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A&P Compiled Digests No. 3


AUSTRIA v. CA 39 SCRA 527 FACTS: Maria G. Abad received from Guillermo Austria a pendant with diamonds valued at P4,500.00 to be sold on a commission basis or to be returned on demand. While walking home to her residence in Mandaluyong, Rizal, the purse containing the jewelry and cash, was snatched by two men. Among the pieces of jewelry allegedly taken by the robbers was the consigned pendant. A complaint of the incident was filed in the Court of First Instance against certain persons. Abad failed to return the jewelry or pay for its value despite demands made by Austria. Austria brought an action against the Abad spouses for the recovery of the pendant or of its value and damages. Abad spouses set up the defense that the alleged robbery had extinguished their obligation The trial court rendered judgment for the plaintiff, and ordered defendants spouses, jointly and severally, to pay to the former the sum of P4,500.00, with legal interest thereon, plus the amount of P450.00 as reasonable attorney's fees, and the costs. It was held that defendants failed to prove the fact of robbery, or, if indeed it was committed, that defendant Maria Abad was guilty of negligence when she went home without any companion, although it was already getting dark and she was carrying a large amount of cash and valuables on the day in question,, and such negligence did not free her from liability for damages for the loss of the jewelry. The CA overruling the finding of the trial court on the lack of credibility of the two defense witnesses who testified on the occurrence of the robbery, and holding that the facts of robbery and defendant Maria Abad's possession of the pendant on that unfortunate day have been duly established, declared respondents not responsible for the loss of the jewelry on account of a fortuitous event, and relieved them from liability for damages to the owner. ISSUE: Should the Abad spouse be held liable for the loss of the pendant? RULING: No. The Court ruled that the exempting provision of Article 1174 of the Civil Code is applicable in the case. It is a recognized jurisdiction that to constitute a caso fortuito that would exempt a person from responsibility, it is necessary that the event must be independent of the human will or of the obligors will; the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and that the obligor must be free of participation in, or aggravation of, the injury to the creditor. To avail of the exemption granted, it is not necessary that the persons responsible for the event should be found or punished. It is sufficient that to unforeseeable event which is the robbery took place without concurrent fault or negligence on the part of the obligor which can be proven by preponderant evidence. It was held that the act of Maria Abad in walking home alone carrying the jewelry was not negligent for at that time (1961) the incidence of crimes was not high. had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of P311,230.41. Its demands on the principal debtor and the Surety having been refused, the Bank sued both in the Court of First Instance of Manila to recover the balance of P158,563.18 as of February 15, 1950, plus interests and costs. TC: Ordered defendants to pay PNB From said decision, only the defendant Surety Company has duly perfected its appeal. The Central Bank of the Philippines did not appeal, while defendant ATACO failed to perfect its appeal. CA: Modified the judgment of the court of origin as to the surety's liability. The Court of Appeals found the Bank to have been negligent in having stopped collecting from the Bureau of Public Works the moneys falling due in favor of the principal debtor, ATACO, from and after November 18, 1948, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety, and held that the Bank's negligence resulted in exoneration of respondent Manila Surety & Fidelity Company.

ISSUES: 1. WON the power of attorney PNB obtained from ATACO was merely in additional security in its favor- NO 2. WON it was the duty of the surety, and not that of the creditor owed to see to it that the obligor fulfills his obligation- NO 3. WON the creditor owed the surety no duty of active diligence to collect any, sum from the principal debtor- NO RATIO: The Court of Appeals did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). It must not be forgotten that the Bank's power to collect was expressly made irrevocable, so that the Bureau of Public Works could very well refuse to make payments to the principal debtor itself, and a fortiori reject any demands by the surety. Even if the assignment with power of attorney from the principal debtor were considered as mere additional security still, by allowing the assigned funds to be exhausted without notifying the surety, the Bank deprived the former of any possibility of recoursing against that security. The Bank thereby exonerated the surety, pursuant to Article 2080 of the Civil Code: o ART. 2080. The guarantors, even though they be solidary, are released from their obligation whenever by come act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. The fact remains that because of the Bank's inactivity the other creditors were enabled to collect P173,870.31, when the balance due to appellant Bank was only P158,563.18. Even if the Court of Appeals erred on the second reason it advanced in support of the decision now under appeal, because the rules on application of payments, giving preference to secured obligations are only operative in cases where there are several distinct debts, and not where there is only one that is partially secured, the error is of no importance, since the principal reason based on the Bank's negligence furnishes adequate support to the decision of the Court of Appeals that the surety was thereby released. DOMINGO v. DOMINGO 42 SCRA 131 FACTS: Vicente granted Gregorio exclusive agency to sell lot for P2 per square meter. 5% commission was to be granted to Gregorio is Vicente sells the property during the period of agency or if the property is sold by Vicente within three months from the termination of the agency to a purchaser to whom it was submitted by Gregorio during the continuance of the agency with notice ot Vicente. Gregorio authorized Purisima to look for a buyer with the agreement that Purisima will get half of the 5% commission. Purisima introduced Oscar de Leon to Gregorio as a prospective buyer.

PNB v. MANILA SURETY 14 SCRA 776 FACTS: The Philippine National Bank had opened a letter of credit and advanced thereon $120,000.00 to Edgington Oil Refinery for 8,000 tons of hot asphalt. Of this amount, 2,000 tons worth P279,000.00 were released and delivered to Adams & Taguba Corporation (known as ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. up to the amount of P75,000.00. To pay for the asphalt, ATACO constituted the Bank its assignee and attorney-in-fact to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor . ATACO delivered to the Bureau of Public Works, and the latter accepted, asphalt to the total value of P431,466.52. Of this amount the Bank regularly collected, from April 21, 1948 to November 18, 1948, P106,382.01. Thereafter, for unexplained reasons, the Bank ceased to collect, until in 1952 its investigators found that more moneys were payable to ATACO from the Public Works office, because the latter

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A&P Compiled Digests No. 3


Written offer of De Leon was really low but subsequent conferences between De Leon and Gregorio led to the 109K purchase price which Vicente agreed to. De Leon issued 1K as earnest money. Vicente advanced to Gregorio 300 as part of his commission. When De Leon confirmed his former offer to pay, Vicente asked for an additional 1000 which De Leon promised to give. It was agreed that de Leon will vacate his house in September as his house is part of the purchase price. It was later moved to December as de Leon's wife was pregnant. It was also agreed that Vicente could stay in the property until June 1956. Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina P1000 for succeeding in persuading Vicente to sell his lot at P1.20 per square meter or a total of 109K. This gift was not disclosed by Gregorio to Vicente. Neither did Oscar pay Vicente the additional 1000 by way of earnest money. When the Deed of Sale was not executed as stipulated in Oscar's offer to pay, Oscar told Gregorio that he was giving up negotiations. Vicente tore the Contract of Agency when Gregorio came to claim the 5% commission he was entitled to receive. Gregorio was not worried as he still had a duplicate copy. Gregorio later found out that Vicente proceeded with the sale, not with Oscar but his wife Amparo. Vicente apparently told Oscar to eliminate Gregorio in the transaction and the former would lower the price to 104K. Vicente claims that Gregorio is not entitled to the 5% commission because he sold the property not to Gregorio's buyer, Oscar but to another buyer, Amparo. TC and CA ordered Vicente to pay. CA found that there was a C of agency. J. Esguerra in his concurring opinion found that there was no fraud on the part of the broker as it was merely part of the whole process of bringing about the meeting of the minds of the seller and the buyer. J. Gatmaitan held the view that such an act on the part of Gregorio was fraudulent and constituted a breach of trust, which should deprive him of his right to the commission. contract was with Gregorio alone and not with Vicente who was not even aware of the sub-agency. SEVERINO v. SEVERINO 44 PHIL 343 CHARACTERS: Melecio Severino (deceased) principal - owner of the subject land Fabiola Severino plaintiff, alleged natural daughter and sole heir of Melecio Severino Guillermo Severino defendant, agent - worked as administrator of the land for and on behalf of his brother Melecio during the lifetime of Melecio Felicitas Villanueva intervenor, administratrix of the estate of Melecio Roque Hofilena Guillermos lawyer during the cadastral proceedings THE CASE: Fabiola brought an action to compel Guillermo to conver to her four parcels of land owned by Melecio or, in default thereof, to pay her the sum of P800,000 in damages for wrongfully causing said land to be registered in his name. Complaint in intervention by Felicitas: same relief except that she prays that the lands be conveyed to the estate THE STORY: There was some 428 hectares of land recorded in the Mortgage Law register in the name of Melecio Severino by virtue of possessory information proceedings instituted by his brother Agapito in his behalf. When Melecio was still alive, the land was worked by his brother Guillermo as administrator on his behalf. After Melecios death, a parcel survey was made on the lands (including Melecios land which was described as four separate lots) in Silay, and cadastral proceedings were instituted for registration of the land titles within the surveyed area. In these proceedings, Roque Hofilena filed answers on behalf of Guillermo and claimed that the subject lots were the property of Guillermo. The title was decreed in Guillermos favor since no opposition was presented in the proceedings. At the time of the proceedings, Fabiola was a minor. Also, Guillermo never appeared in court. Neither did he testify. It was his lawyer Hofilena who testified in support of Guillermos claim and who swore that he knew the land and that he also knew that Guillermo who had been in possession of the land for thirty years inherited it from his father. ISSUES and HELD: 1. WON the action is with regard to the alleged fraud committed by Guillermo and the relations between the parties can no longer be inquired to because he has acquired indefeasible title to the land under Sec. 38 of the Land Registration Act. No. 2. WON Guillermos duty as an agent to restore the property committed to his custody to his principal or to the latters estate has been extinguished the issuance of the decree of registration in his name. No. (There were other issues in the case, but I did not include them anymore.) RATIO: 1. It is an action in personam against an agent to compel him to return the property committed to his custody and to execute the necessary documents of conveyance, or to pay damages in default thereof. Guillermo came into possession of the land as the agent of Melecio in the administration of the latters property. He stated under oath in another case that the land was Melecios and that he (Guillermo) was administering the property. He also disclaimed all personal interest in the land. His possession at the time he acquired the decree was of the same character as that he held when Melecio was still alive, except that he was able to secure from his siblings a relinquishment in his favor of any right they might have in the land. An agent is estopped from acquiring or asserting from acquiring or asserting a title adverse to the principals because of the fiduciary relations between the two of them. (A number of SC decisions were quoted in the case). 2. (copy-paste)

ISSUES: 1. WON the failure on the part of Gregorio to disclose to Vicente the payment to him by Oscar of the 1K as gift or propina constitutes fraud as to cause the forfeiture of his 5% commission on the sale price. YES 2. WON Gregorio or Vicente should be liable directly to the intervenor Purisima for the latter's share in the expected commission of Gregorio by reason of the sale. GREGORIO RATIO: 1. Articles 1891 and 1909 of the NCC demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency. The duty of the agent is likened to that of a trustee. An agent who takes a secret profit in the nature of a bonus, gratuity, or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results, or that the agency is a gratuitous one, or that usage of custom allows it. The rule is to prevent any possibility of a wrong. By taking such profit or bonus or gift or propina from the vendee, the agent thereby assumes a position wholly inconsistent with that of being an agent for his principal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed. Gregorio received the propina without the knowledge and consent of Vicente. His acceptance of the 1K corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal. Instead of exerting his best to get the most advantageous terms for Vicente, he succeeded in persuading his principal to accept terms that are more beneficial to the prospective buyer. Because of this, Gregorio must forfeit his right to the commission and must return the part of the commission he received from his principal. Purisima can only recover from Gregorio of whatever amount Gregorio received by virtue of the transaction as his sub-agency

2.

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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. 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. (Court cited a number of cases for this one also.) GREEN VALLEY POULTRY v. IAC 133 SCRA 697 FACTS: Squibb (respondent) and Green Valley (petitioner) entered into a contract where Green Valley was appointed as a non-exclusive distributor for Squibb Veterinary Products As a distributor, Green Valley is entitled to discounts on sales. It will distribute only for the Central Luzon and Northern Luzon including Cagayan Valley areas Squibb delivered the goods to Green Valley but they were unpaid, prompting Squibb file suit to collect The trial court gave judgment in favor of Squibb which was affirmed by the Court of Appeals (IAC) In both TC and IAC, Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never purchased goods from Squibb; that the goods received were on consignment only with the obligation to turn over the proceeds, less its commission, or to return the goods if not sold, and since it had sold the goods but had not been able to collect from the purchasers thereof, the action was premature Upon the other hand, Squibb claimed that the contract was one of (direct) sale so that Green Valley was obligated to pay for the goods received upon the expiration of the 60-day credit period As stated above, both courts upheld the claim of Squibb that the agreement between the parties was a sales contract hence, this appeal by Green Valley ISSUE: WON the contract was of mere agency to sell or a contract of sale HELD: It does not matter what the contract is because regardless of its character, Green Valley is still liable to pay Squibb. Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is indubitable. Petition is dismissed, IAC decision affirmed. RATIO: Adopting Green Valley's theory that the contract is of an agency to sell, it is liable because it sold on credit without authority from its principal. The Civil Code has a provision exactly in point. It reads: Art. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. [NOTE: this is the whole case, by the way. Shortest case ever!] MUNICIPAL COUNCIL OF ILOILO v. EVANGELISTA 55 PHIL 290 FACTS: Tan Ong Sze Vda. de Tan Toco filed a complaint with CFI Iloilo to recover from the Municipality of Iloilo the value of a strip of land taken by the Municipality to widen a public street. CFI rendered a judgment in favor of Vda. de Tan Toco entitled to recover P42,966.40(value of the land). SC affirmed the judgment After the case was remanded to the court of origin, and the judgment had become final and executory, Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of Jose Ma .Arroyo's intestate estate, filed a claim in the same case for professional services rendered by him, which the court, acting with the consent of Vda. de Tan Toco, fixed at 15% of the amount of the judgment. PNB appeared at the hearing of the claim and prayed that the amount of the judgment be turned over to it because the land taken over had been mortgaged to it. Antero Soriano also appeared claiming the amount of the judgment as it had been assigned to him, and by him, turn, assigned to Mauricio Cruz & Co., Inc. Lower court ordered that the attorney's lien in the amount of 15% of the judgment, be recorded in favor of Atty. Evangelista, in his own behalf and as counsel for the administratrix of the deceased Jose Ma .Arroyo, and directed the municipality of Iloilo to file an action of interpleading against the adverse claimants, the PNB, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo. Municipality of Iloilo filed an action of interpleading against the adverse claimants. CFI rendered a judgment declaring valid and binding the deed of assignment of the credit executed by Vda. de Tan Toco, through her attorney-in-fact Tan Buntiong, in favor of late Antero Soriano; likewise the assignment executed by the latter during his lifetime in favor of the Mauricio Cruz & Co., Inc., and Vda. de Tan Toco is ordered to pay the said Mauricio Cruz & Co., Inc., the balance of P30,966.40; Vda. de Tan Toco is also ordered to deposit said sum in a local bank within the period of 90 from the time this judgment shall become final, at the disposal of the Mauricio Cruz & Co. Inc. Vda. de Tan Toco appealed. The sole issue - claim of Mauricio Cruz & Co. as alleged assignee of the rights of the Soriano by virtue of the said judgment in payment of professional services rendered by him to the said widow and her coheirs1. ISSUE: WON the assignment made by Tan Boon Tiong, as attorney-in-fact of the Vda. de Tan Toco, to Soriano, of all the credits, rights and interests belonging to Vda de Tan Toco by virtue of the judgment rendered in a civil case is valid. YES RATIO: Receipts of payment made for professional services rendered, not by Antero Soriano personally, by the firm of Soriano & Arroyo. Vda. de Tan Toco - the assignments was not made in consideration of professional services by Atty. Soriano, for they had already been satisfied before the execution of said deed of assignment, but in order to facilitate the collection of the amount of said judgment in favor of the Vda. de Tan Toco, for the reason that, being Chinese, she had encountered many difficulties in trying to collect. A glance at the receipts shows that those amounts were received by Atty. Soriano for the firm of Soriano & Arroyo, which is borne out by the stamp on said receipts reading, "Befete Soriano & Arroyo," and the manner in which said attorney receipted for them, "Soriano & Arroyo, by A. Soriano." Besides, if at the time of the assignments to Soriano his professional services to the Vda. de Tan Toco had already been paid for, no reason can be given why it was necessary to write him money in payment of professional services after the deed of assignment had been executed.

1 Municipal treasurer of Iloilo paid the Soriano the amount of P6,000 in

part payment of the judgment, assigned to him by Tan Boon Tiong, acting as attorney-in-fact of the Vda. de Tan Toco. Municipal treasurer of Iloilo deposited with the clerk of the Court of First Instance of Iloilo the amount of P6,000 on account of the judgment. Clerk of court delivered to Atty. Evangelista the said amount of P6,000. The judgment for P42,966.44 against the municipality of Iloilo was reduced to P30,966.40, which was adjudicated by said court to Mauricio Cruz & Co.

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The assignment of the amount of a judgment made by a person to his attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment of professional services in other cases, does not contravene the prohibition of article 1459, case 5, of the Civil Code2. It does not appear that Atty. Soriano was counsel for Vda. de Tan Toco in the civil case she instituted against the municipality of Iloilo for the recovery of the value of a strip of land. The only lawyers who appear to have represented her in that case were Arroyo and Evangelista, who filed a claim for their professional fees .When Vda. de Tan Toco 's credit, right, and interests in that case were assigned by her attorney-in-fact Tan Boon Tiong, to Atty. Soriano in payment of professional services rendered by the latter to Vda. de Tan Toco and her coheirs in connection with other cases, that particular case had been decided, and the only thing left to do was to collect the judgment. There was no relation of attorney and client, then, between Soriano and Vda. de Tan Toco, in the case where that judgment was rendered; and therefore the assignment of her credit, right and interests to said lawyer did not violate the prohibition cited above. An agent of attorney-in -fact empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and may satisfy them by an assignment of a judgment rendered in favor of said principal In paragraph VI of the power of attorney, Tan Boon Tiong is authorized to employ and contract for the services of lawyers upon such conditions as he may deem convenient, to take charge of any actions necessary or expedient for the interests of his principal, and to defend suits brought against her. This power necessarily implies the authority to pay for the professional services thus engaged. The assignment made by Tan Boon Tiong, as Attorney-in-fact, in favor of Atty. Soriano for professional services rendered in other cases in the interests of Vda. de Tan Toco and her coheirs, was that credit which she had against the municipality of Iloilo, and such assignment was equivalent to the payment of the amount of said credit to Soriano for professional services. With regard to the failure of the other attorney-in-fact of Vda. de Tan Toco, Tan Montano to consent to the deed of assignment, the latter being also authorized to pay, in the name and behalf of the principal, all her debts and the liens and encumbrances her property, the very fact that different letters of attorney were given to each of these two representatives shows that it was not the principal's intention that they should act jointly in order to make their acts valid. Furthermore, Vda. de Tan Toco was aware of that assignment and she not only did not repudiate it, but she continued employing Atty. Soriano to represent her in court.

2 ART. 1459. The following persons cannot take by purchase, even at a

public or judicial auction, either in person or through the mediation of another: 5. Justices, judges, members of the department of public prosecution, clerks of superior and inferior courts, and other officers of such courts, the property and rights in litigation before the court within whose jurisdiction or territory they perform their respective duties .This prohibition shall include the acquisition of such property by assignment. Actions between co-heirs concerning the hereditary property, assignments in payment of debts, or to secure the property of such persons, shall be excluded from this rule. The prohibition contained in this paragraph shall include lawyers and solicitors with respect to any property or rights involved in any litigation in which they may take part by virtue of their profession and office.