Cases Week 9 AGENCY

7/23/2019 Cases Week 9 AGENCY

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Republic of the PhilippinesSUPREME COURT

Manila

G.R. No. L-24332 January 31, 1978

RAMON RALLOS, A!"n"#$ra$or o% $&' E#$a$' o% CONCEPC(ON RALLOS,petitioner,vs.)EL(* GO C+AN SONS REALT CORPORAT(ON an COURT O) APPEALS,respondents.

Seno, Mendoza & Associates for petitioner.

Ramon Duterte for private respondent.

MUO/ PALMA,J.:

This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal, Concepcion Rallos, sold the latter'sundivided share in a parcel of land pursuant to a power of attorney which the principal had eecuted in favor. The administrator of theestate of the went to court to have the sale declared uneanforceable and to recover the disposed share. The trial court !ranted therelief prayed for, but upon appeal the Court of "ppeals uphold the validity of the sale and the complaint.

#ence, this Petition for Review on certiorari.

The followin! facts are not disputed. Concepcion and $erundia both surnamed Rallos were sisters and re!istered co-owners of aparcel of land %nown as &ot o. ()*+ of the Cadastral Survey of Cebu covered by Transfer Certificate of Title o. of theRe!istry of Cebu. n "pril /, )(0, the sisters eecuted a special power of atto rney in favor of their brother, Simeon Rallos,authori1in! him to sell for and in their behalf lot ()*+. n March +, )((, Concepcion Rallos died. n September /, )((, Simeon

Rallos sold the undivided shares of his sisters Concepcion and $erundia in lot ()*+ to 2eli $o Chan 3 Sons Realty Corporation forthe sum of P4,*.)4. The deed of sale was re!istered in t he Re!istry of 5eeds of Cebu, TCT o. * was cancelled, and a newtransfer certificate of Title o. /)*) was issued in the named of the vendee.

n May *, )( Ramon Rallos as administrator of the 6ntestate 7state of Concepcion Rallos filed a complaint doc%eted as CivilCase o. R-0(+4 of the Court of 2irst 6nstance of Cebu, prayin! 89 that the sale of the undivided share of the deceased ConcepcionRallos in lot ()*+ be d unenforceable, and said share be reconveyed to her estate: 8/9 that the Certificate of 'title issued in the nameof 2eli $o Chan 3 Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and the;6ntestate estate of Concepcion Rallos; in eud!ment with the followin! dispositive portion?

". n Plaintiffs Complaint @

89 5eclarin! the deed of sale, 7h. ;C;, null and void insofar as the one-half pro-indiviso share of Concepcion Rallos in the property in


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"!ency is basicallypersonal representative, and derivativein nature. The authority of the a!ent to act emanates from the powers!ranted to him by his principal: his act is the act of the principal if done within the scope of the authority.Qui facit per alium facit se .;#e who acts throu!h another acts himself;.

/. There are various ways of etin!uishin! a!ency,7but her =e are concerned only with one cause @ death of the principalPara!raph + of "rt. )) of the Civil Code which was ta%en from "rt. G4) of the Spanish Civil Code provides?

"RT. )).Agency is etinguished

.

+. !y the death

, civil interdiction, insanity or insolvency of the principal or of the a!ent: ... 87mphasis supplied9

Ey reason of the very nature of the relationship between Principal and a!ent, a!ency is etin!uished by the death of the principal orthe a!ent. This is the law in this >urisdiction.8

Manresacommentin! on "rt. G4) of the Spanish Civil Code eplains that the rationale for the law is found in the"uridical #asis

ofa!ency which is representationThem bein! an in. inte!ration of the personality of the principal inte!ration that of the a!ent it is notpossible for the representation to continue to eist once the death of either is establish.$othiera!rees with Manresa that by reason ofthe nature of a!ency, death is a necessary cause for its etinction.%aurentsays that the >uridical tie between the principal and thea!ent is severed ipso >ure upon the death of either without necessity for the heirs of the fact to notify the a!ent of the fact of death ofthe former. 9

The same rule prevails at common law @ the death of the principal effects instantaneous and absolute revocation of the authority ofthe a!ent unless the Power be coupled with an interest.1This is the prevalent rule in "merican Durisprudence where it is well-settledthat a power without an interest confer. red upon an a!ent is dissolved by the principal's death, and any attempted eecution of thepower afterward is not bindin! on the heirs or representatives of the deceased.11

+. 6s the !eneral rule provided for in "rticle )) that the death of the principal or of the a!ent etin!uishes the a!ency, sub>ect to anyeception, and if so, is the instant case within that eceptionF That is the determinative point in issue in this liti!ation. 6t is the

contention of respondent corporation which was sustained by respondent court that notwithstandin! the death of the principalConcepcion Rallos the act of the attorney-in-fact, Simeon Rallos in sellin! the former's sham in the property is valid and enforceableinasmuch as the corporation acted in !ood faith in buyin! the property in


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. #oldin! that the !ood faith of a third person in said with an a!ent affords the former sufficient protection, respondent court drew a;parallel; between the instant case and that of an innocent purchaser for value of a land, statin! that if a person purchases are!istered land from one who aco ano in his favor.Jalle>o delivered to ano his land titles. The power was re!istered in the ffice of the Re!ister of 5eeds.=hen the lawyer-husband of "n!ela Elondeau went to that ffice, he found all in order includin! the power ofattorney. Eut Jalle>o denied havin! eecuted the power The lower court sustained Jalle>o and the plaintiffElondeau appealed. Reversin! the decision of the court a o in favor ofano. 6f this had not been so and if thereafter the proper notation of the encumbrancecould not have been made, "n!ela Elondeau would not have sent P/,444.44 to thedefendant Jalle>o.' "n eecuted transfer of re!istered lands placed by the re!isteredowner thereof in the hands of another operates as a representation to a third party thatthe holder of the transfer is authori1ed to deal with the land.

"s between two innocent persons, one of whom must suffer the conseection can be ta%en to it. Eut if it intended to say that his principle applies where there was 4 ndeath, or opportunity of twice 6 must be permitted to dissent from it.

... That a payment may be !ood today, or bad tomorrow, from the accident circumstance of the deaprincipal, which he did not %now, and which by no possibility could he %nowF 6t would be un>ust to thand un>ust to the debtor. 6n the civil law, the acts of the a!ent, done#ona fide in ignorance of the deaprincipal are held valid and bindin! upon the heirs of the latter. The same rule holds in the Scottish cannot believe the common law is so unreasonable... 8+) "m. 5ec. G, *4, *: emphasis supplied9

To avoid any wron! impression which the pinion inassiday v. Mc1enziemay evo%e, mention may be made that the abovrepresents the minority view in "merican >urisprudence. Thus inlayton v. Merrett, the Court said.@

There are several cases which seem to hold that althou!h, as a !eneral principle, death revo%es an

and renders null every act of the a!ent thereafter performed, yet that where a payment has been mi!norance of the death, such payment will be !ood. The leadin! case so holdin! is that ofassiday v.Mc1enzie, 0 =atts 3 S. 8Pa9 /*/, +) "m. G, where, in an elaborate opinion, this view ii broadly anis referred to, and seems to have been followed, in the case ofDic' v. $age,G Mo. /+0, (G "m5 /this latter case it appeared that the estate of the deceased principal had received the benefit of the paid, and therefore the representative of the estate mi!ht well have been held to be estopped from a!ain. . . . These cases, in so far, at least, as they announce the doctrine under discussion, are ecThe Pennsylvania Case, supra8Cassiday v. McIen1ie 0 =atts 3 S. /*/, +) "m5 G9, is believed toalmost, if not udicial indication ofon the !eneral sub>ect, than as the ad>udication of the Court upon the point in ud!ment of a of !reat respectability, it stands alone amon! coauthorities and is opposed by an array too formidable to permit us to followin! it. 8( Cal. /,G, cit(0)9

=hatever conflict of le!al opinion was !enerated byassiday v. Mc1enziein "merican >urisprudence, no such conflict eistown for the simple reason that our statute, the Civil Code, epressly provides for two eceptions to the !eneral rule that deprincipal revo%es ipso >ure the a!ency, to wit? 89 that the a!ency is coupled with an interest 8"rt )+49, and 8/9 that the aca!ent was eecuted without %nowled!e of the death of the principal and the third person who contracted with the a!ent ac!ood faith 8"rt. )+9. 7ception o. / is t he doctrine followed in Cassiday, and a!ain =e stress the indispensable reudrendered by then #on. "mador 7. $ome1 of the Court of 2irst 6 nstance of Cebu,


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Manila

7 E"C

G.R. No. L-211 ''!5'r 17, 19

N(ELSON COMPAN, (NC.,plaintiff-appellant,vs.LEPANTO CONSOL(ATE M(N(NG COMPAN,defendant-appellee.

6. 0. Quasha and Associates for plaintiff:appellant.$once 5nrile, Siguion:Reyna, Montecillo and !elo for defendant:appellee.

/AL(6AR,J.:

n 2ebruary , )(*, plaintiff brou!ht this action a!ainst defendant before the Court of 2irst 6nstance of Manila to recover certainsums of money representin! dama!es alle!edly suffered by the former in view of the refusal of the latter to comply with the terms of amana!ement contract entered into between them on Danuary +4, )+G, includin! attorney's fees and costs.

5efendant in its answer denied the material alle!ations of the complaint and set up certain special defenses, amon! them,prescription and laches, as bars a!ainst the institution of the present action.

"fter trial, durin! which the parties presented testimonial and numerous documentary evidence, the courta quorendered a decisiondismissin! the complaint with costs. The court stated that it did not f ind sufficient evidence to establish defendant's counterclaim andso it li%ewise dismissed the same.

The present appeal was ta%en to this Court directly by the plaintiff in view of the amount involved in the case.

The facts of this case, as stated in the decision appealed from, are hereunder udicial notice of that war supervened in our country and that the mines in the Philippeither destroyed or ta%en over by the occupation forces with a view to their operation. The &epanto mines were no eceptiwas the mine itself destroyed but the mill, power plant, supplies on hand, e


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n the other hand, the record shows that the defendant admitted that the occupation forces operated its minin! properties sub>ect ofthe mana!ement contract,/and from the very report submitted by President 5e=itt it appears that the date of the liberation of themine was "u!ust , )0( althou!h at the time there were still many booby traps.+Similarly, in a report submitted by the defendant toits stoc%holders dated "u!ust /(, )0*, the followin! appears? ;Bour 5irectors ta%e pleasure in reportin! that Dune /, )0* mar%edthe official return to operations of this Company of its properties in Man%ayan, Mountain Province, Philippines.;0

6t is, therefore, clear f rom the fore!oin! that the &epanto mines were liberated on "u!ust , )0(, but because of the period ofrehabilitation and reconstruction that had to be made as a result of the destruction of the mill, power plant and other necessaryeections to the introduction of said evidence: 8c9 ielson failed to show the essential elements of usamust be shown to eist before any proof thereof can be !iven to affect the contract: and 8d9 the testimony of its witnesses prevail over the very terms of the mana!ement contract which, as a rule, is supposed to contain all the terms and conditiothe parties intended to be bound.

6t is here necessary to analy1e the contradictory evidence which the parties have presented re!ardin! the interpretation ofma"eure clause in the mana!ement contract.

"t the outset, it should be stated that, as a rule, in the construction and interpretation of a document the intention of the pbe sou!ht 8Rule +4, Section 4, Rules of Court9. This is the basic rule in the interpretation of contracts because all other but ancilliary to the ascertainment of the meanin! intended by the parties. "nd once this intention has been ascertained it inte!ral part of the contract as thou!h it had been ori!inally epressed therein in une


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planted. This Court, in holdin! that the years which the lessee could not use the land because of the war could not be discountedfrom the period a!reed upon, held that ;owhere is there any insinuation that the defendant-lessee was to have possession of landsfor seven years ecludin! years on which he could not harvest su!ar.; Clearly, thisratio decidendi is not applicable to the case at barwherein there is evidence that the parties understood the ;suspension clause by force ma>eure; to mean the etension of the periodof a!reement.

&astly, in the case of%o hing y So ;oung hong o. vs. ourt of Appeals, et al., * Phil. 4, appellant leased a buildin! fromappellee be!innin! September +, )04 for three years, renewable for two years. The lessee's possession was interrupted in2ebruary, )0/ when he was ousted by the Dapanese who turned the same over to $erman tto Schul1e, the latter occupyin! thesame until Danuary, )0( upon the arrival of the liberation forces. "ppellant contended that the period durin! which he did not en>oythe leased premises because of his dispossession by the Dapanese had to be deducted from the period of the lease, but this wasoverruled by this Court, reasonin! that such dispossession was merely a simple ;perturbacion de merohecho y de la cual noresponde el arrendador; under "rticle (4 of the old Civil Code "rt. 09. This rulin! is also not applicable in the instant casebecause in that case there was no evidence of the intention of the parties that any suspension of the lease b yforce ma"eure would beunderstood to etend the period of the a!reement.

ustification for Hs to conclude that the cases cited by appellee are inapplicable because the facts thereininvolved do not run parallel to those obtainin! in the present case.

=e shall now consider appellee's defense of laches. "ppellee is correct in its contention that the defense of laches appliesindependently of prescription. &aches is different from the statute of limitations. Prescription is concerned with the fact of delay,whereas laches is concerned with the effect of delay. Prescription is a matter of time: laches is principally a


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Comin! now to the facts, =e find that the ri!ht of ielson to its 4K participation in the )0 operations accrued on 5ecember /,)0 and the ri!ht to commence an action thereon be!an on Danuary , )0/ so that the action must be brou!ht within ten 849 yearsfrom the latter date. 6t is true that the complaint was filed only on 2ebruary , )(*, that is siteen 89 years, one 89 month and five8(9 days after the ri!ht of action accrued, but the action has not yet prescribed for various reasons which =e will hereafter discuss.

The first reason is the operation of the Moratorium &aw, for appellant's claim is undeniably a claim for money. Said claim accrued on5ecember +, )0, and &epanto is a war sufferer. #ence the claim was covered by 7ecutive rder o. +/ of March 4, )0(. 6t iswell settled that the operation of the Moratorium &aw suspends the runnin! of the statue of limitations 8Pacific Commercial Co. vs."ection by counsel for &epanto. /)ielson claims 4K share in said amount with interest thereon at K per annum. The document87hibit &9 was even reco!ni1ed by &epanto's President J. &. &ednic%y,+4and this claim is predicated on the provision of para!raph Jof the mana!ement contract as modified pursuant to the proposal of &epanto at the special meetin! of the Eoard of 5irectors on"u!ust /, )04 87h. E9, whereby it was provided that ielson would be entitled to 4K of any dividends to be declared and paid

durin! the period of the contract.

=ith re!ard to the second claim, ielson admits that there is no evidence re!ardin! the amount set aside by &epanto for depletionreserve for )0 +and so the 4K participation claimed thereon cannot be assessed.

"nent the third claim relative to the 4K participation of ielson on the sum of P)G,0G.4*, which appears in &epanto's annualreport for )0* +/and entered as profit for prior years in the statement of income and surplus, which amount consisted ;almost in itsentirety of proceeds of copper concentrates shipped to the Hnited States durin! )0G,; this claim should to denied because theamount is not ;dividend declared and paid; within the purview of the mana!ement contract.

The fifth assi!nment of error of appellant refers to the failure of the lower court to order &epanto to pay its mana!ement fees forDanuary, )0/, and for the full period of etension amountin! to P(4,444.44, or P/,(44.44 a month for sity 849 months, @ a total ofP(/,(44.44 @ with interest thereon from the date of >udicial demand.

6t is true that the claim of mana!ement fee for Danuary, )0/ was not amon! the causes of action in the complaint, but inasmuch asthe contract was suspended in 2ebruary, )0/ and the mana!ement fees as%ed for included that of Danuary, )0/, the fact that suchclaim was not included in a specific manner in the complaint is of no moment because an appellate court may treat the pleadin! asamended to conform to the evidence where the facts show that the plaintiff is entitled to relief other than what is as%ed f or in the

complaint 8"lon1o vs. Jillamor, Phil. +(9. The evidence shows that the last payment made by &epanto for mana!ement fee wasfor ovember and 5ecember, )0. ++6f, as =e have declared, the mana!ement contract was suspended be!innin! 2ebruary )0/,it follows that ielson is entitled to the mana!ement fee for Danuary, )0/.

&et us now come to the mana!ement fees claimed by ielson for theperiod of etension. 6n this respect, it has been shown that themana!ement contract was etended from Dune /G, )0* to Dune /, )(+, or for a period of sity 849 months. 5urin! this periodielson had a ri!ht to continue in the mana!ement of the minin! properties of &epanto and &epanto was under obli!ation to letielson do it and to pay the correspondin! mana!ement fees. "ppellant ielson insisted in performin! its part of the contract but&epanto prevented it from doin! so. #ence, by virtue of "rticle * of the Civil Code, there was a constructive fulfillment an the part

of ielson of its obli!ation to mana!e said minin! properties in accordance with the contract and &epanto had the reciprocto pay the correspondin! mana!ement fees and other benefits that would have accrued to ielson if &epanto allowed it 8continue in the mana!ement of the mines durin! the etended period of five 8(9 years.

=e find that the preponderance of evidence is to the effect that ielson had insisted in mana!in! the minin! properties soliberation. 6n the report +0of &epanto, submitted to its stoc%holders for the period from )0 to March +, )0, are stated activities of ielson's officials in relation to ielson's insistence in continuin! the mana!ement. This report was admitted inwithout ob>ection. =e find the followin! in the report?

Mr. Elessin!, in May, )0(, accompanied Clar% and Stanford to San 2ernando 8&a Hnion9 to await the liberation of t he minElessin! was the Treasurer and Metallur!ist of ielson9. Elessin! with Clar% and Stanford went to the property on Duly athat while the mill site had been cleared of the enemy the latter was still holdin! the area around the staff houses and puttstron! defense. "s a result, they returned to San 2ernando and later went bac% to the mines on Duly /. Mr. Elessin! maddated "u!ust , recommendin! a pro!ram of operation. Mr. ielson himself spent a day in the mine early in 5ecember, )

reiterated the pro!ram which Mr. Elessin! had outlined. Two or three wee%s before the date of the report, Mr. Coldren of tor!ani1ation also visited the mine and told President C. ". 5e=itt of &epanto that he thou!ht that the mine could be put infor the delivery of the ore within ten 849 days. "nd accordin! to Mar% estle, a witness of appellant, ielson had several mincludin! en!ineers to do the >ob in the mines and to resume the wor%. These en!ineers were in fact sent to the mine site submitted reports of what they had done.+(

n the other hand, appellee claims that ielson was not ready and able to resume the wor% in the mines, relyin! mainly otestimony of 5r. Duan abon!, former secretary of both ielson and &epanto, !iven in the separate case of ancy 6rvin! R&epanto Consolidated Minin! Company 8Civil Case o. (/, C26, Ea!uio9, to the effect that as far as he %new ;ielson anhad not attempted to operate the &epanto Consolidated Minin! Company because Mr. ielson was not here in the Philippthe last war. #e came bac% later,; and that ielson and Company had no money nor stoc%s with which to start the operatioas%ed by counsel for the appellee if he had testified that way in Civil Case o. (/ of the Court of 2irst 6nstance of Ea!uioanswered that he did not confirm it fully. =hen this witness was as%ed by the same counsel whether he confirmed that tessaid that when he testified in that case he was not fully aware of what happened and that after he learned more about thethe corporation it was only then that he became aware that ielson had really sent his men to the mines alon! with Mr. Elethat he was aware of this fact personally. #e further said that Mr. ielson was here in )0( and ;he was !oin! out and conpeople.; +

&epanto admits, in its own brief, that ielson had really insisted in ta%in! over the mana!ement and operation of the mine

8&epanto9 une


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* 4K ovember )0) P /44,444.44

) 4K Duly )(4 +44,444.44

4 4K ctober )(4 (44,444.44

/4K 5ecember )(4 ,444,444.44

/ /4K March )( ,444,444.44

+ /4K Dune )( ,444,444.44

0 /4K September )( ,444,444.44

( 04K 5ecember )( /,444,444.44

/4K March )(/ ,444,444.44

G /4K May )(/ ,444,444.44

* /4K Duly )(/ ,444,444.44

) /4K September )(/ ,444,444.44

/4 /4K 5ecember )(/ ,444,444.44

/ /4K March )(+ ,444,444.44

// /4K Dune )(+ ,444,444.44

TT"& P0,444,444.44

"ccordin! to the terms of the mana!ement contract as modified, appellant is entitled to 4K of the P0,444,444.44 cash dividendsthat had been distributed, as stated in t he above-mentioned report, or the sum of P,044,444.44.

=ith re!ard to the second cate!ory, the stoc% dividends declared by &epanto durin! the period of etension of the contract are? november /*, )0), the stoc% dividend declared was (4K of the outstandin! authori1ed capital of P/,444,444.44 of the company, orstoc% dividends worth P,444,444.44: and on "u!ust //, )(4, the stoc% dividends declared was -/+K of the standin! authori1edcapital of P+,444,444.44 of the company, or stoc% dividends worth P/,444,444.44.04

"ppellant's claim that it should be !iven 4K of the cash value of said stoc% dividends with interest thereon at K from 2ebruary ,)(* cannot be !ranted for that would not be in accordance with the mana!ement contract which entitles ielson to 4K of anydividends declared paid, hen and as paid. ielson, therefore, is entitled to 4K of the stoc% dividends and to the fruits that may haveaccrued to said stoc% dividends pursuant to "rticle 0 of the Civil Code. #ence to ielson is due shares of stoc% worthP44,444.44, as per stoc% dividends declared on ovember /*, )0) and all the fruits accruin! to said shares after said date: andalso shares of stoc% worth P/44,444.44 as per stoc% dividends declared on "u!ust /4, )(4 and all fruits accruin! thereto after saiddate.

"nent the third cate!ory, the depletion reserve appearin! in the statement of income and surplus submitted by &epanto correspondin!to the years covered by the period of etension of the contract, may be itemi1ed as follows?

6n )0*, as per 7h. 2, p. + and 7h. , p. (, the depletion reserve set up was P,4/.*4.

6n )0), as per 7h. $, p. 0) and 7h. , p. (, the depletion reserve set up was P++,((.4G.

6n )(4, as per 7h. #, p. +G, 7h. , p. and 7h. 6, p. +G, the depletion reserve set up was P*0,)+.+4.

6n )(, as per 7h. 6, p. 0(, 7h. , p. , and 7h. D, p. 0(, the depletion reserve set up was P/),4*).**.

6n )(/, as per 7h. D, p. 0(, 7h. , p. and 7h. I p. 0, the depletion reserve was P0G,0.(0.

6n )(+, as per 7h. I, p. 0, and 7h. , p. , the depletion reserve set up as P/GG,0)+./(.

Re!ardin! the depletion reserve set up in )0* it should be noted that the amount !iven was for the whole year. 6nasmuchcontract was etended only for the last half of the year )0*, said amount of P,4/.*4 should be divided by two, and soonly entitled to 4K of the half amountin! to P(,*4.04.

&i%ewise, the amount of depletion reserve for the year )(+ was for the whole year and since the contract was etended ofirst half of the year, said amount of P/GG,0)+./( should be divided by t wo, and so ielson is only entitled to 4K of the haamountin! to P+*,G0./. Summin! up the entire depletion reserves, from the middle of )0* to the middle of )(+, we wa total of P(+),/)*.*, of which ielson is entitled to 4K, or to the sum of P(+,)/*.**.

2inally, with re!ard to the fourth cate!ory, there is no fi!ure in the record representin! the value of the fied assets as of thof the period of etension on Dune /G, )0*. 6t is possible, however, to arrive at the amount needed by addin! to the valueassets as of 5ecember +, )0G one-half of the amount spent for capital account in the year )0*. "s of 5ecember +, )value of the fied assets was P,4,*G*.**0and as of 5ecember +, )0*, the value of the fied assets wasP+,/G4,04*.4G. 0/#ence, the increase in the value of the fied assets for the year )0* was P/,/4*,(/).), one-half of whP,40,/0.(), which amount represents the epenses for capital account for the first half of the year )0*. 6f to this amothe fied assets as of 5ecember +, )0G amountin! to P,4,*G*.**, we would have a total of P/,,0+.0G which repfied assets at the be!innin! of the second half of the year )0*.

There is also no fi!ure representin! the value of the fied assets when the contract, asetended, ended on Dune /, )(+: may be computed by !ettin! one-half of the epenses for capital account made in )(+ and addin! the same to the value assets as of 5ecember +, )(+ is P),G((,*04.00+which the value of the fied assets as of 5ecember +, )(/ is P*,0the difference bein! P,/)/,4)*.). ne-half of this amount is P0,40).+0 which would represent the epenses for capitup to Dune, )(+. This amount added to the value of the fied assets as of 5ecember +, )(/ would !ive a total of P),4which would be the value of fied assets at the end of Dune, )(+.

The increase, therefore, of the value of the fied assets of &epanto from Dune, )0* to Dune, )(+ is P,)0+,0G.), whicrepresents the difference between the value of the fied assets of &epanto in the year )0* and in the year )(+, as statethis amount ielson is entitled to a share of 4K or to the amount of P)0,+0.G.

Considerin! that most of the claims of appellant have been entertained, as pointed out in this decision, =e believe that apentitled to be awarded at torney's fees, especially when, accordin! to the undisputed testimony of Mr. Mar% estle, ielsonhimself to pay attorney's fees in connection with the institution of the present case. 6n this respect, =e believe, considerin!intricate nature of the case, an award of fifty thousand 8P(4,444.449 pesos for attorney's fees would be reasonable.

6 J67= 2 T#7 2R7$6$ CS657R"T6S, =e hereby reverse the decision of the courta quo and enter in lieu thanother, orderin! the appellee &epanto to pay appellant ielson the different amounts as specified hereinbelow?

89 4K share of cash dividends of 5ecember, )0 in the amount of PG,(44.44, with le!al interest t hereon from the dateof the complaint:

8/9 mana!ement fee for Danuary, )0/ in the amount of P/,(44.44, with le!al interest thereon from the date of the filin! ofcomplaint:


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8+9 mana!ement fees for the sity-month period of etension of the mana!ement contract, amountin! to P(4,444.44, with le!alinterest from the date of the filin! of the complaint:

809 4K share in the cash dividends durin! the period of etension of the mana!ement contract, amountin! to P,044,444.44, withle!al interest thereon from the date of the filin! of the complaint:

8(9 4K of the depletion reserve set up durin! the period of etension, amountin! to P(+,)/*.**, with le!al interest thereon from thedate of the filin! of the complaint:

89 4K of the epenses for capital account durin! the period of etension, amountin! to P)0,+0.G, with le!al interest thereonfrom the date of the filin! of the complaint:

8G9 to issue and deliver to ielson and Co., 6nc. shares of stoc% of &epanto Consolidated Minin! Co. at par value eud!ment, defendant-appellee shall pay plaintiff-appellant anamount in cash euries, li!ht or serious, resultin! in loss of a mthe body or of any one of the senses, or permanent physical disability or even death, suffered in line of duty and in the couperformance of the duties assi!ned to the servant or employee, and these cases are mainly !overned by the 7mployer's &and the =or%men's Compensation "ct. Eut a case involvin! dama!es caused to an employee by a stran!er or outsider whemployee was in the performance of his duties, presents a novel


10/22

6n a case li%e the present or a similar case of say a driver employed by a t ransportation company, who while in the course ofemployment runs over and inflicts physical in>uries on or causes the death of a pedestrian: and such driver is later char!ed criminallyin court, one can ima!ine that it would be to the interest of the employer to !ive le!al help to and defend its employee in order to showthat the latter was not !uilty of any crime either deliberately or throu!h ne!li!ence, because should the employee be finally heldcriminally liable and he is found to be insolvent, the employer would be subsidiarily liable. That is why, we repeat, it is to the interest ofthe employer to render le!al assistance to its employee. Eut we are not prepared to say and to hold that the !ivin! of said le!alassistance to its employees is a le!al obli!ation. =hile it mi!ht yet and possibly be re!arded as a normal obli!ation, it does not atpresent count with the sanction of man-made laws.

6f the employer is not le!ally obli!ed to !ive, le!al assistance to its employee and provide him with a lawyer, naturally said employeemay not recover the amount he may have paid a lawyer hired by him.

Jiewed from another an!le it may be said that the dama!e suffered by the plaintiff by reason of the epenses incurred by him inremuneratin! his lawyer, is not caused by his act of shootin! to death the !ate crasher but rather by t he filin! of the char!e of

homicide which made it necessary for him to defend himself with the aid of counsel. #ad no criminal char!e been filed a!ainst him,there would have been no epenses incurred or dama!e suffered. So the dama!e suffered by plaintiff was caused rather by theimproper filin! of the criminal char!e, possibly at the instance of the heirs of the deceased !ate crasher and by the State t hrou!h the2iscal. =e say improper filin!, >ud!in! by the results of the court proceedin!s, namely, ac


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latter could, ;upon certain contin!encies,; ta%e possession of the incompleted buildin! and all materials on the !round, did not chan!eMerritt from an independent contractor to an a!ent. Suppose that, at the time the buildin! was ta%en over Merritt had actually used inthe construction thus far P44,444 worth of materials and supplies which he had purchased on a credit, could those creditorsmaintain an action a!ainst the defendant for the value of such suppliesF Certainly not. The fact that the P44,444 worth of supplieshad been actually used in the buildin! would place those creditors in no worse position to recover than that of the plaintiffs, althou!hthe materials which the plaintiffs sold to Merritt had not actually !one into the construction. To hold that either !roup of creditors canrecover would have the effect of compellin! the defendants to pay, as we have indicated, >ust such prices for materials as Merritt andthe sellers saw fit to fi. 6n the absence of a statute creatin! what is %nown as mechanics' liens, the owner of a buildin! is not liable forthe value of materials purchased by an independent contractor either as such owner or as the assi!nee of the contractor.

The alle!ation in para!raph that Merritt was the a!ent of the defendant contradicts all the other alle!ations and is a mere conclusiondrawn from them. Such conclusion is not admitted, as we have said, by the demurrer.

The alle!ations in the complaint not bein! sufficient to constitute a cause of action a!ainst the defendant, the >ud!ment appealed from

is affirmed, with costs a!ainst the appellants. So ordered.


Manila

7 E"C

G.R. No. L-819 January 29, 1907

T+E S+ELL COMPAN O) T+E P+(L(PP(NES, LT.,petitioner,vs.)(REMEN:S (NSURANCE COMPAN O) NEAR;, NE JERSE COMMERC(AL C ASUALT (NSURANCE CO., SAL6AORS(SON, POR)(R(O E LA )UENTE an T+E COURT O) APPEALS ,respondents.

Ross, Selph, arrascoso & 9anda for petitioner.9. A. 6olfson and Manuel ;. Macias for respondents.

PA(LLA,J.

"ppeal by certiorari under Rule 0 to review a >ud!ment of the Court of "ppeals which reversed that of the Court of 2irst 6nstance ofManila and sentenced ;. . . the defendants-appellees to pay, >ointly and severally, the plaintiffs-appellants the sum of P,(.+*, withle!al interest from 5ecember , )0G 8$utierre1vs.$utierre1, ( Phil., GG, *49, and the costs in both instances.;

The Court of "ppeals found the followin!?

6nasmuch as both the Plaintiffs-"ppellants and the 5efendant-"ppellee, the Shell Company of the Philippine 6slands, &td.accept the statement of facts made by the trial court in its decision and appearin! on pa!es /+ to +G of the Record on"ppeal, we ustor Company, the ad>ustor of the f iremen's 6nsurance Company andCommercial Casualty 6nsurance Company, as the car was insured with these insurance companies. "fter havin! been inspone Mr. Eaylon, representative of t he Manila "d>ustor Company, the dama!ed car was ta%en to the shops of t he Philippine6ncorporated, for repair upon order of the 2iremen's 6nsurance Company and the Commercial Casualty Company, with theSalvador R. Sison. The car was restored to runnin! condition after repairs amountin! to P,(.+*, and was delivered to SSison, who, in turn made assi!nments of his ri!hts to recover dama!es in favor of the 2iremen's 6nsurance Company and Commercial Casualty 6nsurance Company.

n the other hand, the fall of the car from the hydraulic lifter has been eplained by "lfonso M. "driano, a !reathe Shell $asoline and Service Station, as follows?

. =ere you able to lift the car on the hydraulic lifter on the occasion, September +, )0GF

". Bes, sir.

. To what hei!ht did you raise more or lessF

". More or less five feet, sir.

. "fter liftin! that car that hei!ht, what did you do with the carF

". 6 also washed it, sir.

. "nd after washin!F

". 6 !reased it.

. n that occasion, have you been able to finish !reasin! and washin! the carF

". There is one point which 6 could not reach.

. "nd what did you do thenF

". 6 lowered the lifter in order to reach that point.

. "fter lowerin! it a little, what did you do thenF

". 6 pushed and pressed the valve in its !radual pressure.


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. =ere you able to reach the portion which you were not able to reach while it was lowerF

". o more, sir.

. =hyF

". Eecause when 6 was lowerin! the lifter 6 saw that the car was swin!in! and it fell.

T#7 CHRT. =hy did the car swin! and fallF

=6T7SS? 'That is what 6 do not %now, sir'. 8t.s.n., p.G.9

The position of 5efendant Porfirio de la 2uente is stated in his counter-statement of facts which is hereunder also reproduced?

6n the afternoon of September +, )0G, an automobile belon!in! to the plaintiff Salvador Sison was brou!ht by his son,Perlito Sison, to the !asoline and service station at the corner of Marob of washin! and !reasin! was underta%en by defendant Porfirio de la 2uente throu!h his two employees, "lfonsoM. "driano, as !reaseman and one surnamed de los Reyes, a helper and washer 8t.s.n., pp. (-G9. To perform the >obthe car was carefully and centrally placed on the platform of the lifter in the !asoline and service station aforementionedbefore raisin! up said platform to a hei!ht of about ( feet and then the servicin! >ob was started. "fter more than one hourof washin! and !reasin!, the >ob was about to be completed ecept for an un!reased portion underneath the vehiclewhich could not be reached by the !reasemen. So, the lifter was lowered a little by "lfonso M. "driano and while doin! so,the car for un%nown reason accidentally fell and suffered dama!e to the value of P, (.+* 8t.s.n., pp. (-G9.

The insurance companies after payin! the sum of P,(.+* for the dama!e and char!in! the balance of P44.44 to

Salvador Sison in accordance with the terms of the insurance contract, have filed this action to!ether with said SalvadorSison for the recovery of the t otal amount of the dama!e from the defendants on the !round of ne!li!ence 8Record on"ppeal, pp. -9.

The defendant Porfirio de la 2uente denied ne!li!ence in the operation of the lifter in his separate answer and contendedfurther that the accidental fall of the car was caused by unforseen event 8Record on "ppeal, pp. G-)9.

The owner of the car forthwith notified the insurers who ordered their ad>ustor, the Manila "d>ustor Company, to investi!ate theincident and after such investi!ation the dama!ed car, upon order of the insures and with the consent of the owner, was brou!ht tothe shop of the Philippine Motors, 6nc. The car was r estored to runnin! condition after thereon which amounted to P,(.+* andreturned to the owner who assi!ned his ri!ht to collect the aforesaid amount to the 2iremen's 6nsurance Company and theCommercial Casualty 6nsurance Company.

n 5ecember )0G the insures and the owner of the car brou!ht an action in the Court of 2irst 6nstance of Manila a!ainst the ShellCompany of the Philippines, &td. and Porfirio de la 2uente to recover from t hem, >ointly and severally, the sum of P,(.+*, interestthereon at the le!al rate from the filin! of the complaint until fully paid, the costs. "fter trial the Court dismissed the complaint. Theplaintiffs appealed. The Court of "ppeals reversed the >ud!ment and sentenced the defendant to pay the amount sou!ht to berecovered, le!al interest and costs, as stated at the be!innin! of this opinion.

6n arrivin! at the conclusion that on + September )0G when the car was brou!ht to the station f or servicin! Profirio de la 2uente, theoperator of the !asoline and service station, was an a!ent of the Shell Company of the Philippines, &td., the Court of "ppeals foundthat @

. . . 5e la 2uente owned his position to the Shell Company which could remove him terminate his services at any timefrom the said Company, and he undertoo% to sell the Shell Company's products eculusively at the said Station. 2or thispurpose, 5e la 2uente was placed in possession of the !asoline and service station under consideration, and was

provided with all the eud!ment under review is affirmed, with costs a!ainst the petitioner.


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$aras, .9., !engzon, Montemayor, Reyes, A., !autista Angelo, %a#rador, oncepcion, Reyes, 9.!.%., 5ndencia and 8eli,99.,concur. epublic of the Philippines

SUPREME COURTManila

7 E"C

G.R. No. L-1298 Mar& 31, 19

T+E SPOUSES ?ERNA?E A)R(CA an SOLEA C. A)R(CA, an $&' +E(RS O) OM(NGA ONG,petitioners-appellants,vs.CALTE* , (NC., MATEO ?O@U(REN an T+E COURT O) APPEALS,respondents-appellees.

Ross, Selph, arrascoso and 9anda for the respondents.!erna#e Africa, etc. for the petitioners.

MA;AL(NTAL.,J.:

This case is before us on a petition f or review of the decision of the Court of "ppeals, which affirmed that of the Court of 2irst 6nstanceof Manila dismissin! petitioners' second amended complaint a!ainst respondents.

The action is for dama!es under "rticles )4/ and )4+ of the old Civil Code. 6t appears that in the afternoon of March *, )0* a firebro%e out at the Calte service station at the corner of "ntipolo street and Ri1al "venue, Manila. 6t started while !asoline was bein!hosed from a tan% truc% into the under!round stora!e, ri!ht at the openin! of the receivin! tan% where the no11le of the hose was

inserted. The fire spread to and burned several nei!hborin! houses, includin! the personal properties and effects inside them. Theirowners, amon! them petitioners here, sued respondents Calte 8Phil.9, 6nc. and Mateo Eoect.

The fore!oin! reports were ruled out as ;double hearsay; by the Court of "ppeals and hence inadmissible. This rulin! is noassi!ned as error. 6t is contended? first, that said reports were admitted by the trial court without ob>ection on the part of resecondly, that with respect to the police report 87hibit J-"frica9 which appears si!ned by a 5etective Napanta alle!edly ;foCapacillo,; the latter was presented as witness but respondents waived their ri!ht to cross-eamine him althou!h they hadopportunity to do so: and thirdly, that in any event the said reports are admissible as an eception to the hearsay rule unde+( of Rule /+, now Rule +4.

The first contention is not borne out by the record. The transcript of the hearin! of September G, )(+ 8pp. G-G49 showreports in ected to by counsel for each of respondents on the !round that thehearsay and that they were ;irrelevant, immaterial and impertinent.; 6ndeed, in the court's resolution only 7hibits D, I, I-(were admitted ithout o#"ection: the admission of the others, includin! the disputed ones, carried no such eplanation.

n the second point, althou!h 5etective Capacillo did ta%e the witness stand, he was not eamined and he did not testify facts mentioned in his alle!ed report 8si!ned by 5etective Napanta9. "ll he said was that he was one of t hose who investi!location of the fire and, if possible, !ather witnesses as to the occurrence, and that he brou!ht the report with him. There wtherefore, on which he need be cross-eamined: and the contents of t he report, as to which he did not testify, did not therecompetent evidence. "nd even if he had testified, his testimony would still have been ob>ectionable as far as information !him from third persons was concerned.

Petitioners maintain, however, that the reports in themselves, that is, without further testimonial evidence on their contentsthe scope of section +(, Rule /+, which provides that ;entries in official records made in the performance of his duty by aofficer of the Philippines, or by a person in the perf ormance of a duty specially en>oined by law, areprima facie evidence of ttherein stated.;

There are three reust mentioned? 8a9 that t he entry was made by a public officer, o

person specially en>oined by law to do so: 8b9 that it was made by the public officer in the performance of his duties, or by person in the performance of a duty specially en>oined by law: and 8c9 that the public officer or other person had sufficient of the facts by him stated, which must have been ac


14/22

2lores, driver of the tan% truc% from which !asoline was bein! transferred at the time to the under!round tan% of the station: and torespondent Mateo Eoud!ment, on the !round the testimonshow with reasonable certainty any ne!li!ence on the part of the Shell Petroleum Corporation or any of its a!eemployees. Plaintiff applied to this Court for a =rit of Review which was !ranted, and the case is now before udecision.+=ph>+.?@t

6n resolvin! the issue of ne!li!ence, the Supreme Court of &ouisiana held?

Plaintiff's petition contains two distinct char!es of ne!li!ence @ one relatin! to the cause of the fire and the otto the spreadin! of the !asoline about the fillin! station.

ther than an epert to assess the dama!es caused plaintiff's buildin! by the fire, no witnesses were placed oby the defendant.

Ta%in! up plaintiff's char!e of ne!li!ence relatin! to the cause of the fire, we find it established by the record thstation and the tan% truc% were under the control of the defendant and operated by its a!ents or employees. =find from the uncontradicted testimony of plaintiff's witnesses that fire started in the under!round tan% attachedfillin! station while it was bein! filled from the tan% truc% and while both the tan% and the truc% were in char!e ooperated by the a!ents or employees of the defendant, etended to the hose and tan% truc%, and was communthe burnin! hose, tan% truc%, and escapin! !asoline to the buildin! owned by the plaintiff.

Predicated on these circumstances and the further circumstance of defendant's failure to eplain the cause of tshow its lac% of %nowled!e of the cause, plaintiff has evo%ed the doctrine ofres ipsa loquitur. There are many cawhich the doctrine may be successfully invo%ed and this, we thin%, is one of them.

=here the thin! which caused the in>ury complained of is shown to be under the mana!ement of defendant or servants and the accident is such as in the ordinary course of thin!s does not happen if those who have its maor control use proper care, it affords reasonable evidence, in absence of eplanation by defendant, that the accfrom want of care. 80( C.D. G*, p. )+9.

This statement of the rule of res ipsa loquitur has been widely approved and adopted by the courts of last resortthe cases in this >urisdiction in which the doctrine has been applied are the followin!,viz.? Maus v. Eroderic%, ((+, /( So. )GG: #ebert v. &a%e Charles 6ce, etc., Co., &a. (//, +( So. G+, 0 &.R.". 4, 44 "m. St. R=illis v. Jic%sbur!, etc., R. Co., ( &a. +, +* So. *)/: Eents v. Pa!e, ( &a. (4, +) So. ()).

The principle enunciated in the aforevities of these peopleor li!htin! a ci!arette cannot be ecluded and thisa secondary ha1ard to its operation which in turn endan!ers the entire nei!hborhood to confla!ration.

2urthermore, aside from precautions already ta%en by its operator the concrete walls south and west ad>oinin!nei!hborhood are only /-/ meters hi!h at most and cannot avoid the flames from leapin! over it in case of fir

Records show that there have been two cases of fire which caused not only material dama!es but desperationpanic in the nei!hborhood.


15/22

"lthou!h the soft drin%s stand had been eliminated, this !asoline service station is also used by its operator as a !ara!eand repair shop for his fleet of taicabs numberin! ten or more, addin! another ris% to the possible outbrea% of fire at thisalready small but crowded !asoline station.

The fore!oin! report, havin! been submitted by a police officer in the performance of his duties on the basis of his own personalobservation of the facts reported, may properly be considered as an eception to the hearsay rule. These facts, descriptive of thelocation and ob>ective circumstances surroundin! the operation of the !asoline station in


16/22

municipal treasurer in his official record, because he ac


17/22

embar%ed on the steamer


18/22

over the administration of the said property to his cousin, "ntonio #idal!o, upon whom the writer had conferred a !eneral power ofattorney, but as%in!, in case that this was not sufficient, that Pea send to "ntonio #idal!o a new power of attorney.

This notifications is of the !reatest importance in the decision of this case. The plaintiff avers that he found no such letter amon! hisfather's papers after the latter's death, for which reason he did not have it in his possession, but on the introduction of a copy thereofby the defendant at the t rial, it was admitted without ob>ection by the plaintiff 8p. * of t he record9: wherefore, in spite of the denial ofthe plaintiff and of his averment of his not havin! found that said ori!inal amon! his father's papers, >ustice demands that it beconcluded that this letter of the //d of March, *)0, was sent to, and was received by Dose de la Pea y $omi1, durin! his lifetime,for its transmittal, with inclosure of the last partial accounts of 2ederico #idal!o's administration and of the !eneral resume ofbalances, bein! affirmed by the defendant, the fact of the plaintiff's havin! found amon! his deceased father's paper's the saidresume which he ehibited at the trial, shows conclusively that it was received by the deceased, as well as the letter of transmittal ofthe //nd of March, *)0, one of the several letters written by #idal!o, which the said priest, 2ather $omi1, affirms that he saw amon!the papers of the deceased Pea, the dates of which ran from *)4 to *)0: and it is also shown by the record that the defendant#idal!o positively asserted that the said letter of March was the only one that he wrote to Pea durin! the year *)0: 2rom all ofwhich it is deduced that the constituent, Pea y $omi1, was informed of the departure of his a!ent from these 6slands f or reasons ofhealth and because of the physician's advice, of the latter's havin! turned over the administration of the property to "ntonio #idal!o,and of his a!ent's the defendant's petition that he send a new power of attorney to the substitute.

The eistence, amount the papers of the deceased, of t he aforementioned statement of all accounts rendered, which comprise thewhole period of the administration of the property of t he constituent by the defendant, 2ederico #idal!o, from ovember *, **G, to5ecember +, *)+ @ a statement transmitted with the last partial accounts which were a continuation of those already previouslyreceived @ and the said letter of March //, *)0, fully prove that Dose de la Pea y $omi1 also received the said letter, informedhimself of its contents, and had full %nowled!e that "ntonio #idal!o commenced to administer his property from Danuary of that year.They li%ewise prove that he did no see fit to eecute a new power of attorney in the letter's f avor, nor to appoint or desi!nate a newa!ent to ta%e char!e of the administration of his property that had been abandoned by the defendant, 2ederico #idal!o.

2rom the procedure followed by the a!ent, 2ederico #idal!o, it is lo!ically inferred that he had definitely renounced his a!ency wasduly terminated, accordin! to the provisions of article G+/ of the Civil Code, because, althou!h in the said letter of March //, *)0,the word ;renounce; was not employed in connection with the a!ency or power of attorney eecuted in his favor, yet when the a!entinforms his principal that for reasons of health and by medical advice he is about to depart from the place where he is eercisin! histrust and where the property sub>ect to his administration is situated, abandons the property, turns it over a third party, without statin!when he may return to ta%e char!e of the administration, renders accounts of its revenues up to a cert ain date, 5ecember +, *)+,and transmits to his principal a !eneral statement which summari1es and embraces all the balances of his accounts since he be!anto eercise his a!ency to the date when he ceased to hold his trust, and as%s that a power of attorney in due form in due form be

eecuted and transmitted to another person who substituted him and too% char!e of the administration of the principal's property, it isthen reasonable and >ust to conclude that the said a!ent epressly and definitely renounced his a!ency, and it may not be alle!edthat the desi!nation of "ntonio #idal!o to ta%e char!e of the said administration was that of a mere proceed lasted for more thanfifteen years, for such an alle!ation would be in conflict with the nature of the a!ency.

This renouncement was confirmed by the subseurisprudence of the supremSpain9 in its noteworthy decision of the Gth of Duly, **, settin! up the followin! doctrine?

That laws /* and +/, title /$artida +, refer to the epenses incurred in thin!s not one's own and without poweattorney from those to whom they belon!, and therefore the said laws are not applicable to this suit where the the plaintiff is founded on the verbal re


19/22

The defendant 2ederico #idal!o, havin! ceased in his administration of the property belon!in! to Pea y $omi1, on account ofphysical impossibility, which cessation he duly reported to his principal and also informed him of the person who relieved him as suchadministrator, and for whom he had reection whatever to the said accounts and did not manifest his disapproval ofthe same nor of the !eneral statement, which he must have received in "pril or may, *)0, to the time he died, in "u!ust, )4/: andwhen his son, the plaintiff, came to this city in company with the defendant, 2ederico #idal!o, they traveled to!ether from Spain andarrived in Manila durin! one of the early days of Danuary, )40, the former, for the purpose of ta%in! char!e of the estate left by hisfather, and after the plaintiff had eamined the accounts %ept by 2ederico #idal!o, his deceased father's first a!ent, he approvedthem and therefore issued in favor of the defendant the document, 7hibit (, found on pa!e )+ of the second record of trial, datedDanuary (, )40, in which Dose de la Pea y de Ramon ac%nowled!ed havin! received from his deceased father's old a!ent theaccounts, balances, and vouchers to his entire satisfaction, and !ave an acud!ment appealed from.

Two amounts are have claimed which have one and the same ori!in, yet are based on two causes of action, the second aalle!ed by the plaintiff: and althou!h the latter, afterwards convinced by the truth and of the impropriety of his claim, had tosaid third cause of action durin! the second hearin! of this cause 8pp. (G and 0/ of the record of the evidence9, the trial >u!rounds that the said second and third causes of action ref er to the same certificates of deposit of the treasury of the Spa$overnment, found, in the >ud!ment appealed from, that the plaintiff was not entitled to recover anythin! for the aforesaid third causes of action @ a findin! that is proper and >ust, althou!h


20/22

new deposit of (,(44 pesos as accredited by the reply-letter, transcribed on pa!e ) of the record, and by the letter addressed by#idal!o to Pea, of the date of 5ecember /4 of that year and shown as an ori!inal ehibit by the plaintiff himself on pa!e /) of therecord of the evidence.

&astly, in 5ecember, *)4, 2ather Caviedas, aforementioned, delivered to the defendant #idal!o the said deposit receipt for (,(44pesos in order that he mi!ht withdraw this amount from deposit and deliver it with the interest thereon to the former for the purpose ofremittin! it by draft to Dose de la Pea: this #idal!o did, accordin! to a reply-letter from 2ather Caviedas, the ori!inal of whichappears on pa!e )G) of the file of ehibits and is copied on pa!e G of the trial record, and is apparently confirmed by the latter inhis sworn testimony.

So that the two amounts of +,444 pesos each, epressed in two deposit receipts received from 5e la Pea y $omi1 by 2ather RamonCaviedas and afterwards delivered to 2rancisco #idal!o for the successive operations of remittance and redeposit in the ban% beforementioned, are the same and only ones that were on deposit in t he said ban% in the name of their owner, Pea y $omi1. Thedefendant #idal!o made two remittances by drafts of &ondon, one in *** for G0.4 pesos, throu!h a draft purchased from theChartered Ean%, and another in **) for *4 pesos, t hrou!h a draft purchased from the house of Tuason 3 Co., and both in favor of

Pea y $omi1, who received throu!h 2ather Ramon Caviedas the remainder, (,(44 pesos, of the sums deposited. 2or these reasons,the trial >ud!e was of the opinion that t he certificates of deposit sent by Pea y $omi1 to 2ather Ramon Caviedas and those receivedfrom the latter by the def endant #idal!o were identicals, as were li%ewise the total amounts epressed by the said receipts orcertificates of deposit, from the sum of which were deducted the amounts remitted to Pea y $omi1 and the remainder depositedafter each anual operation until, finally, the sum of (,(44 pesos was remitted to its owner, Pea y $omi1, accordin! to his instructions,throu!h the said 2ather Caviedas. The lower court, in concludin! its >ud!ment, found that the plaintiff was entitled to recover any sumwhatever for the said second and third causes of action, notwithstandin! that, as hereinbefore stated, the said plaintiff withdrew thethird cause of action. This findin! of the court, with respect to the collection of the amounts of the aforementioned deposit receipts, isperfectly le!al and in accordance with >ustice, inasmuch as it is a sustained by abundant and conclusive documentary evidence,which proves in an incontrovertible manner the unri!hteousness of the claim made by the plaintiff in twice see%in! payment, bymeans of the said second and third causes of action, of the said sum which, after various operations of deposit and r emittance durin!three years, was finally returned with its interest to the possession of its owner, Pea y $omi1.

2rom the trial had in this case, it also appears conclusively proved that Dose de la Pea y $omi1 owed, durin! his lifetime, to 2ederico#idal!o, G,44 pesos, 0,444 pesos of which were to bear interest at the rate of per cent per annum, and the remainder without anyinterest, and that, notwithstandin! the lapse of the period of three years, from ovember, **G, within which he bound himself torepay the amount borrowed, and in spite of his creditor's demand of payment, made by re!istered letter, the ori!inal copy of which ison pa!e +* of the file of ehibits and a transcription thereof on pa!e )+4 of the first and second record of the evidence, the debt wasnot paid up to the time of the debtor's death. 2or such reasons, the t rial court, in the >ud!ment appealed from, found that there was apreponderance of evidence to prove that this loan had been made and that the plaintiff actually owed the defendant the sum loaned,as well as the interest thereon, after deductin! therefrom the /,444 pesos which the defendant received from the plaintiff on accountof the credit, and that the former was entitled to recover.

6t appears from the pleadin!s and evidence at the t rial that in Danuary, )40, on the arrival in this city of 2ederico de la Pea deRamon, and on the occasion of the latter's proceedin! to eamine the accounts previously rendered, up to 5ecember +, *)+, bythe defendant #idal!o to the plaintiff's father, then deceased, #idal!o made demand upon the plaintiff, Pea y de Ramon, for thepayment of the said debt of his f ather, althou!h the creditor #idal!o acceded to the re


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Deposite! N&3ber A3o&nt N&3ber

)9+9 1-(+/0* P**.** 0

)9+*9 A-/*: (:+.(+

)9+)9 A-/+) (:.0+ +*

9)9 1-(/):/) +*.** +(

9/9 1-(/):: +*.** +)

+. Dra$n by the 6nri;&e Corti< = Co. &pon the Pa%ifi% 1an2in7 Corporation an! payable to the Inter-Islan! 'asSer#i%e, In%. or bearer5

)9(9 1-((*/( P +*0.:* +

)9+:9 1-((*:+ P++*.) ++

(. Dra$n by the >&ife Ins. Co. #s. on72on7 = Shan7hai 1an2, the Co&rt r&le! that it is the obli7ation of t%olle%tin7 ban2 to rei3b&rse the !ra$ee-ban2 the #al&e of the %he%2s s&bse;&ently fo&n! to %ontain the foin!orse3ent of the payee. The reason is that the ban2 $ith $hi%h the %he%2 $as !eposite! has no ri7ht to ps&3 state! therein to the for7er or anyone else &pon a for7e! si7nat&re. It $as its !&ty to 2no$, sai! thethat the payee@sG en!orse3ent $as 7en&ine before %ashin7 the %he%2. The petitioner 3&st in t&rn sho&l!loss of the a3o&nts $hi%h the respon!ent as its %olle%tin7 a7ent, ha! to rei3b&rse to the !ra$ee-ban2s.

Be !o not %onsi!er 3aterial for the p&rposes of the %ase at bar that 3ore than three 3onths ha! elapse! sin

pro%ee!s of the %he%2s in ;&estion $ere %olle%te! by the respon!ent. The re%or! sho$s that the respon!ent a%te! pro3ptly after bein7 infor3e! that the in!orse3ents on the %he%2s $ere for7e!. 4oreo#er, ha#in7 re%the %he%2s 3erely for %olle%tion an! !eposit, the respon!ent %annot he e8pe%te! to 2no$ or as%ertain the7en&ineness of all prior in!orse3ents on the sai! %he%2s. In!ee!, ha#in7 itself in!orse! the3 to the respona%%or!an%e $ith the r&les an! pra%ti%es of %o33er%ial ban2s, of $hi%h the Co&rt ta2es !&e %o7nia$e#ery sin7le one of those %he%2s is 7en&ine an! in all respe%ts $hat it p&rports to be..

The petitioner $as, 3oreo#er, 7rossly re%reant in a%%eptin7 the %he%2s in ;&estion fro3 Ra3ire


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es%ape! the attention of the petitioner that the payee of all the %he%2s $as a %orporation E the Inter-Islan! 'asSer#i%e, In%. Het, the petitioner %ashe! these %he%2s to a 3ere in!i#i!&al $ho $as a!3itte!ly a habit&e at its ?ai-alai7a3es $itho&t 3a2in7 any in;&iry as to his a&thority to e8%han7e %he%2s belon7in7 to the payee-%orporation. InIns&lar Dr&7 Co. #s. National / the Co&rt 3a!e the prono&n%e3ent that.

. . . The ri7ht of an a7ent to in!orse %o33er%ial paper is a #ery responsible po$er an! $ill not be li7htly inferre!. Asales3an $ith a&thority to %olle%t 3oney belon7in7 to his prin%ipal !oes not ha#e the i3plie! a&thority to in!orse%he%2s re%ei#e! in pay3ent. Any person ta2in7 %he%2s 3a!e payable to a %orporation, $hi%h %an a%t only by a7ents,!oes so at his peril, an! 3&st abi!e by the %onse;&en%es if the a7ent $ho in!orses the sa3e is $itho&t a&thority.&n!ers%orin7 s&pplie!"

It 3&st be note! f&rther that three of the %he%2s in ;&estion are %rosse! %he%2s, na3ely, e8hs. +, + an! +:,$hi%h 3ay only be !eposite!, b&t not en%ashe! yet, the petitioner ne7li7ently a%%epte! the3 for %ash. That t$o ofthe %rosse! %he%2s, na3ely, e8hs. + an! +, are bearer instr&3ents $o&l! not, in o&r #ie$, e8%&lpate thepetitioner fro3 liability $ith respe%t to the3. The fa%t that they are bearer %he%2s an! at the sa3e ti3e %rosse!%he%2s sho&l! ha#e aro&se! the petitioner@s s&spi%ion as to the title of Ra3ire< o#er the3 an! his a&thority to %ashthe3 apparently to p&r%hase ?ai-alai ti%2ets fro3 the petitioner", it appearin7 on their fa%e that a %orporate entityE the Inter Islan! 'as Ser#i%e, In%. E $as the payee thereof an! Ra3ire< !eli#ere! the sai! %he%2s to thepetitioner ostensibly on the stren7th of the payee@s %ashiers@ in!orse3ents.

At all e#ents, &n!er Se%tion /: of the Ne7otiable Instr&3ents >a$, Bhere a person pla%es his in!orse3ent on aninstr&3ent ne7otiable by !eli#ery he in%&rs all the liability of an in!orser, an! &n!er Se%tion // of the sa3e stat&tea 7eneral in!orser $arrants that the instr&3ent is 7en&ine an! in all respe%ts $hat it p&rports to be. Consi!erin7that the petitioner in!orse! the sai! %he%2s $hen it !eposite! the3 $ith the respon!ent, the petitioner as anin!orser 7&arantee! the 7en&ineness of all prior in!orse3ents thereon. The respon!ent $hi%h relie! &pon thepetitioner@s $arranty sho&l! not be hel! liable for the res&ltin7 loss. This %on%l&sion applie! si3ilarly to e8h. ++$hi%h is an &n%rosse! bearer instr&3ent, for &n!er Se%tion / of the Ne7otiable Instr&3ent >a$. 6#ery personne7otiatin7 an instr&3ent by !eli#ery . . . $arrants a" That the instr&3ent is 7en&ine an! in all respe%ts $hat itp&rports to be. n!er that sa3e se%tion this $arranty e8ten!s in fa#or of no hol!er other than the i33e!iate

transferee, $hi%h, in the %ase at bar, $o&l! be the respon!ent.

The pro#ision in the !eposit slip iss&e! by the respon!ent $hi%h stip&lates that it reser#es to itself the ri7h%har7e ba%2 the ite3 to t he a%%o&nt of its !epositor, at any ti3e before %&rrent f&n!s or sol#ent %re!its shbeen a%t&ally re%ei#e! by the 1an2, $o&l! not 3aterially affe%t the %on%l&sion $e ha#e rea%he!. That stip&pres%ribes that there 3&st be an a%t&al re%eipt by the ban2 of %&rrent f&n!s or sol#ent %re!its b&t as $e haearlier in!i%ate! the transfer by the !ra$ee-ban2s of f&n!s to the respon!ent on a%%o&nt of the %he%2s in ;$as ineffe%t&al be%a&se 3a!e &n!er the 3ista2en an! #ali! ass&3ption that the in!orse3ents of the payee$ere 7en&ine. n!er arti%le +) of the Ne$ Ci#il Co!e If so3ethin7 is re%ei#e! $hen there is no ri7ht to !ean! it $as &n!&ly !eli#ere! thro&7h 3ista2e, the obli7ation to ret&rn it arises. There $as, therefore, in%onte3plation of la$, no #ali! pay3ent of 3oney 3a!e by the !ra$ee-ban2s to the respon!ent on a%%o&nt o;&estione! %he%2s.

ACCORDIN'>H, the ?&!73ent of the Co&rt of Appeals is affir3e!, at petitioner@s %ost.

Makasiar, Esguerra, Muo Pa!"a a#$ Mar%i#, JJ., &o#&ur'

Tee(a#kee, J., is o# !ea)e

Cases Week 9 AGENCY

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