a collections of case digests and laws that can help aspiring law students to become a lawyer.
Plaintiff is the industrial partner, while deceased is the capitalist partner Plaintiff sued the administratrix of the estate of the deceased Santos to recover sum of P9,534, alleged to be the net profits due the plaintiff in a partnership business conducted under the name of "Taller Sinukuan” Respondent admitted existence of partnership. Consequently, she filed a counterclaim praying that the plaintiff be ordered to render an accounting of the partnership business and to pay to the estate of the deceased the sum of P25,000 as net profits, credits, and property pertaining to said deceased. Guidote called several witnesses and introduced a so-called accounting and a mass of documentary evidence which hopelessly and inextricably confused that the court could not consider it of much probative value. However, court ordered that respondent be absolved from the action and to render an account thereof to the administratrix of Santos' estate since plaintiff failed to liquidate the affairs of the partnership Defendant Borja then presented an account and liquidation prepared by a public accountant, Santiago A. Lindaya, showing a balance of P29,088.95 in favor of the defendant. In addition, defendant introduced the public accountant Jose Turiano Santiago to testify as to the results of an audit made by him of the accounts of the partnership. The plaintiff presented Tomas Alfonso and the bookkeeper, Pio Gaudier, as witnesses in his favor to contradict defendant’s witnesses. TC: these two witnesses is so unreliable that the court can place no reliance thereon. Alfonso is the same public accountant who filed the liquidation Exhibit O on behalf of the plaintiff, in relation to the partnership business, which liquidation was disapproved by this court in its decision of August 20, 1923. Gaudier is the same bookkeeper who prepared three entirely separate and distinct liquidation for the same partnership business all of which were repeated by the court in its decisions of September 1, 1922 and the court finds that the testimony given by him at the last hearing is confusing, contradictory and unreliable.1aw As to other witness: Chua Chak – testified and identified the documents shown by counsel for plaintiff can neither read nor write Claro Reyes – testified as to the originality of an exhibit claims that he was forced to admit that it was a mere copy. Hence, the conclusions reached by Santiago A. Lindaya as modified by Jose Turinao Santiago were just and correct and ordered the plaintiff to pay the defendant the sum of P26,020.89 Petitioner’s argument: Since the deceased up to the time of his death generally took care of the payments and collections of the partnership, his legal representatives were under the obligation to render accounts of the operations of the partnership, notwithstanding the fact that the plaintiff was in charge of the business subsequent to the death of Santos.
Whether or not the court erred in ordering the plaintiff and appellant to pay to the defendant and appellee the sum of P26,020.89.
No,There may be some merit in Guidote’s contention that the dismissal of his complaint was premature. The better practice would been to let the complaint stand until the result of the liquidation of the partnership affairs was known. But under the circumstances, no harm was done by the dismissal of Guidote’s complaint. However, in Wahl vs. Donaldson Sim & Co. death of one of the partners dissolves the partnership, but that the liquidation of its affairs is by law entrusted, not to the executors of the deceased partner, but to the surviving partners or the liquidators appointed by them In equity surviving partners are treated as trustees of the representatives of the deceased partner, in regard to the interest of the deceased partner in the firm. As a consequence of this trusteeship, surviving partners are held in their dealings with the firm assets and the representatives of the deceased to that nicety of dealing and that strictness of accountability required of and incident to the position of one occupying a confidential relation. It is the duty of surviving partners to render an account of the performance of their trust to the personal representatives of the deceased partner, and to pay over to them the share of such deceased member in the surplus of firm property, whether it consists of real or personal assets. Perhaps the court could have more inclined to question the conclusions of Lindaya and Santiago if the plaintiff had shown a disposition to render an honest account of the business and to affect a fair liquidation of the partnership but instead of doing so, he has by means of very questionable, and apparently false, evidence sought to mulct his deceased partner's estate to the extent of over P9,000.
From the fourth to the twelfth paragraph of the complaint, the plaintiff set forth that, prior to December 1, 1898, Warner, Barnes and Co. were conducting a business in Albay. The principal object of the business was the purchase of hemp in the pueblos of Legaspi and Tobacco for the purpose of bringing it to Manila to sell if for exportation. On the same date, the plaintiff company became interested in the business of Warner, Barnes and Co. in Albay and formed therewith a joint-account partnership in which Aldecoa and Co. were to share equally in the gains and losses of the business.
The defendant is the successor to all the rights and obligations of Warner, Barnes and Co., among which is that of being manager of the joint-account partnership with Aldecoa and Co., It is a recognized fact, and one admitted by both parties that the partnership herein concerned concluded its transactions on December 31, 1903. Wherefore the firm of Warner, Barnes & Co. Ltd., the manager of the partnership, in declaring the latter's transactions concluded and in rendering duly verified accounts of its results, owes the duty to include therein the property and effects belonging to the partnership in common.
Whether or not this litigation concerns the rendering of accounts pertaining to the management of the business of a joint-account partnership formed between the two litigants companies.
It is a rule of law generally observed that he who takes charge of the management of another's property is bound immediately thereafter to render accounts covering his transactions; and that it is always to be understood that all accounts rendered must be duly substantiated by vouchers. It is one of the duties of the manager of a joint-account partnership, to liquidate the assets that form the common property, and to state the result obtained therefrom in the final rendering of the accounts which he is to present at the conclusion of the partnership.
It is a general rule of law that he who takes charge of the management of another's property is bound immediately thereafter to render accounts of his transactions; and that it is always to be understood that all accounts must be duly supported by proofs.
The acceptance and approval of any account rendered from a certain date does not excuse nor relieve the manager of a joint-account partnership from complying with the unquestionable duty of rendering accounts covering a period of time prior to the said date. They must be rendered from the time the partnership was formed and its business actually commenced.
The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard Inc., (SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, the NDC and KAWASAKI will contribute P330M for the capitalization of PHILSECO in the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture.
NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant to an Administrative Order.
When the former President Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of non-performing assets of the National Government, a trust agreement was entered into between the National Government and the APT wherein the latter was named the trustee of the National Government’s share in PHILSECO.
In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National Government’s share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI , they agreed that the latter’s right of first refusal under the JVA be “exchanged” for the right to top by 5%, the highest bid for the said shares. They further agreed that KAWASAKI woul.d be entitled to name a company in which it was a stockholder, which could exercise the right to top. KAWASAKI then informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top.
At the public bidding, petitioner J.G. Summit Holdings Inc. submitted a bid of Two Billion and Thirty Million Pesos (Php2,030,000,000.00) with an acknowledgement of KAWASAKI/PHILYARDS right to top.
As petitioner was declared the highest bidder, the COP approved the sale “subject to the right of Kawasaki Heavy Industries, Inc. / PHILYARDS Holdings Inc. to top JG’s bid by 5% as specified in the bidding rules.”
On the other hand, the respondent by virtue of right to top by 5%, the highest bid for the said shares timely exercised the same.
Petitioners, in their motion for reconsideration, raised, inter alia, the issue on the maintenance of the 60%-40% relationship between the NIDC and KAWASAKI arising from the Constitution because PHILSECO is a landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional limitation.
Whether under the 1977 Joint Venture Agreement, KAWASAKI can purchase only a maximum of 40% of PHILSECO’s total capitalization.
The right of first refusal is meant to protect the original or remaining joint ventures or shareholder(s) from the entry of third persons who are not acceptable to it as co-venturer(s) or co-shareholder(s). The joint venture between the Philippine Government and KAWASAKI is in the nature of a partnership36 which, unlike an ordinary corporation, is based on delectus personae.37 No one can become a member of the partnership association without the consent of all the other associates. The right of first refusal thus ensures that the parties are given control over who may become a new partner in substitution of or in addition to the original partners. Should the selling partner decide to dispose all its shares, the non-selling partner may acquire all these shares and terminate the partnership. No person or corporation can be compelled to remain or to continue the partnership. Of course, this presupposes that there are no other restrictions in the maximum allowable share that the non-selling partner may acquire such as the constitutional restriction on foreign ownership in public utility. The theory that KAWASAKI can acquire, as a maximum, only 40% of PHILSECO’s shares is correct only if a shipyard is a public utility. In such instance, the non-selling partner who is an alien can acquire only a maximum of 40% of the total capitalization of a public utility despite the grant of first refusal. The partners cannot, by mere agreement, avoid the constitutional proscription. But as afore-discussed, PHILSECO is not a public utility, and no other restriction is present that would limit the right of KAWASAKI to purchase the Government’s share to 40% of Philseco’s total capitalization.
Furthermore, the phrase “under the same terms” in section 1.4 cannot be given an interpretation that would limit the right of KAWASAKI to purchase PHILSECO shares only to the extent of its original proportionate contribution of 40% to the total capitalization of the PHILSECO. Taken together with the whole of section 1.4, the phrase “under the same terms” means that a partner to the joint venture that decides to sell its shares to a third party shall make a similar offer to the non-selling partner. The selling partner cannot make a different or a more onerous offer to the non-selling partner.
The exercise of first refusal presupposes that the non-selling partner is aware of the terms of the conditions attendant to the sale for it to have a guided choice. While the right of first refusal protects the non-selling partner from the entry of third persons, it cannot also deprive the other partner the right to sell its shares to third persons if, under the same offer, it does not buy the shares.
Apart from the right of first refusal, the parties also have preemptive rights under section 1.5 in the unissued shares of Philseco. Unlike the former, this situation does not contemplate transfer of a partner’s shares to third parties but the issuance of new Philseco shares. The grant of preemptive rights preserves the proportionate shares of the original partners so as not to dilute their respective interests with the issuance of the new shares. Unlike the right of first refusal, a preemptive right gives a partner a preferential right over the newly issued shares only to the extent that it retains its original proportionate share in the joint venture.
The case at bar does not concern the issuance of new shares but the transfer of a partner’s share in the joint venture. Verily, the operative protective mechanism is the right of first refusal which does not impose any limitation in the maximum shares that the non-selling partner may acquire.
The court upheld the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC.
The right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns the land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40% ration. This transfer by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with.
Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECO’s equity. In fact, in can even be said that if the foreign shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely affected but the capacity of the corporation to own land—that is, the corporation becomes disqualified to own land.
This finds support under the basic corporate law principle that the corporation and its stockholders are separate judicial entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land.
Private respondent Nenita A. Anay met petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water Purifier, through her former employer in Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her desire to enter into a joint venture with her for the importation and local distribution of kitchen cookwares.
Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing department and later, vice-president for sales
The parties agreed that Belo's name should not appear in any documents relating to their transactions with West Bend Company. Anay having secured the distributorship of cookware products from the West Bend Company and organized the administrative staff and the sales force, the cookware business took off successfully. They operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao's name.
The parties agreed further that Anay would be entitled to:
(1) ten percent (10%) of the annual net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services. The agreement was not reduced to writing on the strength of Belo's assurances that he was sincere, dependable and honest when it came to financial commitments.
On October 9, 1987, Anay learned that Marjorie Tocao had signed a letter addressed to the Cubao sales office to the effect that she was no longer the vice-president of Geminesse Enterprise.
Anay attempted to contact Belo. She wrote him twice to demand her overriding commission for the period of January 8, 1988 to February 5, 1988 and the audit of the company to determine her share in the net profits.
Anay still received her five percent (5%) overriding commission up to December 1987. The following year, 1988, she did not receive the same commission although the company netted a gross sales of P 13,300,360.00.
On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with damages against Marjorie D. Tocao and William Belo before the Regional Trial Court of Makati, Branch 140
The trial court held that there was indeed an "oral partnership agreement between the plaintiff and the defendants. The Court of Appeals affirmed the lower court’s decision.
Whether the parties formed a partnership
Yes, the parties involved in this case formed a partnership
The Supreme Court held that to be considered a juridical personality, a partnership must fulfill these requisites:
(1) two or more persons bind themselves to contribute money, property or industry to a common fund; and
(2) intention on the part of the partners to divide the profits among themselves. It may be constituted in any form; a public instrument is necessary only where immovable property or real rights are contributed thereto.
This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one.
In the case at hand, Belo acted as capitalist while Tocao as president and general manager, and Anay as head of the marketing department and later, vice-president for sales. Furthermore, Anay was entitled to a percentage of the net profits of the business.
Therefore, the parties formed a partnership.
Private respondent Olivia V. Yanson and Petitioner Lourdes Navarro were engaged in the business of Air Freight Service Agency. Pursuant to the Agreement which they entered, they agreed to operate the said Agency; It is the Private Respondent Olivia Yanson who supplies the necessary equipment and money used in the operation of the agency. Her brother in the person of Atty. Rodolfo Villaflores was the manager thereof while petitioner Lourdes Navarro was the Cashier; In compliance to her obligation as stated in their agreement, private respondent brought into their business certain chattels or movables or personal properties. However, those personal properties remain to be registered in her name; Among the provisions stipulated in their agreement is the equal sharing of whatever proceeds realized from their business; However, sometime on July 23, 1976, private respondent Olivia V. Yanson, in order for her to recovery the above mentioned personal properties which she brought into their business, filed a complaint against petitioner Lourdes Navarro for "Delivery of Personal Properties With Damages and with an application for a writ of replevin. Private respondents' application for a writ of replevin was later approved/granted by the trial court. For her defense, petitioner Navarro argue that she and private respondent Yanson actually formed a verbal partnership which was engaged in the business of Air Freight Service Agency. She contended that the decision sustaining the writ of replevin is void since the properties belonging to the partnership do not actually belong to any of the parties until the final disposition and winding up of the partnership.
Article 1767 of the New Civil Code defines the contract of partnership: Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the proceeds among themselves. A cursory examination of the evidence presented no proof that a partnership, whether oral or written had been constituted. In fact, those movables brought by the plaintiff for the use in the operation of the business remain registered in her name. While there may have been co-ownership or co-possession of some items and/or any sharing of proceeds by way of advances received by both plaintiff and the defendant, these are not indicative and supportive of the existence of any partnership between them. Art. 1769 par. 2 provides: Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made using the property” Besides, the alleged profit was a difference found after evaluating the assets and not arising from the real operation of the business. In accounting procedures, strictly, this could not be profit but a net worth.
The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the Mercantile Registry on 4 January 1937 and reconstituted with the Securities and Exchange Commission on 4 August 1948. The SEC records show that there were several subsequent amendments to the articles of partnership to change the firm name. On 19 December 1980, Joaquin L. Misa, Jesus B. Bito, and Mariano M. Lozada associated themselves together, as senior partners with Gregorio F. Ortega, Tomas O. del Castillo, Jr., and Benjamin Bacorro, as junior partners. On February 17, 1988, petitioner-appellant wrote the respondents-appellees a letter stating his withdrawal and retirement from the firm of Bito, Misa and Lozada and requested to make proper liquidation including his interest to the two floors of the building.
The petitioner led with this Commission's Securities Investigation and Clearing Department (SICD) a petition for dissolution and liquidation of partnership which resulted to respondents-appellees filing their opposition. The Hearing Officer held that the withdrawal of Atty. Misa had dissolved the partnership of Bito, Misa and Lozada. A Motion for Reconsideration was sought but during the pendency of the case in the CA, Bito and Lozada died which prompted Misa to renew his application for receivership.
Whether or not CA has erred in holding that the partnership of Bito, Misa & Lozada is a partnership at will;
Whether or not CA has erred in holding that the withdrawal of private respondent dissolved the partnership regardless of his good or bad faith
The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to choose with whom a person wishes to associate himself is the very foundation and essence of that partnership. Its continued existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner's capability to give it, and the absence of a cause for dissolution provided by the law itself. Any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will.
Neither would the presence of a period for its specific duration or the statement of a particular purpose for its creation prevent the dissolution of any partnership by an act or will of a partner. Among partners, mutual agency arises and the doctrine of delectus personae allows them to have the power, although not necessarily the right, to dissolve the partnership.
The Court we accord to the CA and the respondent Commission on their common factual finding, that Attorney Misa did not act in bad faith. Public respondents viewed his withdrawal to have been spurred by "interpersonal conflict" among the partners. It would not be right to let any of the partners remain in the partnership under such an atmosphere of animosity; certainly, not against their will. For as long as the reason for withdrawal of a partner is not contrary to the dictates of justice and fairness, nor for the purpose of unduly visiting harm and damage upon the partnership, bad faith cannot be said to characterize the act.
This is a petition for review on certiorari assailing CA decision which affirmed the RTC decision. Santos and Nieves Reyes verbally agreed that Santos would act as financier while Nieves and Meliton Zabat would act as solicitors for membership and collectors of loan payment. 70% of the profits would go to Santos while Nieves and Zabat would get 15% each.
It was a lending venture business.
Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the partnership in consideration of commissions. In 1986, Nieves and Zabat executed an agreement which formalized their earlier verbal agreement. But Santis and Nieves later discovered that Zabat engaged in the same lending business. Hence, Zabat was expelled from the partnership. In June 1987, Santos filed a complaint for recovery of sum of money and damages against the respondents, alleging them as employees who misappropriated the funds. Respondents assert they were partners and not mere employees. Santos claimed that after discovery of Zabat's activities, he ceased infusing funds thereby extinguishing the partnership.
Whether or not the parties' relationship was one of partnership or of employer-employee
Yes, they were partners. By the contract of partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. The "Articles of Agreement" stipulated that the signatories shall share the profits of the business in a 70-15-15 manner, with petitioner getting the lion's share. This stipulation clearly proved the establishment of a partnership.
Indeed, the partnership was established to engage in a money-lending business, despite the fact that it was formalized only after the Memorandum of Agreement had been signed by petitioner and Gragera.
Spouses Martin Ramos and Candida Tanate died on October 4, 1906 and October 26, 1880, respectively. They were survived by their 3 children. Moreover, Martin was survived by his 7 natural children. In December 1906, a special proceeding for the settlement of the intestate estate of said spouses was conducted. Rafael Ramos, a brother of Martin, administered the estate for more than 6 years. Eventually, a partition project was submitted which was signed by the 3 legitimate children and 2 of the 7 natural children. A certain Timoteo Zayco signed in representation of the other 5 natural children who were minors. The partition was sworn to before a justice of peace. The conjugal hereditary estate was appraised at P74,984.93, consisting of 18 parcels of land, some head of cattle and the advances to the legitimate children. ½ thereof represented the estate of Martin. 1/3 thereof was the free portion or P12,497.98. The shares of the 7 natural children were to be taken from that 1/3 free portion. Indeed, the partition was made in accordance with the Old Civil code. Thereafter, Judge Richard Campbell approved the partition project. The court declared that the proceeding will be considered closed, and the record should be archived as soon as proof was submitted that each he3ir had received the portion adjudicated to him. On February 3, 1914, Judge Nepumoceno asked the administrator to submit a report showing that the shares of the heirs had been delivered to them as required by the previous decision. Nevertheless, the manifestation was not in strict conformity with the terms of the judge’s order and with the partition project itself. 8 lots of the Himamaylan Cadastre were registered in equal shares in the names of Gregoria (widow of Jose Ramos) and her daughter, when in fact the administrator was supposed to pay the cash adjudications to each of them as enshrined in the partition project. Plaintiffs were then constrained to bring the suit before the court seeking for the reconveyance in their favor their corresponding participations in said parcels of land in accordance with Article 840 of the old Civil Code. Note that 1/6 of the subject lots represents the 1/3 free portion of martin’s shares which will eventually redound to the shares of his 7 legally acknowledged natural children. The petitioners’ action was predicated on the theory that their shares were merely held in trust by defendants. Nonetheless, no Deed of Trust was alleged and proven. Ultimately, the lower court dismissed the complaint on the grounds of res judicata, prescription and laches.
Whether or not the plaintiffs’ action was barred by prescription, laches, and res judicata to the effect that they were denied of their right to share in their father’s estate.
Yes, there was inexcusable delay thereby making the plaintiffs’ action unquestionably barred by prescription and laches and also by res judicata. Inextricably interwoven with the questions of prescription and res judicata is the question on the existence of a trust. It is noteworthy that the main thrust of plaintiffs’ action is the alleged holding of their shares in trust by defendants. Emanating from such, the Supreme Court elucidated on the nature of trusts and the availability of prescription and laches to bar the action for reconveyance of property allegedly held in trust. It is said that trust is the right, enforceable solely in equity to the beneficial enjoyment of property, the legal title to which is vested in another. It may either be express or implied. The latter ids further subdivided into resulting and constructive trusts. Applying it now to the case at bar, the plaintiffs did not prove any express trust. Neither did they specify the kind of implied trust contemplated in their action. Therefore, its enforcement maybe barred by laches and prescription whether they contemplate a resulting or a constructive trust.
Petitioner acquired 10 checks from a certain Antonio Ramirez. The said checks were deposited by the petitioner to the respondent bank. The Respondent bank temporarily credited the said checks to the account of the petitioner. After 3 months, the checks were found out to be forged. The respondent bank debited the account of the petitioner. The petitioner filed a collection of sums of money against the respondent. The CFI and the Court of Appeals dismissed the said complaint, hence this case.
Whether the respondent is liable to return the amount debited from the account of the Petitioner.
No, the respondent acted within legal bounds when it debited the petitioner’s account. When the petitioner deposited the checks with the respondent, the nature of the relationship created at that stage was one of agency, that is, the bank was to collect from the drawees of the checks the corresponding proceeds. It is true that the respondent had already collected the proceeds of the checks when it debited the petitioner’s account. Section 23 of the Negotiable Instruments Law states that “When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.”
A fire broke out at the Caltex service station at the corner of Antipolo street and Rizal Avenue, Manila. It started while gasoline was being hosed from a tank truck into the underground storage, right at the opening of the receiving tank where the nozzle of the hose was inserted (a lighted matchstick was thrown by a stranger near the opening, causing the fire). The fire spread to and burned several neighboring houses. Their owners, among them petitioners here, sued respondents Caltex (Phil.), Inc. and Boquiren, the first as alleged owner of the station and the second as its agent in charge of operation. Negligence on the part of both of them was attributed as the cause of the fire.
The trial court and the CA found that petitioners failed to prove negligence and that respondents had exercised due care in the premises and with respect to the supervision of their employees. Hence this petition.
Whether or not without proof as to the cause and origin of the fire, the doctrine of res ipsa loquitur should apply so as to presume negligence on the part of appellees
The decision appealed from is reversed and respondents-appellees are held liable solidarily to appellants,
Both the trial court and the appellate court refused to apply the doctrine in the instant case on the grounds that “as to (its) applicability … in the Philippines, there seems to be nothing definite,” and that while the rules do not prohibit its adoption in appropriate cases, “in the case at bar, however, we find no practical use for such doctrine.”
The question deserves more than such summary dismissal. The doctrine has actually been applied in this jurisdiction, in the case of Espiritu vs. Philippine Power and Development Co
The principle enunciated in the aforequoted case applies with equal force here. The gasoline station, with all its appliances, equipment and employees, was under the control of appellees. A fire occurred therein and spread to and burned the neighboring houses. The persons who knew or could have known how the fire started were appellees and their employees, but they gave no explanation thereof whatsoever. It is a fair and reasonable inference that the incident happened because of want of care.
Even then the fire possibly would not have spread to the neighboring houses were it not for another negligent omission on the part of defendants, namely, their failure to provide a concrete wall high enough to prevent the flames from leaping over it. Defendants’ negligence, therefore, was not only with respect to the cause of the fire but also with respect to the spread thereof to the neighboring houses.
There is an admission on the part of Boquiren in his amended answer to the second amended complaint that “the fire was caused through the acts of a stranger who, without authority, or permission of answering defendant, passed through the gasoline station and negligently threw a lighted match in the premises.” No evidence on this point was adduced, but assuming the allegation to be true — certainly any unfavorable inference from the admission may be taken against Boquiren — it does not extenuate his negligence. A decision of the Supreme Court of Texas, upon facts analogous to those of the present case, states the rule which we find acceptable here. “It is the rule that those who distribute a dangerous article or agent, owe a degree of protection to the public proportionate to and commensurate with a danger involved … we think it is the generally accepted rule as applied to torts that ‘if the effects of the actor’s negligent conduct actively and continuously operate to bring about harm to another, the fact that the active and substantially simultaneous operation of the effects of a third person’s innocent, tortious or criminal act is also a substantial factor in bringing about the harm, does not protect the actor from liability.’ Stated in another way, “The intention of an unforeseen and unexpected cause, is not sufficient to relieve a wrongdoer from consequences of negligence, if such negligence directly and proximately cooperates with the independent cause in the resulting injury.”
Respondent Sison owned a Plymouth car, which was brought to petitioner company's gasoline and service station for washing, greasing, and spraying, in which such services were undertaken by Profirio De La Fuente (agent of petitioner) through his two employees. - Nearly finishing the services, the crew positioned carefully the car for a final greasing, but it accidentally fell off, damaging the said car. - Car of respondent Sison was repaired and after the investigation made by the car's insurance companies, both the insurance companies and the owner of the car brought an action in the CFI Manila against petitioner Shell and de la Fuente - RTC dismissed complaint, but CA reversed and sentenced petitioner to pay respondents
Whether or not Petitioner Shell Phil is bound to the acts of his agent de la Fuente.
Yes, As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is one for which the principal is answerable. - the finding of the Court of Appeals that the operator De la Fuente was an agent of the company and not an independent contractor should not be disturbed, in which, the servicing job on Appellant Sison's automobile was accepted by De la Fuente in the normal and ordinary conduct of his business as operator of his co-appellee's service station, and that the jerking and swaying of the hydraulic lift which caused the fall of the subject car were due to its defective condition, resulting in its faulty operation. - Court of Appeals found, Company's mechanic failed to make a thorough check up of the hydraulic lifter, check-up was "merely routine" by raising "the lifter once or twice, after observing that the operator was satisfactory, he (the mechanic) left the place. The latter was negligent, and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car from the hydraulic lifter.
Petitioner Domingo Dela Cruz, was hired as a special guard of Northern Theatrical Enterprises. July 4, 1941, Benjamin Martin wanted to crash the gate or entrance of the cinema. The latter then attacked petitioner with a bolo and petitioner defended himself resulting to Martin’s death.
Dela Cruz was then charged with homicide by the court of first instance of Ilocos-Norte. A re-investigation was conducted acquitting petitioner of the criminal charges.
Dela Cruz then demanded reimbursement of expenses from his former employer after which he filed an action against the respondent together with 3 board of directors to recover not only the amounts, he paid his lawyer but as well as moral damages amounting to P15,000.00
Whether or not Northern Theatrical enterprises is liable for the reimbursement expenses
No. The relationship between Dela Cruz and Northern Theatrical Enterprises because Dela Cruz was not the principal and agent, the principle of representation was in no way involved. Dela Cruz was not employed to represent the defendant corporation in its dealings with third parties. he was a mere employee hired to perform a certain duty or task.
All laws and principles of law found refer to cases of physical injuries/ death suffered in the line of duty or in the course of the performance of duties. but the Court is not prepared to say and to hold that giving of said legal assistance to its employees is a legal obligation. Viewed from another angle, it may be said that the damage suffered by Dela Cruz, that is, the expenses incurred by him in remunerating his lawyer, is not caused by his shooting the gate crasher but rather the filing of charge. had no criminal charges filed against him, no expenses would have incurred so the damage caused by Dela Cruz was the the improper filing of criminal charge. if despite the innocence and despite the absence of criminal responsibility, he was accused of homicide. The responsibility for the improper accusation may be laid at the door of the heirs of the deceased and the state. and so, theoretically, they are the parties that may be held for damages
On January 30, 1937, the parties have entered into an operating agreement wherein Nielson & Co. would operate and manage the mining properties owned by Lepanto Consolidated Mining Co. for a period of five years. Before the lapse of the five-year period, the parties have renewed the contract for another five years with modifications made by Lepanto on the management fee.
On its modified contract Nielson will receive
(1) 10% of the dividends declared and paid, when and as paid during the period of the contract and at the end of each year,
(2) 10% of any depletion reserve that may set up, and
(3) 10% of any amount expended during the year out of surplus earnings for capital account.
In January 1942 operation of the mining properties was disrupted on account of the war. The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and who were ousted from the mining properties only in August of 1945.
After the mining properties were liberated from the Japanese forces, Lepanto took possession thereof and embarked in rebuilding and reconstructing the mines and mill. The restoration lasted for nearly three years and the mines have resumed its operation under the exclusive management of Lepanto.
Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement arose between NIELSON and LEPANTO over the status of the operating contract in question which as renewed expired in 1947.
Whether or not Nielson is entitled to his share in the stock dividends.
Stock dividends cannot be issued to a person who is not a stockholder in payment of services rendered.
Section 16 of the Corporation Law, in part, provides a follow:
No corporation organized under this Act shall create or issue bills, notes or other evidence of debt, for circulation as money, and no corporation shall issue stock or bonds except in exchange for actual cash paid to the corporation or for: (1) property actually received by it at a fair valuation equal to the par or issued value of the stock or bonds so issued; and in case of disagreement as to their value, the same shall be presumed to be the assessed value or the value appearing in invoices or other commercial documents, as the case may be; and the burden or proof that the real present value of the property is greater than the assessed value or value appearing in invoices or other commercial documents, as the case may be, shall be upon the corporation, or for (2) profits earned by it but not distributed among its stockholders or members; Provided, however, That no stock or bond dividend shall be issued without the approval of stockholders representing not less than two-thirds of all stock then outstanding and entitled to vote at a general meeting of the corporation or at a special meeting duly called for the purpose.
In the case at bar Nielson cannot be paid in shares of stock which form part of the stock dividends of Lepanto for services it rendered under the management contract. We sustain the contention of Lepanto that the understanding between Lepanto and Nielson was simply to make the cash value of the stock dividends declared as the basis for determining the amount of compensation that should be paid to Nielson, in the proportion of 10% of the cash value of the stock dividends declared. In other words, Nielson must still be paid his 10% fee using as the basis for computation the cash value of the stock dividends declared.
Moreover, from the above-quoted provision of Section 16 of the Corporation Law, the consideration for which shares of stock may be issued are: (1) cash; (2) property; and (3) undistributed profits. Shares of stock are given the special name “stock dividends” only if they are issued in lieu of undistributed profits. If shares of stocks are issued in exchange of cash or property then those shares do not fall under the category of “stock dividends”. A corporation may legally issue shares of stock in consideration of services rendered to it by a person not a stockholder, or in payment of its indebtedness. A share of stock issued to pay for services rendered is equivalent to a stock issued in exchange of property, because services is equivalent to property. Likewise a share of stock issued in payment of indebtedness is equivalent to issuing a stock in exchange for cash. But a share of stock thus issued should be part of the original capital stock of the corporation upon its organization, or part of the stocks issued when the increase of the capitalization of a corporation is properly authorized. In other words, it is the shares of stock that are originally issued by the corporation and forming part of the capital that can be exchanged for cash or services rendered, or property; that is, if the corporation has original shares of stock unsold or unsubscribed, either coming from the original capitalization or from the increased capitalization. Those shares of stock may be issued to a person who is not a stockholder, or to a person already a stockholder in exchange for services rendered or for cash or property. But a share of stock coming from stock dividends declared cannot be issued to one who is not a stockholder of a corporation.
A “stock dividend” is any dividend payable in shares of stock of the corporation declaring or authorizing such dividend.
So, a stock dividend is actually two things: (1) a dividend, and (2) the enforced use of the dividend money to purchase additional shares of stock at par.16 When a corporation issues stock dividends, it shows that the corporation’s accumulated profits have been capitalized instead of distributed to the stockholders or retained as surplus available for distribution, in money or kind, should opportunity offer. Far from being a realization of profits for the stockholder, it tends rather to postpone said realization, in that the fund represented by the new stock has been transferred from surplus to assets and no longer available for actual distribution. Thus, it is apparent that stock dividends are issued only to stockholders. This is so because only stockholders are entitled to dividends. They are the only ones who have a right to a proportional share in that part of the surplus which is declared as dividends. A stock dividend really adds nothing to the interest of the stockholder; the proportional interest of each stockholder remains the same. If a stockholder is deprived of his stock dividends – and this happens if the shares of stock forming part of the stock dividends are issued to a non-stockholder — then the proportion of the stockholder’s interest changes radically. Stock dividends are civil fruits of the original investment, and to the owners of the shares belong the civil fruits.
A Special Power of Attorney was executed by sisters Concepcion and Gerundia in favor of their brother Simeon for the sale of a parcel of land co-owned by the two. Months after Conception died, Simeon sold the undivided shares of his sisters to herein respondent Felix Go Chan & Realty Corp. Petitioner Ramon Rallos, administrator of the late Concepcion’s estate, prayed that the sale of the undivided share of the deceased be invalidated and a new certificate be issued in the name of respondent corporation and Concepcion’s intestate estate, plus damages. Court of First Instance ruled in favor of petitioner and granted the payers, but CA reversed the decision. Respondent’s MR was further denied.
Whether or not the sale entered into by an agent is valid although executed after death of the principal.
No, the sale is void because Simeon’s authority as an agent of Concepcion was extinguished upon her death.
Article 1317 provides that no one may contract in the name of another without being authorized or unless he has, by law, a right to represent him. Article 1919 furthers that the death of the principal terminates the agency.
The case at bar is also not among the exceptions whereby an agent’s acts bind the principal even after the latter’s death because of Simeon’s knowledge of Concepcion’s death is material. Hence, the sale was null and void.