A.

DEFINITION (ART 1868)

1. PHILPOTTS VS. PHILIPPINE MANUFACTURING CO. AND BERRY W.G. Philpotts (Petitioner), a stockholder in Philippine Manufacturing Company sought to compel respondents to permit plaintiff, a person or by some authorized agent or attorney to inspect and examine the records of the business transacted by said company since January 1, 1918. Respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his duly authorized agent or attorney. Petitioner desires to exercise said right through agent or attorney. Petition is filed originally in the Supreme Court under authority of Section 515 of Code of Civil Procedure, which gives SC concurrent jurisdiction with then Court of First Instance in cases where any corporation or person unlawfully excludes the plaintiff from use and enjoyment and some right he is entitled. ISSUE: Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by stockholder in person HELD: Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as well as by stockholder in person. The right of inspection / examination into corporate affairs given to a stockholder in section 51 of the Corporation Law which states: The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hour can be exercised either by himself or by any duly authorized representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another.

2. CARLOS GELANO v. COURT OF APPEALS and INSULAR SAWMILL, INC. Facts: Insular Sawmill was a corporation engaged in the general lumber and sawmill business with a corporate life of fifty years, beginning Sept 17, 1945 Sept 17, 1995. To carry on the business, Insular Sawmill leased paraphernal property of petitioner Guillerma Gelano. It was while leasing the property, that the Guillerma, and her husband Carlos, incurred the following debts to the corporation: 1. For cash advances made by the corporation to Carlos which was supposed to be deducted from the monthly rentals being paid by the corporation 2. For credit purchases of lumber materials from the company 3. For credit accommodation obtained by the spouses from China Banking Corporation, for which the corporation executed a promissory note in favour of the bank from which the bank collected Carlos debt from. On May 22, 1959, the corporation, thru Atty. German Lee, filed a complaint for collection against the spouses Gelano before CFI- Manila. Trial was held and when the case was at the stage of submitting memorandum, Atty. Lee retired from active law practice and Atty. Eduardo F. Elizalde took over and prepared the memorandum. While the case was pending, Insular Sawmill amended its Articles of Incorporation to shorten its term of existence up to December 31, 1960 only. The amended Articles of Incorporation was filed with, and approved by the Securities and Exchange Commission, but the trial court was not notified of the amendment shortening the corporate existence and no substitution of party was ever made. On November 20, 1964 and almost four (4) years after the dissolution of the corporation, the trial court rendered a decision in favor of Insular Sawmill. The CA modified the decision, holding the spouses solidarily liable. After the Gelanos received a copy of the decision on August 24, 1973, they came to know that the Insular Sawmill Inc. was dissolved way back on December 31, 1960. Thus they filed an MD on th ground that the case was prosecuted even after dissolution of Insular Sawmill

as a corporation and that a defunct corporation cannot maintain any suit for or against it without first complying with the requirements of the winding up of the affairs of the corporation and the assignment of its property rights within the required period. Their MD was denied thus the present petition for review. ISSUE: WON Insular Sawmill, a defunct corporation, complied with the requirements for winding up affairs and is entitled to the decision against the Gelanos? RATIO: YES Section 77 of Corp Law provides that the corporation shall "be continued as a body corporate for three (3) years after the time when it would have been dissolved, for the purpose of prosecuting and defending suits by or against it. For this reason, Sec 78 of the Corp Law authorizes the corporation, "at any time during said three years to convey all of its property to trustees for the benefit of members, stockholders, creditors and other interested," evidently for the purpose, among others, of enabling said trustees to prosecute and defend suits by or against the corporation begun before the expiration of said period. American corporate law dictates that while there is no time limited limited within which the trustees must complete a liquidation placed in their hands. It is provided only that the conveyance to the trustees must be made within the three-year period. In this case, the SC held that the counsel who prosecuted and defended the interest of the corporation in the instant case and who in fact appeared in behalf of the corporation may be considered a trustee of the corporation at least with respect to the matter in litigation only. It deemed it substantial compliance under Sec 78 of the Corp Law. The word "trustee" as used in the corporation statute must be understood in its general concept which could include the counsel to whom was entrusted the prosecution of the suit filed by the corporation. The purpose in the transfer of the assets of the corporation to a trustee upon its dissolution is more for the protection of its creditor and stockholders. Debtors like the spouses Gelano may not take advantage of the failure of the corporation to transfer its assets to a trustee, assuming it has any to transfer which petitioner has failed to show, in the first place. To sustain petitioners' contention would be to allow them to

enrich themselves at the expense of another, which all enlightened legal systems condemn. WHEREFORE, with the modification that only the conjugal partnership is liable, the appealed decision is hereby affirmed in all other respects. Without pronouncement as to costs. SO ORDERED. 3. SHELL CO. V. FIREMENS INSURANCE Facts: This is an action for recovery of sum of money, based on alleged negligence of the defendants A car was brought to a Shell gasoline station owned by dela Fuente for washing and greasing. The car was placed on a hydraulic lifter for greasing. As some parts of the car couldnt be reached by the greaseman, the lifter was lowered. Unfortunately, for unknown reasons (probably due to mechanical failure or human error), while the lifter was being lowered, the car swung and fell from the platform. Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000. The insurance companies after paying the sum of P1,651.38 for the damage and charging the balance of P100.00 to Salvador Sison in accordance with the terms of the insurance contract, have filed this action together with said Salvador Sison for the recovery of the total amount of the damage from the defendants on the ground of negligence Issue: WON dela Fuente is merely an agent of Shell Co. Held: Yes De la Fuente was the operator of the station "by grace" of the Defendant Company which could and did remove him as it pleased; that all the equipments needed to operate the station was owned by the Defendant Company which took charge of their proper care and maintenance, despite the fact that they were loaned to him; that the Defendant company did not leave the fixing of price for gasoline to De la Fuente; That the service station belonged to the company and bore its tradename and the operator sold only the products of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance

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 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. 4. QUIROGA V. PARSONS HARDWARE FACTS: Quiroga and Parsons entered into a contract for the exclusive sale of Quiroga beds in the Visayan Islands. They agreed on the following terms: a) Quiroga shall furnish the beds and shall give a 25% discount on the invoiced prices as commission sales and Parsons shall order by the dozen; b) Payment shall be made within 60 days from date of shipment; c) Transportation and shipment expenses shall be borne by Quiroga while freight, insurance, and cost of unloading by Parsons; d) If before an invoice falls due, Quiroga should request payment, payment made shall be prompt payment and a deduction of 2% shall be given; same discount if payment is in cash; e) Notice from Quiroga shall be given at least 15 days before any change in price; f) Parsons binds himself not to sell any other kind of bed; and g) Contract is for an unlimited period. Parsons violated some of the conditions such as not to sell the beds at higher prices, pay for the advertisement expenses, and to order beds by the dozen. Quiroga alleged that Parsons was his agent and that the obligations are implied in a commercial agency contract. ISSUE: w/n Parsons, by reason of the contract, was a purchaser or an agent of Quiroga for the sale of the latters beds. HELD: NO, Parsons was not an agent. In order to classify a contract, due regard must be given to the essential clauses. In this case, there was an obligation on Quirogas part to supply beds while an obligations on Parsons part to pay the price. These are essential features of a contract of purchase and sale. None of the clauses conveys the idea of an agency where an agent received the thing to sell it and does not pay the price but delivers to the principal the price he obtains from the sale to a third person, and if he does not sell it, he returns it.

The word agency used in the contract only expresses that Parsons was the only one who could sell the petitioners beds in the Visayan Islands. A contract is what the law defines it to be and not what the parties call it. 5. PUYAT V. ARCO AMUSEMENT CO. FACTS: Arco Amusement was engaged in the business of operating cinematopgraphs. Gonzalo Puyat & Sons Inc (GPS) was the exclusive agent in the Philippines for the Starr Piano Company. Desiring to equip its cinematograph with sound reproducing devices, Arco approached GPS, through its president, GIl Puyat, and an employee named Santos. After some negotiations, it was agreed between the parties that GPS would order sound reproducing equipment from Starr Piano Company and that Arco would pay GPS, in addition to the rice of the equipment, a 10% commission, plus all expenses such as freight, insurance, etc. When GPS inquired Starr Piano the price (without discount) of the equipment, the latter quoted such at $1,700 FOB Indiana. Being agreeable to the price (plus 10% commission plus all other expenses), Arco formally authorized the order. The following year, both parties agreed for another order of sound reproducing equipment on the same terms as the first at $1,600 plus 10% plus all other expenses. Three years later, Arco discovered that the prices quoted to them by GPS with regard to their first 2 orders mentioned were not the net prices, but rather the list price, and that it had obtained a discount from Starr Piano. Moreover, Arco alleged that the equipment were 0verpriced. Thus, being its agent, GPS had to reimburse the excess amount it received from Arco. ISSUE: W/N there was a contract of agency, not of sale HELD: NO. The letters containing Arco's acceptance of the prices for the equipment are clear in their terms and admit no other interpretation that the prices are fixed and determinate. While the letters state that GPS was to receive a 10% commission, this does not necessarily mean that it is an agent of Arco, as this provision is only an additional price which it bound itself to pay, and which stipulation is not incompatible with the contract of sale. It is GPS that is the exclusive agent of Starr Piano in the Philippines, not the agent of Arco. It is out of the ordinary for one to be the agent of both

the seller and the buyer. The facts and circumstances show that Arco entered into a contract of sale with GPS, the exclusive agent of Starr Piano. As such, it is not duty bound to reveal the private arrangement it had with Starr Piano relative to the 25% discount. Thus, GPS is not bound to reimburse Arco for any difference between the cost price and the sales price, which represents the profit realized by GPS out of the transaction.

ISSUE: Whether there was a valid agency in the case of ANTONIO (2nd period) HELD: There was an implied agency in the case of ANTONIO. DE LA PENA created an implied agency in favor of ANTONIO because of his silence on the matter for a number of years. There was a valid renunciation in the case of FEDERICO. His reason for leaving the country is legitimate. Furthermore, he gave notice to DE LA PENA about his situation in which the latter failed to give his objection. Being a valid agency on the part of ANTONIO and a valid renunciation on the party of FEDERICO, it must follow that the liability of FEDERICO only extends up to the point before his renunciation of the agency (1st period). The implied agency is founded on the lack of contradiction or opposition, which constitutes simultaneous agreement on the part of the presumed principal to the execution of the contract. The agent and administrator who was obliged to leave his charge for a legitimate cause and who duly informed his principal, is thenceforward released and freed from the results and consequences of the management of the person who substituted him with the consent, even tacit though it be, of his principal. SIDE NOTE ON POWER OF ATTORNEY: It was also argued by DE LA PENA that there was no authority on the part of FEDERICO to appoint a substitute. The COURT ruled that the power of attorney given by DE LA PENA to FEDERICO did not include a power to appoint a substitute. Nevertheless, it was pointed out that the appointment made by FEDERICO was not based on the power of attorney of DE LA PENA. The appointment was grounded on a new power of attorney FEDERICO himself executed in favor of ANTONIO. Thus, there was no violation incurred by FEDERICO. And as stated in the case, DE LA PENA was duly informed of this but nevertheless kept his silence on the matter.

B. FROM (ART 1869, 1874, 1876-77)

6. DE LA PENA V. HIDALGO FACTS: 1887-1893 (1st period) FEDERICO

1893-1902 (2nd period) ANTONIO

1902-1904 (3rd period) FRANCISCO

Before DE LA PENA went to Spain, he executed a power of attorney in favor of FEDERICO and 3 other people. Their task is to represent him and administer various properties he owned in Manila. FEDERICO took charge in Nov. 1887. After a few years, FEDERICO wrote a letter to DE LA PENA. It contains a request that DE LA PENA assign a person who might substitute FEDERICO in the event that he leaves the Philippines because one of the agents died and the other 2 are unwilling to take charge. DE LA PENA did not answer the letter there was neither approval nor objection on the accounts and no appointment of another person who might substitute FEDERICO. Because of health reasons, FEDERICO went to Spain. Before he departed, he sent another letter to DE LA PENA a summary of accounts and informing that he will be leaving the Philippines and that he turned over the administration to ANTONIO (though FEDERICO stated that if DE LA PENA is not happy with this, DE LA PENA must send ANTONIO a new power of attorney). DE LA PENA files in court for the collection of revenue from his accounts which was handled by FEDERICO. DE LA PENA alleges that FEDERICO has only remitted 1.2k and still owes him roughly 72k. Furthermore, DE LA PENA seeks to hold FEDERICO liable for the administration from the period of 1887 until 1904. FEDERICO asserts that he cannot be liable for the period after he renounced his agency. Furthermore FEDERICO argues that his renunciation and appointment of a substitute was legal for there was no objection on the part of DE LA PENA.

7. GUTIERREZ HERMANOS V. ORENSE (GR. NO. L9188 1914)

Facts: Orense is the owner a parcel of land (with masonry house, and with the nipa roof erected) situated in the pueblo of Guinobatan, Albay. This property has been recorded in the new property registry in his name. Feb 14, 1907.Jose DURAN, a nephew of Orense, executed before a notary a public instrument that he sold and conveyed to the plaintiff

company the said property for P1,500 and that the vendor Duran reserved to himself the right to repurchase it for the same price within a period of four years. Gutierrez Hermanos had not entered into possession of the purchased property, because of its continued occupancy by ORENSE and DURAN by virtue of a contract of lease executed by the plaintiff to Duran, effective up to February 14, 1911.After the lapse of the four years stipulated for the redemption, the defendant refused to deliver the property to the purchaser. Gutierrez Hermanos then charged DURAN with estafa, for having represented himself in the said deed of sale to be the absolute owner of the land. During that trial, when ORENSE was called as a witness, he admitted that he consented to Durans selling of property under right of redemption. Because of this, the court acquitted DURAN for charge of estafa. Mar 5, 1913 Gutierrez Hermanos then filed a complaint in the CFI Albay against Engracio Orense. Petitioner Claims that The instrument of sale of the property, executed by Jose Duran, was publicly and freely confirmed and ratified by ORENSE. In order to perfect the title to the said property, all plaintiff had to do was demand of Orense to execute in legal form a deed of conveyance. But Orense refused to do so, without any justifiable cause or reason, and so he should be compelled to execute the said deed by an express order of the court. Jose DURAN is notoriously insolvent and cannot reimburse the plaintiff company for the price of the sale which he received, nor pay any sum for the losses and damages occasioned by the sale. Also, Duran had been occupying the said property since February 14, 1911, and refused to pay the rental notwithstanding the demand made upon him at the rate of P30 per month. Plaintiff prays that the land and improvements be declared as belonging legitimately and exclusively to him, and that defendant be ordered to execute in the plaintiff's behalf the said instrument of transfer and conveyance of the property and of all the right, interest, title and share which the defendant has. Respondent contends that the Facts in the complaint did not constitute a cause of action and He is the lawful owner of the property claimed in the complaint, and since his Ownership was recorded in the property registry, this was conclusive against the plaintiff, He had not executed any written power of attorney nor given any verbal authority to Jose DURAN to sell the property to Gutierrez Hermanos. His knowledge of the sale was acquired long after the execution of the contract of sale between Duran and Gutierrez Hermanos, and he did not intentionally and deliberately perform any act such as might have

induced the plaintiff company to believe that Duran was empowered and authorized by the defendant. Issue: Whether Orense is bound by Durans act of selling plaintiffs property. Held: Yes. Ratio It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who acted within the scope of his authority. (Civil Code, arts. 1709, 1710 and1727)Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or without his legal representation according to law. A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless its hould be ratified by the person in whose name it was executed before being revoked by the other contracting party. - The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by his nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects which the contract may have contained from the moment of its execution.

8. JIMENEZ VS RABOT
Facts: Gregorio was in need of money to pay off his debts. He instructed his sister, through a letter, to sell one of his two parcels of land so as to come up with cash. Nicolasa, following her brother's request, sold one of his parcels of land to Rabot for 500 pesos. There was proof of payment between Rabot and Nicolasa but there was no proof of the payment ever reaching Gregorio. When Gregorio asked for the parcel of land, Nicolasa refused. Gregorio now sues for the land and learns later on that ownership was already with Rabot. Issue: Whether or not the conveyance between Nicolasa and Pedro Rabot was a valid. Held: It was valid. Judgement of CA is reversed.

Ratio: The purpose in giving a power of attorney is to substitute the mind and hand of the agent for the mind and hand of the principal; and if the character and extent of the power is so far defined as to leave no doubt as to the limits within which the agent is authorized to act, and he acts within those limits, the principal cannot question the validity of his act. It is not necessary that the particular act to be accomplished should be predestinated by the language of the power. The question to be answered always, after the power has been exercised, is rather this: Was the act which the agent performed within the scope of his authority? In the case before us, if the question is asked whether the act performed by Nicolasa Jimenez was within the scope of the authority which had been conferred upon her, the answer must be obviously in the affirmative.

C. ACCEPTANCE (1870-73)
10. RALLOS V YANGCO
Facts: Through a letter, Yangco invited Rallos in a consignment arrangement for the business of buying and selling of leaf tobacco and other native products, terms and conditions of which were also included in the letter. In the same letter, Yangco introduced to Rallos the former's agent, Collantes, upon whom Yangco conferred a public power of attorney to perform on Yangco's behalf, all acts necessary for carrying out the business. Rallos accepted the invitation and transacted with Yangco through Collantes; last transaction being the supply of tobacco, the cost of which that belonged to Rallos was misappropriated by Collantes. Apparently, prior to the last delivery of tobacco, Yangco had already terminated his agency relation with Collantes, unknown to Rallos. ISSUE: W/N Rallos, in good faith and without knowledge of the termination of the agency agreement, can recover from Yangco the amount misappropriated by Collantes. RULING: Yes, Yangco was liable. Having given special notice to Rallos that Collantes was his (Yangco's) agent and having given him invitation to deal with such agent, it was then the duty of Yangco to give due and timely notice to Rallos regarding the termination of the agency. Failing to do so, Yangco will be held liable to third parties acting in good faith and properly relying upon such agency.

When the owner, or his agent, comes to make a contract to sell, or a conveyance to effect a transfer, there must be a description of the property which is the subject of the sale or conveyance. This is necessary of course to define the object of the contract The general rule here applicable is that the description must be sufficiently definite to identify the land either from the recitals of the contract or deed or from external facts referred to in the document, thereby enabling one to determine the identity of the land and if the description is uncertain on its face or is shown to be applicable with equal plausibility to more than one tract, it is insufficient. The principle embodied in these decisions is not, in our opinion, applicable to the present case, which relates to the sufficiency of the authorization, not to the sufficiency of the contract or conveyance. It is unquestionable that the deed which Nicolasa executed contains a proper description of the property which she purported to convey There is ample authority to the effect that a person may by a general power of attorney an agent to sell "all" the land possessed by the principal, or all that he possesses in a particular city, county, or state. In the present case the agent was given the power to sell either of the parcels of land belonging to the plaintiff. We can see no reason why the performance of an act within the scope of this authority should not bind the plaintiff to the same extent as if he had given the agent authority to sell "any or all" and she had conveyed only one.

D. CONSIDERATION (1870-73)
12. REYES V. MOSQUEDA- DONATION INTER VIVOS
The nature of the disposition made is the determinative factor which makes the donation inter vivos or mortis causa and not the title given to a deed of donation. FACTS: Dr. Emilio Pascual died intestate and was survived by his sister Ursula Pascual and the children of his late sisters, herein petitioners Ruperto Reyes et. al. The heirs of Dr. Pascual filed Special Proceedings No. 73-30-M in the CFI

for the administration of Pascuals estate. Ursula then filed a motion to exclude some properties included alleging that these were donated to her in a donation mortis causa in 1966. This was granted by the CFI without prejudice to its final determination in a separate action. An appeal was made to the SC. The SC then issued a TRO enjoining the CFI from enforcing the order. Among the properties donated to Ursula is lot 24 which was also donated in 1969 in a deed of donation inter vivos in favor of Ofelia Parungao who was then a minor at the time of the donation. When she reached the age of majority, she had the donation registered but found out that the certificate of title was missing so she filed a petition for reconstitution of title which was granted and she registered the donation and was issued a new TCT in her name. Ursula then sold the lot in favor of the Reyes. Benjamin Reyes filed a complaint for declaration of nullity of Ofelias TCT which prompted Ofelia to file a petition for recovery of possession against Benjamin Reyes. The CFI issued a joint decision for the 2 cases ruling that Ofelias TCT was null and void. The IAC affirmed thus an appeal to the SC. ISSUES: (1) Whether or not the probate has jurisdiction to exclude properties donated to Ursula (2) Whether or not the donation executed in favor of Ursula was a donation inter vivos RULING: (1) YES. It was stressed in the order of the probate court that it was without prejudice to the final determination in a separate action. It is well-settled that although a probate court cannot adjudicate or determine title to properties, it can determine whether or not the properties should be included in the inventory to be administered. Such determination is not conclusive and is subject to the final decision in a separate action.

(2) YES. Although the donation was entitled donations mortis causa it has been held that dispositions in a deed of donation do not depend on the title or term used in the deed of donation. It is the body of the document which should be considered in ascertaining the intention of the donor. For a donation to be a donation mortis causa, the following characteristics should be present: 1. It conveys no title before the death of the transferor or the transferor retains ownership over the property 2. Before his death, the transfer should be revocable by the transferor at will 3. The transfer is void should the transferor survive the transferee The following are not present in the case. The transfer of ownership was immediate and independent of the death of the donor. The provision stating that the donor has reserved sufficient properties for himself to maintain him for life confirms the intention of the donor to give naked ownership immediately after execution of the deed of donation. Outline: A. Definition (Art 1868) a. Philpotts v. Phil Manufacturing b. Gelano v. CA c. Shell v. Fireman Insurance d. Quiroga v. Parsons Hardware e. Gonzalo Puyat and Sons v. Arco Amusement B. From (Art 1869, 1874, 1876-77) a. Dela Pena v. Hidalgo b. Gutierrez Hermanos v. Orense c. Jimenez v. Rabot C. Acceptance (1870-73) a. Dela Pena v. Hidalgo b. Rallos v. Yancgo D. Consideration (1870-73) a. Broker Ysmael v. William Lines b. Reyes v. Mosqueda and CA c. De Tagle v. Luzon Surety