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G.R. No.

L-25950

December 24, 1926

E. AWAD, plaintiff-appellant,
vs.
FILMA MERCANTILE CO., INC., defendant-appellee.
M. H. de Joya and Ramon P. Gomez for appellant.
Crossfield and O'Brien for appellee.

OSTRAND, J.:
Early in the month of September, 1924, the plaintiff, doing business in the Philippine Islands under
the name of E. Awad & Co., delivered certain merchandise of the invoice value of P11,140 to Chua
Lioc, a merchant operating under the name of Hang Chua Co. in Manila, said merchandise to be
sold on commission by Chua Lioc. Representing himself as being the owner of the merchandise,
Chua Lioc, on September 8, 1924, sold it to the defendant for the sum of P12,155.60. He owed the
Philippine Manufacturing Co., the sum of P3,480, which the defendant agreed to pay, and was also
indebted to the defendant itself in the sum of P2,017.98. The total amount of the two debts,
P5,497.98, was deducted from the purchase price, leaving a balance of P6,657.52 which the
defendant promised to pay to Chua Lioc on or before October 9, 1924.
The merchandise so purchased on September 9, was delivered to the defendant, who immediately
offered it for sale. Three days later D. J. Awad, the representative of the plaintiff in the Philippine
Islands; having ascertained that the goods entrusted to Chua Lioc was being offered for sale by the
defendant, obtained authorization from Chua Lioc to collect the sum of P11,707 from said defendant
and informed the latter's treasurer of the facts above set forth. On September 15, D. J. Awad, in
behalf of E. Awad & Co., wrote a letter to the defendant corporation advising it that, inasmuch as the
merchandise belonged to E. Awad & Co., the purchase price should be paid to them, to which letter,
the defendant, on September 18, 1924, made the following answer:
Messrs. E. AWAD & CO.
435 Juan Luna Manila.
GENTLEMEN: We are in receipt of your letter of September 15, 1924, in which you state that certain
blankets and shirts were brought from you by the Chinaman Chua Lioc under false pretenses on
consignment, basis, and in which you say that the merchandise is yours and we should make
payment to you for said merchandise. In answer to your letter, we beg to say to you that the blankets
and shirts in question, together with other merchandise, were purchased and received by us from
the Chinaman Chua Lioc on September 9, 1924, in the ordinary course of business, and that there is
now due from us to the said Chinaman a balance of P6,657.52, which is payable on October 9,
1924. In view of these facts, we are unable to comply with your request, and would advise you, in
case this Chinaman is indebted to you for said merchandise, to take the necessary steps through the
Court to secure the payment of this balance due to him to your firm, inasmuch as if you do not do so,
we shall be obliged to pay the balance which we owe for said merchandise directly to him.
Yours respectfully,

FILMA MERCHANTILE CO. INC.

On the same date, September 18, 1924, the Philippine Trust Company, brought an action, civil case
No. 26934, against Chua Lioc for the recovery of the sum of P1,036.36 and under a writ of
attachment garnished the balance due Chua Lioc from the defendant. On October 7, E. Awad also
brought an action, civil case No. 27016, against Chua Lioc for the recovery of the sum of P11,140,
the invoice value of the merchandise above-mentioned and also obtained a writ of attachment under
which notice of garnishment of the said aforesaid balance we served upon the herein defendant.
The complaint in the present action was filed on November 26, 1924, the plaintiff demanding
payment of the same sum of P11,140 for which action had already been brought against Chua Lioc.
The defendant, its answer, set up as special defense that it brought the merchandise in good faith
and without any knowledge whether of the person from whom or the condition under which the said
merchandise had been acquired by Chua Lioc or Hang Chuan Co.; that the defendant therefore had
acquired title to the merchandise purchased; that the balance of P6,657.52, now in the hands of the
defendant had been attached in the two actions brought on September 18, and October 7,
respectively, and garnishment served upon the defendant, who therefore, holds the money subject to
the orders of the court in the cases above-mentioned, but which sum the defendant is able and
willing to pay at any time when the court decides to whom the money lawfully pertains.
1awphil.net

Upon trial, the court below dismissed the case without costs on the ground that the plaintiff was only
entitled to payment of the sum of P6,657.52, but which sum the defendant had the right to retain
subject to the orders of the court in cases Nos. 26134 and 27016. From this judgment the plaintiff
appealed.
The law applicable to the case is well settled. Article 246 of the Code of Commerce reads as follows:
When the agent transacts business in his own name, it shall not be necessary for him to
state who is the principal and he shall be directly liable, as if the business were for his own
account, to the persons with whom he transacts the same, said persons not having any right
of action against the principal, nor the latter against the former, the liabilities of the principal
and of the agent to each other always being reserved.
The rule laid down in the article quoted is contrary to the general rule in the United States as to
purchases of merchandise from agents with undisclosed principal, but it has been followed in a
number of cases and is the law in its jurisdiction. (Pastells & Regordosa vs. Hollman & Co., 2 Phil.,
235; Castle Bros., Wolf & Sons vs. Go-Juno, & Phil., 144; Lim Tiu vs. Ruiz y Rementeria, 15 Phil.,
367.) But the appellant points out several circumstances which, in his opinion, indicate that the
defendant-appellee was aware of the condition under which the merchandise was entrusted to the
agent Chua Lioc and therefore did not purchase the goods in good faith. This, if true, would, of
course, lead to a decision of the case in favor of the plaintiff, but there is, in our opinion, nothing
conclusive about the circumstances referred to and they are not sufficient to overcome the
presumption of good faith.
The appealed judgment is in accordance with the law and the facts and is affirmed with the costs
against the appellant. So ordered.
Avancea, C. J., Street, Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-6530

October 6, 1911

LA COMPAIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellant,


vs.
DIABA, defendant-appellee.
Orense and Gonzales diez, for appellant.
No appearance for appellee.

JOHNSON, J.:
On the 19th of July, 1909, the plaintiff commenced an action against the defendant in the
Court of First Instance of the Province of Leyte, for the purpose of recovering the sum of P442, for
goods sold and delivered by the plaintiff, through its agent (Gutierrez) to the defendant, between the
11th of January, 1909, and the 1st of April, 1909.
To this complaint the defendant, in his special answer, admitted that he had purchased from
the agent of the plaintiff (Gutierrez) goods, wares, and merchandise, between the 12th of January,
1909, and the 15th of March, 1909, amounting to the sum of P692, and that he had sold to the agent
of the plaintiff (Gutierrez) abaca and other effects, between the 25th of January, 1909, and the 6th of
February, 1909, amounting to P1,308.80, leaving a balance due him (the defendant) of P616.80.
1awphil.net

After hearing the evidence, the Hon. Charles A. Low, judge, found that the plaintiff was
indebted to the defendant in the sum of P616.80, and rendered a judgment against the plaintiff for
said sum. From that judgment the plaintiff appealed for said sum. From that judgment the plaintiff
appealed and made several assignments of error in this court.
An examination of the record brought to this court shows by a large preponderance of the
evidence that the agent of the plaintiff (Gutierrez) had been selling goods, wares, and merchandise
to the defendant, and buying abaca and other agricultural products of the defendant for a period
covering more than eight years; that the particular transactions to which the present action related
took place between the 11th of January, 1909, and the 1st of April, 1909. The plaintiff attempted to
show that it had suspended its agent (Gutierrez), as its agent, and that he (Gutierrez) had no further
authority to represent it (the plaintiff). There is no convincing proof in the record that the orders given
by the plaintiff to its agent (Gutierrez) had ever been communicated to the defendant. The defendant
had a perfect right to believe, until otherwise informed, that the agent of the plaintiff, in his purchase
of abaca and other effects was still representing the plaintiff in said transactions. The plaintiff, during
the trial of the cause, placed Gutierrez, its agent, upon the stand as a witness. He testified that the
abaca which was purchased of the defendant was purchased by him a agent of the plaintiff and that
said abaca was actually delivered to the plaintiff. The plaintiff, it appears, was perfectly willing to
ratify the acts of its agent in selling goods to the defendant, but seemed to be unwilling to ratify said
agent's acts in purchasing goods from the defendant.

Under all of the facts of record, we see no reason for modifying the judgment of the lower
court; the same is, therefore, hereby affirmed with costs.
Torres, Mapa, Carson and Moreland, JJ., concur.
G.R. No. L-12579

July 27, 1918

GREGORIO JIMENEZ, plaintiff-appellee,


vs.
PEDRO RABOT, NICOLASA JIMENEZ and her husband EMILIO RODRIGUEZ, defendants.
PEDRO RABOT, appellant.
Antonio Bengson for appellant.
Jose Rivera for appellee.
STREET, J.:
This action was instituted by the plaintiff, Gregorio Jimenez, to recover from the defendant, Pedro
Rabot, a parcel of land situated in the municipality of Alaminos, in the Province of Pangasinan, and
described in the complaint as follows:
Approximate area of three hectares; bounded on the north and west with land of Pedro
Reynoso, on the south with land of Nicolasa Jimenez, and on the east with land of Calixta
Apostol before, at present with that of Juan Montemayor and Simon del Barrio. It is situated
in Dinmayat Tancaran, barrio of Alos of this same municipality of Alaminos, Pangasinan.
From a judgment rendered in favor of the plaintiff, Pedro Rabot has appealed; but his co-defendants,
Nicolasa Jimenez and her husband, who were cited by the defendant for the purpose of holding her
liable upon her warranty in case of his eviction, have not appealed.
It is admitted that the parcel of land in question, together with two other parcels in the same locality
originally belonged of the heirs in the division of the estate of his father. It is further appears that
while Gregorio was staying at Vigan, in the Province of Ilocos Sur, during the year 1911, his property
in Alaminos was confided by him to the care of his elder sister Nicolasa Jimenez. On February 7 of
that year he wrote this sister a letter from Vigan in which he informed her that he was pressed for
money and requested her to sell one of his parcels of land and send him the money in order that he
might pay his debts. This letter contains no description of the land to be sold other than is indicated
in the words "one of my parcels of land" ("uno de mis terrenos").
Acting upon this letter Nicolasa approached the defendant Pedro Rabot, and the latter agreed to buy
the parcel in question for the sum of P500. Two hundred and fifty peso were paid at once, with the
understanding that a deed of conveyance would be executed when the balance should be paid.
Nicolasa admits having received this payment of P250 at the time stated; but there is no evidence
that she sent any of it to her brother.

About one year later Gregorio came down to Alaminos and demanded that his sister should
surrender this piece of land to him, it being then in her possession. She refused upon some pretext
or other to do so; and as a result Gregorio, in conjunction with others of his brothers and sisters,
whose properties were also in the hands of Nicolasa, instituted an action in the Court of First
Instance for the purpose of recovering their land from her control. This action was decided favorably
to the plaintiffs upon August 12, 1913; and no appeal was taken from the judgment.
Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and delivered to Pedro Rabot a deed
purporting to convey to him the parcel of land which is the subject of this controversy. The deed
recites that the sale was made in consideration of the sum of P500, the payment of which is
acknowledged. Pedro Rabot went into possession, and the property was found in his hands at the
time when final judgment was entered in favor of the plaintiffs in the action above mentioned. It will
thus be seen that Pedro Rabot acquired possession under the deed from Nicolasa during the
pendency of the litigation appear that he was at the time cognizant of that circumstance.
In considering the questions presented by this appeal one or two preliminary observations may be
made. The first is that, as a matter of formality, a power of attorney to convey real property ought to
appear in a public document, just as any other instrument intended to transmit or convey an interest
in such property ought to appear in a public document. (Art. 1280, Civil Code.) But inasmuch as it is
an established doctrine that a private document is competent to create, transmit, modify, or
extinguish a right in real property (Thunga Chui vs. Que Bentec, 2 Phil. Rep., 561; Couto
Soriano vs. Cortes, 8 Phil. Rep., 459), it follows that a power of attorney to convey such property,
even though in the form of a private document, will operate with effect. Again, supposing that the
letter contained adequate authority for Nicolasa to sell the property in question, her action in
conveying the property in her own name, without showing the capacity in which she acted, was
doubtless irregular. Nevertheless, such deed would in any event operate to bind her brother, the
plaintiff in its character as a contract (Lyon vs. Pollock, 99 U.S., 668; 25 L. ed., 265), and supposing
that the authority was sufficient, he could be compelled by a proper judicial proceeding to execute a
document to carry such contract into effect. (Art. 1279, Civil Code.)
The principal question for consideration therefore in the end resolves itself into this, whether the
authority conferred on Nicolasa by the letter of February 7, 1911, was sufficient to enable her to bind
her brother. The only provisions of law bearing on this point are contained in article 1713 of the Civil
Code and in section 335 of the Code of Civil Procedure. Article 1713 of the Civil Code requires that
the authority to alienate land shall be contained in an express mandate; while subsection 5 of
section 335 of the Code of Civil Procedure says that the authority of the agent must be in writing and
subscribed by the party to be charged. We are of the opinion that the authority expressed in the
letter is a sufficient compliance with both requirements.
It has been urged here that in order for the authority to be sufficient under section 335 of the Code of
Civil Procedure the authorization must contain a particular description of the property which the
agent is to be permitted to sell. There is no such requirement in subsection 5 of section 335; and we
do not believe that it would be legitimate to read such a requirement into it. 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.
It should not escape observation that the problem with which we are here concerned relates to the
sufficiency of the power of attorney under subsection 5 of section 335 of the Code of Civil Procedure
and not to the sufficiency of the note or memorandum of the contract, or agreement of sale, required
by the same subsection, in connection with the first paragraph of the same section. It is well-settled
in the jurisprudence of England and the United States that 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. (Brockway vs. Frost, 40 Minn., 155; Carr vs. Passaic Land etc. Co., 19 N. J.
Eq., 424; Lippincott vs. Bridgewater, 55 N. J. Eq., 208; Craig vs. Zelian, 137 Cal., 105; 20 Cyc., 271.)
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. (Roper vs.McFadden, 48 Cal., 346; Rownd vs. Davidson, 113 La., 1047; Carson vs. Ray, 52 N.
C., 609; 78 Am. Dec., 267; 31 Cyc., 1229.) It is also held that where a person authorizes an agent to
sell a farm ("my farm") in a certain county, this is sufficient, if it be shown that such party has only
one farm in that country. (Marriner vs. Dennison, 78 Cal., 202.) In Linton vs. Moorhead (209 Pa. St.,
646), the power authorized the agent to sell or convey "any or all tracts, lots, or parcels" of land
belonging to the plaintiff. It was held that this was adequate. In Lyon vs. Pollock (99 U.S., 668), the
owner in effect authorized an agent to sell everything he had in San Antonio Texas. The authority
was held sufficient. In Linan vs. Puno (31 Phil. Rep., 259), the authority granted was to the effect that
the agent might administer "the interests" possessed by the principal in the municipality of Tarlac and
to that end he was authorized to purchase, sell, collect, and pay, etc. It was held that this was a
sufficient power.
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.

From what have been said it is evident that the lower court should have absolved the defendant
Pedro Rabot from the complaint. Judgment will accordingly be reversed, without any express
adjudication of costs this instance. So ordered.
Torres, Johnson, Malcolm, Avancea and Fisher, JJ., concur.
G.R. No. L-42465

November 19, 1936

INTERNATIONAL FILMS (CHINA), LTD., plaintiff-appellant,


vs.
THE LYRIC FILM EXCHANGE, INC., defendant-appellee.
J. W. Ferrier for appellant.
Juan T. Santos and Arsenio Solidum for appellee.

VILLA-REAL, J.:
This is an appeal taken by the plaintiff company International Films (China), Ltd. from the
judgment of the Court of First Instance of Manila dismissing the complaint filed by it against the
defendant company the Lyric Film Exchange, Inc., with costs to said plaintiff.
In support of its appeal the appellant assigns six alleged errors as committed by the court a
quo in its said judgment, which will be discussed in the course of this decision.
The record shows that Bernard Gabelman was the Philippine agent of the plaintiff company
International Films (China), Ltd. by virtue of a power of attorney executed in his favor on April 5,
1933 (Exhibit 1). On June 2, 1933, the International Films (China), Ltd., through its said agent,
leased the film entitled "Monte Carlo Madness" to the defendant company, the Lyric Film Exchange,
Inc., to be shown in Cavite for two consecutive days, that is, on June 1 and 2, 1933, for 30 per cent
of the receipts; in the Cuartel de Espaa for one day, or on June 6, 1933, for P45; in the University
Theater for two consecutive days, or on June 8, and 9, 1933, for 30 per cent of the receipts; in
Stotsenburg for two consecutive days, or on June 18 and 19, 1933, for 30 per cent of the receipts,
and in the Paz Theater for two consecutive days, or on June 21 and 22, 1933, for 30 per cent of the
receipts (Exhibit C). One of the conditions of the contract was that the defendant company would
answer for the loss of the film in question whatever the cause. On June 23, 1933, following the last
showing of the film in question in the Paz Theater, Vicente Albo, then chief of the film department of
the Lyric Film Exchange, Inc., telephoned said agent of the plaintiff company informing him that the
showing of said film had already finished and asked, at the same time, where he wished to have the
film returned to him. In answer, Bernard Gabelman informed Albo that he wished to see him
personally in the latter's office. At about 11 o'clock the next morning, Gabelman went to Vicente
Albo's office and asked whether he could deposit the film in question in the vault of the Lyric Film
Exchange, Inc., as the International Films (China) Ltd. did not yet have a safety vault, as required by
the regulations of the fire department. After the case had been referred to O'Malley, Vicente Albo's
chief, the former answered that the deposit could not be made inasmuch as the film in question

would not be covered by the insurance carried by the Lyric Film Exchange, Inc. Bernard Gabelman
then requested Vicente Albo to permit him to deposit said film in the vault of the Lyric Film Exchange,
Inc., under Gabelman's own responsibility. As there was a verbal contract between Gabelman and
the Lyric Film Exchange Inc., whereby the film "Monte Carlo Madness" would be shown elsewhere,
O'Malley agreed and the film was deposited in the vault of the defendant company under Bernard
Gabelman's responsibility.
About July 27, 1933, Bernard Gabelman severed his connection with the plaintiff company,
being succeeded by Lazarus Joseph. Bernard Gabelman, upon turning over the agency to the new
agent, informed the latter of the deposit of the film "Monte Carlo Madness" in the vault of the
defendant company as well as of the verbal contract entered into between him and the Lyric Film
Exchange, Inc., whereby the latter would act as a subagent of the plaintiff company, International
Films (China) Ltd., with authority to show this film "Monte Carlo Madness" in any theater where said
defendant company, the Lyric Film Exchange, Inc., might wish to show it after the expiration of the
contract Exhibit C. As soon as Lazarus Joseph had taken possession of the Philippine agency of the
International Films (China) Ltd., he went to the office of the Lyric Film Exchange, Inc., to ask for the
return not only of the film "Monte Carlo Madness" but also of the films "White Devils" and "Congress
Dances". On August 13 and 19, 1933, the Lyric Film Exchange, Inc., returned the films entitled
"Congress Dances" and "White Devils" to Lazarus Joseph, but not the film "Monte Carlo Madness"
because it was to be shown in Cebu on August 29 and 30, 1933. Inasmuch as the plaintiff would
profit by the showing of the film "Monte Carlo Madness", Lazarus Joseph agreed to said exhibition. It
happened, however, that the bodega of the Lyric Film Exchange, Inc., was burned on August 19,
1933, together with the film "Monte Carlo Madness" which was not insured.
The first question to be decided in this appeal, which is raised in the first assignment of
alleged error, is whether or not the court a quo erred in allowing the defendant company to amend its
answer after both parties had already rested their respective cases.
In Torres Viuda de Nery vs. Tomacruz (49 Phil., 913, 915), this court, through Justice Malcolm,
said:
Sections 109 and 110 of the Philippine Code of Civil Procedure, relating to the
subjects of Variance and Amendments in General, should be equitably applied to the end
that cases may be favorably and fairly presented upon their merits, and that equal and exact
justice may be done between the parties. Under code practice, amendments to pleadings
are favored, and should be liberally allowed in furtherance of justice. This liberality, it has
been said, is greatest in the early stages of a lawsuit, decreases as it progresses, and
changes at times to a strictness amounting to a prohibition. The granting of leave to file
amended pleadings is a matter peculiarly within the sound discretion of the trial court. The
discretion will not be disturbed on appeal, except in case of an evident abuse thereof. But
the rule allowing amendments to pleadings is subject to the general but not inflexible
limitation that the cause of action or defense shall not be substantially changed, or that the
theory of the case shall not be altered. (21 R. C. L., pp. 572 et seq.; 3 Kerr's Cyc. Codes of
California, sections 469, 470 and 473; Ramirez vs. Murray [1855], 5 Cal., 222;
Haydenvs. Hayden [1873], 46 Cal., 332; Hackett vs. Bank of California [1881], 57 Cal., 335;

Hancock vs. Board of Education of City of Santa Barbara [1903], 140 Cal., 554;
Dunphy vs. Dunphy [1911], 161 Cal., 87; 38 L. R. A. [N. S.], 818.)
lawphi1.net

In the case of Gould vs. Stafford (101 Cal., 32, 34), the Supreme Court of California,
interpreting section 473 of the Code of Civil Procedure of said State, from which section 110 of our
Code was taken, stated as follows:
The rule is that courts will be liberal in allowing an amendment to a pleading when it
does not seriously impair the rights of the opposite party and particularly an amendment
to an answer. A defendant can generally set up as many defenses as he may have.
Appellant contends that the affidavits upon which the motion to amend was made show that
it was based mainly on a mistake of law made by respondent's attorney; but, assuming that
to be, so, still the power of a court to allow an amendment is not limited by the character of
the mistake which calls forth its exercise. The general rule that a party cannot be relieved
from an ordinary contract which is in its nature final, on account of a mistake of law, does not
apply to proceedings in an action at law while it is pending and undetermined. Pleadings are
not necessarily final until after judgment. Section 473 of the Code of Civil Procedure provides
that the court may allow an amendment to a pleading to correct certain enumerated mistakes
or "a mistake in any other respect," and "in other particulars." The true rule is well stated in
Ward vs. Clay (62 Cal. 502). In the case at bar evidence of the lease was given at the first
trial; and we cannot see that the amendment before the second trial put plaintiff in a position
any different from that which he would have occupied if the amendment had been made
before the first trial.
In the case of Ward vs. Clay (82 Cal., 502, 510), the Supreme Court of said State stated:
The principal purpose of vesting the court with this discretionary power is to enable it
"to mold and direct its proceedings so as to dispose of cases upon their substantial merits,"
when it can be done without injustice to either party, whether the obstruction to such a
disposition of cases be a mistake of fact or a mistake as to the law; although it may be that
the court should require a stronger showing to justify relief from the effect of a mistake in law
than in case of a mistake as to matter of fact. The exercise of the power conferred by section
473 of the code, however, should appear to have, been "in furtherance of justice," and the
relief, if any, should be granted upon just terms.
Lastly, in the case of Simpson vs. Miller (94 Pac., 253), the said Supreme Court of California
said:
In an action to recover property which had vested in plaintiff's trustee in bankruptcy
prior to the suit, an amendment to the answer, made after both parties had rested, but before
the cause was submitted, pleading plaintiff's bankruptcy in bar to the action, was properly
allowed in the discretion of the court.
Under the above-cited doctrines, it is discretionary in the court which has cognizance of a
case to allow or not the amendment of an answer for the purpose of questioning the personality of
the plaintiff to bring the action, even after the parties had rested their cases, as it causes no injustice

to any of the parties, and this court will not interfere in the exercise of said discretion unless there is
an evident abuse thereof, which does not exist in this case.
The second question to be decided is whether or not the defendant company, the Lyric Film
Exchange, Inc., is responsible to the plaintiff, International Films (China) Ltd., for the destruction by
fire of the film in question, entitled "Monte Carlo Madness".
The plaintiff company claims that the defendant's failure to return the film "Monte Carlo
Madness" to the former was due to the fact that the period for the delivery thereof, which expired on
June 22, 1933, had been extended in order that it might be shown in Cebu on August 29 and 30,
1933, in accordance with an understanding had between Lazarus Joseph, the new agent of the
plaintiff company, and the defendant. The defendant company, on the other hand, claims that when it
wanted to return the film "Monte Carlo Madness" to Bernard Gabelman, the former agent of the
plaintiff company, because of the arrival of the date for the return thereof, under the contract Exhibit
C, said agent, not having a safety vault, requested Vicente Albo, chief of the film department of the
defendant company, to keep said film in the latter's vault under Gabelman's own responsibility,
verbally stipulating at the same time that the defendant company, as subagent of the International
Films (China) Ltd., might show the film in question in its theaters.
It does not appear sufficiently proven that the understanding had between Lazarus Joseph,
second agent of the plaintiff company, and Vicente Albo, chief of the film department of the
defendant company, was that the defendant company would continue showing said film under the
same contract Exhibit C. The preponderance of evidence shows that the verbal agreement had
between Bernard Gabelman, the former agent of the plaintiff company, and Vicente Albo, chief of the
film department of the defendant company, was that said film "Monte Carlo Madness" would remain
deposited in the safety vault of the defendant company under the responsibility of said former agent
and that the defendant company, as his subagent, could show it in its theaters, the plaintiff company
receiving 5 per cent of the receipts up to a certain amount, and 15 per cent thereof in excess of said
amount.
If, as it has been sufficiently proven in our opinion, the verbal contract had between Bernard
Gabelman, the former agent of the plaintiff company, and Vicente Albo, chief of the film department
of the defendant company, was a sub-agency or a submandate, the defendant company is not civilly
liable for the destruction by fire of the film in question because as a mere submandatary or
subagent, it was not obliged to fulfill more than the contents of the mandate and to answer for the
damages caused to the principal by his failure to do so (art. 1718, Civil Code). The fact that the film
was not insured against fire does not constitute fraud or negligence on the part of the defendant
company, the Lyric Film Exchange, Inc., because as a subagent, it received no instruction to that
effect from its principal and the insurance of the film does not form a part of the obligation imposed
upon it by law.
As to the question whether or not the defendant company having collected the entire proceeds
of the fire insurance policy of its films deposited in its vault, should pay the part corresponding to the
film in question which was deposited therein, the evidence shows that the film "Monte Carlo
Madness" under consideration was not included in the insurance of the defendant company's films,
as this was one of the reasons why O'Malley at first refused to receive said film for deposit and he

consented thereto only when Bernard Gabelman, the former agent of the plaintiff company, insisted
upon his request, assuming all responsibility. Furthermore, the defendant company did not collect
from the insurance company an amount greater than that for which its films were insured,
notwithstanding the fact that the film in question was included in the vault, and it would have
collected the same amount even if said film had not been deposited in its safety vault. Inasmuch as
the defendant company, The Lyric Film Exchange, Inc., had not been enriched by the destruction by
fire of the plaintiff company's film, it is not liable to the latter.
For the foregoing considerations, we are of the opinion and so hold: (1) That the court a
quo acted within its discretionary power in allowing the defendant company to amend its answer by
pleading the special defense of the plaintiff company's lack of personality to bring the action, after
both parties had already rested their respective cases; (2) that the defendant company, as subagent
of the plaintiff in the exhibition of the film "Monte Carlo Madness", was not obliged to insure it against
fire, not having received any express mandate to that effect, and it is not liable for the accidental
destruction thereof by fire.
Wherefore, and although on a different ground, the appealed judgment is affirmed, with the
costs to the appellant. So ordered.
Avancea, C. J., Abad Santos, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.
G.R. No. L-11491

August 23, 1918

ANDRES QUIROGA, plaintiff-appellant,


vs.
PARSONS HARDWARE CO., defendant-appellee.
Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant.
Crossfield & O'Brien for appellee.
AVANCEA, J.:
On January 24, 1911, in this city of manila, a contract in the following tenor was entered into by and
between the plaintiff, as party of the first part, and J. Parsons (to whose rights and obligations the
present defendant later subrogated itself), as party of the second part:
CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J.
PARSONS, BOTH MERCHANTS ESTABLISHED IN MANILA, FOR THE
EXCLUSIVE SALE OF "QUIROGA" BEDS IN THE VISAYAN ISLANDS.
ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan
Islands to J. Parsons under the following conditions:
(A) Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's
establishment in Iloilo, and shall invoice them at the same price he has fixed for sales, in
Manila, and, in the invoices, shall make and allowance of a discount of 25 per cent of the

invoiced prices, as commission on the sale; and Mr. Parsons shall order the beds by the
dozen, whether of the same or of different styles.
(B) Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within a period of
sixty days from the date of their shipment.
(C) The expenses for transportation and shipment shall be borne by M. Quiroga, and the
freight, insurance, and cost of unloading from the vessel at the point where the beds are
received, shall be paid by Mr. Parsons.
(D) If, before an invoice falls due, Mr. Quiroga should request its payment, said payment
when made shall be considered as a prompt payment, and as such a deduction of 2 per cent
shall be made from the amount of the invoice.
The same discount shall be made on the amount of any invoice which Mr. Parsons may
deem convenient to pay in cash.
(E) Mr. Quiroga binds himself to give notice at least fifteen days before hand of any alteration
in price which he may plan to make in respect to his beds, and agrees that if on the date
when such alteration takes effect he should have any order pending to be served to Mr.
Parsons, such order shall enjoy the advantage of the alteration if the price thereby be
lowered, but shall not be affected by said alteration if the price thereby be increased, for, in
this latter case, Mr. Quiroga assumed the obligation to invoice the beds at the price at which
the order was given.
(F) Mr. Parsons binds himself not to sell any other kind except the "Quiroga" beds.
ART. 2. In compensation for the expenses of advertisement which, for the benefit of both
contracting parties, Mr. Parsons may find himself obliged to make, Mr. Quiroga assumes the
obligation to offer and give the preference to Mr. Parsons in case anyone should apply for
the exclusive agency for any island not comprised with the Visayan group.
ART. 3. Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga"
beds in all the towns of the Archipelago where there are no exclusive agents, and shall
immediately report such action to Mr. Quiroga for his approval.
ART. 4. This contract is made for an unlimited period, and may be terminated by either of the
contracting parties on a previous notice of ninety days to the other party.
Of the three causes of action alleged by the plaintiff in his complaint, only two of them constitute the
subject matter of this appeal and both substantially amount to the averment that the defendant
violated the following obligations: not to sell the beds at higher prices than those of the invoices; to
have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public
exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the
dozen and in no other manner. As may be seen, with the exception of the obligation on the part of
the defendant to order the beds by the dozen and in no other manner, none of the obligations

imputed to the defendant in the two causes of action are expressly set forth in the contract. But the
plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency. The whole question, therefore, reduced
itself to a determination as to whether the defendant, by reason of the contract hereinbefore
transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.
In order to classify a contract, due regard must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter might order, at the price stipulated, and that the
defendant was to pay the price in the manner stipulated. The price agreed upon was the one
determined by the plaintiff for the sale of these beds in Manila, with a discount of from 20 to 25 per
cent, according to their class. Payment was to be made at the end of sixty days, or before, at the
plaintiff's request, or in cash, if the defendant so preferred, and in these last two cases an additional
discount was to be allowed for prompt payment. These are precisely the essential features of a
contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds,
and, on the part of the defendant, to pay their price. These features exclude the legal conception of
an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not
pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the
plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their
price within the term fixed, without any other consideration and regardless as to whether he had or
had not sold the beds.
It would be enough to hold, as we do, that the contract by and between the defendant and the
plaintiff is one of purchase and sale, in order to show that it was not one made on the basis of a
commission on sales, as the plaintiff claims it was, for these contracts are incompatible with each
other. But, besides, examining the clauses of this contract, none of them is found that substantially
supports the plaintiff's contention. Not a single one of these clauses necessarily conveys the idea of
an agency. The words commission on sales used in clause (A) of article 1 mean nothing else, as
stated in the contract itself, than a mere discount on the invoice price. The word agency, also used in
articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiff's
beds in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that
they are not incompatible with the contract of purchase and sale.
The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-president of the defendant
corporation and who established and managed the latter's business in Iloilo. It appears that this
witness, prior to the time of his testimony, had serious trouble with the defendant, had maintained a
civil suit against it, and had even accused one of its partners, Guillermo Parsons, of falsification. He
testified that it was he who drafted the contract Exhibit A, and, when questioned as to what was his
purpose in contracting with the plaintiff, replied that it was to be an agent for his beds and to collect a
commission on sales. However, according to the defendant's evidence, it was Mariano Lopez
Santos, a director of the corporation, who prepared Exhibit A. But, even supposing that Ernesto Vidal
has stated the truth, his statement as to what was his idea in contracting with the plaintiff is of no
importance, inasmuch as the agreements contained in Exhibit A which he claims to have drafted,
constitute, as we have said, a contract of purchase and sale, and not one of commercial agency.
This only means that Ernesto Vidal was mistaken in his classification of the contract. But it must be

understood that a contract is what the law defines it to be, and not what it is called by the contracting
parties.
The plaintiff also endeavored to prove that the defendant had returned beds that it could not sell;
that, without previous notice, it forwarded to the defendant the beds that it wanted; and that the
defendant received its commission for the beds sold by the plaintiff directly to persons in Iloilo. But
all this, at the most only shows that, on the part of both of them, there was mutual tolerance in the
performance of the contract in disregard of its terms; and it gives no right to have the contract
considered, not as the parties stipulated it, but as they performed it. Only the acts of the contracting
parties, subsequent to, and in connection with, the execution of the contract, must be considered for
the purpose of interpreting the contract, when such interpretation is necessary, but not when, as in
the instant case, its essential agreements are clearly set forth and plainly show that the contract
belongs to a certain kind and not to another. Furthermore, the return made was of certain brass
beds, and was not effected in exchange for the price paid for them, but was for other beds of another
kind; and for the letter Exhibit L-1, requested the plaintiff's prior consent with respect to said beds,
which shows that it was not considered that the defendant had a right, by virtue of the contract, to
make this return. As regards the shipment of beds without previous notice, it is insinuated in the
record that these brass beds were precisely the ones so shipped, and that, for this very reason, the
plaintiff agreed to their return. And with respect to the so-called commissions, we have said that they
merely constituted a discount on the invoice price, and the reason for applying this benefit to the
beds sold directly by the plaintiff to persons in Iloilo was because, as the defendant obligated itself in
the contract to incur the expenses of advertisement of the plaintiff's beds, such sales were to be
considered as a result of that advertisement.
In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his
right and cannot complain for having acted thus at his own free will.
For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a
cause of action are not imposed upon the defendant, either by agreement or by law.
The judgment appealed from is affirmed, with costs against the appellant. So ordered.
Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ., concur.
G.R. No. 6906

September 27, 1911

FLORENTINO RALLOS, ET AL., plaintiff-appellee,


vs.
TEODORO R. YANGCO, defendant-appellant.
Mariano Escueta, for appellant.
Martin M. Levering, for appellees.

MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of the Province of Cebu, the Hon.
Adolph Wislizenus presiding, in favor of the plaintiffs, in the sum of P1,537.08, with interest at 6 per
cent per annum from the month of July, 1909, with costs.
The defendant in this case on the 27th day of November, 1907, sent to the plaintiff Florentino Rallos,
among others, the following letter:
CIRCULAR NO. 1.
MANILA, November 27, 1907
MR. FLORENTINO RALLOS, Cebu.
DEAR SIR: I have the honor to inform you that I have on this date opened in my steamship
office at No. 163 Muelle de la Reina, Binondo, Manila, P. I., a shipping and commission
department for buying and selling leaf tobacco and other native products, under the following
conditions:
1. When the consignment has been received, the consignor thereof will be credited with a
sum not to exceed two-thirds of the value of the goods shipped, which may be made
available by acceptance of a draft or written order of the consignor on five to ten day's sight,
or by his ordering at his option a bill of goods. In the latter case he must pay a commission of
2 per cent.
2. No draft or written order will be accepted without previous notice forwarding the
consignment of goods to guarantee the same.
3. Expenses of freight, hauling and everything necessary for duly executing the commission
will be charged in the commission.
4. All advances made under sections (1) and (3) shall bear interest at 10 per cent a year,
counting by the sale of the goods shipped or remittance of the amount thereof.
5. A commission of 2 per cent will be collected on the amount realized from the sale of the
goods shipped.
6. A Payment will be made immediately after collection of the price of the goods shipped.
7. Orders will be taken for the purchase of general merchandise, ship-stores, cloths, etc.,
upon remittance of the amount with the commission of 2 per cent on the total value of the
goods bought. Expenses of freight, hauling, and everything necessary for properly executing
the commission will be charged to the consignor.

8. The consignor of the good may not fix upon the consignee a longer period than four
months, counting from the date of receipt, for selling the same; with the understanding that
after such period the consignee is authorized to make the sale, so as to prevent the advance
and cost of storage from amounting to more than the actual value of said goods, as has
often happened.
9. The shipment to the consignors of the goods ordered on account of the amount realized
from the sale of the goods consigned and of the goods bought on remittance of the value
thereof, under sections (1) and (3), will not be insured against risk by sea and land except on
written order of the interested parties.
10. On all consignments of goods not insured according to the next preceding section, the
consignors will bear the risk.
11. All the foregoing conditions will take effect only after this office has acknowledged the
consignor's previous notice.
12. All other conditions and details will be furnished at the office of the undersigned.
If you care to favor me with your patronage, my office is at No. 163 Muelle de la Reinna,
Binondo, Manila, P. I., under the name of "Teodoro R. Yangco." In this connection it gives me
great pleasure to introduce to you Mr. Florentino Collantes, upon whom I have conferred
public power of attorney before the notary, Mr. Perfecto Salas Rodriguez, dated November
16, 1907, to perform in my name and on my behalf all acts necessary for carrying out my
plans, in the belief that through his knowledge and long experience in the business, along
with my commercial connections with the merchants of this city and of the provinces, I may
hope to secure the most advantageous prices for my patrons. Mr. Collantes will sign by
power of attorney, so I beg that you make due note of his signature hereto affixed.
Very respectfully,
(Sgd.) T. R. YANGCO.
(Sgd.) F. COLLANTES.
Accepting this invitation, the plaintiffs proceeded to do a considerable business with the defendant
through the said Collantes, as his factor, sending to him as agent for the defendant a good deal of
produce to be sold on commission. Later, and in the month of February, 1909, the plaintiffs sent to
the said Collantes, as agent for the defendant, 218 bundles of tobacco in the leaf to be sold on
commission, as had been other produce previously. The said Collantes received said tobacco and
sold it for the sum of P1,744. The charges for such sale were P206.96. leaving in the hands of said
Collantes the sum of P1,537.08 belonging to the plaintiffs. This sum was, apparently, converted to
his own use by said agent.
It appears, however, that prior to the sending of said tobacco the defendant had severed his
relations with Collantes and that the latter was no longer acting as his factor. This fact was not

known to the plaintiffs; and it is conceded in the case that no notice of any kind was given by the
defendant to the plaintiffs of the termination of the relations between the defendant and his agent.
The defendant refused to pay the said sum upon demand of the plaintiffs, placing such refusal upon
the ground that at the time the said tobacco was received and sold by Collantes he was acting
personally and not as agent of the defendant. This action was brought to recover said sum.
As is seen, the only question for our decision is whether or not the plaintiffs, acting in good faith and
without knowledge, having sent produce to sell on commission to the former agent of the defendant,
can recover of the defendant under the circumstances above set forth. We are of the opinion that the
defendant is liable. Having advertised the fact that Collantes was his agent and having given them a
special invitation to deal with such agent, it was the duty of the defendant on the termination of the
relationship of principal and agent to give due and timely notice thereof to the plaintiffs. Failing to do
so, he is responsible to them for whatever goods may have been in good faith and without
negligence sent to the agent without knowledge, actual or constructive, of the termination of such
relationship.
For these reasons the judgment appealed from is confirmed, without special finding as to costs.
Torres, Mapa, Johnson and Carson, JJ., concur.
G.R. No. L-18058

January 16, 1923

FABIOLA SEVERINO, plaintiff-appellee,


vs.
GUILLERMO SEVERINO, defendant-appellant.
FELICITAS VILLANUEVA, intervenor-appellee.
Serafin P. Hilado and A. P. Seva for appellant.
Jose Ma. Arroyo, Jose Lopez Vito, and Fisher and DeWitt for appellees.
OSTRAND, J.:
This is an action brought by the plaintiff as the alleged natural daughter and sole heir of one Melecio
Severino, deceased, to compel the defendant Guillermo Severino to convey to her four parcels of
land described in the complaint, or in default thereof to pay her the sum of P800,000 in damages for
wrongfully causing said land to be registered in his own name. Felicitas Villanueva, in her capacity
as administratrix of the estate of Melecio Severino, has filed a complaint in intervention claiming in
the same relief as the original plaintiff, except in so far as she prays that the conveyance be made,
or damages paid, to the estate instead of to the plaintiff Fabiola Severino. The defendant answered
both complaints with a general denial.
The lower court rendered a judgment recognizing the plaintiff Fabiola Severino as the acknowledged
natural child of the said Melecio Severino and ordering the defendant to convey 428 hectares of the
land in question to the intervenor as administratrix of the estate of the said Melecio Severino, to
deliver to her the proceeds in his possession of a certain mortgage placed thereon by him and to pay
the costs. From this judgment only the defendant appeals.

The land described in the complaint forms one continuous tract and consists of lots Nos. 827, 828,
834, and 874 of the cadaster of Silay, Province of Occidental Negros, which measure, respectively,
61 hectares, 74 ares, and 79 centiares; 76 hectares, 34 ares, and 79 centiares; 52 hectares, 86
ares, and 60 centiares and 608 hectares, 77 ares and 28 centiares, or a total of 799 hectares, 75
ares, and 46 centiares.
The evidence shows that Melecio Severino died on the 25th day of May, 1915; that some 428
hectares of the land were recorded in the Mortgage Law Register in his name in the year 1901 by
virtue of possessory information proceedings instituted on the 9th day of May of that year by his
brother Agapito Severino in his behalf; that during the lifetime of Melecio Severino the land was
worked by the defendant, Guillermo Severino, his brother, as administrator for and on behalf of the
said Melecio Severino; that after Melecio's death, the defendant Guillermo Severino continued to
occupy the land; that in 1916 a parcel survey was made of the lands in the municipality of Silay,
including the land here in question, and cadastral proceedings were instituted for the registration of
the lands titles within the surveyed area; that in the cadastral proceedings the land here in question
was described as four separate lots numbered as above stated; that Roque Hofilea, as lawyer for
Guillermo Severino, filed answers in behalf of the latter in said proceedings claiming the lots
mentioned as the property of his client; that no opposition was presented in the proceedings to the
claims of Guillermo Severino and the court therefore decreed the title in his favor, in pursuance of
which decree certificates of title were issued to him in the month of March, 1917.
It may be further observed that at the time of the cadastral proceedings the plaintiff Fabiola Severino
was a minor; that Guillermo Severino did not appear personally in the proceedings and did not there
testify; that the only testimony in support of his claims was that of his attorney Hofilea, who swore
that he knew the land and that he also knew that Guillermo Severino inherited the land from his
father and that he, by himself, and through his predecessors in interest, had possessed the land for
thirty years.
The appellant presents the following nine assignments of error:
1. The trial court erred in admitting the evidence that was offered by plaintiff in order to
establish the fact that said plaintiff was the legally acknowledged natural child of the
deceased Melecio Severino.
2. The trial court erred in finding that, under the evidence presented, plaintiff was the legally
acknowledged natural child of Melecio Severino.
3. The trial court erred in rejecting the evidence offered by defendant to establish the
absence of fraud on his part in securing title to the lands in Nacayao.
4. The trial court erred in concluding that the evidence adduced by plaintiff and intervenor
established that defendant was guilty of fraud in procuring title to the lands in question in his
name.
5. The trial court erred in declaring that the land that was formerly placed in the name of
Melecio Severino had an extent of either 434 or 428 hectares at the time of his death.

6. The trial court erred in declaring that the value of the land in litigation is P500 per hectare.
7. The trial court erred in granting the petition of the plaintiff for an attachment without first
giving the defendant an opportunity to be heard.
8. The trial court erred in ordering the conveyance of 428 hectares of land by defendant to
the administratrix.
9. The trial court erred in failing or refusing to make any finding as to the defendant's
contention that the petition for attachment was utterly devoid of any reasonable ground.
In regard to the first two assignments of error, we agree with the appellant that the trial court erred in
making a declaration in the present case as to the recognition of Fabiola Severino as the natural
child of Melecio Severino. We have held in the case of Briz vs. Briz and Remigio (43 Phil., 763), that
"The legitimate heirs or kin of a deceased person who would be prejudiced by a declaration that
another person is entitled to recognition as the natural child of such decedent, are necessary and
indispensable parties to any action in which a judgment declaring the right to recognition is sought."
In the present action only the widow, the alleged natural child, and one of the brothers of the
deceased are parties; the other potential heirs have not been included. But, inasmuch as the
judgment appealed from is in favor of the intervenor and not of the plaintiff, except to the extent of
holding that the latter is a recognized natural child of the deceased, this question is, from the view
we take of the case, of no importance in its final disposition. We may say, however, in this
connection, that the point urged in appellant's brief that it does not appear affirmatively from the
evidence that, at the time of the conception of Fabiola, her mother was a single woman, may be
sufficiently disposed of by a reference to article 130 of the Civil Code and subsection 1 of section
334 of the Code of Civil Procedure which create the presumption that a child born out of wedlock is
natural rather than illegitimate. The question of the status of the plaintiff Fabiola Severino and her
right to share in the inheritance may, upon notice to all the interested parties, be determined in the
probate proceedings for the settlement of the estate of the deceased.
The fifth assignment of error relates to the finding of the trial court that the land belonging to Melecio
Severino had an area of 428 hectares. The appellant contends that the court should have found that
there were only 324 hectares inasmuch as one hundred hectares of the original area were given to
Melecio's brother Donato during the lifetime of the father Ramon Severino. As it appears that Ramon
Severino died in 1896 and that the possessory information proceedings, upon which the finding of
the trial court as to the area of the land is principally based, were not instituted until the year 1901,
we are not disposed to disturb the conclusions of the trial court on this point. Moreover, in the year
1913, the defendant Guillermo Severino testified under oath, in the case of Montelibano vs.
Severino, that the area of the land owned by Melecio Severino and of which he (Guillermo) was the
administrator, embraced an area of 424 hectares. The fact that Melecio Severino, in declaring the
land for taxation in 1906, stated that the area was only 324 hectares and 60 ares while entitled to
some weight is not conclusive and is not sufficient to overcome the positive statement of the
defendant and the recitals in the record of the possessory information proceedings.
The sixth assignment of error is also of minor importance in view of the fact that in the dispositive
part of the decision of the trial court, the only relief given is an order requiring the appellant to convey

to the administratrix the land in question, together with such parts of the proceeds of the mortgage
thereon as remain in his hands. We may say further that the court's estimate of the value of the land
does not appear unreasonable and that, upon the evidence before us, it will not be disturbed.
The seventh and within assignments of error relate to the ex parte granting by the trial court of a
preliminary attachment in the case and the refusal of the court to dissolve the same. We find no
merit whatever in these assignments and a detailed discussion of them is unnecessary.
The third, fourth, and eight assignments of error involve the vital points in the case, are inter-related
and may be conveniently considered together.
The defendant argues that the gist of the instant action is the alleged fraud on his part in causing the
land in question to be registered in his name; that the trial court therefore erred in rejecting his offer
of evidence to the effect that the land was owned in common by all the heirs of Ramon Severino and
did not belong to Melecio Severino exclusively; that such evidence, if admitted, would have shown
that he did not act with fraudulent intent in taking title to the land; that the trial court erred in holding
him estopped from denying Melecio's title; that more than a year having elapsed since the entry of
the final decree adjudicating the land to the defendant, said decree cannot now be reopened; that
the ordering of the defendant to convey the decreed land to the administratrix is, for all practical
purposes, equivalent to the reopening of the decree of registration; that under section 38 of the Land
Registration Act the defendant has an indefeasible title to the land; and that the question of
ownership of the land being thus judicially settled, the question as to the previous relations between
the parties cannot now be inquired into.
Upon no point can the defendant's contentions be sustained. It may first be observed that this is not
an action under section 38 of the Land Registration Act to reopen or set aside a decree; it is an
action in personam against an agent to compel him to return, or retransfer, to the heirs or the estate
of its principal, the property committed to his custody as such agent, to execute the necessary
documents of conveyance to effect such retransfer or, in default thereof, to pay damages.
That the defendant came into the possession of the property here in question as the agent of the
deceased Melecio Severino in the administration of the property, cannot be successfully disputed.
His testimony in the case of Montelibano vs. Severino (civil case No. 902 of the Court of First
Instance of Occidental Negros and which forms a part of the evidence in the present case) is, in fact,
conclusive in this respect. He there stated under oath that from the year 1902 up to the time the
testimony was given, in the year 1913, he had been continuously in charge and occupation of the
land as the encargado or administrator of Melecio Severino; that he had always known the land as
the property of Melecio Severino; and that the possession of the latter had been peaceful,
continuous, and exclusive. In his answer filed in the same case, the same defendant, through his
attorney, disclaimed all personal interest in the land and averred that it was wholly the property of his
brother Melecio.
Neither is it disputed that the possession enjoyed by the defendant at the time of obtaining his
decree was of the same character as that held during the lifetime of his brother, except in so far as
shortly before the trial of the cadastral case the defendant had secured from his brothers and sisters
a relinguishment in his favor of such rights as they might have in the land.

The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in
regard to property forming the subject-matter of the agency, he is estopped from acquiring or
asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he
cannot consistently, with the principles of good faith, be allowed to create in himself an interest in
opposition to that of his principal or cestui que trust. Upon this ground, and substantially in harmony
with the principles of the Civil Law (see sentence of the supreme court of Spain of May 1, 1900), the
English Chancellors held that in general whatever a trustee does for the advantage of the trust
estate inures to the benefit of the cestui que trust. (Greenlaw vs. King, 5 Jur., 18; Ex parte Burnell, 7
Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex parte James, 8 Ves., 337; Oliver vs. Court, 8 Price, 127.)
The same principle has been consistently adhered to in so many American cases and is so well
established that exhaustive citations of authorities are superfluous and we shall therefore limit
ourselves to quoting a few of the numerous judicial expressions upon the subject. The principle is
well stated in the case of Gilbert vs. Hewetson (79 Minn., 326):
A receiver, trustee, attorney, agent, or any other person occupying fiduciary relations
respecting property or persons, is utterly disabled from acquiring for his own benefit the
property committed to his custody for management. This rule is entirely independent of the
fact whether any fraud has intervened. No fraud in fact need be shown, and no excuse will
be heard from the trustee. It is to avoid the necessity of any such inquiry that the rule takes
so general a form. The rule stands on the moral obligation to refrain from placing one's self in
positions which ordinarily excite conflicts between self-interest and integrity. It seeks to
remove the temptation that might arise out of such a relation to serve one's self-interest at
the expense of one's integrity and duty to another, by making it impossible to profit by
yielding to temptation. It applies universally to all who come within its principle.
In the case of Massie vs. Watts (6 Cranch, 148), the United States Supreme Court, speaking through
Chief Justice Marshall, said:
But Massie, the agent of Oneale, has entered and surveyed a portion of that land for himself
and obtained a patent for it in his own name. According to the clearest and best established
principles of equity, the agent who so acts becomes a trustee for his principal. He cannot
hold the land under an entry for himself otherwise than as trustee for his principal.
In the case of Felix vs. Patrick (145 U. S., 317), the United States Supreme Court, after examining
the authorities, said:
The substance of these authorities is that, wherever a person obtains the legal title to land by
any artifice or concealment, or by making use of facilities intended for the benefit of another,
a court of equity will impress upon the land so held by him a trust in favor of the party who is
justly entitled to them, and will order the trust executed by decreeing their conveyance to the
party in whose favor the trust was created. (Citing Bank of Metropolis vs. Guttschlick, 14
Pet., 19, 31; Moses vs. Murgatroyd, 1 Johns. Ch., 119; Cumberland vs.Codrington, 3 Johns.
Ch., 229, 261; Neilson vs. Blight, 1 Johns. Cas., 205; Weston vs. Barker, 12 Johns., 276.)
The same doctrine has also been adopted in the Philippines. In the case of Uy Aloc vs. Cho Jan
Ling (19 Phil., 202), the facts are stated by the court as follows:

From the facts proven at the trial it appears that a number of Chinese merchants raised a
fund by voluntary subscription with which they purchased a valuable tract of land and
erected a large building to be used as a sort of club house for the mutual benefit of the
subscribers to the fund. The subscribers organized themselves into an irregular association,
which had no regular articles of association, and was not incorporated or registered in the
commercial registry or elsewhere. The association not having any existence as a legal entity,
it was agreed to have the title to the property placed in the name of one of the members, the
defendant, Cho Jan Ling, who on his part accepted the trust, and agreed to hold the property
as the agent of the members of the association. After the club building was completed with
the funds of the members of the association, Cho Jan Ling collected some P25,000 in rents
for which he failed and refused to account, and upon proceedings being instituted to compel
him to do so, he set up title in himself to the club property as well as to the rents accruing
therefrom, falsely alleging that he had bought the real estate and constructed the building
with his own funds, and denying the claims of the members of the association that it was
their funds which had been used for that purpose.
The decree of the court provided, among other things, for the conveyance of the club house and the
land on which it stood from the defendant, Cho Jan Ling, in whose name it was registered, to the
members of the association. In affirming the decree, this court said:
In the case at bar the legal title of the holder of the registered title is not questioned; it is
admitted that the members of the association voluntarily obtained the inscription in the name
of Cho Jan Ling, and that they had no right to have that inscription cancelled; they do not
seek such cancellation, and on the contrary they allege and prove that the duly registered
legal title to the property is in Cho Jan Ling, but they maintain, and we think that they rightly
maintain, that he holds it under an obligation, both express and implied, to deal with it
exclusively for the benefit of the members of the association, and subject to their will.
In the case of Camacho vs. Municipality of Baliuag (28 Phil., 466), the plaintiff, Camacho, took title to
the land in his own name, while acting as agent for the municipality. The court said:
There have been a number of cases before this court in which a title to real property was
acquired by a person in his own name, while acting under a fiduciary capacity, and who
afterwards sought to take advantage of the confidence reposed in him by claiming the
ownership of the property for himself. This court has invariably held such evidence
competent as between the fiduciary and the cestui que trust.
xxx

xxx

xxx

What judgment ought to be entered in this case? The court below simply absolved the
defendant from the complaint. The defendant municipality does not ask for a cancellation of
the deed. On the contrary, the deed is relied upon the supplement the oral evidence showing
that the title to the land is in the defendant. As we have indicated in Consunji vs. Tison, 15
Phil., 81, and Uy Aloc vs. Cho Jan Ling, 19 Phil., 202, the proper procedure in such a case,
so long as the rights of innocent third persons have not intervened, is to compel a

conveyance to the rightful owner. This ought and can be done under the issues raised and
the proof presented in the case at bar.
The case of Sy-Juco and Viardo vs. Sy-Juco (40 Phil., 634) is also in point.
As will be seen from the authorities quoted, and agent is not only estopped from denying his
principal's title to the property, but he is also disable from acquiring interests therein adverse to those
of his principal during the term of the agency. But the defendant argues that his title has become res
adjudicata through the decree of registration and cannot now be disturbed.
This contention may, at first sight, appear to possess some force, but on closer examination it proves
untenable. The decree of registration determined the legal title to the land as the date of the decree;
as to that there is no question. That, under section 38 of the Land Registration Act, this decree
became conclusive after one year from the date of the entry is not disputed and no one attempts to
disturb the decree or the proceedings upon which it is based; the plaintiff in intervention merely
contends that in equity the legal title so acquired inured to the benefit of the estate of Melecio
Severino, the defendant's principal and cestui que trust and asks that this superior equitable right be
made effective by compelling the defendant, as the holder of the legal title, to transfer it to the estate.
We have already shown that before the issuance of the decree of registration it was the undoubted
duty of the defendant to restore the property committed to his custody to his principal, or to the
latter's estate, and that the principal had a right of action in personam to enforce the performance of
this duty and to compel the defendant to execute the necessary conveyance to that effect. The only
question remaining for consideration is, therefore, whether the decree of registration extinguishing
this personal right of action.
In Australia and New Zealand, under statutes in this respect similar to ours, courts of equity exercise
general jurisdiction in matters of fraud and error with reference to Torrens registered lands, and
giving attention to the special provisions of the Torrens acts, will issue such orders and direction to
all the parties to the proceedings as may seem just and proper under the circumstances. They may
order parties to make deeds of conveyance and if the order is disobeyed, they may cause proper
conveyances to be made by a Master in Chancery or Commissioner in accordance with the practice
in equity (Hogg, Australian Torrens System, p. 847).
In the Untied States courts have even gone so far in the exercise of their equity jurisdiction as to set
aside final decrees after the expiration of the statutory period of limitation for the reopening of such
decrees (Baart vs. Martin, 99 Minn., 197). But, considering that equity follows the law and that our
statutes expressly prohibit the reopening of a decree after one year from the date of its entry, this
practice would probably be out of question here, especially so as the ends of justice may be attained
by other equally effective, and less objectionable means.
Turning to our own Land Registration Act, we find no indication there of an intention to cut off,
through the issuance of a decree of registration, equitable rights or remedies such as those here in
question. On the contrary, section 70 of the Act provides:

Registered lands and ownership therein, shall in all respects be subject to the same burdens
and incidents attached by law to unregistered land. Nothing contained in this Act shall in any
way be construed to relieve registered land or the owners thereof from any rights incident to
the relation of husband and wife, or from liability to attachment on mesne process or levy on
execution, or from liability to any lien of any description established by law on land and the
buildings thereon, or the interest of the owner in such land or buildings, or to change the
laws of descent, or the rights of partition between coparceners, joint tenants and other
cotenants, or the right to take the same by eminent domain, or to relieve such land from
liability to be appropriated in any lawful manner for the payment of debts, or to change or
affect in any other way any other rights or liabilities created by law and applicable to
unregistered land, except as otherwise expressly provided in this Act or in the amendments
hereof.
Section 102 of the Act, after providing for actions for damages in which the Insular Treasurer, as the
Custodian of the Assurance Fund is a party, contains the following proviso:
Provided, however, That nothing in this Act shall be construed to deprive the plaintiff
of any action which he may have against any person for such loss or damage or deprivation
of land or of any estate or interest therein without joining the Treasurer of the Philippine
Archipelago as a defendant therein.
That an action such as the present one is covered by this proviso can hardly admit of doubt. Such
was also the view taken by this court in the case of Medina Ong-Quingco vs. Imaz and Warner,
Barnes & Co. (27 Phil., 314), in which the plaintiff was seeking to take advantage of his possession
of a certificate of title to deprive the defendant of land included in that certificate and sold to him by
the former owner before the land was registered. The court decided adversely to plaintiff and in so
doing said:
As between them no question as to the indefeasibility of a Torrens title could arise. Such an
action could have been maintained at any time while the property remained in the hands of
the purchaser. The peculiar force of a Torrens title would have been brought into play only
when the purchaser had sold to an innocent third person for value the lands described in his
conveyance. . . . Generally speaking, as between the vendor and the purchaser the same
rights and remedies exist with reference to land registered under Act No. 496, as exist in
relation to land not so registered.
In Cabanos vs. Register of Deeds of Laguna and Obiana (40 Phil., 620), it was held that, while a
purchaser of land under a pacto de retro cannot institute a real action for the recovery thereof where
the vendor under said sale has caused such lands to be registered in his name without said
vendee's consent, yet he may have his personal action based on the contract of sale to compel the
execution of an unconditional deed for the said lands when the period for repurchase has passed.
Torrens titles being on judicial decrees there is, of course, a strong presumption in favor of their
regularity or validity, and in order to maintain an action such as the present the proof as to the
fiduciary relation of the parties and of the breach of trust must be clear and convincing. Such proof
is, as we have seen, not lacking in this case.

But once the relation and the breach of trust on the part of the fiduciary in thus established, there is
no reason, neither practical nor legal, why he should not be compelled to make such reparation as
may lie within his power for the injury caused by his wrong, and as long as the land stands
registered in the name of the party who is guilty of the breach of trust and no rights of innocent third
parties are adversely affected, there can be no reason why such reparation should not, in the proper
case, take the form of a conveyance or transfer of the title to the cestui que trust. No reasons of
public policy demand that a person guilty of fraud or breach of trust be permitted to use his certificate
of title as a shield against the consequences of his own wrong.
The judgment of the trial court is in accordance with the facts and the law. In order to prevent
unnecessary delay and further litigation it may, however, be well to attach some additional directions
to its dipositive clauses. It will be observed that lots Nos. 827, 828, and 834 of a total area of
approximately 191 hectares, lie wholly within the area to be conveyed to the plaintiff in intervention
and these lots may, therefore, be so conveyed without subdivision. The remaining 237 hectares to
be conveyed lie within the western part of lot No. 874 and before a conveyance of this portion can be
effected a subdivision of that lot must be made and a technical description of the portion to be
conveyed, as well as of the remaining portion of the lot, must be prepared. The subdivision shall be
made by an authorized surveyor and in accordance with the provisions of Circular No. 31 of the
General Land Registration Office, and the subdivision and technical descriptions shall be submitted
to the Chief of that office for his approval. Within thirty days after being notified of the approval of
said subdivision and technical descriptions, the defendant Guillermo Severino shall execute good
and sufficient deed or deeds of conveyance in favor of the administratrix of the estate of the
deceased Melecio Severino for said lots Nos. 827, 828, 834, and the 237 hectares segregated from
the western part of lot No. 874 and shall deliver to the register of deeds his duplicate certificates of
title for all of the four lots in order that said certificates may be cancelled and new certificates issued.
The cost of the subdivision and the fees of the register of deeds will be paid by the plaintiff in
intervention. It is so ordered
With these additional directions the judgment appealed from is affirmed, with the costs against the
appellant. The right of the plaintiff Fabiola Severino to establish in the probate proceedings of the
estate of Melecio Severino her status as his recognized natural child is reserved.
Araullo, C. J., Johnson, Street, Malcolm, Avancea, Villamor, Johns, and Romualdez, JJ., concur.

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