Agency - F Busorg1

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Agency Part F: Limitations (Art. 1894 - 1898) 1

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FIRST DIVISION [G.R. No. 5236. January 10, 1910.]

PEDRO MARTINEZ, plaintiff-appellee, vs. ONG PONG CO and ONG LAY , defendants. ONG

PONG CO, appellant.

Fernando de la Cantera for appellant. O'Brien & De Wittfor appellee.

SYLLABUS

1. PARTNERSHIP; LIABILITY OF MANAGING PARTNERS .Where two persons receive from another a

sum of money for the establishment of a business, and agree to share with the latter the profits or

losses that may result therefrom, the said two persons, as the apparent administrators of the

partnership, acted as agents for the capitalist partner under the provisions of article 1695, rule 1, of

the Civil Code, and by virtue thereof are bound to fulfill the contract which implies the

management of the business.

2. ID.; ID.; CONTRACT OF "MANDATUM." A contract of mandatum requires that agents shall

account to the principal for all their transactions and pay him whatever sum they received by virtue

thereof. By not accounting for it, or otherwise justifying the investment of the money received and

administered, the parties who received it become debtors and are under obligation to make

restitution of the money to the person who entrusted it to them.

3.ID.; ID.; ID.; The above obligation is not in solidum, neither by reason of the general rules

governing the obligations of two or more persons, nor by the special rule governing contracts of

partnership or ofmandatum; it is simply a contract in severalty, each person being liable for one

half.D E C I S I O N

ARELLANO, C.J p:

On the 12 of December, 1900, the plaintiff herein delivered P1,500 to the defendants who, in

a private document, acknowledged that they had received the same with the agreement, as stated

by them, "that we are to invest the amount in a store, the profits or losses of which we are to

divide with the former, in equal shares."

The plaintiff filed a complaint on April 25, 1907, in order to compel the defendants to render

him an accounting of the partnership as agreed to, or else to refund him the P1,500 that he had

given them for the said purpose. Ong Pong Co alone appeared to answer the complaint; he

admitted the fact of the agreement and the delivery to him and to Ong Lay of the P1,500 for the

purpose aforesaid, but he alleged that Ong Lay, who was then deceased, was the one who had

managed the business, and that nothing had resulted therefrom save the loss of the capital of

P1,500, to which loss the plaintiff had agreed.

The judge of the Court of First Instance of the city of Manila who tried the case ordered Ong

Pong Co to return to the plaintiff one-half of the said capital of P1,500 which, together with Ong

Lay, he had received from the plaintiff, to wit, P750, plus P90 as one-half of the profits, calculated

at the rate of 12 per cent per annum for the six months that the store was supposed to have been

open, both sums in Philippine currency, making a total of P840, with legal interest thereon at the

rate of 6 per cent per annum, from the 12th of June, 1901, when the business terminated and on

which date he ought to have returned the said amount to the plaintiff, until the full payment

thereof with costs.

From this judgment Ong Pong Co appealed to this court, and assigned the following errors:

1.For not having taken into consideration the fact that the reason for the closing of the store was

the ejectment from the premises occupied by it.

2.For not having considered the fact that there were losses.

3.For holding that there should have been profits.

4.For having applied article 1138 of the Civil Code.

5 and 6.For holding that the capital ought to have yielded profits, and that the latter should be

calculated at 12 per cent per annum; and7.The findings of the judgment.

As to the first assignment of error, the fact that the store was closed by virtue of ejectment

proceedings is of no importance for the effects of the suit. The whole action is based upon the fact

that the defendants received certain capital from the plaintiff for the purpose of organizing a

company; they, according to the agreement, were to handle the said money and invest it in a store

which was the object of the association; they, in the absence of a special agreement vesting in one

sole person the management of the business, were the actual administrators thereof; as such

administrators they were the agents of the company and incurred the liabilities peculiar to every

agent, among which is that of rendering account to the principal of their transactions, and paying

him everything they may have received by virtue of the mandatum. (Arts. 1695 and 1720, Civil

Code.) Neither of them has rendered such account nor proven the losses referred to by Ong Pong

Co; they are therefore obliged to refund the money that they received for the purpose of

establishing the said store the object of the association. This was the principal pronouncement

of the judgment.

With regard to the second and third assignments of error, this court, like the court below,

finds no evidence that the entire capital or any part thereof was lost. It is no evidence of such loss

to aver, without proof, that the effects of the store were ejected. Even though this were proven, it

could not be inferred therefrom that the ejectment was due to the fact that no rents were paid,

and that the rent was not paid on account of the loss of the capital belonging to the enterprise.

With regard to the possible profits, the findings of the court below are based on the

statements of the defendant Ong Pong Co, to the effect that "there were some profits, but not

large ones." This court, however, does not find that the amount thereof has been proven, nor

deem it possible to estimate them to be a certain sum, and for a given period of time; hence, it can

not admit the estimate, made in the judgment, of 12 per cent per annum for the period of six

months.

Inasmuch as in this case nothing appears other than the failure to fulfill an obligation on the

part of a partner who acted as agent in receiving money for a given purpose, for which he has

rendered no accounting, such agent is responsible only for the losses which, by a violation of the

provisions of the law, he incurred. This being an obligation to pay in cash, there are no other losses

than the legal interest, which interest is not due except from the time of the judicial demand, or, in

the present case, from the filing of the complaint. (Arts. 1108 and 1100, Civil Code.) We do not

consider that article 1688 is applicable in this case, in so far as it provides "that the partnership is


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liable to every partner for the amounts he may have disbursed on account of the same and for the

proper interest," for the reason that no other money than that contributed as capital is involved.

As in the partnership there were two administrators or agents liable for the above-named

amount, article 1138 of the Civil Code has been properly applied, and article 1698 might also have

been invoked; this latter deals with debts of a partnership where the obligation is not a joint one,

as is likewise provided by article 1723 of said code with respect to the liability of two or more

agents with respect to the return of the money that they receive from their principal. Therefore,

the other errors assigned have not been committed.

In view of the foregoing, the judgment appealed from is hereby affirmed, provided, however,

that the defendant Ong Pong Co shall only pay the plaintiff the sum of P750 with the legal interest

thereon at the rate of 6 per cent per annum from the time of the filing of the complaint, and the

costs, without special ruling as to the costs of this instance. So ordered. Torres, Johnson, Carson

and Moreland, JJ., concur.

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FIRST DIVISION [G.R. No. 32977. November 17, 1930.]

THE MUNICIPAL COUNCIL OF ILOILO, plaintiff-appellee, vs. JOSE EVANGELISTA ET AL.,

defendants-appellees. TAN ONG SZE VDA. DE TAN TOCO, appellant.

Trenas & Laserna for defendant-appellant.

Provincial Fiscal Blanco of Iloilo for plaintiff-appellee.Felipe Ysmaelfor appellee Mauricio Cruz & Co.

No appearancefor other appellees.

SYLLABUS

1.PRINCIPAL AND AGENT; POWER OF AGENT; PAYMENTS OF ATTORNEYS' FEES. An agent or

attorney-in-fact empowered to pay the debts of the principal, and to employ attorneys to defend

the latter's interests, is impliedly empowered to pay the attorney'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.

2.ID.; APPOINTMENT OF TWO AGENTS. When a person appoints two agents independently, the

consent of one will not be required to validate the acts of the other, unless that appears positively

to have been the principal's attention.

3.JUDGMENT; ASSIGNMENT OF AMOUNT FOR PROFESSIONAL SERVICES. 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 Code.

D E C I S I O N

VILLA-REAL, J p:

This is an appeal taken by the defendant Tan Ong Sze Vda. de Tan Toco from the judgment of

the Court of First Instance of Iloilo, providing as follows:

"Wherefore, judgment is hereby rendered, declaring valid and b inding the

deed of assignment of the credit executed by Tan Toco's widow, through her

attorney-in-fact Tan Buntiong, in favor of the late Antero Soriano; likewise the

assignment executed by the latter during his lifetime in favor of the defendant

Mauricio Cruz & Co., Inc., and the plaintiff is hereby ordered to pay the said

Mauricio Cruz & Co., Inc., the balance of P30,966.40; the plaintiff is also ordered

to deposit said sum in a local bank within the period of ninety days from the

time this judgment shall become final, at the disposal of the aforesaid Mauricio

Cruz & Co., Inc., and in case that the plaintiff shall not make such deposit in the

manner indicated, said amount shall bear the legal interest of six per cent per

annum from the date when the plaintiff shall fail to make the deposit within the

period herein set forth, until fully paid.

"Without special pronouncement of costs."

In support of its appeal, the appellant assigns the following alleged errors as committed by the trial

court in its decision, to wit:

"1.The lower court erred in rejecting as evidence Exhibit 4-A, Tan

Toco, and Exhibit 4-B, Tan Toco.

"2.The lower court erred in sustaining the validity of the deed of

assignment of the credit, Exhibit 2-Cruz, instead of finding that said assignment

made by Tan Buntiong to Attorney Antero Soriano was null and void.

"3.The lower court erred in upholding the assignment of that creditby Antero Soriano to Mauricio Cruz & Co., Inc., instead of declaring it null and

void.

"4.The court below erred in holding that the balance of the credit

against the municipality of Iloilo should be adjudicated to the appellant herein,

Tan Toco's widow.

"5.The lower court erred in denying the motion for a new trial filed

by the defendant-appellant."

The facts of the case are as follows:

On March 20, 1924, the Court of First Instance of Iloilo rendered judgment in civil case No.

3514 thereof, wherein the appellant herein, Tan Ong Sze Vda. de Tan Toco was the plaintiff, and

the municipality of Iloilo the defendant, and the former sought to recover of the latter the value of

a strip of land belonging to said plaintiff taken by the defendant to widen a public street; the

judgment entitled the plaintiff to recover P42,966.40, representing the value of said strip of land,

from the defendant (Exhibit A). On appeal to this court (G. R. No. 22617) 1 the judgment was

affirmed on November 28, 1924 (Exhibit B).

After the case was remanded to the court of origin, and the judgment rendered therein 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 the appellant widow, fixed at

15 per cent of the amount of the judgment (Exhibit 22 Soriano).

At the hearing on said claim, the claimants appeared, as did also the Philippine National Bank,

which prayed that the amount of the judgment be turned over to it because the land taken over
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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, in turn, assigned to Mauricio Cruz & Co., Inc.

After hearing all the adverse claims on the amount of the judgment, the court ordered that

the attorney's lien in the amount of 15 per cent of the judgment, be recorded in favor of Attorney

Jose 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 Philippine National Bank, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista, and

Jose Arroyo, as was done, the case being filed in the Court of First Instance of Iloilo as civil case No.

7702.

After due hearing, the court rendered the decision quoted from at the beginning.

On March 29, 1928, the municipal treasurer of Iloilo, with the approval of the auditor, of the

provincial treasurer of Iloilo, and of the Executive Bureau, paid the late Antero Soriano the amount

of P6,000 in part payment of the judgment mentioned above, assigned to him by Tan Boon Tiong,

acting as attorney-in-fact of the appellant herein, Tan Ong Sze Vda. de Tan Toco.

On December 18, 1928, the 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 rendered in said civil

case No. 3514. In pursuance of the resolution of the court below ordering that the attorney's lien in

the amount of 15 per cent of the judgment be recorded in favor of Attorney Jose Evangelista, in his

own behalf and as counsel for the late Jose Ma. Arroyo, the said clerk of court delivered on thesame date to said Attorney Jose Evangelista the said amount of P6,000. At the hearing of the

instant case, the codefendants of Attorney Jose Evangelista agreed not to discuss the payment

made to the latter by the clerk of the Court of First Instance of Iloilo of the amount of P6,000

mentioned above in consideration of said lawyer's waiver of the remainder of the 15 per cent of

said judgment amounting to P444.69.

With these two payments of P6,000 each making a total of P12,000, 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.

This appeal, then, is confined to the claim of Mauricio Cruz & Co. as alleged assignee of the

rights of the late Attorney Antero Soriano by virtue of the said judgment in payment of professional

services rendered by him to the said widow and her coheirs.

The only question to be decided in this appeal is the legality of the assignment made by Tan

Boon Tiong, as attorney-in-fact of the appellant Tan Ong Sze Viuda de Tan Toco, to Attorney Antero

Soriano, of all the credits, rights and interests belonging to said appellant Tan Ong Sze Viuda de Tan

Toco by virtue of the judgment rendered in civil case No. 3514 of the Court of First Instance of

Iloilo, entitled Viuda de Tan Toco vs. The Municipal Council of Iloilo, adjudicating to said widow the

amount of P42,966.40, plus the costs of court, against said municipal council of Iloilo, in

consideration of professional services rendered by said attorney to said widow of Tan Toco and her

coheirs, by virtue of the deed Exhibit 2.

The appellant contends, in the first place, that said assignment was not made in consideration

of professional services by Attorney Antero 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 appellant, for the reason that, being Chinese, she had encountered many

difficulties in trying to collect.

In support of her contention on this point, the appellant alleges that the payments admitted

by the court in its judgment, as made by Tan Toco's widow to Attorney Antero Soriano for

professional services rendered to her and to her coheirs, amounting to P2,900, must be added to

the P700 evidenced by Exhibits 4-A, Tan Toco, and 4-B, Tan Toco, respectively, which exhibits the

court below rejected as evidence, on the ground that they were considered as payments made for

professional services rendered, not by Antero Soriano personally, but by the firm of Soriano &

Arroyo.

A glance at these receipts shows that those amounts were received by Attorney Antero

Soriano for the firm of Soriano & Arroyo, which is borne out be the stamp on said receipts reading,

"Bufete Soriano & Arroyo," and the manner in which said attorney receipted for them, "Soriano &

Arroyo, byA. Soriano."

Therefore, the appellant's contention that the amounts of P200 and P500 evidenced by said

receipts should be considered as payments made to Attorney Antero Soriano for professional

services rendered by him personally to the interests of the widow of Tan Toco, is untenable.

Besides, if at the time of the assignment to the late Antero Soriano, his professional services

to the appellant widow of Tan Toco had already been paid for, no reason can be given why it was

necessary to wire him money in payment of professional services on March 14, 1928 (Exhibit 5-GTan Toco) and December 15, of the same year (Exhibit 5-H Tan Toco) after the deed of assignment,

(Exhibit 2-Cruz) dated September 27, 1927, had been executed. In view of the fact that the

amounts involved in the cases prosecuted by Attorney Antero Soriano as counsel for Tan Toco's

widow, some of which cases have been appealed to this court, run into the hundreds of thousands

of pesos, and considering that said attorney had won several of those cases for his clients, the sum

of P10,000 to date paid to him for professional services is wholly inadequate, and shows, even if

indirectly, that the assignment of the appellant's rights and interests made to the late Antero

Soriano and determined in the judgment aforementioned, was made in consideration of the

professional services rendered by the latter to the aforesaid widow and her coheirs.

The defendant-appellant also contends that the deed of assignment Exhibit 2-Cruz was drawn up

in contravention of the prohibition contained in article 1459, case 5, of the Civil Code, which

reads as follows:

"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:

xxx xxx xxx

"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.


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"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."

It does not appear that Attorney Antero Soriano was counsel for the herein appellant in civil

case No. 3514 of the Court of First Instance of Iloilo, which she instituted against the municipality of

Iloilo, Iloilo, for the recovery of the value of a strip of land expropriated by said municipality for the

widening of a certain public street. 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 the

appellant's credit, right, and interests in that case were assigned by her attorney-in-fact Tan Boon

Tiong, to Attorney Antero Soriano in payment of professional services rendered by the latter to the

appellant 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 Antero Soriano and the appellant, 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.

As to whether Tan Boon Tiong, as attorney-in-fact of the appellant, was empowered by hisprincipal to make an assignment of credits, rights, and interests, in payment of debts for

professional services rendered by lawyers, in paragraph VI of the power of attorney, Exhibit 5-Cruz,

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. In the present case, the

assignment made by Tan Boon Tiong, as attorney-in-fact for the appellant, in favor of Attorney

Antero Soriano for professional services rendered in other cases in the interests of the appellant

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 Antero Soriano for

professional services.

With regard to the failure of the other attorney-in-fact of the appellant, Tan Montano,

authorized by Exhibit 1 Tan Toco, 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 of 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, the appellant was aware of that assignment

and she not only did not repudiate it, but she continued employing Attorney Antero Soriano to

represent her in court.

For the foregoing considerations, the court is of opinion and so holds: (1) That an agent or

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; (2) that when a person appoints two attorneys-in-fact independently, the consent

of the one will not be required to validate the acts of the other unless that appears positively to

have been the principal's intention; and (3) that 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 Code.

By virtue whereof, and finding no error in the judgment appealed from, the same is affirmed

in its entirety, with costs against the appellant. So ordered.

Avancea, C. J., Johnson, Street, Malcolm, Villamor, Ostrand, Johns and Romualdez, JJ.,

concur.

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EN BANC [G.R. No. 35469. March 17, 1932.]

E. S. LYONS, plaintiff-appellant, vs. C. W. ROSENSTOCK, Executor of the Estate of Henry W.

Elser, deceased, defendant-appellee.

Harvey & O'Brien, for appellant. DeWitt, Perkins & Brady, for appellee.

SYLLABUS

1.PRINCIPAL AND AGENT; RATIFICATION OF ACT OF AGENT; RIGHTS INCIDENT TO OWNERSHIP.

Where one of two individuals who had been associated in certain real estate deals, owing a sum ofmoney to his associate, invested it in the shares of a new company promoted by himself, and this

action was ratified by the associate, to whom the shares were accordingly issued, no legal or

equitable rights, other than those ordinarily incident to ownership, can be deduced from the

transaction in favor of the owner thus acquiring such shares.

2.ID.; AGENT'S LIABILITY FOR INTEREST ON MONEY OF HIS CONSTITUENT. Under article 1724 of

the Civil Code and article 264 of the Code of Commerce, an agent is liable for interest on funds

belonging to his principal (constituent) which have been applied by the agent to unauthorized uses.

3.EQUITY; TRUSTS; FOLLOWING TRUST FUNDS; WHEN CASE GOVERNED BY ORDINARY RULE OF

CIVIL LIABILITY. The doctrine developed in the courts of England and the United States relative

to the pursuing of trust funds is conversant with rights deducible from the application, by a person

in a trust relation with another, of specific property belonging to such other person to some

unauthorized purpose. The fact that one of two cowners subjects their joint property to a

contingent liability which results in no damage does not create a trust in favor of the other, and the

liability thereby incurred must be determined in conformity with the principles of the civil law

properly applicable to the case.

4.ID.; ID.; ID.; ID.; CASE AT BAR .Where two individuals had been jointly associated in various real

estate deals, one of them, while the other was away, bought a valuable piece of property with a

view to the promotion of a suburban development, and as he expected that his absent former

associate would come into this deal and contribute some capital to the purchase and development

of the property, he subjected a piece of mortgaged property owned by them jointly to a second

mortgage, to secure against loss a surety company which had been induced to sign a note with the

active promoter to secure a loan necessary to complete the first payment on the property


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purchased. After the second individual returned to Manila he consented for this s econd mortgage

(which had been executed under a sufficient power of attorney) to remain upon the property until

it was paid off, as was presently done. Held, that the use to which the joint property was thus

subjected did not create a trust in favor of the second individual, with the effect of making him a

co-partner in the ownership of the property purchased as aforesaid.

D E C I S I O N

STREET, J p:

This action was instituted in the Court of First Instance of the City of Manila, by E. S. Lyons

against C. W. Rosenstock, as executor of the estate of H. W. Elser, deceased, consequent upon the

taking of an appeal by the executor from the allowance of the claim sued upon by the committee

on claims in said estate. The purpose of the action is to recover four hundred forty-six and two

thirds shares of the stock of J. K. Pickering & Co., Ltd., together with the sum of about P125,000,

representing the dividends which accrued on said stock prior to October 21, 1926, with lawful

interest. Upon hearing the cause the trial court absolved the defendant executor from the

complaint, and the plaintiff appealed.

Prior to his death on June 18, 1923, Henry W. Elser had been a resident of the City of Manila

where he was engaged during the years with which we are here concerned in buying, selling, and

administering real estate. In several ventures which he had made in buying and selling property of

this kind the plaintiff, E. S. Lyons, had joined with him, the profits being shared by the two in equalparts. In April, 1919, Lyons, whose regular vocation was that of a missionary, or missionary agent,

of the Methodist Episcopal Church, went on leave to the United States and was gone for nearly a

year and a half, returning on September 21, 1920. On the eve of his departure Elser made a written

statement showing that Lyons was, at that time, half owner with Elser of three particular pieces of

real property. Concurrently with this act Lyons executed in favor of Elser a general power of

attorney empowering him to manage and dispose of said properties at will and to represent Lyons

fully and amply, to the mutual advantage of both. During the absence of Lyons two of the pieces of

property above referred to were sold by Elser, leaving in hands a single piece of property located at

616-618 Carriedo Street, in the City of Manila, containing about 282 square meters of land, with

the improvements thereon.

In the spring of 1920 the attention of Elser was drawn to a piece of land, containing about

1,500,000 square meters, near the City of Manila, and he discerned therein a fine opportunity for

the promotion and development of a suburban improvement. This property, which will be herein

referred to as the San Juan Estate, was offered by its owners for P570,000. To afford a little time for

maturing his plans, Elser purchased an option on this property for P5,000, and when this option

was about to expire without his having been able to raise the necessary funds, he paid P15,000

more for an extension of the option, with the understanding in both cases that, in case the option

should be exercised, the amounts thus paid should be credited as part of the first payment. The

amounts paid for this option and its extension were supplied by Elser entirely from his own funds.

In the end he was able from his own means, and with the assistance which he obtained from

others, to acquire said estate. The amount required for the first payment was P150,000, and as

Elser had available only about P120,000, including the P20,000 advanced upon the option, it was

necessary to raise the remainder by obtaining a loan for P50,000. This amount was finally obtained

from a Chinese merchant of the city named Uy Siuliong. This loan was secured through Uy Cho Yee,

a son of the lender; and in order to get the money it was necessary for Elser not only to give a

personal note signed by himself and his two associates in the projected enterprise, but also by the

Fidelity & Surety Company. The money thus raised was delivered to Elser by Uy Siuliong on June 24,

1920. With this money and what he already had in bank purchased the San Juan Estate on or about

June 28, 1920. For the purpose of the further development of the property a limited partnership

had, about this time, been organized by Elser and three associates, under the name of J. K.

Pickering & Company; and when the transfer of the property was effected the deed was made

directly to this company. As Elser was the principal capitalist in the enterprise he received by far

the greater number of the shares issued, his portion amounting in the beginning to 3,290 shares.

While these negotiations were coming to a head, Elser contemplated and hoped that Lyons

might be induced to come in with him and supply part of the means necessary to carry the

enterprise through. In this connection it appears that on May 20, 1920, Elser wrote Lyons a letter,

informing him that he had made an offer for a big subdivision and that, if it should be acquired and

Lyons would come in, the two would be well fixed. (Exhibit M-5.) On June 3, 1920, eight days

before the first option expired, Elser cabled Lyons that he had bought the San Juan Estate and

thought it advisable for Lyons to resign (Exhibit M-13), meaning that he should resign his position

with the mission board in New York. On the same date he wrote Lyons a letter explaining somedetails of the purchase, and added "Have advised in my cable that you resign and I hope you can do

so immediately and will come and join me on the lines we have so often spoken about. . . .There is

plenty of business for us all now and I believe we have started something that will keep us going for

some time." In one or more communications prior to this, Elser had sought to impress Lyons with

the idea that he should raise all the money he could for the purpose of giving the necessary

assistance in future deals in real estate.

The enthusiasm of Elser did not communicate itself in any marked degree to Lyons, and found

him averse from joining in the purchase of the San Juan Estate. In fact upon this visit of Lyons to the

United States a grave doubt had arisen as to whether he would ever return to Manila, and it was

only in the summer of 1920 that the board of missions of his church prevailed upon him to return

to Manila and resume his position as managing treasurer and one of its trustees. Accordingly, on

June 21, 1920, Lyons wrote a letter from New York thanking Elser for his offer to take Lyons into his

new project and adding that from the standpoint of making money, he had passed up a good thing.

One source of embarrassment which had operated on Lyons to bring him to the resolution to

stay out of this venture, was that the board of missions was averse to his engaging in business

activities other than those in which the church was concerned; and some of Lyons' missionary

associates had apparently been criticizing his independent commercial activities. This fact was

dwelt upon in the letter above- mentioned. Upon receipt of this letter Elser was of course informed

that it would be out of the question to expect assistance from Lyons in carrying out the San Juan

project. No further efforts to this end were therefore made by Elser.

When Elser was concluding the transaction for the purchase of the San Juan Estate, his books

showed that he was indebted to Lyons to the extent of, possibly, P11,669.72, which had accrued to


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Lyons from profits and earnings derived from other properties; and when the J. K. Pickering &

Company was organized and stock issued, Elser indorsed to Lyons 200 of the shares allocated to

himself, as he then believed that Lyons would be one of his associates in the deal. It will be noted

that the par value of these 200 shares was more than P8,000 in excess of the amount which Elser in

fact owed to Lyons; and when the latter returned to the Philippine Islands, he accepted these

shares and sold them for his own benefit. It seems to be supposed in the appellant's brief that the

transfer of these shares to Lyons by Elser supplies some sort of basis for the present action, or at

least strengthens the considerations involved in a feature of the case to be presently explained.

This view is manifestly untenable, since the ratification of the transaction by Lyons and the

appropriation by him of the shares which were issued to him leaves no ground whatever for

treating the transaction as a source of further equitable rights in Lyons. We should perhaps add

that after Lyons' return to the Philippine Islands he acted for a time as one of the members of the

board of directors of the J. K. Pickering & Company, his qualification for this office being derived

precisely from the ownership of these shares.

We now turn to the incident which supplies the main basis of this action. It will be

remembered that, when Elser obtained the loan of P50,000 to complete the amount needed for

the first payment on the San Juan Estate, the lender, Uy Siuliong, insisted that he should procure

the signature of the Fidelity & Surety Co. on the note to be given for said loan. But before signingthe note with Elser and his associates, the Fidelity & Surety Co. insisted upon h aving security for the

liability thus assumed by it. To meet this requirement Elser mortgaged to the F idelity & Surety Co.

the equity of redemption in the property owned by himself and Lyons on Carriedo Street. This

mortgage was executed on June 30, 1920, at which time Elser expected that Lyons would come in

on the purchase of the San Juan Estate. But when he learned from the letter from Lyons of July 21,

1920, that the latter had determined not to come into this deal, Elser began to cast around for

means to relieve the Carriedo property of the encumbrance which he had placed upon it. For this

purpose, on September 9, 1920, he addressed a letter to the Fidelity & Surety Co., asking it to

permit him to substitute a property owned by himself at 644 M. H. del Pilar Street, Manila, and

1,000 shares of the J. K. Pickering & Company, in lieu of the Carriedo property, as security. The

Fidelity & Surety Co. agreed to the proposition; and on September 15, 1920, Elser executed in favor

of the Fidelity & Surety Co. a new mortgage on the M. H. del Pilar property and delivered the same,

with 1,000 shares of J. K. Pickering & Company, to said company. The latter thereupon in turn

executed a cancellation of the mortgage on the Carriedo property and delivered it to Elser. But

notwithstanding the fact that these documents were executed and delivered, the new mortgage

and the release of the old were never registered; and on September 25, 1920, thereafter, Elser

returned the cancellation of the mortgage on the Carriedo property and took back from the Fidelity

& Surety Co. the new mortgage on the M. H. del Pilar property, together with the 1,000 shares of

the J. K. Pickering & Company which he had delivered to it.

The explanation of this change of purpose is undoubtedly to be found in the fact that Lyons

had arrived in Manila on September 21, 1920, and shortly thereafter, in the course of a

conversation with Elser told him to let the Carriedo mortgage remain on the property ("Let the

Carriedo mortgage ride"). Mrs. Elser testified to the conversation in which Lyons used the words

above quoted, and as that conversation supplies the most reasonable explanation of Elser's

recession from his purpose of relieving the Carriedo property, the trial court was, in our opinion,

well justified in accepting as a proven fact the consent of Lyons for the mortgage to remain on the

Carriedo property. This concession was not only reasonable under the circumstances, in view of the

abundant solvency of Elser, but in view of the further fact that Elser had given to Lyons 200 shares

of the stock of the J. K. Pickering & Co., having a value of nearly P8,000 in excess of the

indebtedness which Elser had owed to Lyons upon statement of account. The trial court found in

effect that the excess value of these shares over Elser's actual indebtedness was conceded by Elser

to Lyons in consideration of the assistance that had been derived from the mortgage placed upon

Lyons' interest in the Carriedo property. Whether the agreement was reached exactly upon this

precise line of thought is of little moment, but the relations of the parties had been such that it was

to be expected that Elser would be g enerous; and he could scarcely have failed to take account of

the use he had made of the joint property of the two.

As the development of the San Juan Estate was a success from the s tart, Elser paid the note of

P50,000 to Uy Siuliong on January 18, 1921, although it was not due until more than five months

later. It will thus be seen that the mortgaging of the Carriedo property never resulted in damage to

Lyons to the extent of a single cent; and although the court refused to allow the defendant to

prove that Elser was solvent at this time in an amount much greater than the entire encumbranceplaced upon the property, it is evident that the risk imposed upon Lyons was negligible. It is also

plain that no money actually deriving from this mortgage was ever applied to the purchase of the

San Juan Estate. What really happened was that Elser merely subjected the property to a

contingent liability, and no actual liability ever resulted therefrom. The financing of the purchase of

the San Juan Estate, apart from the modest financial participation of his three associates in the San

Juan deal, was the work of Elser accomplished entirely upon his own account.

The case for the plaintiff supposes that, when Elser placed a mortgage for P50,000 upon the

equity of redemption in the Carriedo property, Lyons, as half owner of said p roperty, became, as it

were, involuntarily the owner of an undivided interest in the property acquired partly by that

money; and it is insisted for him that, in consideration of this fact, he is entitled to the four

hundred forty- six and two-thirds shares of J. K. Pickering & Company, with the earnings thereon, as

claimed in his complaint.

Lyons tells us that he did not know until after Elser's death that the money obtained from Uy

Siuliong in the manner already explained had been used to help finance the purchase of the San

Juan Estate. He seems to have supposed that the Carriedo property had been mortgaged to aid in

putting through another deal, namely, the purchase of a property referred to in the

correspondence as the "Ronquillo property"; and in this connection a letter of Elser of the latter

part of May, 1920, can be quoted in which he uses this language:

"As stated in cablegram I have arranged for P50,000 loan on Carriedo

property. Will use part of the money for Ronquillo buy (P60,000) if the owner

comes through."


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Other correspondence shows that Elser had apparently been trying to buy the Ronquillo

property, and Lyons leads us to infer the he thought that the money obtained by mortgaging the

Carriedo property had been used in the purchase of this property. It doubtless appeared so to him

in the retrospect, but certain considerations show that the letter above given. He had already been

informed that, although Elser was angling for the Ronquillo property, its price had gone up, thus

introducing a doubt as to whether he would get it; and the quotation above given shows that the

intended use of the money obtained by mortgaging the Carriedo property was that only part of the

P50,000 thus obtained would be used in this way, if the deal went through. Naturally, upon the

arrival of Lyons in September, 1920, one of his first inquiries would have been, if he did not know

before, what was the status of the pr oposed trade for the Ronquillo property.

Elser's widow and one of his clerks testified that about June 15, 1920, Elser cabled Lyons

something to this effect: "I have mortgaged the property on Carriedo Street, secured by my

personal note. You are amply protected. I wish you to join me in the San Juan Subdivision. Borrow

all money you can." Lyons says that no such cablegram was received by him, and we consider this

point of fact of little moment, since the proof shows that Lyons knew that the Carriedo mortgage

had been executed, and after his arrival in Manila he consented for the mortgage to remain on the

property until it was paid off, as shortly occurred. It may well be that Lyons did not at first clearly

understand all the ramifications of the situations, but he knew enough, we think, to apprise him of

the material factors in the situation, and we concur in the conclusion of the trial court that Elser didnot act in bad faith and was guilty of no fraud.

In the purely legal aspect of the case, the position of the appellant is, in our opinion,

untenable. If Elser had used any money actually belonging to Lyons in this deal, he would under

article 1724 of the Civil Code and article 264 of the Code of Commerce, be obligated to pay interest

upon the money so applied to his own use. Under the law prevailing in this jurisdiction a trust does

not ordinarily attach with respect to property acquired by a person who uses money belonging to

another (Martinez vs. Martinez, 1 Phil., 647; Enriquez vs. Olaguer, 25 Phil., 641). Of course, if an

actual relation of partnership had existed in the money used, the case might be different; and

much emphasis is laid in the appellant's brief upon the relation of partnership which, it is claimed,

existed. But there was clearly no general relation of partnership between the parties; and the most

that can be said is that Elser and Lyons had been coparticipants in various transactions in real

estate. No objection can be made to the use of the word partnership as a term descriptive of the

relation in those particular transactions, but it must be remembered that it was in each case a

particular partnership, under article 1678 of the Civil Code. It is clear that Elser, in buying the San

Juan Estate, was not acting for any partnership composed into a proposition which would make

Lyons a participant in this deal contrary to his express determination.

It seems to be supposed that the doctrines of equity worked out in the jurisprudence of

England and the United States with reference to trusts supply a basis for this action. The doctrines

referred to operate, however, only where money belonging to one person is used by another for

the acquisition of property which should belong to both; and it takes but little discernment to see

that the situation here involved is not one for the application of that doctrine, for no money

belonging to Lyons or any partnership composed of Elser and Lyons was in fact used by Elser in the

purchase of the San Juan Estate. Of course, if any damage had been caused to Lyons by the p lacing

of the mortgage upon the equity of redemption in the Carriedo property, Elser's estate would be

liable for such damage. But it is evident that Lyons was not prejudiced by the act.

The appellee insists that the trial court committed error in admitting the testimony of Lyons

upon matters that passed between him and Elser while the later was still alive. While the admission

of this testimony was of questionable propriety, any error made by the trial court on this point was

error without injury, and the determination of the question is not necessary to this decision. We

therefore pass the point without further discussion.

The judgment appealed from will be affirmed, and it is so ordered, with costs against the

appellant.

Avancea, C.J., Johnson, Malcolm, Villamor, Villa-Realand Imperial, JJ., concur.

---------------------------------------------------------------------------------------------------------------------------------------

EN BANC [G.R. No. 31739. March 11, 1930.]

LEONOR MENDEZONA, plaintiff-appellee, vs. ENCARNACION C. VIUDA DE GOITIA,

administratrix of the estate of Benigno Goitia, defendant-appellant.

[G.R. No. 31740. March 11, 1930.]

VALENTINA IZAGUIRRE Y NAZABAL, plaintiff-appellee, vs. ENCARNACION C. VIUDA DEGOITIA, ETC., defendant-appellant.

Avancea & Lata, for appellant. Ramon Sotelo, for appellees.

SYLLABUS

1.PLEADING AND PRACTICE; AMENDMENT OF PLEADINGS. As in the other ordinary actions in

which the pleadings may be amended, the amounts claimed in the complaint presented in the

instant case before the committee of claims and appraisal, were charged in the complaint which

was filed in the court and approved by the same without exception from the other party. There was

no change of the nature of the action, because that the plaintiffs had not received the amounts

claimed as dividends due on their shares in the partnership styled "Tren de Aguadas."

2.ID.; DEMURRER FOR MISJOINDER; WAIVER. Since the bill of exception does not show that the

appellant demurred on the ground of misjoinder of parties, or alleged such misjoinder in her

answer, in accordance with section 93 of the Code of Civil Procedure she must be deemed to have

waived her right to raise any objection on that ground.

3.ID; ORDER FOR ACCOUNTING. The order of the court enjoining the appellant to render an

account of all the amounts collected by her late husband, as representative and attorney-in-fact of

the plaintiffs, was made for the purpose of giving her an opportunity of showing, if she could, just

what amounts the decedent had received on account of the plaintiff's shares. This showing was

proper because the action was to demand the reimbursement of said amounts.

4.ID; LEGAL PROHIBITION TO TESTIFY. The law prohibits a witness directly interested in a claim

against the estate of a decedent from testifying upon a matter of fact which took place before the

death of the deceased. The underlying principle of this prohibition is to protect the estate from


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fictitious claims; but it should not be understood to prohibit the filing of a just claim against the

decedent's estate.

D E C I S I O N

VILLAMOR, J p:

The plaintiffs, Leonor Mendezona and Valentina Izaguirre y Nazabal, filed separate claims

with the committee of claims and appraisal against the intestate estate of Benigno Goitia y Lazaga

(Court of First Instance of Manila, civil case No. 30273), the first for the amount of P5,940, and the

second, P2,376. By order of the court dated June 16, 1927, these claims were herd by the

committee. The claimants presented their evidence, which the committee deemed insufficient and

disapproved their claims. Both claimants appealed from the report of the committee, and in

accordance with section 776 of the Code of Civil Procedure, filed a new complaint which was later

amended with the approval of the court, there being nothing in the bill of exceptions to show that

the defendant, or the administratrix of the deceased Benigno Goitia, excepted to the court's order

admitting the amendments to the complaints.

The defendant answered the amended complaints, pleading in special defense, that not

having intervened in any of the transactions of Benigno Goitia y Lazaga as attorney-in-fact of the

plaintiffs, and having no knowledge of the supposed management of their rights in the "Tren de

Aguadas," and, furthermore, not having seen nor received any money of the plaintiff's from said

business, she is not in a position to render an account of any sort to the plaintiffs, either ownpersonal capacity or as judicial administratrix of Benigno Goitia's intestate estate.

By agreement of the parties, both cases were tried together, and the trial court rendered but

one decision upon them on October 31, 1928, holding it sufficiently proved, "that defendant

Encarnacion C. Vda. de Goitia has been duly appointed judicial administratrix of the estate of her

deceased husband Benigno Goitia in special proceeding No. 30273 of this court; that Benigno Goitia

was the representative and attorney-in-fact of the p laintiffs in the joint-account partnership known

as the 'Tren de Aguadas' and located in the City of Manila, of which the plaintiff Leonor

Mendezona, widow of Juan Bautista Goitia, owns 180 shares worth P18,00, and the plaintiff

Valentina Izaguirre y Nazabal owns 72 shares worth P7,200; that prior to 1915, Benigno Goitia, at

that time the manager of the aforesaid copartnership, collected the dividends for the plaintiffs,

which he remitted to them every year; that prior to 1915, the usual dividends which Benigno Goitia

forwarded to plaintiff Leonor Mendezona each year were P540, and to plaintiff Valentina Izaguirre

y Nazabal, P216; that from 1915 until his death in August, 1926, Benigno Goitia failed to remit to

them the dividends upon their shares in the 'Tren de Aguadas'; that some time before his death,

more particularly, in July, 1926, Benigno Goitia, who was no longer the manger of the said business,

received as attorney-in-fact of both plaintiffs, the amount P90 as dividend upon plaintiff Leonor

Mendezona's shares, and P36 upon Valentina Izaguirre y Nazabal's stock; that from 1915 to 1926,

the 'Tren de Aguadas' paid dividends to the shareholders, one of them, Ramon Salinas, having

received the total amount of P1,155 as ordinary and special dividends upon his 15 shares, that

calculating the dividends due from 1915 to 1926 upon Leonor Mendezona's 180 shares at P540 per

annum, and at P216 yearly upon the 72 shares held by Valentina Izaguirre y Nazabal, counsel for

both plaintiffs filed their claims and appraisal of the estate of Benigno Goitia, and, upon their

disallowance, appealed from the committee's decision by means of the complaints in these two

cases."

The trial court likewise deemed it proven that "during the period from 1915 to 1926, Benigno

Goitia collected and received certain sums as dividends and profits upon the plaintiffs' stock in the

'Tren de Aguadas' in his capacity as representative and attorney-in-fact for both of them, which he

has neither remitted nor accounted for to the said plaintiffs, although it has been proved that said

Benigno Goitia was their attorney-in-fact and representative in the 'Tren de Aguadas' up to the

time of his death."

The court below therefore ordered the defendant, as judicial administratrix of Benigno

Goitia's estate to render a judicial account of the intestate estate of the deceased Benigno Goitia,

in special proceeding No. 30273 of this court (below), to render an account of the amounts

collected by her aforesaid husband Benigno Goitia, as attorney-in-fact and representative of the

plaintiffs Leonor Mendezona and Valentina Izaguirre y Nazabal in the copartnership known as the

"Tren de Aguadas" from 1915 to July, 1926, within thirty days from the notice of this decision; and

that the defendant may see, examine, and make a copy of the books and documents relative to the

business of the aforementioned copartnership, in accordance with the provisions of section 664 of

the Code of Civil Procedure. Without special pronouncement of costs.

On December 15, 1928, at the instance of the plaintiffs, the trial court set the 15th of January,

1929, as the date on which the defendant should p resent her account of the dividends and profitscollected by the decedent, as attorney-in-fact for the plaintiffs, with regard to the "Tren de

Aguadas" copartnership, from 1915 to 1926, and the hearing was postponed to the 7th of

February, 1929.

On February 6, 1929, the defendant, reiterating her exception to the court's decision

enjoining her to render accounts, manifested that after a painstaking examination of the books of

account of the copartnership "tren de Aguadas," and several attempts to obtain data from Ruperto

Santos, the manager and administrator thereof, she has found no more evidence of any amount

received by her late husband, Benigno Goitia, than a book of accounts where she came upon an

item of P90 for Leonor Mendezona, and another P36 for Valentina Izaguirre.

In view of this report and the evidence taken at the hearing, the court rendered a suppletory

judgment, upon motion of the plaintiffs dated December 3, 1928; and taking into account chiefly

the testimony of Ruperto Santos and Ramon Salinas, it was held that, upon the basis of the

dividends received by the witness Salinas on his fifteen shares in the "Tren de Aguadas" from 1915

to 1925, it appears that the dividends distributed for each share was equal to one-fifteenth of

P1,087.50, that is P72.50. Thus the dividends upon plaintiff Leonor Mendezona's 180 shares would

be P13,050, upon the 72 shares pertaining to Valentina Izaguirre, P5,220; and these sums, added to

those collected by the attorney-in-fact Benigno Goitia as part of the 1926 dividends, P90 for Leonor

Mendezona, and P36 for Valentina Izaguirre, show that Benigno Goitia thereby received P13,140 in

behalf of Leonor Mendezona, and P5,256 in behalf of Valentina Izaguirre.

Wherefore, the court ordered the defendant, as judicial administratrix of the estate of the

deceased Benigno Goitia, to pay plaintiff Leonor Mendezona the sum of P13,140 with legal interest

from the date of the filing of the complaint, and to pay the plaintiff Valentina Izaguirre P5,256


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likewise with legal interest from the date of the filing of the complaint, and moreover, to pay the

costs of both instances.

The defendant duly appealed from this judgment to this Supreme Court through the proper

bill of exceptions.

The fundamental question raised by the appellant in the first assignment of error refers to the

court's jurisdiction to admit the amended complaints whereby the plaintiffs claim P13,680 and

P5,470, respectively, whereas the claims presented to the committee of claims and appraisal were

only for P5,940 and P2,376, respectively. Appellant contends that the plaintiffs have not perfected

their appeal in accordance with section 773 of the Code of Civil Procedure in claiming more in their

complaints than in the claims filed with the committee of claims and appraisal, by including therein,

not only the yearly dividends paid form 1915 to 1925, inclusive, but also the ordinary and

extraordinary dividends upon the shares for the years 1915 to 1926, alleged to have been delivered

to Benigno Goitia.

The fact that the claims filed with the committee were upon the basis of annual dividends,

while those filed with the court below were on ordinary and extraordinary dividends, is of no

importance, for, after all they refer to the same amounts received by the deceased Benigno Goitia

in the name and for the benefits of the plaintiffs. The question to be decided is whether or not in

this jurisdiction a greater sum may be claimed before the court than was claimed before thecommittee. It should be noted that according to the cases cited by the appellant on pages 12 and

13 of her brief, to wit, Patrick vs. Howard, 47 Mich., 40; 10 N. W., 71, 72; Dayton vs. Dakin's Estate,

61 N.W., 349; and Luizzi vs. Brady's Estate, 113 N. W., 73; 12 Detroit Leg., 59, the claims passed

upon by the committee cannot be enlarged in the Circuit Court by amendment. But counsel for the

appellees draws our attention to the doctrines of the Vermont Supreme Court (Maughan vs. Burns'

Estate, 64 Vt., 316, 24 Atlantic, 583), permitting an augmentative amendment to the claim filed

with the committee.

In the Maughan case, supra, the court stated:

"ROWELL, J. This is an appeal from the decision and report of the

commissioners of the estate of Michael Burns. Plaintiff presented her claim to

the commissioners at $2,789.65. The ad damnum in her declaration filed in the

probate court was $3,500. In the county court she recovered $3,813.49.

Thereupon she moved for leave to amend her declaration by raising the ad

damnum to $4,000, which was granted, and had judgment for the amount of

her recovery. The identical claim presented to the commissioners was the claim

tried above. The amount of plaintiff's recovery rested on the quantum meruit.

The jury found that she merited more than she estimated her claim when she

presented it to the commissioners. But such underestimate did not preclude her

from recovering more, if the testimony show her entitled to it, as presumably it

did, as more was found. The fact of such estimate was evidence against her

deserving more, as it was an implied admission was not conclusive upon her,

and did not prevent her from recovering more. (Rooney vs. Minor, 56 Vt., 527;

Stowe vs. Bishop, 58 Vt., 498; 3 Atl. Rep., 494; Hard vs. Burton, 62 Vt., 314; 20

Atl. Rep., 269.)

"It is conceded that in common-law actions the court has power to raise

the ad damnum at any time; but it is claimed that as the probate court is not a

common-law court, but it is a court of special and limited jurisdiction, and has

no power to raise the ad damnum of the declaration filed in the probate court.

The country court has, by statute, appellate jurisdiction of matters originally

within the jurisdiction of the probate court and in such appeals it sits as a higher

court of probate, and its jurisdiction is co-extensive with that of the probate

court in the matter appealed, but is expressly extended to matters originally

within the jurisdiction of that court. It is an appellate court for the rehearsing

and the re-examination of matters not particular questions merely that

have been acted upon in the court below. (Adams vs. Adams, 21 Vt., 162.) And

these matters embrace even those that rest in discretion. (Holmes vs. Holmes,

26 Vt., 536.) In Francis vs. Lathrope, 2 Tyler, 372, the claimant was allowed, on

terms, to file a declaration in the country court, he having omitted to file one in

the probate court as required by statute. It was within the jurisdiction of the

probate court to have allowed this amendment, and, as the country court had

all the jurisdiction of the probate court in this behalf, it also had power to allowthe amendment."

However this may be, in this jurisdiction there is a rule governing the question raised in this

assignment of error, namely, section 776 of the Code of Civil Procedure, as construed in the cases

of Zaragoza vs. Estate of De Viademonte (10 Phil., 23); Escuin vs. Escuin (11 Phil., 332); and In re

Estate of Santos (18 Phil., 403). This section provides:

"Sec. 776.Upon the lodging of such appeal with the clerk, the disputed

claim shall stand for trial in the same manner as any other action in the Court of

First Instance, the creditor being deemed to be the plaintiff, and the estate the

defendant, and pleadings as in other actions shall be filed."

Just as in ordinary actions in which the pleadings may be amended, so in the instant case, the

original complaint for the same amounts claimed before the committee was altered, increasing the

amounts, and the amended complaint was approved by the court and not objected to by the

adverse party. The character of the action throughout is the same. The action before the

committee rested on the contention that as attorney-in-fact for the plaintiffs with respect to the

partnership "Tren de Aguadas," the late Benigno Goitia had received dividends upon their shares

which he failed to turn over to them; the appeal to the Court of First Instance is founded on the

same contention. When the claim was filed with the committee, counsel for the plaintiffs merely

made a calculation of the amounts due, in view of the fact that he had not all the data from the

plaintiffs, who live in Spain; but after filing the complaint on appeal with the Court of First Instance,

he discovered that his clients were entitled to larger sums, and was therefore compelled to change

the amount of the claims.


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shares for the months of May and June, 1926, or P90 for Leonor Mendezona, and P36 for Valentina

Izaguirre, amounts which had not been remitted by the deceased to the plaintiffs.

Finally, the appellant complains that the trial court held by mere inference that Benigno

Goitia received from the "Tren de Aguadas" the amounts of P13,140 and P5,265 for Mendezona

and Izaguirre, respectively, as dividends for the years from 1915 to 1926, inclusive, and in holding

again, by mere inference, that Benigno Goitia did not remit said sums to the plaintiffs.

It is a well established fact in the record that the plaintiffs had an interest or some shares in

the partnership called "Tren de Aguadas," Mendezona holding 180 shares, worth P18,000, and

Izaguirre, 72 shares worth P7,200. By the testimony of Ruperto Santos, former secretary of Benigno

Goitia and his successor in the administration of that partnership, it appears that the deceased

Benigno Goitia had received the dividends due the appellees for the months of May and June,

1926. And according to Exhibit K-1, the dividend for the months of May and June, 1926. And

according to Exhibit K-1, the dividend for the months of May and June was P0.50 a share. And

witness Ramon Salinas, a practicing attorney and one of the shareholders of the partnership "Tren

de Aguadas," testified, from a notebook which he had, that he received from the "Tren de

Aguadas" the following ordinary dividends: P45 in 1915; P45 in 1916; P45 in 1917; P45 in 1918; P45

in 1919; P90 in 1920; PP67.50 in 1921, and P45 each for 1922, 1923, 1924, 1925, and 1926. By way

of extraordinary dividends, the witness testified that he received P22.50 each year from 1915 to

1918 inclusive; P45 in 1919; P60 in 1920; P37.50 in 1921, 1922, 1923, and 1924; P15 in 1925; andP22.50 in 1926. He further stated that he received P165 in 1918 as his share of the proceeds of the

sale of that boat Santolan. Summing up all these amounts, we find that the witness Ramon Salinas,

from 1915 to 1925, received a total of P1,087.50.

It further appears that Ruperto Santos assured the court that the dividends for the period

from 1915 to 1926 have been distributed among the shareholders, and that the late Benigno Goitia

received the dividends due on the shares pertaining to Leonor Mendezona and Valentina Izaguirre,

deducting them from the total distribution. In view of these data, the court below reached the

conclusion, on the basis of the dividends received by partner Ramon Salinas, that the attorney-in-

fact Benigno Goitia received from the plaintiffs appellees, respectively, the amounts of P13,140 and

P5,256, including the dividends for 1926, or P90 for Leonor Mendezona, and P36 for Valentina

Izaguirre.

As to the interest imposed in the judgment appealed from, it is sufficient to cite article 1724

of the Civil Code, which provides that an agent shall be liable for interest upon any sums he may

have applied to his own use, from the day on which he did so, and upon those which he still owes,

after the expiration of the agency, from the time of his d efault.

The judgment, appealed from being in accordance with the merits of the case, we are of the

opinion, and so hold, that the same must be as it is hereby, affirmed, with costs against the

appellant. So ordered.

Johnson, Malcolm, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

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EN BANC [G.R. No. 38479. November 20, 1933.]

QUINTIN DE BORJA, judicial administrator of the intestate estate of the deceased Marcelo

de Borja, plaintiff-appellant, vs. FRANCISCO DE BORJA, defendant-appellant.

M. H. de Joya and Quintin Paredes, for plaintiff-appellant.

Jose de Borja for, defendant-appellant.

SYLLABUS

1.PLEADING AND PRACTICE; PERIOD FOR FILING OF COUNTERCLAIMS. The plaintiff-appellant's

contention that the counterclaims presented by the defendant have already prescribed is

untenable. The counterclaims in question are based on instruments in writing marked Exhibits 1 to

6. The period of prescription thereof is not six (6) years, as claimed, but ten (10) years, in

accordance with the provisions of section 43 (1) of the Code of Civil Procedure.

2.DEBTS AND DEBTORS; PAYMENT OF INTEREST. Neither is the plaintiff entitled to the interest

claimed by him upon the alleged sums of money loaned to and collected by the defendant from

various persons for his deceased father. In all the aforesaid transactions, the defendant acted in his

capacity as attorney-in-fact of his deceased father and, there being no evidence showing that he

converted the money entrusted to him to his own use, he is not liable for interest thereon in

accordance with the provisions of article 1724 of the Civil Code.

D E C I S I O NIMPERIAL, J p:

The plaintiff herein, in his capacity as judicial administrator of the estate of the deceased

Marcelo de Borja, instituted this action in the Court of First Instance of Rizal, to recover from the

defendant the sum of P61,376.56 which, according to the amended complaint, the said defendant

owed the aforesaid deceased, for certain sums of money loaned to and collected by him from other

persons with the obligation to render an accounting thereof to the said deceased.

In his amended answer, the defendant interposed various counterclaims for alleged sums of

money owed him by the aforesaid deceased.

After the trial thereof and the presentation of voluminous evidence therein, the trial court

reached the conclusion and held that, from his various causes of action, the plaintiff was entitled to

recover the sum of P33,218.86 from the defendant, and that, by way of counterclaim, the said

defendant, in turn, was entitled to collect the sum of P39,683 from the plaintiff, and rendered

judgment in favor of the defendant in the sum of P6,464.14 with legal interest thereon from the

date of the counterclaim, with the costs. Both parties appealed therefrom.

The trial court made a very careful analysis of the oral and documentary evidence presented

therein, and from the preponderance thereof, inferred the findings of fact stated in its decision. We

are convinced that, from the evidence presented, the liquidation made by the trial court is the

nearest approach to its findings of fact, and for this reason we do not feel inclined to alter or

modify it.

The plaintiff-appellant's contention that the counterclaims presented by the defendant have

already prescribed, is untenable. The counterclaims in question are based on instruments in writing


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marked Exhibits 1 to 6. The period of prescription thereof is not six (6) years, as claimed, but ten

(10) years, in accordance with the provisions of section 43 (1) of the Code of Civil Procedure.

Neither is the plaintiff entitled to the interest claimed by him upon the alleged sums loaned

to and collected by the defendant from various persons for his deceased father. In all the

aforementioned transactions, the defendant acted in his capacity as attorney-in-fact of his

deceased father, and there being no evidence showing that he converted the money entrusted to

him to his own use, he is not liable for interest thereon, in accordance with the provisions of article

1724 of the Civil Code.

The defendant-appellant's claim to the effect that he is entitled to collect the rents for the

use of the earthen jar factory and the buildings thereof, is, likewise, unfounded. The trial court held

that all there existed between the parties was a mere gratuitous commodatum and that the most

that the deceased bound himself to do was to pay the taxes on the properties in question. There is

nothing in the records of the case to justify reversing the judgment rendered therein.

The judgment appealed from being, in our opinion, in accordance with the law and

sufficiently supported by a preponderance of the evidence presented therein, it is hereby affirmed,

without special pronouncement as to the costs of this instance. So ordered.

Avancea, C.J., Malcolm, Villa-Realand Hull, JJ., concur.

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EN BANC [G.R. No. L-16492. March 9, 1922.]E. MACIAS & Co., importers and exporters , plaintiff-appellant, vs. Warner, Barnes & Co., in

its capacity as agents of "The China Fire Insurance Co.," of "The Yang-Tsze" and of "The

State Assurance Co., Ltd.," defendant-appellant.

Ramon Sotelo for plaintiff-appellant. Cohn, Fisher & DeWittfor defendant-appellant.

SYLLABUS

1. RESIDENT INSURANCE AGENT NOT LIABLE ON POLICY. A resident agent of a foreign insurance

company doing business in the Philippine Islands is not liable, as principal or agent, on insurance

contracts issued in the name of the company.

2. EVERY "EX CONTRACTU" CAUSE IS FOUNDED ON CONTRACT. Every cause of action ex contractu

is founded upon a contract, oral or written, express or implied. In the instant case, the contracts

were made by the insurance company, through its agent, and are contracts between the company

and the insured.

3. IN THE ABSENCE OF CONTRACT AGENT NOT LIABLE . The defendant in the instant case is

"Warner, Barnes & Co., in its capacity as agents of" insurance companies. W. B. & Co. never made

any insurance contract, and is not liable, either as principal or agent.

4. NO BREACH OF CONTRACT. There is no breach of contract by W. B. & Co., either as agent or

principal, for the very simple reason that W. B. & Co. did not make any contract with plaintiff,

either as agent or principal.

5. WHERE NO CONTRACT IS ALLEGED IN COMPLAINT. In the instant case, the want of any

contractual relation appears on the face of the complaint, was raised before any testimony was

taken, and by a motion for a new trial, and should have been sus tained.

D E C I S I O N

STATEMENT

The plaintiff is a corporation duly registered and domiciled in Manila. The defendant is a

corporation duly licensed to do business in the Philippine Islands, and is the resident agent of

insurance companies "The China Fire Insurance Company, Limited, of Hong Kong," "The Yang-Tsze

Insurance Company, Limited, of Liverpool." The plaintiff is an importer of textures and commercial

articles for wholesale.

In the ordinary course of business, it applied for, and obtained, the following policies against

loss by fire:

Policy No. 4143, issued by the China

Fire Insurance Co., Ltd., for P12,000

Policy No. 4382, issued by the China

Fire Insurance Co., Ltd., for 15,000

Policy No. 326, issued by the Yang-Tsze

Insurance Co., Ltd., for 10,000

Policy No. 796111, issued by the State

Assurance Co., Ltd., for 8,000

Policy No. 4143, for P12,000, recites that Mrs. Rosario Vizcarra, having paid to the China Fire

Insurance Company, Limited, P102 for insuring against loss or damage by fire certain merchandise

the description of which follows, " the company agrees with the insured that, if the property abovedescribed, or any part thereof, shall be destroyed or damaged by fire between September 16,

1918, and September 16, 1919," etc., "the company will, pay or make good all such damage, not

exceeding" the amount of the policy. This policy was later duly assigned to the plaintiff.

Policy No. 4382, for P15,000, was issued by the same company to, and in the name of, the

plaintiff.

Policy No. 326, for P10,000, was issued to, and in the name of the plaintiff by the Yang-Tsze

Insurance Association, Limited, and recites that the premium of P125 was paid by the plaintiff to

the association shall be subject and liable to pay, reinstate, or make good to the said assured, their

heirs, executors, or administrators, such loss or damage as shall be occasioned by fire to the

property above-mentioned and hereby insured," not exceeding the amount of the policy.

Policy No. 796111, for P8,000, was issued by the State Assurance Company, Limited, to the

plaintiff for a premium of P100, which was paid to the Assurance Company through the defendant,

its authorized agent, and recites that "the company agrees with the insured that in the event of

loss by fire between certain dates, the company will, out of its capital pay, stocks and funds, pay

the amount of such loss or damage," not exceeding the amount of the policy, and it is attested by

the defendant, through its "Cashier and Accountant and Manager, Agents, State Assurance Co.,

Ltd.," authorized agents of the Assurance Company.

Policy No. 4143 is attested "on behalf of The China Fire Insurance Company, Limited," by the

cashier and accountant and manager of the defendant, as agents of The China Fire Insurance

Company, Limited. The same as true as to policy No. 4382.

Policy No. 326 recites the payment of a premium of P125 by the plaintiff The Yang-Tsze

Insurance Association, Limited, and that, in the event of loss, "the funds and the property of the


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said association shall be subject and liable to pay, reinstate, or make good to the said assured, their

heirs, executors, or administrators, such loss or damage as shall be occasioned by fire or lightning

to the property" insured, not exceeding the amount of the policy, and it is attested by the

defendant, through its cashier and accountant and manager, as agents of the association "under

the authority of a Power of Attorney from The Yang-Tsze Insurance Association, Limited," "to sign,

for and on behalf of the said Association, etc."

March 25, 1919, and while the policies were in force, a loss occurred in which the insured

property was more or less damaged by fire and the use of water resulting from the fire.

The plaintiff made a claim for damages under its policies, but could not agree as to the

amount of loss sustained. It sold the insured property in its then damaged condition, and brought

this action against Warner, Barnes & Co., in its capacity as agents, to recover the difference

between the amount of the policies and the amount realized from the sale of the property, and in

the cause of action, it prayed for judgment for P23,052.99 and in the second cause of action

P9,857.15.

The numbers and amounts of the policies and the names of the insurance companies are set

forth and alleged in the complaint.

The answer admits that the defendant is the resident agent of the insurance companies, the

issuance of the policies, and that a fire occurred on March 25, 1919, in the building in which the

goods covered by the insurance policies were stored, and that to extinguish the fire three packagesof goods were all other material allegations of the complaint.

As a further and separate defenses, the defendant pleads certain provisions in the policies,

among which was a written notice of loss, and all other insurance and certain detailed information.

It is then alleged

"That although frequently requested to do so, plaintiff failed and refused

to deliver to defendant or to any other person authorized to receive it, any

claim in writing specifying the articles or items of property damaged caused

thereto.

"That defendant was at all times ready and willing to pay, on behalf of the

insurance companies by whom said policies were issued, and to the extent for

which each was proportionately liable, the actual damage to plaintiff's goods

covered by the risks insured against, upon compliance within the time limited,

with the terms of the clause of the contracts of insurance above set forth."

Defendants prays judgment for costs.

Before the trial, counsel for the defendant objected to the introduction of any evidence in the

case, and moved "that judgment be entered for the defendant on the pleading upon the ground

that it appears from the averments of the complaint that the plaintiff has had no contractual

relations with the defendant, and that the action has not been brought against the real party in

interest." The objection and motion was overruled and exception duly taken. After trial the court

found that there was due the plaintiff from the three insurance companies P18,492.29, with

interest thereon at the rate of 6 per cent per annum, from the date of the commencement of the

action, and costs, and rendered the following judgment:

"It is, therefore, ordered that judgment be entered against Warner,

Barnes & Co., Ltd., in its capacity as agent and representative in the Philippine

Islands for The China Fire Insurance Company, Ltd., The Yang-Tsze Insurance

Association, Ltd., and The State Assurance Co., Ltd., for the payment for the

plaintiff, E. Macias & Co., of the sum of P18,493.29, the amount of his judgment

to be prorated by Warner, Barnes & Co., among the three insurance companies

above-mentioned by it represented, in proportion to the interest insured by

each of said three insurance companies, according to the policies issued by

them in favor of the plaintiff, and sued upon in this action."

The defendant then filed a motion to set aside the judgment and for a new trial, which was

overruled and exception taken. From this judgment the defendant appealed, claiming that "the

court erred in overruling defendant's motion for judgment on the pleadings; that the court erred in

giving judgment for the plaintiff; that the court erred in denying defendant's motion for a new

trial," and specifying other assignments which are not material to this opinion. Plaintiff also

appealed.

JOHNS, J p:

The material facts are not in dispute. It must be conceded that the policies in question were

issued by the different insurance companies, through the defendant as their respective agent; that

they were issued in consideration of a premium which was paid by the insured to the respectivecompanies for the amount of the policies, as alleged; that the defendant was, and is now, the

resident agent in Manila of the companies, and was authorized to solicit and do business for them

as such agent; that each company is a foreign corporation. The principal office and place of

business of The China Fire Insurance Company is at Hong Kong; of The Yang-Tsze Insurance

Association is at Shanghai; and of The State Assurance Company is at Liverpool. As such foreign

corporations they were duly authorized and licensed to do insurance business in the Philippine

Islands, and, to that end and for that purpose, the defendant corporation, Warner, Barnes & Co.,

was the agent of each company.

All of the policies are in writing, and recite that the premium was paid by the insured to the

insurance company which issued the policy, and that, in the event of a loss, the insurance company

which issued it will pay to the insured the amount of the policy.

This is not a case of an undisclosed agent or an undisclosed principal.

The policies on their face show that the defendant was the agent of the respective

companies, and that it was acting as such agent in dealing with the plaintiff. That in the issuance

and delivery of the policies, the defendant was doing business in the name of, acting for, and

representing, the respective insurance companies. The different policies expressly recite that, in

the event of a loss, the respective companies agree to compensate the plaintiff for the amount of

the loss. The defendant company did not insure the property of the plaintiff, or in any manner

agree to pay the plaintiff the amount of any loss. There is no contract of any kind, either oral or

written, between the plaintiff and Warner, Barnes & Co. Plaintiff's contracts are with the insurance

companies, and are in writing, and the premiums were paid to insurance companies and the


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policies were issued by, and in the name of, the insurance companies, and on the face of the policy

itself, the plaintiff knew that the defendant was acting as agent for, and was representing, the

respective insurance companies in the issuance and delivery of the policies. The defendant

company did not contract or agree to do anything or to pay the plaintiff any money at any time or

on any condition, either as agent or principal.

There is a very important distinction between the power and the duties of a resident

insurance agent of a foreign company and that of an executor, administrator, or receiver. An

insurance agent as such is not responsible for, and does not have, any control over the corpus or

estate of the corporate property, as does an executor, administrator, or receiver. Subject only to

the order of the court, such officers are legal custodians and have actual possession of

Documents

Agency - F Busorg1