies, the issuance of the policies, and that a fire occurred on March 25, 1919, in the building in which the goods covered by the insurance policies were stored, and that to extinguish the fire three packages of goods were damage by water not to exceed P500, and denies generally all other material allegations of the complaint.

As a further and separate defense, the defendant pleads certain provisions in the policies, among which was a written notice of loss, and all other insurance and certain detailed information. It is then alleged —

That although frequently requested to do so, plaintiff failed and refused to deliver to defendant or to any other person authorized to receive it, any claim in writing specifying the articles or items of property damaged or destroyed and of the alleged amount of the loss or damage caused thereto.

That defendant was at all times ready and willing to pay, on behalf of the insurance companies by whom said policies were issued, and to the extent for which each was proportionately liable, the actual damage to plaintiff's goods covered by the risks insured against, upon compliance within the time limited, with the terms of the clause of the contracts of insurance above set forth.

Defendants prays judgment for costs.

Before the trial, counsel for the defendant objected to the introduction of any evidence in the case, and moved "that judgment be entered for the defendant on the pleadings upon the ground that it appears from the averment of the complaint that the plaintiff has had no contractual relations with the defendant, and that the action has not been brought against the real party in interest." The objection and motion was overruled and exception duly taken. After trial the court found that there was due the plaintiff from the three insurance companies p18,493.29 with interest thereon at the rate of 6 per cent per annum, from the date of the commencement of the action, and costs, and rendered the following judgment:

It is, therefore, ordered that judgment be entered against Warner, Barnes & Co., Ltd., in its capacity as agent and representative in the Philippine Islands for The China fire Insurance Company, Ltd., The Yang-Tsze Insurance Association, Ltd., and The State Assurance Co., Ltd., for the payment to the plaintiff, E.Macias & Co., of the sum of P18,493.29, the amount of this judgment to be prorated by Warner, Barnes & Co., among the three insurance companies above-mentioned by it represented, in proportion to the interest insured by each of said three insurance companies, according to the policies issued by them in favor of the plaintiff, and sued upon in this action.

The defendant then filed a motion to set aside the judgment and for a new trial, which was overruled and exception taken. From this judgment the defendant appealed, claiming that "the court erred in overruling defendant's motion for judgment on the pleadings; that the court erred in giving judgment for the plaintiff; that the court erred in denying defendants motion for a new trial," and specifying other assignments which are not material to this opinion, Plaintiff also appealed.

JOHNS, J.:

The material facts are not in dispute it must be conceded that the policies in question were issued by the different insurance companies, through the defendant as their respective agent; that they were issued in consideration of a premium which was paid by the insured to the respective companies for the amount of the policies, as alleged; that the defendant was, and is now, the resident agent in Manila of the companies, and was authorized to solicit and do business for them as such agent; that each company is a foreign corporation. The principal office and place business of the The China Fire Insurance Company is at Hongkong; of The Yang-Tsze Insurance Association is at Shanghai; and of The State Assurance Company is at Liverpool. As such foreign corporations they were duly authorized and licensed to do insurance business in the Philippine Islands, and, to that end and for that purpose, the defendant corporation, Warner, Barnes & Co., was the agent of each company.

All of the policies are in writing, and recite that the premium was paid by the insured to the insurance company which issued the policy, and that, in the event of a loss, the insurance company which issued it will pay to the insured the amount of the policy.

This is not a case of an undisclosed agent or an undisclosed principal. It is a case of a disclosed agent and a disclosed principal.

The policies on their face shows that the defendant was the agent of the respective companies, and that it was acting as such agent in dealing with the plaintiff. That in the issuance and delivery of the policies, the defendant was doing business in the name of, acting for, and representing, the respective insurance companies. The different policies expressly recite that, in the event of a loss, the respective companies agree to compensate the plaintiff for the amount of the loss. the defendant company did not insure the property of the plaintiff, or in any manner agree to pay the plaintiff the amount of any loss. There is no contract of any kind. either oral or written, between the plaintiff and Warner, Barnes & Co. Plaintiff's contracts are with the insurance companies, and are in writing, and the premiums were paid to the insurance companies, and are in writing, and the premiums were paid to the insurance companies and the policies were issued by, and in the name of, the insurance companies, and on the face of the policy itself,

the plaintiff knew that the defendant was acting as agent for, and was representing, the respective insurance companies in the issuance and deliver of the policies. The defendant company did not contract or agree to do anything or to pay the plaintiff any money at any time or on any condition, either as agent or principal.

There is a very important distinction between the power and duties of a resident insurance agent of a foreign company and that of an executor, administrator, or receiver. An insurance agent as such is not responsible for, and does not have, any control over the corpus or estate of the corporate property, as does an executor, administrator, or receiver. Subject only to the order of the court, such officers are legal custodians and have actual possession of the corporate property. It is under their control and within their jurisdiction.

As stated by counsel for Warner, Barnes & Co., an attorney of record for an insurance company has greater power and authority to act for, and bind, the company than does a soliciting agent of an insurance company. Yet, no attorney would contend that a personal action would lie against local attorneys who represent a foreign corporation to recover on a contract made by the corporation. On the same principles by which plaintiff seeks to recover from the defendant, an action could be maintained against the cashier of any bank on every foreign draft which he signed for, and on behalf of, the bank.

Every cause of action ex contractu must be founded upon a contract, oral or written, either express or implied.

Warner, Barnes & Co., as principal or agent, did not make any contract, either or written, with the plaintiff. The contracts were made between the respective insurance companies and the insured, and were made by the insurance companies, through Warner, Barnes & Co., as their agent.

As in the case of a bank draft, it is not the cashier of the bank who makes the contract to pay the money evidenced by the draft, it is the bank, acting through its cashier, that makes the contract. So, in the instant case, it was the insurance companies, acting through Warner, Barnes & Co., as their agent, that made the written contracts wit the insured.

The trial court attached much importance to the fact that in the further and separate answer, an admission was made "that defendant was at all times ready and will not to pay, on behalf of the insurance companies by whom each was proportionately liable, the actual damage" sustained by the plaintiff covered by the policies upon the terms and conditions therein stated.

When analyzed, that is nothing more than a statement that the companies were ready and willing to prorate the amount when the losses were legally ascertained. Again, there is not claim or pretense that Warner, Barnes & Co. had any authority to act for, and represent the insurance companies in the pending action, or to appear for them or make any admission which would bind them. As a local agent, it could not do that without express authority. That power could only exercised by an executive officer of the company, or a person who was duly authorized to act for, and represent, the company in legal proceedings, and there is no claim or pretense, either express or implied, that the defendant has any such authority.

Plaintiff's cause of action, if any, is direct against the insurance companies that issued the policies and agreed to pay the losses.

The only defendant in the instant case is "Warner, Barnes & Co., in its capacity as agents of:" the insurance companies. Warner, Barnes & Co. did not make any contract with the plaintiff, and are not liable to the plaintiff on any contract, either as principal or agent. For such reason, plaintiff is not entitled to recover its losses from Warner, Barnes & Co., either as principal or agent. There is no breach of any contract with the plaintiff by Warners, Barnes & Co., either as agent or principal, for the simple reason that Warner, Barnes & Co., as agent or principal, never made any contract, oral or written, with the plaintiff. This defense was promptly raised before the taking of the testimony, and again renewed on the motion to set aside the judgment.

Plaintiff's own evidence shows that any cause of action it may have is against the insurance companies which issued the policies.

The complaint is dismissed, and the judgment of the lower court is reversed, and one will be entered here in favor of Warner, Barnes & Co., Ltd., against the plaintiff, for costs in both this and the lower court. So ordered.

Araullo, C.J., Johnson, Street, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur.

G.R. No. L-16570 March 9, 1922

SMITH, BELL & CO., LTD., plaintiff-appellant, vs.VICENTE SOTELO MATTI, defendant-appellant.

Ross and Lawrence and Ewald E. Selph for plaintiff-appellant.Ramon Sotelo for defendant-appellant.

ROMUALDEZ, J.:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into contracts whereby the former obligated itself to sell, and the latter to purchase from it, two steel tanks, for the total price of twenty-one thousand pesos (P21,000), the same to be shipped from New York and delivered at Manila "within three or four months;" two expellers at the price of twenty five thousand pesos (P25,000) each, which were to be shipped from San Francisco in the month of September, 1918, or as soon as possible; and two electric motors at the price of two thousand pesos (P2,000) each, as to the delivery of which stipulation was made, couched in these words: "Approximate delivery within ninety days. — This is not guaranteed."

The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918; and the motors on the 27th of February, 1919.

The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr. Sotelo refused to receive them and to pay the prices stipulated.

The plaintiff brought suit against the defendant, based on four separate causes of action, alleging, among other facts, that it immediately notified the defendant of the arrival of the goods, and asked instructions from him as to the delivery thereof, and that the defendant refused to receive any of them and to pay their price. The plaintiff, further, alleged that the expellers and the motors were in good condition. (Amended complaint, pages 16-30, Bill of Exceptions.)

In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining and By-Products Co., Inc., denied the plaintiff's allegations as to the shipment of these goods and their arrival at Manila, the notification to the defendant, Mr. Sotelo, the latter's refusal to receive them and pay their price, and the good condition of the expellers and the motors, alleging as special defense that Mr. Sotelo had made the contracts in question as manager of the intervenor, the Manila Oil Refining and By-Products Co., Inc which fact was known to the plaintiff, and that "it was only in May, 1919, that it notified the intervenor that said tanks had arrived, the motors and the expellers having arrived incomplete and long after the date stipulated." As a counterclaim or set-off, they also allege that, as a consequence of the plaintiff's delay in making delivery of the goods, which the intervenor intended to use in the manufacture of cocoanut oil, the intervenor suffered damages in the sums of one hundred sixteen thousand seven hundred eighty-three pesos and ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and twenty-one thousand two hundred and fifty pesos (P21,250) on account of the expellers and the motors not having arrived in due time.

The case having been tried, the court below absolved the defendants from the complaint insofar as the tanks and the electric motors were concerned, but rendered judgment against them, ordering them to "receive the aforesaid expellers and pay the plaintiff the sum of fifty thousand pesos (P50,00), the price of the said goods, with legal interest thereon from July 26, 1919, and costs."

Both parties appeal from this judgment, each assigning several errors in the findings of the lower court.

The principal point at issue in this case is whether or not, under the contracts entered into and the circumstances established in the record, the plaintiff has fulfilled, in due time, its obligation to bring the goods in question to Manila. If it has, then it is entitled to the relief prayed for; otherwise, it must be held guilty of delay and liable for the consequences thereof.

To solve this question, it is necessary to determine what period was fixed for the delivery of the goods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and in both of them we find this clause:

To be delivered within 3 or 4 months — The promise or indication of shipment carries with it absolutely no obligation on our part — Government regulations, railroad embargoes, lack of vessel space, the exigencies of the requirement of the United States Government, or a number of causes may act to entirely vitiate the indication of shipment as stated. In other words, the order is accepted on the basis of shipment at Mill's convenience, time of shipment being merely an indication of what we hope to accomplish.

In the contract Exhibit C (page 63 of the record), with reference to the expellers, the following stipulation appears:

The following articles, hereinbelow more particularly described, to be shipped at San Francisco within the month of September /18, or as soon as possible. — Two Anderson oil expellers . . . .

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:

Approximate delivery within ninety days. — This is not guaranteed. — This sale is subject to our being able to obtain Priority Certificate, subject to the United States Government requirements and also subject to confirmation of manufactures.

In all these contracts, there is a final clause as follows:

The sellers are not responsible for delays caused by fires, riots on land or on the sea, strikes or other causes known as "Force Majeure" entirely beyond the control of the sellers or their representatives.

Under these stipulations, it cannot be said that any definite date was fixed for the delivery of the goods. As to the tanks, the agreement was that the delivery was to be made "within 3 or 4 months," but that period was subject to the contingencies referred to in a subsequent clause. With regard to the expellers, the contract says "within the month of September, 1918," but to this is added "or as soon as possible." And with reference to the motors, the contract contains this expression, "Approximate delivery within ninety days," but right after this, it is noted that "this is not guaranteed."

The oral evidence falls short of fixing such period.

From the record it appears that these contracts were executed at the time of the world war when there existed rigid restrictions on the export from the United States of articles like the machinery in question, and

maritime, as well as railroad, transportation was difficult, which fact was known to the parties; hence clauses were inserted in the contracts, regarding "Government regulations, railroad embargoes, lack of vessel space, the exigencies of the requirements of the United States Government," in connection with the tanks and "Priority Certificate, subject to the United State Government requirements," with respect to the motors. At the time of the execution of the contracts, the parties were not unmindful of the contingency of the United States Government not allowing the export of the goods, nor of the fact that the other foreseen circumstances therein stated might prevent it.

Considering these contracts in the light of the civil law, we cannot but conclude that the term which the parties attempted to fix is so uncertain that one cannot tell just whether, as a matter of fact, those articles could be brought to Manila or not. If that is the case, as we think it is, the obligations must be regarded as conditional.

Obligations for the performance of which a day certain has been fixed shall be demandable only when the day arrives.

A day certain is understood to be one which must necessarily arrive, even though its date be unknown.

If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is conditional and shall be governed by the rules of the next preceding section. (referring to pure and conditional obligations). (Art. 1125, Civ. Code.)

And as the export of the machinery in question was, as stated in the contract, contingent upon the sellers obtaining certificate of priority and permission of the United States Government, subject to the rules and regulations, as well as to railroad embargoes, then the delivery was subject to a condition the fulfillment of which depended not only upon the effort of the herein plaintiff, but upon the will of third persons who could in no way be compelled to fulfill the condition. In cases like this, which are not expressly provided for, but impliedly covered, by the Civil Code, the obligor will be deemed to have sufficiently performed his part of the obligation, if he has done all that was in his power, even if the condition has not been fulfilled in reality.

In such cases, the decisions prior to the Civil Code have held that the obligee having done all that was in his power, was entitled to enforce performance of the obligation. This performance, which is fictitious — not real — is not expressly authorized by the Code, which limits itself only to declare valid those conditions and the obligation thereby affected; but it is neither disallowed, and the Code being thus silent, the old view can be maintained as a doctrine. (Manresa's commentaries on the Civil Code [1907], vol. 8, page 132.)

The decisions referred to by Mr. Manresa are those rendered by the supreme court of Spain on November 19, 1896, and February 23, 1871.

In the former it is held:

First. That when the fulfillment of the conditions does not depend on the will of the obligor, but on that of a third person who can in no way be compelled to carry it out, and it is found by the lower court that the obligor has done all in his power to comply with the obligation, the judgment of the said court, ordering the other party to comply with his part of the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10, of the "Novísima Recopilación," or Law 12, Tit. 11, of Partida 5, when in the said finding of the lower court, no law or precedent is alleged to have been violated. (Jurisprudencia Civil published by the directors of the Revista General de Legislacion y Jurisprudencia [1866], vol. 14, page 656.)

In the second decision, the following doctrine is laid down:

Second. That when the fulfillment of the condition does not depend on the will of the obligor, but on that of a third person, who can in no way be compelled to carry it out, the obligor's part of the contract is complied withalf Belisario not having exercised his right of repurchase reserved in the sale of Basilio Borja mentioned in paragraph (13) hereof, the affidavit of Basilio Borja for the consolidacion de dominio was presented for record in the registry of deeds and recorded in the registry on the same date.

(32) The Maximo Belisario left a widow, the opponent Adelina Ferrer and three minor children, Vitaliana, Eugenio, and Aureno Belisario as his only heirs.

(33) That in the execution and sales thereunder, in which C. H. McClure appears as the judgment creditor, he was represented by the opponent Peter W. Addison, who prepared and had charge of publication of the notices of the various sales and that in none of the sales was the notice published more than twice in a newspaper.

The claims of the opponent-appellant Addison have been very fully and ably argued by his counsel but may, we think, be disposed of in comparatively few words. As will be seen from the foregoing statement of facts, he rest his title (1) on the sales under the executions issued in cases Nos. 435, 450, 454, and 499 of the court of the justice of the peace of Dagupan with the priority of inscription of the last two sales in the registry of deeds, and (2) on a purchase from the Director of Lands after the land in question had been forfeited to the Government for non-payment of taxes under Act No. 1791.

The sheriff's sales under the execution mentioned are fatally defective for what of sufficient publication of the notice of sale. Section 454 of the Code of civil Procedure reads in part as follows:

SEC. 454. Before the sale of property on execution, notice thereof must be given, as follows:

1. In case of perishable property, by posing written notice of the time and place of the sale in three public places of the municipality or city where the sale is to take place, for such time as may be reasonable, considering the character and condition of the property;

2. * * * * * * *

3. In cases of real property, by posting a similar notice particularly describing the property, for twenty days in three public places of the municipality or city where the property is situated, and also where the property is to be sold, and publishing a copy thereof once a week, for the same period, in some newspaper published or having general circulation in the province, if there be one. If there are newspaper published in the province in both the Spanish and English languages, then a like publication for a like period shall be made in one newspaper published in the Spanish language, and in one published in the English language: Provided, however, That such publication in a newspaper will not be required when the assessed valuation of the property does not exceed four hundred pesos;

4. * * * * * * *

Examining the record, we find that in cases Nos. 435 and 450 the sales took place on October 14, 1916; the notice first published gave the date of the sale as October 15th, but upon discovering that October 15th was a Sunday, the date was changed to October 14th. The correct notice was published twice in a local newspaper, the first publication was made on October 7th and the second and last on October 14th, the date of the sale itself. The newspaper is a weekly periodical published every Saturday afternoon.

In case No. 454 there were only two publications of the notice in a newspaper, the first publication being made only fourteen days before the date of the sale. In case No. 499, there were also only two publications, the first of which was made thirteen days before the sale. In the last case the sale was advertised for the hours of from 8:30 in the morning until 4:30 in the afternoon, in violation of section 457 of the Code of Civil Procedure. In cases Nos. 435 and 450 the hours advertised were from 9:00 in the morning until 4.30 in the afternoon. In all of the cases the notices of the sale were prepared by the judgment creditor or his agent, who also took charged of the publication of such notices.

In the case of Campomanes vs. Bartolome and Germann & Co. (38 Phil., 808), this court held that if a sheriff sells without the notice prescribe by the Code of Civil Procedure induced thereto by the judgment creditor and the purchaser at the sale is the judgment creditor, the sale is absolutely void and not title passes. This must now be regarded as the settled doctrine in this jurisdiction whatever the rule may be elsewhere.

It appears affirmatively from the evidence in the present case that there is a newspaper published in the province where the sale in question took place and that the assessed valuation of the property disposed of at each sale exceeded P400. Comparing the requirements of section 454, supra, with what was actually done, it is self-evident that notices of the sales mentioned were not given as prescribed by the statute and taking into consideration that in connection with these sales the appellant Addison was either the judgment creditor or else occupied a position analogous to that of a judgment creditor, the sales must be held invalid.

The conveyance or reconveyance of the land from the Director of Lands is equally invalid. The provisions of Act No. 1791 pertinent to the purchase or repurchase of land confiscated for non-payment of taxes are found in section 19 of the Act and read:

. . . In case such redemption be not made within the time above specified the Government of the Philippine Islands shall have an absolute, indefeasible title to said real property. Upon the expiration of the said ninety days, if redemption be not made, the provincial treasurer shall immediately notify the Director of Lands of the forfeiture and furnish him with a description of the property, and said Director of Lands shall have full control and custody thereof to lease or sell the same or any portion thereof in the same manner as other public lands are leased or sold: Provided, That the original owner, or his legal representative, shall have the right to repurchase the entire amount of his said real property, at any time before a sale or contract of sale has been made by the director of Lands to a third party, by paying therefore the whole sum due thereon at the time of ejectment together with a penalty of ten per centum . . . .

The appellant Addison repurchased under the final proviso of the section quoted and was allowed to do so as the successor in interest of the original owner under the execution sale above discussed. As we have seen, he acquired no rights under these sales, was therefore not the successor of the original owner and could only have obtained a valid conveyance of such titles as the Government might have by following the procedure prescribed by the Public Land Act for the sale of public lands. he is entitled to reimbursement for the money paid for the redemption of the land, with interest, but has acquired no title through the redemption.

The question of the priority of the record of the sheriff's sales over that of the sale from Belisario to Borja is extensively argued in the briefs, but from our point of view is of no importance; void sheriff's or execution sales cannot be validated through inscription in the Mortgage Law registry.

The opposition of Adelina Ferrer must also be overruled. She maintained that the land in question was community property of the marriage of Eulalio Belisario and Paula Ira: that upon the death of Paula Ira inealed from is modified, and the defendant Mr. Vicente Sotelo Matti, sentenced to accept and receive from the plaintiff the tanks, the expellers and the motors in question, and to pay the plaintiff the sum of ninety-six thousand pesos (P96,000), with legal interest thereon from July 17,

1919, the date of the filing of the complaint, until fully paid, and the costs of both instances. So ordered.

Araullo, C.J., Johnson, Street, Malcolm, Avanceña, Villamor, Ostrand, and Johns, JJ., concur.

G.R. No. L-39037 October 30, 1933

THE PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs.PAZ AGUDELO Y GONZAGA, ET AL., defendants. PAZ AGUDELO Y GONZAGA, appellant.

Hilado and Hilado and Norberto Romualdez for appellant.Roman J. Lacson for appellee.

VILLA-REAL, J.:

The defendant Paz Agudelo y Gonzaga appeals to this court from the judgment rendered by the Court of First Instance of Occidental Negros, the dispositive part of which reads as follows:

Wherefore, judgment is rendered herein absolving the defendant Mauro A. Garrucho from the complaint and ordering the defendant Paz Agudelo y Gonzaga to pay to the plaintiff the sum of P31,091.55, Philippine currency, together with the interest on the balance of P20,774.73 at 8 per cent per annum of P4.55 daily from July 16, 1929, until fully paid, plus the sum of P1,500 as attorney's fees, and the costs of this suit.

It is hereby ordered that in case the above sums adjudged in favor of the defendant by virtue of this judgment are not paid to the Philippine National Bank or deposited in the office of the clerk of this court, for delivery to the plaintiff, within three months from the date of this decision, the provincial sheriff of Occidental Negros shall set at public auction the mortgaged properties described in annex E of the second amended complaint, and apply the proceeds thereof to the payment of the sums in question.

It is further ordered that in case the proceeds of the mortgaged properties are not sufficient to cover the amount of this judgment, a writ of execution be issued against any other property belonging to the defendant Paz Agudelo y Gonzaga, not otherwise exempt from execution, to cover the balance resulting therefrom.

In support of her appeal, the appellant assigns six alleged errors as committed by the trial court, which we shall discuss in the course of this decision.

The following pertinent facts, which have been proven without dispute during the trial, are necessary for the decision of the questions raised in the present appeal, to wit:

On November 9, 1920, the defendant-appellant Paz Agudelo y Gonzaga executed in favor of her nephew, Mauro A. Garrucho, the document Exhibit K conferring upon him a special power of attorney sufficiently broad in scope to enable him to sell, alienate and mortgage in the manner and form he might deem convenient, all her real estate situated in the municipalities of Murcia and Bacolod, Occidental Negros, consisting in lots Nos. 61 and 207 of the cadastral survey of Bacolod, Occidental Negros, together with the improvement thereon.

On December 22, 1920, Amparo A. Garrucho executed the document Exhibit H whereby she conferred upon her brother Mauro A

Garrucho a special power of attorney sufficiently broad in scope to enable him to sell, alienate, mortgage or otherwise encumber, in the manner and form he might deem convenient, all her real estate situated in the municipalities of Murcia and Bago, Occidental Negros.

Nothing in the aforesaid powers of attorney expressly authorized Mauro A. Garrucho to contract any loan nor to constitute a mortgage on the properties belonging to the respective principals, to secure his obligations.

On December 23, 1920, Mauro A. Garrucho executed in the favor of the plaintiff entity, the PhilippineNational bank, the document Exhibit G, whereby he constituted a mortgage on lot No. 878 of the cadastral survey of Murcia, Occidental Negros, with all the improvements thereon, described in transfer certificate of title No. 2415 issued in the name of Amparo A. Garrucho, to secure the payment of credits, loans, commercial overdrafts, etc., not exceeding P6,000, together with interest thereon, which he might obtain from the aforesaid plaintiff entity, issuing the corresponding promissory note to that effect.

During certain months of the year 1921 and 1922, Mauro A. Garrucho maintained a personal current account with the plaintiff bank in the form of a commercial credit withdrawable through checks (Exhibits S, 1 and T).

On August 24, 1931, the said Mauro A. Garrucho executed in favor of the plaintiff entity, the PhilippineNational Bank, the document Exhibit J whereby he constituted a mortgage on lots Nos. 61 and 207 of the cadastral survey of Bacolod together with the buildings and improvements thereon, described in original certificates of title Nos. 2216 and 1148, respectively, issued in the name of Paz Agudelo y Gonzaga, to secure the payment of credits, loans and commercial overdrafts which the said bank might furnish him to the amount of P16,00, payable on August 24, 1922, executing the corresponding promissory note to that effect.

The mortgage deeds Exhibit G and J as well as the corresponding promissory notes for P6,000 and P16,000, respectively, were executed in Mauro A. Garrucho's own name and signed by him in his personal capacity, authorizing the mortgage creditor, the Philippine National Bank, to take possession of the mortgaged properties, by means of force if necessary, in case he failed to comply with any of the conditions stipulated therein.

On January 4, 1922, the manager of the Iloilo branch of the Philippine National Bank notified Mauro A. Garrucho that his promissory note for P6,000 of 10 days within which to make payment thereof (Exhibit O).1awphil.net

On May 9, 1922, the said manager notified Mauro A. Garrucho that his commercial credit was closed from that date (Exhibit S).

Inasmuch as Mauro A. Garrucho had overdrawn his credit with the plaintiff-appellee, the said manager thereof, in a letter dated June 27, 1922 (Exhibit T), requested him to liquidate his account amounting to P15,148.15, at the same time notifying him that his promissory note for P16,000 giving as security for the commercial overdraft in question, had fallen due some time since.

On July 15, 1922, Mauro A. Garrucho, executed in favor of the plaintiff entity the deed Exhibit C whereby he constituted a mortgage on lots Nos. 61 and 207 of the cadastral survey of Bacolod, together with the improvements thereon, described in transfer certificates of title Nos. 2216 and 1148, respectively, issued in the name of Paz Agudelo y Gonzaga, and on lot No. 878 of the cadastral survey of Murcia, described in transfer certificate of title No. 2415, issued in the name of Amparo A. Garrucho.

In connection of the credits, loans, and commercial overdrafts amounting to P21,000 which had been granted him, Mauro A. Garrucho, on the said date July 15, 1922, executed the promissory note, Exhibit B, for P21,000 as a novation of the former promissory notes for P6,000 and P16,000, respectively.

In view of the aforesaid consolidated mortgage, Exhibit C, the Philippine National Bank, on the said date of July 15, 1922, cancelled the mortgages constituted on lots Nos. 61, 207 and 878 described in Torrens titles Nos. 2216, 1148 and 2415, respectively.

On November 25, 1925, Amparo A. Garrucho sold lot No. 878 described in certificate of title No. 2415, to Paz Agudelo y Gonzaga (Exhibit M).

On January 15, 1926, in the City of Manila, Paz Agudelo y Gonzaga signed the affidavit, Exhibit N, which reads as follows:

Know all men by these presents: That I, Paz Agudelo y Gonzaga, single, of age, and resident of the City of Manila, P. I., by these present do hereby agree and consent to the transfer in my favor of lot No. 878 of the Cadastre of Murcia, Occidental Negros, P. I., by Miss Amparo A. Garrucho, as evidenced by the public instrument dated November 25, 1925, executed before the notary public Mr. Genaro B. Benedicto, and do hereby further agree to the amount of the lien thereon stated in the mortgage deed executed by Miss Amparo A. Garrucho in favor of the Philippine National Bank.

In testimony whereof, I hereunto affix my signature in the City of Manila, P.I., this 15th of January, 1926.

(Sgd.) PAZ AGUDELO Y GONZAGA.

Pursuant to the sale made by Amparo A. Garrucho in favor of Paz Agudelo y Gonzaga, of lot No. 878 of the cadastral survey of Murcia, described in certificate of title No. 2145 issued in the name of said Amparo A. Garrucho, and to the affidavit, Exhibit N, transfer certificate of title No. 5369 was issued in the name of PazAgudelo y Gonzaga. Without discussing and passing upon whether or not the powers of attorney issued in favor of Mauro A. Garrucho by his sister, Amparo A. Garrucho, and by his aunt, Paz Agudelo y Gonzaga, respectively, to mortgage their respective real estate, authorized him to obtain loans secured by mortgage in the properties in question, we shall consider the question of whether or not Paz Agudelo y Gonzaga is liable for the payment of the loans obtained by Mauro A. Garrucho from the Philippine National Bank for the security of which he constituted a mortgage on the aforesaid real estate belonging to the defendant-appellant Paz Agudelo y Gonzaga. Article 1709 of the Civil Code provides the following:

ART. 1709. By the contract of agency, one person binds himself to render some service, or to do something for the account or at the request of another.

And article 1717 of the same Code provides as follows: ART. 1717. When an agent acts in his own name, the principal shall have no right of action against the persons with whom the agent has contracted, or such persons against the principal. In such case, the agent is directly liable to the person with whom he has contracted, as if the transaction were his own. Cases involving things belonging to the principal are excepted. The provisions of this article shall be understood to be without prejudice to actions between principal and agent.

Aside from the phrases "attorney in fact of his sister, Amparo A. Garrucho, as evidenced by the power of attorney attached hereto" and "attorney in fact of Paz Agudelo y Gonzaga" written after the name of Mauro A. Garrucho in the mortgage deeds, Exhibits G. and J, respectively, there is nothing in the said mortgage deeds to show that Mauro A. Garrucho is attorney in fact of Amparo A. Garrucho and of Paz Agudelo y Gonzaga, and that he obtained the loans mentioned in

the aforesaid mortgage deeds and constituted said mortgages as security for the payment of said loans, for the account and at the request of said Amparo A. Garrucho and Paz Agudelo y Gonzaga. The above-quoted phrases which simply described his legal personality, did not mean that Mauro A. Garrucho obtained the said loans and constituted the mortgages in question for the account, and at the request, of his principals. From the titles as well as from the signatures therein, Mauro A. Garrucho, appears to have acted in his personal capacity. In the aforesaid mortgage deeds, Mauro A. Garrucho, in his capacity as mortgage debtor, appointed the mortgage creditor Philippine National Bank as his attorney in fact so that it might take actual and full possession of the mortgaged properties by means of force in case of violation of any of the conditions stipulated in the respective mortgage contracts. If Mauro A. Garrucho acted in his capacity as mere attorney in fact of Amparo A. Garrucho and of Paz Agudelo y Gonzaga, he could not delegate his power, in view of the legal principle of "delegata potestas delegare non potest" (a delegated power cannot be delegated), inasmuch as there is nothing in the records to show that he has been expressly authorized to do so. He executed the promissory notes evidencing the aforesaid loans, under his own signature, without authority from his principal and, therefore, were not binding upon the latter (2 Corpus Juris, pp. 630-637, par. 280). Neither is there anything to show that he executed the promissory notes in question for the account, and at the request, of his respective principals (8 Corpus Juris, pp. 157-158). Furthermore, it is noted that the mortgage deeds, Exhibits C and J, were cancelled by the documents, Exhibits I and L, on July 15, 1922, and in their stead the mortgage deed, Exhibit C, was executed, in which there is absolutely no mention of Mauro A. Garrucho being attorney in fact of anybody, and which shows that he obtained such credit fro himself in his personal capacity and secured the payment thereof by mortgage constituted by him in his personal capacity, although on properties belonging to his principal Paz Agudelo y Gonzaga. Furthermore, the promissory notes executed by Mauro A. Garrucho in favor of the Philippine NationalBank, evidencing loans of P6,000 and P16,000 have been novated by the promissory notes for P21,000 (Exhibit B) executed by Mauro A. Garrucho, not only without express authority from his principal Paz Agudelo y Gonzaga but also under his own signature. In the case of National Bank vs. Palma Gil (55 Phil., 639), this court laid down the following doctrine:

A promissory note and two mortgages executed by the agent for and on behalf of his principal, in accordance with a power of attorney executed by the principal in favor of the agent, are valid, and as provided by article 1727 of contracted by the agent; but a mortgage on real property of the principal not made and signed in the name of the principal is not valid as to the principal.

It has been intimated, and the trial judge so stated. that it was the intention of the parties that Mauro A. Garrucho would execute the promissory note, Exhibit B, and the mortgage deed, Exhibit C, in his capacity as attorney in facts of Paz Agudelo y Gonzaga, and that although the terms of the aforesaid documents appear to be contrary to the intention of the parties, such intention should prevail in accordance with article 1281 of the Civil Code. Commenting on article 1281 of the Civil Code, Manresa, in his Commentaries to the Civil Code, says the following:

IV. Intention of the contracting parties; its appreciation. — In order that the intention may prevail, it is necessary that the question of interpretation be raised, either because the words used appear to be contrary thereto, or by the existence of overt acts opposed to such words, in which the intention of the contracting parties is made manifest. Furthermore, in order that it may prevail against the terms of the contract, it must be clear or, in other words, besides the fact that such intention should be proven by admissible evidence, the latter must be of such charter as to carry in the mind of the judge an unequivocal conviction. This requisite as to the kind of evidence is laid down in the decision relative to the Mortgage Law of September 30, 1891, declaring that article 1281 of the Civil Code gives preference to intention only when it is clear. When the aforesaid circumstances is not present in a document, the only thing left for the register of deeds to do is to suspend the registration thereof, leaving the solution of the problem to the free will of the parties or to the decision of the courts. However, the evident intention which prevails against the defective wording thereof is not that of one of the parties, but the general intent, which, being so, is to a certain extent equivalent to mutual consent, inasmuch as it

was the result desired and intended by the contracting parties. (8 Manresa, 3d edition, pp. 726 and 727.)

Furthermore, the records do not show that the loan obtained by Mauro A. Garrucho, evidenced by the promissory note, Exhibit B, was for his principal Paz Agudelo y Gonzaga. The special power of attorney, Exhibit K, does not authorize Mauro A. Garrucho to constitute a mortgage on the real estate of his principal to secure his personal obligations. Therefore, in doing so by virtue of the document, Exhibit C, he exceeded the scope if his authority and his principal is not liable for his acts. (2 Corpus Juris, p. 651; article 1714, Civil Code.) It is further claimed that inasmuch as the properties mortgaged by Mauro A. Garrucho belong to PazAgudelo y Gonzaga, the latter is responsible for the acts of the former although he acted in his own name, in accordance with the exception contained in article 1717 of the Civil Code. It would be an exception with the properties of his own name in connection with the properties of his principal, does so within the scope of his authority. It is noted that Mauro A. Garrucho was not authorized to execute promissory notes even in the name of his principal Paz Agudelo y Gonzaga, nor to constitute a mortgage on her real properties to secure such promissory notes. The plaintiff Philippine National Bank should know this inasmuch as it is in duty bound to ascertain the extent of the agent's authority before dealing with him. Therefore, Mauro A. Garrucho and not PazAgudelo y Gonzaga is personally liable for the amount of the promissory note Exhibit B. (2 Corpus Juris, pp. 563-564.) However, Paz Agudelo y Gonzaga in an affidavit dated January 15, 1926 (Exhibit AA), and in a letter dated January 16, 1926 (Exhibit Z), gave her consent to the lien on lot No. 878 of the cadastre of Murcia, Occidental Negros, described in Torrens title No. 5369, the ownership of which was transferred to her by her niece Amparo A. Garrucho. This acknowledgment, however, does not extend to lots Nos. 207 and 61 of the cadastral survey of Bacolod, described in transfer certificates of title Nos. 1148 and 2216, respectively, inasmuch as, although it is true that a mortgage is indivisible as to the contracting parties and as top their successors in interest (article 1860, Civil Code), it is not so with respect to a third person who did not take part in the constitution thereof either personally or through an agent, inasmuch as he can make the acknowledgment thereof in the form and to the extent he may deem convenient, on the ground that he is not in duty bound to acknowledge the said mortgage. Therefore, the only liability of the defendant-appellant Paz Agudelo y Gonzaga is that which arises from the aforesaid acknowledgment, but only with respect to the lien and not to the principal obligation secured by the mortgage acknowledged by her to have been constituted on said lot No. 878 of the cadastral survey of Murcia, Occidental Negros. Such liability is not direct but a subsidiary one. Having reach this contention, it is unnecessary to pass upon the other questions of law raised by the defendant- appellant in her brief and upon the law cited therein. In view of the foregoing consideration, we are of the opinion and so hold that when an agent negotiates a loan in his personal capacity and executes a promissory note under his own signature, without express authority from his principal, giving as security therefor real estate belonging to the letter, also in his own name and not in the name and representation of the said principal, the obligation do constructed by him is personal and does not bind his aforesaid principal. Wherefore, it is hereby held that the liability constructed by the aforesaid defendant-appellant Paz Agudeloy Gonzaga is merely subsidiary to that of Mauro A. Garrucho, limited lot No. 878 of the cadastral survey of Murcia, Occidental Negros, described in Torrens title No. 2415. However, inasmuch as the principal obligator, Mauro A. Garrucho, has been absolved from the complaint and the plaintiff- appellee has not appealed from the judgment absolving him, the law does not afford any remedy whereby Paz Agudelo y Gonzaga may be required to comply with the said subsidiary obligation in view of the legal maxim that the accessory follows the principal. Wherefore, the defendant herein should also be absolved from the complaint which is hereby dismissed, with the costs against the appellee. So ordered.

G.R. No. L-32977 November 17, 1930

THE MUNICIPAL COUNCIL OF ILOILO, Plaintiff-Appellee, vs. JOSE EVANGELISTA, ET AL., Defendants-Appellees. TAN ONG SZE VDA. DE TAN TOCO, Appellant.

VILLA-REAL, J.:chanrobles virtual law library

This is an appeal taken by the defendant Tan Ong Sze Vda. de Tan Toco from the judgment of the Court of First Instance ofIloilo, providing as follows:

Wherefore, judgment is hereby rendered, declaring valid and binding the deed of assignment of the credit executed by Tan Toco's widow, through her attorney-in-fact Tan Buntiong, in favor of late Antero Soriano; likewise the assignment executed by the latter during his lifetime in favor of the defendant Mauricio Cruz & Co., Inc., and the plaintiff is hereby ordered to pay the said Mauricio Cruz & Co., Inc., the balance of P30,966.40; the plaintiff is also ordered to deposit said sum in a local bank within the period of ninety days from the time this judgment shall become final, at the disposal of the aforesaid Mauricio Cruz & Co. Inc., and in case that the plaintiff shall not make such deposit in the manner indicated, said amount shall bear the legal interest of six percent per annum from the date when the plaintiff shall fail to make the deposit within the period herein set forth, until fully paid.chanroblesvirtualawlibrarychanrobles virtual law library

Without special pronouncement of costs.

In support of its appeal, the appellant assigns the following alleged errors as committed by the trial court in its decision, to wit:

1. The lower court erred in rejecting as evidence Exhibit 4-A, Tan Toco, and Exhibit 4-B, Tan Toco.chanroblesvirtualawlibrarychanrobles virtual law library

2. The lower court erred in sustaining the validity of the deed of assignment of the credit, Exhibit 2-Cruz, instead of finding that said assignment made by Tan Buntiong to Attorney Antero Soriano was null and void.chanroblesvirtualawlibrarychanrobles virtual law library

3. The lower court erred in upholding the assignment of that credit by Antero Soriano to Mauricio Cruz & Co., Inc., instead of declaring it null and void.chanroblesvirtualawlibrarychanrobles virtual law library

4. The court below erred in holding that the balance of the credit against the municipality of Iloilo should be adjudicated to the appellant herein, Tan Toco's widow.chanroblesvirtualawlibrarychanrobles virtual law library

5. The lower court erred in denying the motion for a new trial filed by the defendant-appellant.

The facts of the case are as follows:chanrobles virtual law libraryOn March 20, 1924, the Court of First Instance of Iloilo rendered judgment in civil case No. 3514 thereof, wherein the appellant herein, Tan Ong Sze Vda. de Tan Toco was the plaintiff, and the municipality of Iloilo the defendant, and the former sought to recover of the latter the value of a strip of land belonging to said plaintiff taken by the defendant to widen a public street; the judgment entitled the plaintiff to recover P42,966.40, representing the value of said strip of land, from the defendant (Exhibit A). On appeal to this court (G. R. No .22617) 1 the judgment was affirmed on November 28, 1924 (Exhibit B).chanroblesvirtualawlibrarychanrobles virtual law library

After the case was remanded to the court of origin, and the judgment rendered therein had become final and executory, Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of Jose Ma .Arroyo's intestate estate, filed a claim in the same case for professional services rendered by him, which the court, acting with the consent of the appellant widow, fixed at 15 per cent of the amount of the judgment (Exhibit 22 - Soriano).chanroblesvirtualawlibrarychanrobles virtual law libraryAt the hearing on said claim, the claimants appeared, as did also the Philippine National Bank, which prayed that the amount of the judgment be turned over to it because the land taken over had been mortgaged to it. Antero Soriano also appeared claiming the amount of the judgment as it had been assigned to him, and by him, in turn, assigned to Mauricio Cruz & Co., Inc.chanroblesvirtualawlibrarychanrobles virtual law libraryAfter hearing all the adverse claims on the amount of the judgment the court ordered that the attorney's lien in the amount of 15 per cent of the judgment, be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of the deceased Jose Ma .Arroyo, and directed the municipality of Iloilo to file an action of interpleading against the adverse claimants, the Philippine National Bank, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo, as was done, the case being filed in the Court of First Instance of Iloilo as civil case No. 7702.chanroblesvirtualawlibrarychanrobles virtual law libraryAfter due hearing, the court rendered the decision quoted from at the beginning.chanroblesvirtualawlibrarychanrobles virtual law libraryOn March 29, 1928, the municipal treasurer of Iloilo, with the approval of the auditor of the provincial treasurer of Iloilo and of the Executive Bureau, paid the late Antero Soriano the amount of P6,000 in part payment of the judgment mentioned above, assigned to him by Tan Boon Tiong, acting as attorney-in-fact of the appellant herein, Tan Ong Sze Vda. de Tan Toco.chanroblesvirtualawlibrarychanrobles virtual law libraryOn December 18, 1928, the municipal treasurer of Iloilo deposited with the clerk of the Court of First Instance of Iloilo the amount of P6,000 on account of the judgment rendered in said civil case No. 3514. In pursuance of the resolution of the court below ordering that the attorney's lien in the amount of 15 per cent of the judgment be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the late Jose Ma. Arroyo, the said clerk of court delivered on the same date to said Attorney Jose Evangelista the said amount of P6,000. At the hearing of the instant case, the codefendants of Attorney Jose Evangelista agreed not to discuss the payment made to the latter by the clerk of the Court of First Instance of Iloilo of the amount of P6,000 mentioned above in consideration of said lawyer's waiver of the remainder of the 15 per cent of said judgment amounting to P444.69.chanroblesvirtualawlibrarychanrobles virtual law libraryWith these two payments of P6,000 each making a total of P12,000, the judgment for P42,966.44 against the municipality ofIloilo was reduced to P30,966.40, which was adjudicated by said court to Mauricio Cruz & Co.chanroblesvirtualawlibrarychanrobles virtual law libraryThis appeal, then, is confined to the claim of Mauricio Cruz & Co. as alleged assignee of the rights of the late Attorney Antero Soriano by virtue of the said judgment in payment of professional services rendered by him to the said widow and her coheirs.chanroblesvirtualawlibrarychanrobles virtual law libraryThe only question to be decided in this appeal is the legality of the assignment made by Tan Boon Tiong as attorney-in-fact of the appellant Tan Ong Sze Viuda de Tan Toco, to Attorney Antero Soriano, of all the credits, rights and interests belonging to said appellant Tan Ong Sze Viuda de Tan Toco by virtue of the judgment rendered in civil case No .3514 of the Court of First Instance of Iloilo, entitled Viuda de Tan Toco vs. The Municipal Council of Iloilo, adjudicating to said widow the amount of P42,966.40, plus the costs of court, against said municipal council of Iloilo, in consideration of the professional services rendered by said attorney to said widow of Tan Toco and her coheirs, by virtue of the deed Exhibit 2.chanroblesvirtualawlibrarychanrobles virtual law libraryThe appellant contends, in the first place, that said assignments was not made in consideration of professional services by Attorney Antero Soriano, for they had already been satisfied before the execution of said deed of assignment, but in order to facilitate the collection of the amount of said judgment in favor of the appellant, for the reason that, being Chinese, she had encountered many difficulties in trying to collect.chanroblesvirtualawlibrarychanrobles virtual law libraryIn support of her contention on this point, the appellant alleges that the payments admitted by the court in its judgment, as made by Tan Toco's widow to Attorney Antero Soriano for professional services rendered to her and to her coheirs, amounting to P2,900, must be added to the P700 evidenced by Exhibits 4-A, Tan Toco, and 4-B Tan Toco, respectively, which exhibits the court below rejected as evidence, on the ground that

they were considered as payments made for professional services rendered, not by Antero Soriano personally, by the firm of Soriano & Arroyo.chanroblesvirtualawlibrarychanrobles virtual law libraryA glance at these receipts shows that those amounts were received by Attorney Antero Soriano for the firm of Soriano & Arroyo, which is borne out by the stamp on said receipts reading, "Befete Soriano & Arroyo," and the manner in which said attorney receipted for them, "Soriano & Arroyo, by A. Soriano."chanrobles virtual law libraryTherefore, the appellant's contention that the amounts of P200 and P500 evidence by said receipts should be considered as payments made to Attorney Antero Soriano for professional services rendered by him personally to the interests of the widow of Tan Toco, is untenable.chanroblesvirtualawlibrarychanrobles virtual law libraryBesides, if at the time of the assignments to the late Antero Soriano his professional services to the appellant widow of Tan Toco had already been paid for, no reason can be given why it was necessary to write him money in payment of professional services on March 14, 1928 (Exhibit 5-G Tan Toco) and December 15, of the same year (Exhibit 5-H Tan Toco) after the deed of assignment, (Exhibit 2-Cruz) dated September 27, 1927, had been executed. In view of the fact that the amounts involved in the cases prosecuted by Attorney Antero Soriano as counsel for Tan Toco's widow, some of which cases have been appealed to this court, run into the hundreds of thousands of pesos, and considering that said attorney had won several of those cases for his clients, the sum of P10,000 to date paid to him for professional services is wholly inadequate, and shows, even if indirectly, that the assignments of the appellant's rights and interests made to the late Antero Soriano and determined in the judgment aforementioned, was made in consideration of the professional services rendered by the latter to the aforesaid widow and her coheirs.chanroblesvirtualawlibrarychanrobles virtual law libraryThe defendant-appellant also contends that the deed of assignment Exhibit 2-Cruz was drawn up in contravention of the prohibition contained in article 1459, case 5, of the Civil Code, which reads as follows:

ART. 1459. The following persons cannot take by purchase, even at a public or judicial auction, either in person or through the mediation of another:

x x x x x x x x xchanrobles virtual law library

5. Justices, judges, members of the department of public prosecution, clerks of superior and inferior courts, and other officers of such courts, the property and rights in litigation before the court within whose jurisdiction or territory they perform their respective duties .This prohibition shall include the acquisition of such property by assignment.chanroblesvirtualawlibrarychanrobles virtual law library

Actions between co-heirs concerning the hereditary property, assignments in payment of debts, or to secure the property of such persons, shall be excluded from this rule.chanroblesvirtualawlibrarychanrobles virtual law library

The prohibition contained in this paragraph shall include lawyers and solicitors with respect to any property or rights involved in any litigation in which they may take part by virtue of their profession and office.

It does not appear that the Attorney Antero Soriano was counsel for the herein appellant in civil case No. 3514 of the Court of First Instance of Iloilo, which she instituted against the municipality of Iloilo, Iloilo, for the recovery of the value of a strip of land expropriated by said municipality for the widening of a certain public street. The only lawyers who appear to have represented her in that case were Arroyo and Evangelista, who filed a claim for their professional fees .When the appellant's credit, right, and interests in that case were assigned by her attorney-in-fact Tan Boon Tiong, to Attorney Antero Soriano in payment of professional services rendered by the latter to the appellant and her coheirs in connection with other cases, that particular case had been

decided, and the only thing left to do was to collect the judgment. There was no relation of attorney and client, then, between Antero Soriano and the appellant, in the case where that judgment was rendered; and therefore the assignment of her credit, right and interests to said lawyer did not violate the prohibition cited above.chanroblesvirtualawlibrarychanrobles virtual law libraryAs to whether Tan Boon Tiong as attorney-in-fact of the appellant, was empowered by his principal to make as assignment of credits, rights and interests, in payment of debts for professional services rendered by lawyers, in paragraph VI of the power of attorney, Exhibit 5-Cruz, Tan Boon Tiong is authorized to employ and contract for the services of lawyers upon such conditions as he may deem convenient, to take charge of any actions necessary or expedient for the interests of his principal, and to defend suits brought against her. This power necessarily implies the authority to pay for the professional services thus engaged. In the present case, the assignment made by Tan Boon Tiong, as Attorney-in-fact for the appellant, in favor of Attorney Antero Soriano for professional services rendered in other cases in the interests of the appellant and her coheirs, was that credit which she had against the municipality of Iloilo, and such assignment was equivalent to the payment of the amount of said credit to Antero Soriano for professional services.chanroblesvirtualawlibrarychanrobles virtual law libraryWith regard to the failure of the other attorney-in-fact of the appellant, Tan Montano, authorized by Exhibit 1 - Tan Toco, to consent to the deed of assignment, the latter being also authorized to pay, in the name and behalf of the principal, all her debts and the liens and encumbrances her property, the very fact that different letters of attorney were given to each of these two representatives shows that it was not the principal's intention that they should act jointly in order to make their acts valid. Furthermore, the appellant was aware of that assignment and she not only did not repudiate it, but she continued employing Attorney Antero Soriano to represent her in court.chanroblesvirtualawlibrarychanrobles virtual law libraryFor the foregoing considerations, the court is of opinion and so holds: (1) That an agent of attorney-in -fact empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and may satisfy them by an assignment of a judgment rendered in favor of said principal; (2) that when a person appoints two attorneys-in-fact independently, the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's attention; and (3) that the assignment of the amount of a judgment made by a person to his attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment of professional services in other cases, does not contravene the prohibition of article 1459, case 5, of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law libraryBy virtue whereof, and finding no error in the judgment appealed from, the same is affirmed in its entirety, with costs against the appellant. So ordered.chanroblesvirtualawlibrarychanrobles virtual law libraryAvanceña, C.J., Johnson, Street, Malcolm, Villamor, Ostrand, Johns and Romualdez, JJ., concur.

March 25, 1926

G.R. No. L-24904ROBINSON, FLEMING AND CO., plaintiff-appellant,vs.CRUZ & TAN CHONG SAY, defendant-appellee.

J. F. Boomer and C. de G. Alvear for appellant.J. Perez Cardenas and Jose P. Osorio for appellee.

, J.:

I. The trial court erred in that, after finding that Messrs. H. E. Marchant and Francis Adams, during all the times material to the issues in this case, had been agents of the defendant in London for the purpose of selling and disposing of its hemp, the nature, character, and scope of such agency not appearing to have been limited, the trial court held that plaintiff was obliged to show such agency to have included within scope matters necessary and incidental to the selling and disposing of defendant's hemp in London.

II. The trial court erred in holding that the plaintiff was bound to show before the court what evidence was before the arbitrators when they made up the award; that the action of the arbitrators was not binding upon the court and that the court was not bound to assume that such action was legal and just.

III. The trial court erred in finding, in its final decision, that plaintiff was a

British Corporation.

IV. The trial court erred in finding in its final decision that it had sustained objections to certain portions of the deposition of the witness William Ernest Sibley, offered by plaintiff and couched in the following words:

When the said 500 bales arrived in London, the plaintiffs, found that the hemp was not in sound, dry condition in accordance with the clause 9 of the said contract (Exhibit W. E. S. 1). The arbitration which was duly held, resulted in an award being made by the arbitrators appointed by the plaintiffs and defendants, respectively in the plaintiffs' favor, whereby an allowance was made to the plaintiffs on the price of the said 500 bales, &c.' B. E. 49 3G1c.

V. The trial court erred in finding that there was not sufficient evidence before the court to sustain the allegations of plaintiff.

IV. The trial court erred in deciding the issues in the case in favor of the defendant and against the plaintiff.

JOHNS, J.:

This action is founded upon alleged written contract which the plaintiff claims was executed in London on April 1, 1921, by and between it and the defendant, acting by and through its authorized agent, and an alleged copy of which is in the record, and purports to have been executed by H. Marchant, now deceased, who was then in London, and who, the defendant admits in its own testimony, was at that time the London agent of the defendant in the selling of its hemp.

In the very nature of things, an agent cannot sell hemp in a foreign country without making some kind of a contract, and if he had power to sell, it would carry with it the authority to make and enter into the usual and customary contract for its sale.

As we analyze the evidence, Marchant was the London agent of the defendant, and in the ordinary course of business, executed the contract known in the record as Exhibit A, and on behalf of the defendant, as its agent, and as its act and deed, and, for such reason, the defendants is bound by the contract. This is confirmed by the further fact that the defendant undertook to carry out and perform the terms and provisions of the contract, and, by and under its terms, to ship and deliver the hemp, drew the draft, and took and accepted the money for its payment.

We are clearly of the opinion that the contract in question is valid and binding upon the defendant, and that Marchant, as the agent of the defendant, not only had the authority to make and enter into it for and on behalf of the defendant, but as a matter of fact that contract was legally ratified and approved by the subsequent acts and conduct of the defendant. It is very apparent that the contract was executed in the ordinary course of business, and that in executing it, Marchant was acting within the scope of his authority as the agent of the defendant. It will also be noted that under its terms and provisions, the defendant was to deliver the hemp in London.

Clause 18 of the contract provides:

Arbitration. — Any dispute arising out of this Contract, or in any way relating to it or to its construction or fulfillment, shall be referred to Arbitration in accordance with the By-Laws of the Manila Hemp Association endorsed hereon, which shall be deemed to form part of this Contract.

Clause 4 of the By-Laws of the Manila Hemp Association provides:

All questions and matters referred to arbitration pursuant to the annexed contract shall be referred to the arbitration of Two Members or qualified Nominees or Associate Members of the Manila Hemp Association, buyer and seller each nominating one, and in case such arbitrators are unable to agree, then to umpire who shall be appointed by the said arbitrators; but in the event of their not appointing an umpire before proceeding with the reference and within one week of the date of their own appointment, then to an umpire who shall be appointed, at the request of either of the parties to the dispute, by the Chairman, Vice-Chairman or acting Chairman for the time being of the Manila Hemp Association.

Provisions is then made for the manner of proceeding should either party fail to appoint an arbitrator, and for an appeal on certain specified conditions.

Clause 5 of the By-Laws provides:

Awards by Arbitrators shall be made out on the official form issued by the Association, and shall be valid, notwithstanding both arbitrators have no signed the same at the same time and in the presence of each other.

And clause 8 provides that:

Appeals to the Committee of the Association may be heard before a meeting of all or any four or more of the Members of such Committee.

Clause 11 provides:

The evidence and proceedings upon arbitrations or appeals may be taken in a mercantile way, without regarding legal technicalities respecting evidence.

Clause 12 provides:

Awards of the Committee on appeals shall be signed either by the Chairman, Vice-Chairman, or acting Chairman of the Association for the time being Bvr0irC.

Plaintiff alleges that on the arrival in London of the hemp in question, it was not in sound merchantable condition, and that it was not of the grade specified in the contract. For such reason, it demanded an arbitration under the provisions of the contract. That an arbitration was had, and that it made findings as alleged in the complaint, and that the defendant, through its London agent, accepted and ratified the award of the arbitrators, and in legal effect, plaintiff seeks to recover from the defendant on the findings and the award made by the arbitrators peBZx.

It is clear that under the contract, and upon the proof in the record, plaintiff was legally entitled to an arbitration. It is equally clear that, if an arbitration was had and held in the manner and form provided by the contract, and that the arbitrators made findings, and based thereon made the award, as plaintiff alleges, plaintiff in this action would be entitled to recover from the defendant the amount found due and owing by the arbitrators, subject only to the legal right, and under a proper plea, of the defendant to defend upon the ground of fraud or mistake in the arbitration. But in an action to recover founded upon the award of the arbitrators, the plaintiff must both allege and prove, by competent evidence, that the defendant had notice of the motion of the plaintiff to arbitrate; that the arbitrators were selected in the manner and form as provided for in the By-Laws of the Manila Hemp Association; that the arbitrators met and performed their duties, and made and presented their findings, based upon which, they made and signed their award; and that the defendant was either legally a party to the arbitration or that it ratified and approved the arbitration after it was made. Upon all of such questions, there is a failure of proof. There is no competent evidence that arbitrators were ever selected, as the By-Laws provides, who they were, or that they ever met in the discharge of their duties, or of the time and place of their meeting, or who was present. Neither is there any competent evidence that the arbitrators ever made or signed any findings. Neither is there any competent evidence that the defendant was ever notified of the proposed arbitration, or that it book part in it, or that it ever ratified or approved the alleged findings. The proof of an arbitration should conform to the spirit and intent of the By-Laws of the Manila Hemp Association 3WGtAQo.

Under the By-Laws, for certain specified reasons, either party has a legal right to an arbitration, and each person has a legal right to select his own arbitrator, and it is the duty of the person desiring an arbitration to notify the adverse party, so that he can select his own arbitrator and be present or represented in the arbitration, if he sees fit to do so. After the arbitrators have been selected and a hearing is held and the investigation made, it is then the duty of the arbitrators to make their findings, based upon which they make their award, which should be in writing. The only competent evidence of all such matters is the finding and award which is made by the arbitrators. In other words, where a person seeks to recover a judgment upon the findings and award of arbitrators, he must both allege and prove that all of the conditions precedent, and that the necessary legal steps were taken to have an arbitration, and submit to the court either the original or an authenticated copy of the findings and the award of the arbitrators, or in the absence of such preliminary proof, he must both allege and prove that the findings and award of the arbitrators have been ratified and approved by the adverse party SN0lJl.

There is no evidence of any one of those facts in the record. It is true that the witness Sibley on behalf of the plaintiff testified that: "The defendants, by their duly authorized attorney, Francis Adams, accepted

and approved of the award." That is not proof of any fact. It is nothing more than the legal opinion of the witness. The question as to whether the defendant "accepted and approved of the award" is one for the court to determine from the actual facts as to how, when and in what manner the defendant "accepted and approved of the award." What was said and done, by whom it was said, and when and to whom it was said, and if it was in writing, the writing should be produced. Upon the proof of the actual facts, it would then be for the court, and not for the witness, to say whether or not the defendants "accepted and approved of the award."

In the final analysis, where, as in this case, the plaintiff seeks to recover upon the findings and the award of arbitrators, before it can recover, it must both allege and prove a substantial compliance with all of the material provisions of the By-Laws of the Manila Hemp Association, and without such proof, it is not entitled to a judgment upon the findings and award of the arbitrators LdLTEW8.

If it be a fact that the alleged findings and award of the arbitrators was made in a substantial compliance with such "By-Laws," and competent proof of that fact is submitted to the court, plaintiff would then be entitled to judgment as prayed for in its complaint. In such a case, the award of the arbitrators could only be modified or set aside for a mistake apparent on the face of the record, or upon the ground of fraud in the arbitration, both of which must be alleged in a proper plea and proven as any other fact, which could not be done under a general denial.

Upon a mistake of fact, Corpus Juris, volume 5, p. 182, says:

Although an award cannot be avoided on account of a wrong conclusion, drawn by the arbitrators from the facts before them, which conclusion amounts to a mere mistake of judgment, a plain misconception of the facts submitted, by reason of which it is made to appear that the arbitrators must have rendered a different decision had they proceeded in view of the true state of facts, about the existence of which there could be no reasonable question, may constitute a ground for avoiding the award. . . .

Upon the question of fraud, on page 187, the author says:

It is ground for setting aside an award that it was obtained by the fraud, imposition, or other undue means employed a party to the arbitration, or his agent, . . .

And again on page 189:

Fraud corruption, or misconduct of the arbitrators is ground for setting aside the award, especially where one of the parties participates therein. And, for obvious reasons, it has been held that the rule applies, although the submission provides that the award shall not be subject to exception or appeal, or shall be final or conclusive. . . 70hL4kp.

As to the operation and effect of an award on the merits, the same author, on page 160, says:

As between the parties and their privies, an award is entitled to the respect which is due to the judgment of a court of last resort. It is in fact a final adjudication by a court of the parties' own choice, and, until impeached upon sufficient grounds in an appropriate proceeding, an award which is regular on its face is conclusive upon the merits of the controversy submitted, and it is not for the courts to otherwise inquire whether the determination was right or wrong, for the purpose of interfering with it. The court possesses no general supervisory power over awards and if arbitrators keep within their jurisdiction their award will not be set because they have erred in judgment either upon the facts or the law. . . . It is the general rule that a valid award operates to merge and extinguish all claims embraced in the stipulation. Thereafter the submission and award furnish the only basis by which the rights of the parties can be determined, . . . .

This case involves the application and construction of the By-Laws of the Manila Hemp Association, is important to the hemp industry, and is one of first impression in this court.

In the interest of justice, and so that the case may be tried and decided upon its actual merits, the judgment of the lower court is reversed, and the case is remanded, with leave to the plaintiff to submit competent evidence of the arbitration and the findings and award of the arbitrators, and that the arbitration was made in a substantial compliance with the By-Laws of the Manila Hemp Association, and with leave to the defendant, in its discretion, to amend its answer, and to both allege and prove that the arbitration was fraudulent por that the arbitrators made a

mistake, which is apparent on the face of the record. Neither party to recover costs. So ordered.

Avanceña, C. J., Street, Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur. .

EN BANC

G.R. No. L-42958 October 21, 1936

C. N. HODGES, Plaintiff-Appellant, vs. CARLOTA SALAS and PAZ SALAS, Defendants-Appellees.

IMPERIAL, J.: chanrobles virtual law library

The action was brought by the plaintiff to foreclose a certain real estate mortgage constituted by the defendants to secure a loan. The plaintiff appealed from the judgment of the Court of First Instance of Occidental Negros absolving the defendants from the complaint and stating: That of the capital of P28,000 referred to in Exhibit A, the defendants were liable only for the sum of P14,451.71; that the transactions and negotiations specified in Exhibit A as well as the interest charged are usurious; that the sum of P14,778.77 paid by the defendants to the plaintiff should be applied to the payment of the capital of P14,451.71; that the plaintiff must refund the sum of P3,327.06 to the defendants and, lastly, he must pay the costs.chanroblesvirtualawlibrary chanrobles virtual law library

On September 2, 1923, the defendants executed a power of attorney in favor of their brother-in-law Felix S. Yulo to enable him to obtain a loan and secure it with a mortgage on the real property described in transfer certificate of title No. 3335. The power of attorney was registered in the registry of deeds of the Province of Occidental Negros and the pertinent clauses thereof read as follows:

That we confer upon our brother-in-law Mr. Felix S. Yulo, married, of age and resident of the municipality of Bago, Province of Occidental Negros, P. I., as required by law, a special power of attorney to obtain, in our respective names and representation, a loan in any amount which our said brother-in-law may deem necessary, being empowered, by virtue of the authority conferred in this power of attorney, to constitute a mortgage on a parcel of land absolutely belonging to us, the technical description of which is as follows:

"TRANSFER CERTIFICATE OF TITLE NO. 3335

"A parcel of land (lot No. 2464 of the Cadastral Survey of Bago) with the improvements thereon, situated in municipality of Bago. Bounded on the NE. and NW. by the Lonoy Sapa and lot No. 2465; on the SE. by the Ilabo Sapa; and on the SW. by the Ilabo Sapa, lot No. 2508 and the Sapa Talaptapan. Containing an area of one million nine hundred ninety-four thousand eight hundred and thirty-four square meters (1,994,834), more or less." chanrobles virtual law library

That we confer and grant to our said brother-in-law Mr. Felix S. Yulo power and authority to perform and execute each and every act necessary to the performance of his trust, which acts shall be for all purposes as if we had performed or executed them personally, hereby ratifying and confirming everything that our said brother-in-law Mr. Felix S. Yulo may execute or cause to be executed.

Acting under said power of attorney, Felix S. Yulo, on March 27, 1926, obtained a loan of P28,000 from the plaintiff, binding his principals jointly and severally, to pay it within ten (10) years, together with interest thereon at 12 per cent per annum payable annually in advance, to which effect he signed a promissory note for said amount and executed a deed of mortgage of the real property described in transfer certificate of title No. 3335 and the improvements thereon consisting in concrete buildings. It was stated in the deed that in case the defendants failed to pay the stipulated interest and the taxes on the real property mortgaged and if the plaintiff were compelled to bring an action to recover his credit, said defendants would be obliged to pay 10 per cent more on the unpaid capital, as fees for the plaintiff's attorneys. The mortgage so constituted was registered in the registry of deeds of the Province of Occidental Negros and noted on the back of the transfer certificate of title.chanroblesvirtualawlibrary chanrobles virtual law library

The sum of P28,000 was not delivered to Felix S. Yulo, but by agreement between him and the plaintiff, it was employed as follows:

Interest for one year from March 27, 1926, to March 26, 1927, collected in advance by the plaintiff .........................

Paid for the mortgage constituted by Felix S. Yulo, cancelled on the date of the loan ..........................................................

Paid by Felix S. Yulo on account of the purchase price of the real property bought by him on Ortiz Street ........................

Check No. 4590 delivered to Felix S. Yulo ..........................

Check No. 4597 in the name of Rafael Santos, paid to him to cancel the mortgage constituted by the defendants .....

Check No. 4598 delivered to Felix S. Yulo ...........................

Total ........................................................................

The defendants failed to pay at maturity the interest stipulated which should have been paid one year in advance. All the sums paid by them on account of accrued interest up to March 27, 1934, on which the complaint was filed, together with the corresponding exhibits, are as follows:

DateExhibit 1 April 5, 1927 ...............................................................Exhibit 2 May 2, 1927 ................................................................Exhibit 4 August 30, 1927 .........................................................Exhibit 7 June 4, 1928 ................................................................Exhibit 8 May 15, 1929 ..............................................................Exhibit 9 June 19, 1929 ..............................................................Exhibit 10 July 25, 1929 ...............................................................Exhibit 11 August 26, 1929 .........................................................Exhibit 12 October 7, 1929 ..........................................................Exhibit 13 October 7, 1929 ..........................................................Exhibit 14 November 9, 1929 ......................................................Exhibit 15 November 9, 1929 ......................................................Exhibit 16 February 8, 1930 ........................................................Exhibit 17 February 8, 1930 ........................................................Exhibit 18 No date .......................................................................Exhibit 19 February 10, 1931 ......................................................Exhibit 20 August 20, 1931 .........................................................Exhibit 21 July 7, 1932 .................................................................Exhibit 22 July 29, 1932 ...............................................................Exhibit 23 September 23, 1932 ....................................................Exhibit 24 December 17, 1932 .....................................................Exhibit 25 No date ........................................................................

Exhibit 26 January 23, 1934 .........................................................

Total .............................................................................................To the foregoing amount must be added the sum of P3,360 deducted by the plaintiff upon granting the loan, as interest for one year, thereby making the total amount of interest paid by the defendants and received by the plaintiff P18,138.77.chanroblesvirtualawlibrary chanrobles virtual law libraryThe foregoing are facts inferred from the evidence and are not controverted by the parties, with the exception of the existence of the promissory note, the registration of the mortgage deed and the notation on the back of the certificate of title.chanroblesvirtualawlibrary chanrobles virtual law libraryI. The action brought by the plaintiff was for the foreclosure of a mortgage in accordance with the provisions of sections 254 to 261 of the Code of Civil Procedure. It was not expressly alleged in the complaint that the mortgage deed had been registered in accordance with Act No. 496, which was the law applicable in the case of the real property registered under the Torrens system. A copy of the mortgage deed was attached to the complaint and made a part thereof, but said copy did not show that the original had been duly registered. In paragraph 3 of the complaint, however, it was alleged that the mortgage deed had been noted on the back of transfer certificate of title No. 3335 by the register of deeds of the Province of Occidental Negros, in accordance with the provisions of the Mortgage Law. This specific allegation is equivalent to a statement that the mortgage deed had been duly registered.chanroblesvirtualawlibrary chanrobles virtual law libraryAt the trial of the case, the attorney for the plaintiff did not present the mortgage deed showing the registration thereof in the registry, or the owner's transfer certificate of title. In their stead the plaintiff testified that the mortgage had been duly registered in the registry of deeds of Occidental Negros and had been noted on the back of the transfer certificate of title. The oral evidence was admitted without any objection on the part of the attorney for the defendants. In the appealed decision the court held that the plaintiff had failed to substantiate his foreclosure suit and, not having presented competent evidence, the action arising from his evidence was merely a personal action for the recovery of a certain sum of money. The plaintiff excepted to this conclusion and assigns it in his brief as the first error of law committed by the court.chanroblesvirtualawlibrary chanrobles virtual law librarySection 284 of the Code of Civil Procedure requires the contents of a writing to be proven by the writing itself, except in cases therein specified. Section 313, No. 6, provides that official or public documents must be proven by presenting the original or a copy certified by the legal keeper thereof. According to this, the plaintiff was obliged to present the original or a certified copy of the mortgage deed showing the registration thereof, as well as the owner's transfer certificate of title. Both would have been the best evidence to prove the registration of the mortgage and the notation thereof on the back of the title. Had the defendants objected to the oral evidence offered, there is no doubt that it would have been rejected as incompetent. But it is universally accepted that when secondary or incompetent evidence is presented and accepted without any objection on the part of the other party, the latter is bound thereby and the court is obliged to grant it, the probatory value it deserves. (City of Manilavs. Cabangis, 10 Phil., 151; Bersabal vs. Bernal, 13 Phil., 463; Kuenzle & Streiff vs. Jiongco, 22 Phil., 110; U. S. vs. Choa Tong, 22 Phil., 562; U. S. vs. Ong Shiu, 28 Phil., 242; De Leon vs. Director of Prisons, 31 Phil., 60: U. S. vs. Hernandez, 31 Phil., 342; 23 C. J., 39, section 1783, and the cases therein cited; 10 R. C. L., 1008, paragraph 197, and the cases therein cited.) chanrobles virtual law libraryInasmuch as the registration of the mortgage and the notation thereof on the back of the transfer certificate of title have been established by the oral evidence above stated, the court was without authority to conclude that the action was personal in character and, consequently, the first assignment of error is well founded.chanroblesvirtualawlibrary chanrobles virtual law libraryII. The court held that the loan and the mortgage were usurious and illegal for two reasons: First, because the plaintiff charged compound interest notwithstanding the fact that it had not been stipulated, and second, because the plaintiff charged interest yearly in advance in accordance with the agreement. These conclusions are the subject matter of the plaintiff's second assignment of error.chanroblesvirtualawlibrary chanrobles virtual law libraryThe plaintiff categorically denied having charged compound interest, stating in his brief that all the interest charged by him should be applied to the interest unpaid by the defendants. We have examined Exhibits 8 to 17 of the defendants, which are the evidence offered to establish the fact that compound interest had been charged, and we have, without any difficulty, arrived at the conclusion that the plaintiff has really charged said unauthorized and unstipulated interest. If there is any doubt on this fact, it is dispelled by Exhibit 10, in the handwriting of the plaintiff himself,

wherein it appears that the sum of P33.60 was charged by him on account of interest on unpaid interest. But the fact of charging illegal interest that may be charged, does not make the loan or the mortgage usurious because the transactions took place subsequent to the execution of said contracts and the latter do not appear to be void ab initio (66 C. J., pages 243, 244, section 194). Said interest should be applied first to the payment of the stipulated and unpaid interest and, later, to that of the capital. (Aguilar vs. Rubiato and Gonzalez Vila, 40 Phil., 570; Go Chioco vs. Martinez, 45 Phil., 256; Gui Jong & Co. vs. Rivera and Avellar, 45 Phil., 778; Lopez and Javelona vs. El Hogar Filipino, 47 Phil., 249; Sajo vs. Gustilo, 48 Phil, 451.) chanrobles virtual law libraryThe plaintiff admits having charged in advance the interest corresponding to the first year. The mortgage deed contains the stipulation that the defendants should pay in advance the stipulated interest corresponding to each year. The court declared the contract usurious for this reason, basing its opinion upon some American authorities holding the same point of view. This court cannot adopt said doctrine in this jurisdiction. Section 5 of Act No. 2655, as amended by section 3 of Act No. 3291, expressly permit a creditor to charge in advance interest corresponding to not more than one year, whatever the duration of the loan. What is prohibited is the charging in advance of interest for more than one year. Section 6 reiterates said rule in exempting a creditor found guilty of usury from the obligation to return the interest and commissions collected by him in advance, provided said interest and commissions are not for a period of more than one year and the rate of interest does not exceed the maximum limit fixed by law.chanroblesvirtualawlibrary chanrobles virtual law libraryThis court concludes, therefore, that the second assignment of error is well founded in the sense that both the loan and the mortgage are not usurious or illegal.chanroblesvirtualawlibrary chanrobles virtual law libraryIII. In his third assignment of error, the plaintiff contends that the court should have declared the action for the usury interposed by the defendants in their cross-complaint barred by the statute of limitations, in accordance with the provision of section 6 of Act No. 2655, as amended by section 4 of Act No. 3291. It is true that according to the evidence more than two years have already elapsed from the time the defendants paid and the plaintiff received the usurious interest to the registration of the cross-complaint, but the plaintiff cannot successfully invoke the defense of prescription because he failed to allege it in his reply to the cross-complaint. In order that prescription may constitute a valid defense and it may be considered on appeal, it must be specifically pleaded in the answer and proven with the same degree of certainty with which an essential allegation in a civil action is established. Otherwise it will not be taken into consideration, much less if it is alleged for the first time on appeal. (Aldeguer vs. Hoskyn, 2 Phil., 500; Domingo vs. Osorio, 7 Phil, 405; Marzon vs. Udtujan, 20 Phil., 232; Pelaez vs. Abreu, 26 Phil., 415; Corporacion de PP. Agustinos Recoletos vs. Crisostomo, 32 Phil., 427; Karagdag vs. Barado, 33 Phil., 529.) chanrobles virtual law libraryIV. The defendants proved that their attorney's fees were contracted at P3,000. The evidence has not been contradicted. The amount so fixed is not unreasonable or unconscionable. In the fourth assignment of error, the plaintiff questions that part of the judgment ordering him to pay said fees. He contends that he is not responsible for the payment thereof because neither the loan nor the mortgage is usurious. However, this court has already stated that the plaintiff violated the Usury Law in charging compound interest notwithstanding the fact that it has not been so stipulated and that adding these sums to the stipulated interest the average exceeds the maximum rate of interest that may be charged for the loan which has been the subject matter of the transaction. This violation falls under the precept of section 6 of the Usury Law and the plaintiff is obliged to pay the fees of the attorney for the defendants. This court holds that the fourth assignment of error is unfounded.chanroblesvirtualawlibrary chanrobles virtual law libraryV. In the fifth assignment of error, the plaintiff alleges that the judgment is erroneous for not having declared that the defendants ratified all the obligations contracted by their attorney in fact. In the sixth assignment of error he contends that an error was likewise committed in not declaring that by virtue of the authority conferred by the defendants, agent Yulo was authorized to borrow money and invest it as he wished, without being obliged to apply it necessarily for the benefit of his principals. In the seventh assignment of error the plaintiff alleges that the court erred in fixing the capital, which the defendants are obliged to pay him by virtue of the power of attorney executed by them, at only P14,451.71. In the eighth and last assignment of error, he insists that the court should have ordered the defendants to pay the entire capital owed, with interest thereon in accordance with the mortgage deed, together with 10 per cent thereof as attorney's fees, the action having been instituted due to nonfeasance on the part of the defendants.chanroblesvirtualawlibrary chanrobles virtual law library

These four assignments of errors refer to the interpretation and scope of the power of attorney and to the computation of the capital and the interest to be paid by the defendants and, finally, to whether or not the latter are obliged to pay the fees of the attorney for the plaintiff. For this reason, this court passes upon them jointly.chanroblesvirtualawlibrary chanrobles virtual law libraryThe pertinent clauses of the power of attorney from which may be determined the intention of the principals in authorizing their agent to obtain a loan, securing it with their real property, were quoted at the beginning. The terms thereof are limited; the agent was thereby authorized only to borrow any amount of money which he deemed necessary. There is nothing, however, to indicate that the defendants had likewise authorized him to convert the money obtained by him to his personal use. With respect to a power of attorney of special character, it cannot be interpreted as also authorizing the agent to dispose of the money as he pleased, particularly when it does not appear that such was the intention of the principals, and in applying part of the funds to pay his personal obligations, he exceeded his authority (art. 1714, Civil Code; Bank of the Philippine Islands vs. De Coster, 47 Phil., 594 and 49 Phil., 574). In the case like the present one, it should be understood that the agent was obliged to turn over the money to the principals or, at least, place it at their disposal. In the case of Manila Trading & Supply Co., vs. Uy Tiepo(G.R. No. 30339, March 2, 1929, not reported), referring to a power of attorney to borrow any amount of money in cash and to guarantee the payment thereof by the mortgage of certain property belonging to the principals, this court held that the agent exceeded his authority in guaranteeing his personal account for automobile parts by the mortgage, not having been specially authorized to do so. This court then said:

Inasmuch as Jose S. Uy Tiepo, as agent of Daniel Ramos and Emilio Villarosa, was only authorized to "borrow any amount of cash", and to guaranty the payment of the sums of money so borrowed by the mortgage of the property stated in the power of attorney, he exceeded the authority conferred upon him in mortgaging his principal's property to secure the payment of his personal debt for automobile parts, and the guaranties so made are null and void, the principals in question not being responsible for said obligations.

The plaintiff contends that the agent's act of employing part of the loan to pay his personal debts was ratified by the defendants in their letter to him dated August 21, 1927 (Exhibit E). This court has carefully read the contents of said document and has found nothing implying ratification or approval of the agent's act. In it the defendants confined themselves to stating that they would notify their agent of the maturity of the obligation contracted by him. They said nothing about whether or not their agent was authorized to use the funds obtained by him in the payment of his personal obligations.chanroblesvirtualawlibrary chanrobles virtual law libraryIn view of the foregoing, this court concludes that the fifth and sixth assignments of error are unfounded.chanroblesvirtualawlibrary chanrobles virtual law libraryIn the seventh assignment of error, the plaintiff insists that the defendants should answer for the entire loan plus the stipulated interest thereon. This court has already stated the manner in which the agent employed the loan, according to the plaintiff. Of the loan of P28,000, the agent applied the sum of P10,188.29 to the payment of his personal debt to the plaintiff. The balance of P17,811.71 constitutes the capital which the defendants are obliged to pay by virtue of the power conferred upon their agent and the mortgage deed.chanroblesvirtualawlibrary chanrobles virtual law libraryIn connection with the stipulated interest, it appears that the capital of P17,811.71 bore interest at 12 per cent per annum from March 27, 1926, to September 30, 1936, equivalent to P22,460.56. All the interest paid by the defendants to the plaintiff, including that which is considered as usurious, amounts to P18,138.77, so that they are still indebted in said concept in the sum of P4,321.79. Adding this sum to the capital of P17,811.71, makes a total of P22,133.50, from which the sum of P3,000 constituting the fees of the attorney for the defendants must be deducted, leaving a net balance of P19,133.50 which is all that the defendants must pay to the plaintiff up to said date.chanroblesvirtualawlibrary chanrobles virtual law libraryThe foregoing disposes of the seventh assignment of error.chanroblesvirtualawlibrary chanrobles virtual law libraryIn the mortgage deed the defendants bound themselves to pay the fees of the attorney for the plaintiff were to resort to the courts to foreclose the

mortgage. Said fees were fixed at 10 per cent of the capital which the defendants might owe. This penalty according to what has been stated heretofore, amounts to P1,781.17 which would have to be added to the total amount to be paid to the plaintiff by the defendants. The court, having declared the contracts usurious, did not order the defendants to pay the penalty and for this reason the plaintiff assigns the omission as the eighth and last assignment of alleged error. Inasmuch as the fees agreed upon are neither excessive nor unreasonable, this court finds no good reason to disapprove it, particularly because the defendants were also granted a larger amount in the same concept.chanroblesvirtualawlibrary chanrobles virtual law libraryIn view of the conclusions arrived at, the motion for a new trial filed by the attorneys for the plaintiff on March 12, 1935, is denied, and the amendments to the complaint proposed by them in their pleading of March 20 of said year are admitted.chanroblesvirtualawlibrary chanrobles virtual law libraryFor all the foregoing reasons, the appealed judgment is modified and the defendants are ordered to, pay jointly and severally to the plaintiff the sums of P19,133.50 and P1,781.17. Within three months they shall make payment of said two sums of money or deposit them with the clerk of court, at the disposal of the plaintiff, upon failure to do which the real property mortgaged with the improvements thereon shall be sold at public auction and the proceeds thereof applied to the payment of the two sums of money above-stated; without special pronouncement as to the costs of this instance. So ordered.chanroblesvirtualawlibrary chanrobles virtual law libraryAvanceña, C. J., Villa-Real, Abad Santos, Diaz, and Laurel, JJ., concur

November 11, 1901

G.R. No. L-439GERMANN & CO., plaintiff-appellees,vs.DONALDSON, SIM & CO., defendants-appellants.

Fernando de la Cantera, for appellants.Francisco Ortigas, for appellees.

Ladd, C.J.:

This is an incident of want of personality of the plaintiff's attorney. The action is to recover a sum claimed to be due for freight under a charter party. It was brought by virtue of a general power for suits, executed in Manila October 27, 1900, by Fernando Kammerzell, and purporting to be a substitution in favor of several attorneys of powers conferred upon Kammerzell in an instrument executed in Berlin, Germany, February 5, 1900, by Max Leonard Tornow, the sole owner of the business carried on in Berlin and Manila under the name of Gemann & Co. The first-named instrument was authenticated by a notary with the formalities required by the domestic laws. The other was not so authenticated. Both Tornow and Kammerzell are citizens of Germany. Tornow is a resident of Berlin and Kammerzell of Manila.

The defendants claim that the original power is invalid under article 1280, No. 5, of the Civil Code, which provides that powers for suits must be contained in a public instrument. No claim is made that the document was not executed with the formalities required by the German law in the case of such an instrument. We see no reason why the general principle that the formal validity of contracts is to be tested by the laws of the country where they are executed should not apply. (Civil Code, art. 11.)

The defendants also claim that the original power can not be construed as conferring upon Kammerzell authority to institute or defend suits, from which contention, if correct, it would of course follow that the delegated power is invalid. In support of this contention reliance is placed upon article 1713 of the Civil Code, by which it is provided that "an agency stated in general terms only includes acts of administration," and that "in order to compromise, alienate, mortgage, or to execute any other act of strict ownership an express commission is required."

It has been argued by counsel for the plaintiff that these provisions of the domestic law are not applicable to the case of an agency conferred, as was that in question, by one foreigner upon another in an instrument executed in the country of which both were citizens. We shall not pass upon this question, since we are clearly of opinion that the instrument contains an explicit grant of a power broad enough to authorize the bringing of the present action, even assuming the applicability of the domestic law as claimed by the defendants.

By this instrument Tornow constitutes Kammerzell his "true and lawful attorney with full power to enter the firm name of Germann & Co. in the

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

We should not be inclined to regard in institution of a suit like the present, which appears to be brought to collect a claim accruing in the ordinary course of the plaintiff's business, as properly belonging to the class of acts described in article 1713 of the Civil Code as acts "of strict ownership." It seems rather to be something which is necessarily a part of the mere administration of such a business as that described in the instrument in question and only incidentally, if at all, involving a power to dispose of the title to property.

But whether regarded as an act of strict ownership or not, it appears to be expressly and specially authorized by the clause conferring the power to "exact the payment" of sums of money "by legal means." This must mean the power to exact the payment of debts due the concern by means of the institution of suits for their recovery. If there could be any doubt as to the meaning of this language taken by itself, it would be removed by a consideration of the general scope and purpose of the instrument in which it occurs. (See Civil Code, art. 1286.) The main object of the instrument is clearly to make Kammerzell the manager of the Manila branch of the plaintiff's business, with the same general authority with reference to its conduct which his principal would himself possess if he were personally directing it. It can not be reasonably supposed, in the absence of very clear language to that effect, that it was the intention of the principal to withhold from his agent a power so essential to the efficient management of the business entrusted to his control as that to sue for the collection of debts.

Arellano, C.J., Torres, Cooper, Willard, and Mapa, JJ., concur.

G.R. No. L-17066 February 7, 1922

N. T. DEEN, Plaintiff-Appellee , vs. PACIFIC COMMERCIAL CO., Defendant-Appellant.

JOHNS, J.: chanrobles virtual law library

It is undisputed that the plaintiff is a resident of Cebu and duly licensed as real estate broker in the Philippine Islands. That the Pacific Commercial Company, to which we will hereafter refer as the Company, is a duly organized corporation and authorized to do business in the Philippine Islands, with its principal office and place of business in the city of Manila. That it has numerous branch houses, one of which is in Cebu, and does more or less business all over the Philippine Islands. That the defendant L.J. Francisco is a resident of Cebu and the local manager of the Company at that place. That at the time specified, the Company was the owner of a concrete cement warehouse in sections 4 and 5 of block 6 on the water front of Cebu, which is used and rented as a bodega. That H.B. Pond was a resident of Manila and the vice-president and general manager of the Company. That on October 15, 1919, he wrote a letter to Francisco at Cebu, enclosing a blueprint of the property which the Company owned there, and stating that it was offered for the sum of P300,000 and our warehouse P100,000," in which he further said: "If this property is sold arrangements will of course have to be made to protect us and also to protect the leases at present on the property of the Cebu Warehouse Co. As you know, it is our plan to occupy the warehouse at present leased to Messrs. Macleod and Co. which adjoins our Cebu Office. Will you please look around Cebu and see if you can find buyers for this property?"chanrobles virtual law library

December 1, 1919, Francisco wrote the following letter to the plaintiff:

I attach blueprint which will show P. C. C. properties for sale on the waterfront. Dr. Pond is familiar with the terms of the Government leases. They were to run for 100 years, I believe, from 1910, and are subject to re-valuation each ten years. Dr. Pond has recently investigated the subject and will give you details, I am sure.chanroblesvirtualawlibrary chanrobles virtual law library

Block No. 4. - The Pacific Commercial Company has for sale sections Nos. 1, 2, and 3. The area is given in the sections. Sections Nos. 1 and 2 are at present occupied by Stevenson and Co. and section No. 3, by Macleod and Co. Stevenson and Co. pay P750 a month for section 1 and 2, and Macleod and Company pay P375, for section No. 3. The Pacific Commercial Company is asking P200,000 net to them for these three sections. Our offer to any one is that these three sections are subject to leases with Macleod and Co. and Stevenson and Co. These leases expire December 31, 1921.chanroblesvirtualawlibrary chanrobles virtual law library

Block No. 6. - The Pacific Commercial Company now owns and occupies a bodega on areas Nos. 4 and 5 in Block No. 6. The areas are given on the blueprint.chanroblesvirtualawlibrary chanrobles virtual law library

The Pacific Commercial Company is placing this property for sale at P100,000 net to them.chanroblesvirtualawlibrary chanrobles virtual law library

In case a sale is consummated it must be understood that we shall be permitted to continue to occupy this warehouse for a reasonable length of time in order that we may secure other bodega space and arrange the transfer of our hemp press, etc."

December 12, 1919, the plaintiff wrote the following letter to Francisco:

Re the sale of Bodegas as per your letter of Dec. 1st/19, I beg to inform you that I have set the ball rolling. Am I right in assuming that there is no other person authorized to offer these Bodegas for sale? I, furthermore, beg to request that no prices be given to any person directly, but any inquiries made be referred to me.

It appears that, as Francisco construed the letter of vice-president Pond to him of date October 15th, he did not think it prudent for the Company to dispose of its property in section 4 and 5 of block 6 in Cebu, and that on December tenth, he wrote to Pond, as vice-president, advising against the sale. December 16th, vice-president Pond wrote a letter to Francisco, in which, among other things, he said:

Your letter leads me to believe that you have misunderstood the basis on which we were considering the sale of your warehouse No. 2. In selling this warehouse we have, therefore, considered all along that it would be only on the understanding that we shall be permitted to occupy this warehouse until the lease of Macleod and Company on their present premises expires. On any other basis it would of course be foolish for us to dispose of the property.chanroblesvirtualawlibrary chanrobles virtual law library

In view of recent developments I suggest that you discontinue making any efforts to dispose of warehouse No. 2. We shall take up our future policy in connection with our warehouses in Cebu at the time Mr. Loewenstain and I visit Cebu in January.

This letter was received by Francisco at Cebu on the morning of December 19th, and he at once telephoned the plaintiff the substance of the letter, and that the property was withdrawn from the market.chanroblesvirtualawlibrary chanrobles virtual law libraryDecember 19th, the plaintiff wrote Francisco, as manager of the Company, the following letter:

With reference to our telephone conversation this morning, the deal for the sale of your Bodega has gone so far and in accordance with the terms of your letter to me, that I don't see how I can repudiate the agreement I have made with the buyer. The entire transaction will be terminated and the money paid to you within ten days or less.

On the same day, Francisco, as manager, wrote the plaintiff the following letter:

I have your letter of the 19th of December with reference to the sale of our Warehouse No. 2. As soon as we receive the offer it will be placed before our Manila Executives for acceptance.chanroblesvirtualawlibrary chanrobles virtual law library

I beg to state - outside of this particular deal - that this property was withdrawn from sale in accordance with the instructions received today from our Manila Office.

And on December 20th, wrote him another letter, the material portions of which are as follows:

Replying to your letters of December 19th and December 20th, we beg to state that our offer to you to negotiate on our behalf a sale of waterfront property in Cebu was subject to confirmation of the agreement to sell by our head office in Manila. This branch has no authority to close a deal of this character without express approval of the Manila office and in fact assignment of the lease to the land must be approved by the Bureau of Lands. On December 19th the writer telephoned you and talked to you withdrawing this property from sale and you replied on the same day by letter that the deal for the sale had gone too far for you to then withdraw your offer. Not until December 20th was a definite offer made to us and then you quoted a price of P100,000 in cash and stated that the money would be paid as soon as the necessary documents are drawn up. We again call your attention to the fact that the necessary documents cannot be drawn up until the Manila office approves this sale, that is to say, you were notified before you closed with the person who is now offering to buy that the writer alone was not authorized to consummate this sale.chanroblesvirtualawlibrary chanrobles virtual law library

A lease of this character for this period is essential to consummate this deal for the reason that the Pacific Commercia Company is now occupying the property was are discussing and no other suitable bodega space is available in Cebu and will not be, according to our information, until about December 31, 1921,

and the Company does not propose to be put out into the street. The writer regrets that you misunderstood his letter of December 1st which was intended to have you secure offers which were to be submitted and forwarded to Manila. . . .

The plaintiff claiming that he had a buyer who was able, ready and willing to purchase the property and pay P120,000 for it, and the Company refusing to sell and convey the property, after certain negotiations, for the purpose of trying to settle the dispute between them, the plaintiff commenced this action.chanroblesvirtualawlibrary chanrobles virtual law libraryThe complaint alleges that on December 1, 1919, the defendant Francisco, as manager of the defendant Company, and complying with its instructions, offered in writing to plaintiff for sale sections 4 and 5 of block of 6 of the Cebu Reclaimed Lands for the sum of P100,000, "and utilized in effect plaintiff in his capacity already cited to negotiate the sale of the property."

That said defendant, L. J. Francisco, in offering and recommending to plaintiff the negotiation for the sale of the property already mentioned, agreed with the latter that, if he could sell said property for the fixed sum of P100,000, the plaintiff would receive, as remuneration for his services in the negotiation of the sale, any amount which could be obtained from the buyer in excess of the said sum, whatever may be the value of the difference.chanroblesvirtualawlibrary chanrobles virtual law library

That on the 18th of December, 1919, the plaintiff effected the negotiation of the sale said warehouse, and promised in the name of his principal with the Roman Catholic Bishop of Cebu, that he would sell to him for the sum of P120,000 the warehouse referred to, having closed the agreement with the Roman Catholic Bishop referred to on the same date; and that the defendant L. J. Francisco was immediately notified of the execution of this agreement.

It is then alleged that the defendants "have refused to pay the plaintiff his commission of P20,000, notwithstanding the demands made by the plaintiff, which sum is due and payable by the defendants jointly and severally."chanrobles virtual law libraryAs a second cause of action, the plaintiff alleges in substance that the defendants have formed a conspiracy to defeat plaintiff's claim against the Company, and to place all liability upon the defendant Francisco.chanroblesvirtualawlibrary chanrobles virtual law libraryThe defendants filed a general demurrer to the complaint which was overruled. An answer was then filed, in which they admit the formal allegations of the complaint, and make a general denial of all the others. Testimony was taken upon such issues, and the trial court dismissed the action as to Francisco, and rendered a judgment against the Company for P20,000, with interest and costs, from which is appealed, making eighteen assignments of error. The plaintiff did not appeal.chanroblesvirtualawlibrary chanrobles virtual law libraryAlthough the trial court found for the plaintiff and against the Company, and there is a sharp conflict in much of the evidence, there is no dispute about any of the matters above stated. Neither is there any allegation or proof that Francisco was an officer or director of the Company, or that he had any authority to convey the property, or that his signature was necessary to the conveyance. It is also undisputed that the fee to the property was in the Government, and that the Company had a ninety-nine-year lease from the Government, dating from 1910, subject to certain terms and provisions, among which was the fact that the lease could not be assigned without the consent of the Government. It is also undisputed that at the time in question Mr. Pond was vice-president and general manager of the Company, and that his signature was necessary to any conveyance of real property. In fact, he was the only officer of the Company in the Philippine Islands who had authority to make such a conveyance.chanroblesvirtualawlibrary chanrobles virtual law libraryThe defendant Francisco, being only the local manager of the branch office of the Company at Cebu and not an officer or director, unless otherwise empowered, would not have any authority to sell or convey the real property of the Company, or make a contract for a sale or

conveyance. That power was primarily vested in the Board of Directors and the executive officers of the Company, and it appears from the record that at the time of the alleged acts, it was delegated to, and vested in, Mr. Pond, who was the vice-president and general manager of the Company, and that he alone was authorized by the Board of Directors to exercise that power. Francisco, as local manager, not having any authority to make contracts for the sale or conveyance of the real property of the Company, his authority, if any, must come from the Company or Pond, its general manager. Any authority of Francisco must be found in the letter to him of October 15, 1919, from vice-president Pond, in which, after speaking of the value of relative areas, and that the value of the property in question would figure out P100,000, he says: "If this property is sold arrangements will of course have to be made to protect us and also to protect the leases at present, on the property of the Cebu Warehouse Co. As you know, it is our plan to occupy the warehouse at present leased to Messrs. Macleod and Co. which adjoins our Cebu Office. Will you please look around Cebu and see if you can find buyers for this property." By the express terms of this letter, the authority of Francisco was limited to "look around Cebu and see if you can find buyers for this property." It did not authorize him to sell the property or to contract for its sale. His instructions were to look around and see if he could find a buyer. Again, the letter clearly says that an agreement will "have to be made to protect us and also to protect the leases at present on the property of the Cebu Warehouse Co." That it was the plan of the Company to occupy the warehouse which adjoint its Cebu office. By the very terms of the latter, any sale of the property was subject to the approval of the home office at Manila, and no sale could be made without its approval, and yet, under the record, any authority of Francisco to sell or contract for the sale of the property must be found in this letter. This letter was followed by the one of Francisco to the plaintiff of December 1, 1919, above quoted, which was written on the stationery of the Company, and is signed merely "L. J. Francisco." The letterhead shows upon its face that the head office of the Company is in Manila, and that it has branch offices at Sydney, Kobe, Cebu, Iloilo and Zamboanga. After stating that the property is held under Government leases and placing the value of the property at P200,000 on block 4, this letter says: The Company "now owns and occupies a bodega on areas Nos. 4 and 5 in block No. 6. The areas are given on the blueprint," and it "is placing this property for sale at P100,000 net to them." Also, that in the event of a sale, "it must be understood that we shall be permitted to continue to occupy this warehouse for a reasonable length of time in order that we may secure other bodega space and arrange the transfer of our hemp press, etc." Here again, this letter expressly says any sale of the property would be conditional. Although this letter is not as clear and explicit on that point as that of vice-president Pond of October 15th, it does clearly point out that, as one of the conditions of the sale, the Company must have an agreement satisfactory to it for the continued possession of the property. By the very terms of this letter, the right was reserved to the Company to say what terms would be and would not be satisfactory, and what would be a reasonable length of time, for its continued possession of the property. The power to do that was never delegated by the Company, or in the letter to Deen. Again, the plaintiff either knew or it was his business to know that he was dealing with a corporation which had executive officers and a board of directors, and whose principal office was in Manila, and that Francisco was not an officer or director of the corporation, and that he was only a local manager of the Company's property at Cebu, and that as such he had no legal right to sell or contract to sell the real property of the Company, and that any power which he had or claimed to have in such matters must be expressly conferred.chanroblesvirtualawlibrary chanrobles virtual law libraryIn Mechem on Agency, 2d ed., vol. 1, section 797, it is said:

Authority to sell rather than merely to find a purchaser; mere broker no authority to make a binding contract. - It is to be noted also that the case here contemplated is that in which the agent is really authorized to sell, and not merely employed to find a purchaser to whom the principal may sell. The distinction is one of consequence, because one employed as a mere real estate broker to `sell' land, even though employed by writing, is usually held to have no power to make a binding contract (much less a deed of conveyance), but is confined to the finding of a person ready, willing and able to buy from the principal on the terms proposed by him. . . .

In section 800, the same author says:

Mere preliminary correspondence or negotiations not enough to confer authority. - It is obvious also that before the questions here suggested can be determined, the authority intended to be conferred must be completely agreed upon and vested. If, therefore, the dealings between the principal and the agent have not passed beyond the stage of preliminary correspondence, if the terms upon which the authority is to be executed or the property sold are not yet fully determined, if further communications are to be had with the principal, or further assent given, before the authority is to be exercised, and the like, there can ordinarily be no present authority to sell in such wise as to bind the principal.

It is Horn-Book law that a person dealing with an agent is put upon inquiry as to the power and authority of the agent.chanroblesvirtualawlibrary chanrobles virtual law libraryCorpus Juris, vol. 2, p. 562, section 204, says:

Duty of third person to ascertain authority; general rule. - It follows from the above rules that as a general rule every person who undertakes to deal with an alleged agent is, by the mere fact of the agency, put upon inquiry, and must discover at his peril that it is in its nature and extent sufficient to permit the agent to do the proposed act, and that its source can be traced to the will of the alleged principal, particularly where he is dealing with an agent whose authority he knows to be special, or where it is his first transaction with the agent, or the circumstances connected with the agency are such as should put him on inquiry, as where it appears from the circumstances of the particular business that the interests of the agent and principal are necessarily adverse, or that the authority is of an unusual, improbable, or extraordinary nature. Such a person is to be regarded as dealing with the power before him, and must, at his peril, observe that the act done by the agent is legally identical with the act authorized by the power.chanroblesvirtualawlibrary chanrobles virtual law library

Source of information. - The person dealing with the agent should ascertain the extent of his authority from the principal, or from some other person who will have a motive to tell the truth in the interests of the principal, and he cannot rely upon the agent's statement or assumption of authority, or upon the mere presumption of authority.chanroblesvirtualawlibrarychanrobles virtual law library

Failure to inquire. - If such person makes no inquiry but chooses to rely on the agent's statements he is chargeable with knowledge of the agent's authority, and his ignorance of its extent will be no excuse to him, and the fault cannot be thrown upon the principal who never authorized the act or contract, although he was careless in reposing confidence in his agent.

Section 207 says:

Where authority is, or required to be, in writing. - Where a third person dealing with an agent has knowledge that his authority must necessarily be in writing in order to bind the principal, it is his duty to ascertain whether the agent has such authority and whether it is in proper form; and where there is written authority, whether it is required or not, and such

person has, or is charged with knowledge thereof, it is his duty to ascertain the nature and extent of the authority conferred, and whether the agent is acting within its scope, unless he is excused from inspecting the written authority by a statement from the principal himself defining the authority. When the authority is by law required to be in writing he is charged with knowledge of that fact, and of the limitations upon the agent's power contained in such writing. . . .

The same rule is laid down in Mechem on Agency, vol. 1, section 758.chanroblesvirtualawlibrary chanrobles virtual law libraryAs a matter of law, it must follow, upon the undisputed facts, that the plaintiff does not have a cause of action against the Company. The lower court dismissed the case as to the defendant Francisco. The plaintiff did not appeal, and that decision is now final. In the final analysis of the facts, Francisco did nothing more than to advise and represent to the plaintiff that this Company was willing to sell the property in question for P100,000, and on condition that the Company would have the right to continue in the use and possession of the property upon such terms and conditions, and for such a length of time, as the Company would approve. That statement was true when it was made, and upon a change in the policy of the Company, Francisco at once notified the plaintiff.chanroblesvirtualawlibrary chanrobles virtual law libraryThe judgment of the lower court against the defendant Pacific Commercial Company will be reversed, and one entered here in favor of the Company and against the plaintiff for the costs and disbursements of this action.chanroblesvirtualawlibrary chanrobles virtual law librarySo ordered.

G.R. No. L-24543 July 12, 1926

ROSA VILLA MONNA, plaintiff-appellee, vs.GUILLERMO GARCIA BOSQUE, ET AL., defendants. GUILLERMO GARCIA BOSQUE, F. H. GOULETTE, and R. G. FRANCE, appellants.

Eiguren and Razon for the appellant Garcia Bosque.Benj. S. Ohnick for the appellants France and Goulette.Fisher, DeWitt, Perkins and Brady and John R. McFie, jr., for appellee.

STREET, J.:

This action was instituted in the Court of First Instance of Manila by Rosa Villa y Monna, widow of Enrique Bota, for the purpose of recovering from the defendants, Guillermo Garcia Bosque and Jose Romar Ruiz, as principals, and from the defendants R. G. France and F. H. Goulette, as solidary sureties for said principals, the sum of P20,509.71, with interest, as a balance alleged to be due to the plaintiff upon the purchase price of a printing establishment and bookstore located at 89 Escolta, Manila, which had been sold to Bosque and Ruiz by the plaintiff, acting through her attorney in fact, one Manuel Pirretas y Monros. The defendant Ruiz put in no appearance, and after publication judgment by default was entered against him. The other defendants answered with a general denial and various special defenses. Upon hearing the cause the trial judge gave judgment in favor of the plaintiff, requiring all of the defendants, jointly and severally, to pay to the plaintiff the sum of P19,230.01, as capital, with stipulated interest at the rate of 7 per centum per annum, plus the further sum of P1,279.70 as interest already accrued and unpaid upon the date of the institution of the action, with interest upon the latter amount at the rate of 6 per centum per annum. From this judgment Guillermo Garcia Bosque, as principal, and R. G. France and F.H. Goulette, as sureties. appealed.

It appears that prior to September 17, 1919, the plaintiff, Rosa Villa y Monna, viuda de E. Bota, was the owner of a printing establishment and bookstore located at 89 Escolta, Manila, and known as La Flor de Cataluna, Viuda de E. Bota, with the machinery, motors, bindery, type material furniture, and stock appurtenant thereto. Upon the date stated, the plaintiff, then and now a resident of Barcelona, Spain, acting through Manuel Pirretas, as attorney in fact, sold the establishment above-mentioned to the defendants Guillermo Garcia Bosque and Jose Pomar Ruiz, residents of the City of Manila, for the

stipulated sum of P55,000, payable as follows: Fifteen thousand pesos (P15,000) on November 1, next ensuing upon the execution of the contract, being the date when the purchasers were to take possession; ten thousand pesos (P10,000) at one year from the same date; fifteen thousand pesos (P15,000) at two years; and the remaining fifteen thousand pesos (P15,000) at the end of three years. By the contract of sale the deferred installments bear interest at the rate of 7 per centum per annum. In the same document the defendants France and Goulette obligated themselves as solidary sureties with the principals Bosque and Ruiz, to answer for any balance, including interest, which should remain due and unpaid after the dates stipulated for payment of said installments, expressly renouncing the benefit of exhaustion of the property of the principals. The first installment of P15,000 was paid conformably to agreement.

In the year 1920, Manuel Pirretas y Monros, the attorney in fact of the plaintiff, absented himself from the Philippine Islands on a prolonged visit to Spain; and in contemplation of his departure he executed a document, dated January 22, 1920, purporting to be a partial substitution of agency, whereby he transferred to "the mercantile entity Figueras Hermanos, or the person, or persons, having legal representation of the same," the powers that had been previously conferred on Pirretas by the plaintiff "in order that," so the document runs, "they may be able to effect the collection of such sums of money as may be due to the plaintiff by reason of the sale of the bookstore and printing establishment already mentioned, issuing for such purpose the receipts, vouchers, letters of payment, and other necessary documents for whatever they shall have received and collected of the character indicated."

When the time came for the payment of the second installment and accrued interest due at the time, the purchasers were unable to comply with their obligation, and after certain negotiations between said purchasers and one Alfredo Rocha, representative of Figueras Hermanos, acting as attorney in fact for the plaintiff, an agreement was reached, whereby Figueras Hermanos accepted the payment of P5,800 on November 10, 1920, and received for the balance five promissory notes payable, respectively, on December 1, 1920, January 1, 1921, February 1, 1921, March 1, 1921, and April 1, 1921. The first three of these notes were in the amount of P1,000 each, and the last two for P2,000 each, making a total of P7,000. It was furthermore agreed that the debtors should pay 9 per centum per annum on said deferred installments, instead of the 7 per centum mentioned in the contract of sale. These notes were not paid promptly at maturity but the balance due upon them was finally paid in full by Bosque on December 24, 1921.

About this time the owners of the business La Flor de Cataluña, appear to have converted it into a limited partnership under the style of Guillermo Garcia Bosque, S. en C.;" and presently a corporation was formed to take over the business under the name "Bota Printing Company, Inc." By a document executed on April 21, 1922, the partnership appears to have conveyed all its assets to this corporation for the purported consideration of P15,000, Meanwhile the seven notes representing the unpaid balance of the second installment and interest were failing due without being paid. Induced by this dilatoriness on the part the debtor and supposedly animated by a desire to get the matter into better shape, M. T. Figueras entered into the agreement attached as Exhibit 1 to the answer of Bosque. In this document it is recited that Guillermo Garcia Bosque. S. en C., is indebted to Rosa Villa, viuda de E. Bota, in the amount of P32,000 for which R. G. France and F. H. Goulette are bound as joint and several sureties, and that the partnership mentioned had transferred all its assets to the Bota Printing Company, Inc., of which one George Andrews was a principal stockholder. It is then stipulated that France and Goulette shall be relieved from all liability on their contract as sureties and that in lieu thereof the creditor, Doña Rosa Villa yMonna, accepts the Bota Printing Company, Inc., as debtor to the extent of P20,000, which indebtedness was expressly assumed by it, and George Andrews as debtor to the extent of P12,000, which he undertook to pay at the rate of P200 per month thereafter. To this contract the name of the partnership Guillermo Garcia Bosque, S. en C., was affixed by Guillermo Garcia Bosque while the name of the Bota Printing Company, Inc., was signed by G. Andrews, the latter also signing in his individual capacity. The name of the plaintiff was affixed by M.T. Figueras in the following style: "p.p. Rosa Villa, viuda de E. Bota, M. T. Figueras, party of the second part."

No question is made as to the authenticity of this document or as to the intention of Figueras to release the sureties; and the latter rely upon the discharge as complete defense to the action. The defendant Bosque

also relies upon the same agreement as constituting a novation such as to relieve him from personal liability. All of the defendants furthermore maintain that even supposing that M. T. Figueras authority to novate the original contract and discharge the sureties therefrom, nevertheless the plaintiff has ratified the agreement by accepting part payment of the amount due thereunder with full knowledge of its terms. In her amended complaint the plaintiff asserts that Figueras had no authority to execute the contract containing the release (Exhibit 1) and that the same had never been ratified by her.

The question thus raised as to whether the plaintiff is bound by Exhibit 1 constitutes the main controversy in the case, since if this point should be determined in the affirmative the plaintiff obviously has no right of action against any of the defendants. We accordingly address ourselves to this point first.

The partial substitution of agency (Exhibit B to amended complaint) purports to confer on Figueras Hermanos or the person or persons exercising legal representation of the same all of the powers that had been conferred on Pirretas by the plaintiff in the original power of attorney. This original power of attorney is not before us, but assuming, as is stated in Exhibit B, that this document contained a general power to Pirretas to sell the business known as La Flor de Cataluña upon conditions to be fixed by him and power to collect money due to the plaintiff upon any account, with a further power of substitution, yet it is obvious upon the face of the act of substitution (Exhibit B) that the sole purpose was to authorize Figueras Hermanos to collect the balance due to the plaintiff upon the price of La Flor de Cataluña, the sale of which had already been affected by Pirretas. The words of Exhibit B on this point are quite explicit ("to the end that the said lady may be able to collect the balance of the selling price of the Printing Establishment and Bookstore above-mentioned, which has been sold to Messrs. Bosque and Pomar"). There is nothing here that can be construed to authorize Figueras Hermanos to discharge any of the debtors without payment or to novate the contract by which their obligation was created. On the contrary the terms of the substitution shows the limited extent of the power. A further noteworthy feature of the contract Exhibit 1 has reference to the personality of the purported attorney in fact and the manner in which the contract was signed. Under the Exhibit B the substituted authority should be exercised by the mercantile entity Figueras Hermanos or the person duly authorized to represent the same. In the actual execution of Exhibit 1, M. T. Figueras intervenes as purpoted attorney in fact without anything whatever to show that he is in fact the legal representative of Figueras Hermanos or that he is there acting in such capacity. The act of substitution conferred no authority whatever on M. T. Figueras as an individual. In view of these defects in the granting and exercise of the substituted power, we agree with the trial judge that the Exhibit 1 is not binding on the plaintiff. Figueras had no authority to execute the contract of release and novation in the manner attempted; and apart from this it is shown that in releasing the sureties Figueras acted contrary to instructions. For instance, in a letter from Figueras in Manila, dated March 4, 1922, to Pirretas, then in Barcelona, the former stated that he was attempting to settle the affair to the best advantage and expected to put through an arrangement whereby Doña Rosa would receive P20,000 in cash, the balance to be paid in installments, "with the guaranty of France and Goulette." In his reply of April 29 to this letter, Pirretas expresses the conformity of Doña Rosa in any adjustment of the claim that Figueras should see fit to make, based upon payment of P20,000 in cash, the balance in installments, payable in the shortest practicable periods, it being understood, however, that the guaranty of Messrs. France and Goulette should remain intact. Again, on May 9, Pirretas repeats his assurance that the plaintiff would be willing to accept P20,000 down with the balance in interest-bearing installments "with the guaranty of France and Goulette." From this it is obvious that Figueras had no actual authority whatever to release the sureties or to make a novation of the contract without their additional guaranty.

But it is asserted that the plaintiff ratified the contract (Exhibit 1) by accepting and retaining the sum of P14,000 which, it is asserted, was paid by the Bota Printing Co., Inc., under that contract. In this connection it should be noted that when the firm of Guillermo Garcia Bosque, S. en C., conveyed all it assets on April 21, 1922 to the newly formed corporation, Bota Printing Co., Inc., the latter obligated itself to pay al the debts of the partnership, including the sum of P32,000 due to the plaintiff. On April 23, thereafter, Bosque, acting for the Bota Printing Co., Inc., paid to Figueras the sum of P8,000 upon the third installment due to the plaintiff under the original contract of sale, and the same was credited by Figueras accordingly. On May 16 a further sum of P5,000

was similarly paid and credited; and on May 25, a further sum of P200 was likewise paid, making P14,000 in all. Now, it will be remembered that in the contract (Exhibit 1), executed on May 17, 1922, the Bota Printing Co., Inc., undertook to pay the sum of P20,00; and the parties to the agreement considered that the sum of P13,800 then already paid by the Bota Printing Co., Inc., should be treated as a partial satisfaction of the larger sum of P20,000 which the Bota Printing Co., Inc., had obligated itself to pay. In the light of these facts the proposition of the defendants to the effect that the plaintiff has ratified Exhibit 1 by retaining the sum of P14,000, paid by the Bota Printing Co., Inc., as above stated, is untenable. By the assumption of the debts of its predecessor the Bota Printing Co., Inc., had become a primary debtor to the plaintiff; and she therefore had a right to accept the payments made by the latter and to apply the same to the satisfaction of the third installment of the original indebtedness. Nearly all of this money was so paid prior to the execution of Exhibit 1 and although the sum of P200 was paid a few days later, we are of the opinion that the plaintiff was entitled to accept and retain the whole, applying it in the manner above stated. In other words the plaintiff may lawfully retain that money notwithstanding her refusal to be bound by Exhibit 1.

A contention submitted exclusively in behalf of France and Goulette, the appellant sureties, is that they were discharged by the agreement between the principal debtor and Figueras Hermanos, as attorney in fact for the plaintiff, whereby the period for the payment of the second installment was extended, without the assent of the sureties, and new promissory notes for unpaid balance were executed in the manner already mentioned in this opinion. The execution of these new promissory notes undoubtedly constituted and extension of time as to the obligation included therein, such as would release a surety, even though of the solidary type, under article 1851 of the Civil Code. Nevertheless it is to be borne in mind that said extension and novation related only to the second installment of the original obligation and interest accrued up to that time. Furthermore, the total amount of these notes was afterwards paid in full, and they are not now the subject of controversy. It results that the extension thus effected could not discharge the sureties from their liability as to other installments upon which alone they have been sued in this action. The rule that an extension of time granted to the debtor by the creditor, without the consent of the sureties, extinguishes the latter's liability is common both to Spanish jurisprudence and the common law; and it is well settled in English and American jurisprudence that where a surety is liable for different payments, such as installments of rent, or upon a series of promissory notes, an extension of time as to one or more will not affect the liability of the surety for the others. (32 Cyc., 196; Hopkirk vs. McConico, 1 Brock., 220; 12 Fed. Cas., No. 6696; Coe vs. Cassidy, 72 N. Y., 133; Cohn vs. Spitzer, 129 N. Y. Supp., 104; Shephard Land Co. vs. Banigan, 36 R. I., 1; I. J. Cooper Rubber Co. vs. Johnson, 133 Tenn., 562; Bleeker vs. Johnson, 190, N. W. 1010.) The contention of the sureties on this point is therefore untenable.

There is one stipulation in the contract (Exhibit A) which, at first suggests a doubt as to propriety of applying the doctrine above stated to the case before us. We refer to cause (f) which declares that the non-fulfillment on the part of the debtors of the stipulation with respect to the payment of any installment of the indebtedness, with interest, will give to the creditor the right to treat and declare all of said installments as immediately due. If the stipulation had been to the effect that the failure to pay any installment when due would ipso facto cause to other installments to fall due at once, it might be plausibly contended that after default of the payment of one installment the act of the creditor in extending the time as to such installment would interfere with the right of the surety to exercise his legal rights against the debtor, and that the surety would in such case be discharged by the extension of time, in conformity with articles 1851 and 1852 of the Civil Code. But it will be noted that in the contract now under consideration the stipulation is not that the maturity of the later installments shall be ipso facto accelerated by default in the payment of a prior installment, but only that it shall give the creditor a right to treat the subsequent installments as due, and in this case it does not appear that the creditor has exercised this election. On the contrary, this action was not instituted until after all of the installments had fallen due in conformity with the original contract. It results that the stipulation contained in paragraph (f) does not affect the application of the doctrine above enunciated to the case before us.

Finally, it is contended by the appellant sureties that they were discharged by a fraud practiced upon them by the plaintiff in failing to require the debtor to execute a mortgage upon the printing establishment to secure the debt which is the subject of this suit. In this

connection t is insisted that at the time France and Goulette entered into the contract of suretyship, it was represented to them that they would be protected by the execution of a mortgage upon the printing establishment by the purchasers Bosque and Pomar. No such mortgage was in fact executed and in the end another creditor appears to have obtained a mortgage upon the plant which is admitted to be superior to the claim of the plaintiff. The failure of the creditor to require a mortgage is alleged to operate as a discharge of the sureties. With this insistence we are unable to agree, for the reason that the proof does not show, in our opinion, that the creditor, on her attorney in fact, was a party to any such agreement. On the other hand it is to be collected from the evidence that the suggestion that a mortgage would be executed on the plant to secure the purchase price and that this mortgage would operate for the protection of the sureties came from the principal and not from any representative of the plaintiff.

As a result of our examination of the case we find no error in the record prejudicial to any of the appellants, and the judgment appealed from will be affirmed, So ordered, with costs against the appellants.

Avanceña, C. J., Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur

G.R. No. L-19001 November 11, 1922

HARRY E. KEELER ELECTRIC CO., INC., plaintiff-appellant, vs.DOMINGO RODRIGUEZ, defendant-appellee.

Hartford Beaumont for appellant.Ross and Lawrence and Antonio T. Carrascoso, Jr., for appellee.

STATEMENT

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 Talisay, Occidental Negros, and A. C. Montelibano was a resident of Iloilo.

Having this information, Montelibano approached plaintiff at its Manila office, claiming that he was from Iloilo and lived with Governor Yulo; that he could find purchaser for the "Matthews" plant, and was told by the plaintiff that for any plant that he could sell or any customer that he could find he would be paid a commission of 10 per cent for his services, if the sale was consummated. Among other persons. Montelibano interviews the defendant, and, through his efforts, one of the "Matthews" plants was sold by the plaintiff to the defendant, and was shipped from Manila to Iloilo, and later installed on defendant's premises after which, without the knowledge of the plaintiff, the defendant paid the purchase price to Montelibano. As a result, plaintiff commenced this action against the defendant, alleging that about August 18, 1920, it sold and delivered to the defendant the electric plant at the agreed price of P2,513.55 no part of which has been paid, the demands judgment for the amount with interest from October 20, 1920.

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 saidelectric 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.

JOHNS, J.:

The testimony is conclusive that the defendant paid the amount of plaintiff's claim to Montelibano, and that no part of the money was ever paid to the plaintiff. The defendant, having alleged that the plaintiff sold and delivered the plant to him, and that he paid the plaintiff the purchase price, it devolved upon the defendant to prove the payment to the plaintiff by a preponderance of the evidence.

It appears from the testimony of H. E. Keeler that he was president of the plaintiff and that the plant in question was shipped from Manila to Iloilo and consigned to the plaintiff itself, and that at the time of the shipment the plaintiff sent Juan Cenar, one of its employees, with the shipment, for the purpose of installing the plant on defendant's premises. That plaintiff gave Cenar a statement of the account, including some extras and the expenses of the mechanic, making a total of P2,563,95. That Montelibano had no authority from the plaintiff to receive or receipt for money. That in truth and in fact his services were limited and confined to the finding of purchasers for the "Matthews" plant to whom the plaintiff would later make and consummate the sale. That Montelibano was not an electrician, could not install the plant and did not know anything about its mechanism.

Cenar, as a witness for the plaintiff, testified that he went with shipment of the plant from Manila to Iloilo, for the purpose of installing, testing it, and to see that everything was satisfactory. That he was there about nine days, and that he installed the plant, and that it was tested and approved by the defendant. He also says that he personally took with him the statement of account of the plaintiff against the defendant, and that after he was there a few days, the defendant asked to see the statement, and that he gave it to him, and the defendant said, "he was going to keep it." I said that was all right "if you want." "I made no effort at all to collect the amount from him because Mr. Rodriguez told me he was going to pay for the plant here in Manila." That after the plant was installed and approved, he delivered it to the defendant and returned to Manila.

The only testimony on the part of the defendant is that of himself in the form of a deposition in which he says that Montelibano sold and delivered the plant to him, and "was the one who ordered the installation of that electrical plant," and he introduced in evidence as part of his deposition a statement and receipt which Montelibano signed to whom he paid the money. When asked why he paid the money to Montelibano, the witness says:

Because he was the one who sold, delivered, and installed the electrical plant, and he presented to me the account, Exhibits A and A-I, and he assured me that he was duly authorized to collect the value of the electrical plant.

The receipt offered in evidence is headed:

STATEMENT Folio No. 2494

Mr. DOMINGO RODRIGUEZ, Iloilo, Iloilo, P.I.

In account with HARRY E. KEELER ELECTRIC COMPANY, INC. 221 Calle Echaque, Quiapo, Manila, P.I. MANILA, P.I., August 18, 1920.

The answer alleges and the receipt shows upon its face that the plaintiff sold the plant to the defendant, and that he bought it from the plaintiff. The receipt is signed as follows:

Received payment HARRY E. KEELER ELECTRIC CO. Inc.,

Recibi(Sgd.) A. C. MONTELIBANO.

There is nothing on the face of this receipt to show that Montelibano was the agent of, or that he was acting for, the plaintiff. It is his own personal receipt and his own personal signature. Outside of the fact that Montelibano received the money and signed this receipt, there is no evidence that he had any authority, real or apparent, to receive or receipt for the money. Neither is there any evidence that the plaintiff ever delivered the statement to Montelibano, or authorized anyone to deliver it to him, and it is very apparent that the statement in question is the one which was delivered by the plaintiff to Cenar, and is the one which Cenar delivered to the defendant at the request of the defendant. The evidence of the defendant that Montelibano was the one who sold him the plant is in direct conflict with his own pleadings and the receipt statement which he offered in evidence. This statement also shows upon its face that P81.60 of the bill is for:

To Passage round trip, 1st Class @ P40.80 a trip ........................................... P81.60.Plus Labor @ P5.00 per day — Machine's transportation ................. 9.85.

This claim must be for the expenses of Cenar in going to Iloilo from Manila and return, to install the plant, and is strong evidence that it was Cenar and not Montelibano who installed the plant. If Montelibano installed the plant, as defendant claims, there would not have been any necessity for Cenar to make this trip at the expense of the defendant. After Cenar's return to Manila, the plaintiff wrote a letter to the defendant requesting the payment of its account, in answer to which the defendant on September 24 sent the following telegram:

Electric plant accessories and installation are paid to Montelibano about three weeks KeelerCompany did not present bill.

This is in direct conflict with the receipted statement, which the defendant offered in evidence, signed by Montelibano. That shows upon its face that it was an itemized statement of the account of plaintiff with the defendant. Again, it will be noted that the receipt which Montelibano signed is not dated, and it does not show when the money was paid: Speaking of Montelibano, the defendant also testified: "and he assured me that he was duly authorized to collect the value of the electrical plant." This shows upon its face that the question of Montelibano's authority to receive the money must have been discussed between them, and that, in making the payment, defendant relied upon Montelibano's own statements and representation, as to his authority, to receipt for the money. 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. There is no evidence that the plaintiff ever delivered any statements to Montelibano, or that he was authorized to receive or receipt for the money, and defendant's own telegram shows that the plaintiff "did not present bill" to defendant. He now claims that at the very time this telegram was sent, he had the receipt of Montelibano for the money upon the identical statement of account which it is admitted the plaintiff did render to the defendant. Article 1162 of the Civil Code provides:

Payment must be made to the persons in whose favor the obligation is constituted, or to another authorized to receive it in his name.

And article 1727 provides: The principal shall be liable as to matters with respect to which the agent has exceeded his authority only when he ratifies the same expressly or by implication.

In the case of Ormachea Tin-Conco vs. Trillana (13 Phil., 194), this court held:

The repayment of a debt must be made to the person in whose favor the obligation is constituted, or to another expressly authorized to receive the payment in his name.

Mechem on Agency, volume I, section 743, says: In approaching the consideration of the inquiry whether an assumed authority exist in a given case, there are certain fundamental principles which must not be overlooked. Among these are, as has been seen, (1) that the law indulges in no bare presumptions that an agency exists: it must be proved or presumed from facts; (2) that the agent cannot establish his own authority, either by his representations or by assuming to exercise it; (3) that an authority cannot be established by mere rumor or general reputation; (4)that even a general authority is not an

unlimited one; and (5) that every authority must find its ultimate source in some act or omission of the principal. An assumption of authority to act as agent for another of itself challenges inquiry. Like a railroad crossing, it should be in itself a sign of danger and suggest the duty to "stop, look, and listen." It is therefore declared to be a fundamental rule, never to be lost sight of and not easily to be overestimated, that persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. . . . It is, moreover, in any case entirely within the power of the person dealing with the agent to satisfy himself that the agent has the authority he assumes to exercise, or to decline to enter into relations with him. (Melchem on Agency, vol. I, sec. 746.) 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.)

This was a single transaction between the plaintiff and the defendant.lawph!l.net 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. The judgment of the lower court is reversed, and one will be entered here in favor of the plaintiff and against the defendant for the sum of P2,513.55 with interest at the legal rate from January 10, 1921, with costs in favor of the appellant. So ordered.Araullo, C. J., Johnson, Street, Malcolm, Avanceña, Villamor, Ostrand, and Romualdez, JJ., concur.

VICENTE SY JUCO AND CIPRIANA VIARDO, Plaintiffs-Appellants,

G. R. No. 13471January 12, 1920 -versus- SANTIAGO V. SY JUCO, Defendant-Appellant. D E C I S I O NAVANCEÑA, J: In 1902 the defendant was appointed by the plaintiffs-administrator of their property and acted as such until June 30, 1916, when his authority was cancelled. The plaintiffs are defendant's father and mother who allege that during his administration, the defendant acquired the property claimed in the Complaint in his capacity as plaintiffs' administrator with

their money and for their benefit. After hearing the case the trial court rendered his decision, the dispositive part of which is the following:

"Wherefore, the court gives judgment for the plaintiffs and orders: "1. That the defendant return to the plaintiffs the launch Malabon, in question, and execute all the necessary documents and instruments for such delivery and the registration in the records of the Custom House of said launch as plaintiffs' property; "2. That the defendant return to the plaintiffs the casco No. 2584, or pay to them the value thereof which has been fixed at the sum of P3,000, and should the return of said casco be made, execute all the necessary instruments and documents for its registration in plaintiffs' name at the Custom House; and "3. That the defendant return to the plaintiffs the automobile No. 2060 and execute the necessary instruments and documents for its registration at the Bureau of Public Works. And judgment is hereby given for the defendant absolving him from the complaint so far concerns:

"1. The rendition of accounts of his administration of plaintiffs' property; "2. The return of the casco No. 2545; "3. The return of the typewriting machine; "4. The return of the house occupied by the defendant; and "5. The return of the price of the piano in question."

Both parties appealed from this judgment. In this instance, defendant assigns three errors alleged to have been committed by the lower court in connection with the three items of the dispositive part of the judgment unfavorable to him. We are of the opinion that the evidence sufficiently justifies the judgment against the defendant. Regarding the launch Malabon, it appears that in July, 1914, the defendant bought it in his own name from the Pacific Commercial Co., and afterwards, registered it at the Custom House. But this does not necessarily show that the defendant bought it for himself and with his own money, as he claims. This transaction was within the agency which he had received from the plaintiffs. The fact that he has acted in his own name may be only, as we believe it was, a violation of the agency on his part. As the plaintiffs' counsel truly say, the question is not in whose favor the document of sale of the launch is executed nor in whose name same was registered, but with whose money was said launch bought. The plaintiffs' testimony that it was bought with their money and for them is supported by the fact that, immediately after its purchase, the launch had to be repaired at their expense, although said expense was collected from the defendant. If the launch was not bought for the plaintiffs and with their money, it is not explained why they had to pay for its repairs. The defendant invokes the Decision of this Court in the case of Martinez vs. Martinez [1 Phil. Rep., 647], which We do not believe is applicable to the present case. In said case, Martinez, Jr., bought a vessel in his own name and in his name registered it at the Custom House. This Court then said that although the funds with which the vessel was bought belonged to Martinez Sr., Martinez Jr. is its sole and exclusive owner. But in said case the relation of principal and agent, which exists between the plaintiffs and the defendant in the present case, did not exist between Martinez, Sr., and Martinez, Jr. By this agency the plaintiffs herein clothed the defendant with their representation in order to purchase the launch in question. However, the defendant acted without this representation and bought the launch in his own name thereby violating the agency. If the result of this transaction should be that the defendant has acquired for himself the ownership of the launch, it would be equivalent to sanctioning this violation and accepting its consequences. But not only must the consequences of the violation of this agency not be accepted, but the effects of the agency itself must be sought. If the defendant contracted the obligation to buy the launch for the plaintiffs and in their representation, by virtue of the agency,

notwithstanding the fact that he bought it in his own name, he is obliged to transfer to the plaintiffs the rights he received from the vendor, and the plaintiffs are entitled to be subrogated in these rights. There is another point of view leading Us to the same conclusion. From the rule established in Article 1717 of the Civil Code that when an agent acts in his own name, the principal shall have no right of action against the person with whom the agent has contracted, cases involving things belonging to the principal are excepted. According to this exception [when things belonging to the principal are dealt with] the agent is bound to the principal although he does not assume the character of such agent and appears acting on his own name [Decision of the Supreme Court of Spain, May 1, 1900]. This means that in the case of this exception the agent's apparent representation yields to the principal's true representation and that, in reality and in effect, the contract must be considered as entered into between the principal and the third person; and, consequently, if the obligations belong to the former, to him alone must also belong the rights arising from the contract. The money with which the launch was bought having come from the plaintiff, the exception established in Article 1717 is applicable to the instant case. Concerning the casco No. 2584, the defendant admits it was constructed by the plaintiff himself in the latter's ship-yard. Defendant's allegation that it was constructed at his instance and with his money is not supported by the evidence. In fact the only proof presented to support this allegation is his own testimony contradicted, on the one hand, by the plaintiffs' testimony and, on the other hand, rebutted by the fact that, on the date this casco was constructed, he did not have sufficient money with which to pay the expense of its construction. As to the automobile No. 2060, there is sufficient evidence to show that its price was paid with plaintiffs' money. Defendant's adverse allegation that it was paid with his own money is not supported by the evidence. The circumstances under which, he says, this payment has been made, in order to show that it was made with his own money, rather indicate the contrary. He presented in evidence his check-book wherein it appears that on March 24, 1916, he issued a check for P300 and on the 27th of same month another for P400 and he says that the first installment was paid with said checks. But it results that, in order to issue the check for P300 on March 24 of that year, he had to deposit P310 on that same day; and in order to issue the other check for P400 on the 27th of the same month, he deposited P390 on that same day. It was necessary for the defendant to make these deposits for on those dates he had not sufficient money in the bank for which he could issue those checks. But, in order to pay for the price of the automobile, he could have made these payments directly with the money he deposited without the necessity of depositing and withdrawing it on the same day. If this action shows something, it shows defendant's preconceived purpose of making it appear that he made the payment with his own funds deposited in the bank. The plaintiffs, in turn, assign in this instance the following three errors alleged to have been committed by the lower court:

"1. The court erred in not declaring that the plaintiffs did not sell to the defendant the casco No. 2545 and that they were its owners until it was sunk in June, 1916. "2. The court erred in absolving the defendant from his obligation to render an account of his administration to the plaintiffs, and to pay to the latter the amount of the balance due in their favor. "3. The court erred in not condemning the defendant to pay to the plaintiffs the value of the woods, windows and doors taken from their lumber-yard by the defendant and used in the construction of the house on calle Real of the barrio of La Concepcion, municipality of Malabon, Rizal."

Concerning the casco No. 2545, the lower court refrained from making any declaration about its ownership in view of the fact that this casco had been leased and was sunk while in the lessee's hands before the complaint in this case was filed. The lower court, therefore, considered it unnecessary to pass upon this point. We agree with the plaintiffs that the trial court should have made a pronouncement upon this casco. The lessee may be responsible in damages for its loss, and it is of interest to the litigants in this case that it be determined who is the owner of said casco that may enforce this responsibility of the lessee. Upon an examination of the evidence relative to this casco, We find that it belonged to the plaintiffs and that the latter sold it afterwards to the defendant by means of a public instrument. Notwithstanding plaintiffs'

allegation that when they signed this instrument they were deceived, believing it not to be an instrument of sale in favor of the defendant, nevertheless, they have not adduced sufficient proof of such deceit which would destroy the presumption of truth which a public document carries with it. Attorney Sevilla, who acted as the notary in the execution of this instrument, testifying as a witness in the case, said that he never verified any document without first inquiring whether the parties knew its content. Our conclusion is that this casco was lawfully sold to the defendant by the plaintiffs. Concerning the wood, windows and doors given by the plaintiffs to the defendant and used in the construction of the latter's house on Calle Real of the Barrio of La Concepcion of the Municipality of Malabon, Rizal, we find correct the trial Court's decision that they were given to the defendant as his and his wife's property. Concerning the rendition of accounts which the plaintiffs require of the defendant, We likewise find correct the trial court's decision absolving the latter from this petition, for it appears, from the plaintiffs' own evidence, that the defendant used to render accounts of his agency after each transaction, to the plaintiffs' satisfaction. From the foregoing considerations, We affirm the judgment appealed from in all its parts except in so far as the casco No. 2545 is concerned, and as to this, We declare that, it having been sold by the plaintiffs to the defendant, the latter is absolved. No special findings as to costs. So ordered.

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