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A Partnership and Agency Digests for Atty Cochingyan

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   PARTNERSHIP Digests Atty. Cochingyan Partnership & Agency | 2B 2008-2009   TAN SEN GUAN & CO. VS. PHILIPPINE TRUST CO. Facts : Plaintiff Tan Sen Guan & Co. secured a judgment for a sum of P21,426 against the Mindoro Sugar Co. of which the Philippine Trust is the trustee. The plaintiff entered into an agreement with the defendant Philippine Trust Co. wherein the former assigned, transferred, and sold to the latter the full amount of said judgment against Mindoro Sugar Co. together with all its rights thereto and the latter offered satisfactory consideration thereto. The agreement further stipulated that upon signing of the agreement, Phil Trust shall pay Tan Sen the sum of P5000; should the Mindoro Sugar be sold or its ownership be transferred, an additional P10,000 pesos will be paid to Tan Sen upon perfection of the sale; in case any other creditor of Mindoro Sugar obtains in the payment of his credit a greater proportion than the price paid to Tan Sen, the Phil Trust shall pay to the latter whatever sum may be necessary to be proportioned the claim of the creditor. However, if the Mindoro Sugar is sold to any person who does not pay anything to the creditors or pay them equal or less than 70 percent of their claim, or should the creditors obtain from other sources the payment of their claim equal to or less than 70 percent, the Phil Trust will only pay to Tan Senthe additional sum of P10,000 upon the sale or transfer of the Mindoro Sugar as above stated. The properties of Mindoro Sugar were later on sold at public auction to the Roman Catholic Archbishop of Manila and base on the agreement plaintiff Tan Sen brought suit against defendant Phil Trust for the sum of P10,000. Defendant’s argument : Only a portion of the Mindoro Sugar’s properties were sold.   CFI : Absolved the defendant on two grounds: (a) in the contract, it was only bound as a trustee and not as an individual; (b) that it has not been proved that all the properties of the Mindoro Sugar had been sold. Issues: (1)   W/N the defendant is not personally responsible for the claim of the plaintiff based on the deed of assignment because of having executed the same in its capacity as trustee of the properties of the Mindoro Sugar. (2)   W/N all the properties of the Mindoro Sugar were sold at public auction to the Roman Catholic Archbishop of Manila. Held : SC reversed CFI’s ruling. (1)   The Phil Trust Company in its individual capacity is responsible for the contract as there was no express stipulation that the trust estate and not the trustee should be held liable on the contract in question. Not only is there no express stipulation that the trustee should not be held responsible but the ‘Wherefore’ clause of the contract states the judgment was expressly assigned in favor of Phil Trust Company and not Phil Trust Company, the trustee. It therefore follows that appellant had a right to proceed directly against the Phil Trust on its contract and has no claim against either Mindoro Sugar or the trust estate. (2)   Exhibit D (the certificate of sale to Roman Catholic Archbishop) shows that all properties to Phil Trust as Trustee were included in the sale. The only thing reserved from the sale was the standing crops, and it is reasonable to presume that they had also been sold between the date of the sale and the institution of this action. Where the real estate, the personal property including animals, and all the bills receivable are sold, it would be a forced construction of the contract of agreement to hold that the assets of the Mindoro Sugar Company had not been sold. PHIL. AIR LINES, INC. VS. HEALD LUMBER CO. Facts : Lepanto Consolidated Mines chartered a helicopter belonging to plaintiff Phil. Air Lines to make a flight from its base at Nichols Field Airport to the former’s camp at Manyakan Mountain Province. The helicopter, with Capt. Gabriel Hernandez and Lt. Rex Imperial on board, failed to reach the destination as it collided with defendant’s tramway steel cables resulting in its destruction and death of the officers. Plaintiff insured the helicopters and the officers who piloted the same for P80,000 and P20,000 respectively and as a result of the crash, the insurance companies paid to the plaintiff the total indemnity of P120,000. Plaintiff sustained additional damages totaling P103,347.82 which were not recovered by insurance. The plaintiff instituted this action against defendant Heald Lumber Company to recover the sum paid by the insurance company to the plaintiff and the additional damages which was not recovered from the insurance. Defendant’s argument : Plaintiff has no cause of action against defendant for if anyone should due defendant for its recovery, it will only be the insurance companies. Plaintiff’s argument : It asserts that the claim of the said amount of P120,000 is on behalf and for the benefit of the insurers and shall be held by plaintiff in trust for the insurers. It is appellant’s theory that, inasmuch as the loss it has sustained exceeds the amount of the insurance paid to it by the insurers, the right to recover the entire loss from the wrongdoer remains with the insured and so the action must be brought in its own name as real party in interest. To the extent of the amount received by it as indemnity from the insurers, plaintiff would then be acting as a trustee for them. To support this contention, appellant cites American authorities. RTC’s Ruling : The court ordered the plaintiff to amend its complaint to delete the first allegation that insurance companies have paid a portion of the plaintiff’s damages, since the Court believes that the real parties in interest are the insurance companies concerned or bring in the insurance companies as parties plaintiff. And having manifested plaintiff’s decision not to amend the complaint, such move of plaintiff amounts to a deletion of the portion objected to and so the complaint should be deemed limited to the additional damages. Issue:   PARTNERSHIP Digests Atty. Cochingyan Partnership & Agency | 2B 2008-2009   (1)   W/N the plaintiff is not the real party in interest respecting the claim for P120,000. Held : SC affirmed the appealed judgment. (1)   In this jurisdiction, we have our own legal provision which in substance differs from the American law. Art. 2207 of the NCC provides that if a property is insured and the owner receives the indemnity from the insurer the same is deemed subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not fully cover the loss, then the aggrieved party is the one entitled to recover the deficiency. Under this legal provision, the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured. (2)   Before a person can sue for the benefit of another under a trust eeship, he must be ‘a trustee of an express trust.’ The right does not exist in cases of implied trust, that is, a trust which may be inferred merely from the acts of the parties or from other circumstances. Also, to adopt a contrary rule to what is authorized by the American statues would be splitting a cause of action or promoting multiplicity of suits which should be avoided. Under our rules, both the insurer and the insured may join as plaintiffs to press their claims against the wrongdoer when the same arise out of the same transaction or event. This is authorized by section 6, rule 3, of the Rules of Court. CRISTOBAL VS. GOMEZ Facts : Epifanio Gomez owned a property which was sold in a pacto de retro sale to Luis Yangco redeemable in 5 years, although the period passed without redemption, the vendee conceded the vendor the privilege of repurchase. Gomez apply to a kinsman, Bibiano Bañas, for assistance on a condition that he will let him have the money if his brother Marcelino Gomez and his sister Telesfora Gomez would make themselves responsible for the loan. The siblings agreed and Bañas advance the sum of P7000 which was used to repurchase the property in the names of Marcelino and Telesfora.. A ‘private partnership in participation’ was created bet ween Marcelino and Telesfora and therein agreed that the capital of the partnership should consist of P7000 of which Marcelino was to supply the amount of P1500 and Telesora the sume of P5500. It was further agreed that the all the property to be redeemed shall be named to the two, that Marcelino should be its manager, that all the income, rent, produce of the property shall be applied exclusively to the amortization of the capital employed by the two parties with its corresponding interest and other incidental expenses and as soon as the capital employed, with its interest and other incidental expenses, shall have been covered, said properties shall be returned to Epifanio Gomez or his legitimate children. A year after Epifanio’s death, Telesfora wanted to free herself from the responsibility which she had assumed to Bañas and conveyed to Marcelino her interest and share in the three properties previously redeemed from Yangco and both declared dissolved the partnership they created. With Marcelino as the sole debtor, Bañas required him to execute a contract of sale of the three parcels with pacto de retro for the purpose of securing the indebtedness. Marcelino later on paid the sum in full satisfaction of the entire claim and received from Bañas a reconveyance of the three parcels. The widow, Paulina Cristobal, and the children of Epifanio Gomez instituted an action for the recovery of the three parcels of land from Marcelino Gomez. Defendant’s argument : Defendant answered with a general denial and claimed to be the owner in his own right of all the property which is the subject of the action. He further claimed that the trust agreement was kept secret from Epifanio Gomez, and that, having no knowledge of it, he could not have accepted it before the stipulation was revoked. And that he has the benefit of prescription in his favor, having been in possession of more than 10 years under the deed which he acquired the sole right from his sister. RTC’s ruling : ruled in favor of plaintiffs and found that the property in question belongs to the plaintiffs, as co-owners, and ordered the defendant to surrender the property to them and execute an appropriate deed of transfer as well as to pay the cost of the proceeding. Issue : (1) W/N the dissolution of partnership between Marcelino and Telesfora destroyed the beneficial right of Epifanio Gomez in the property. (2)   W/N the partnership agreement of Marcelino and Telesfora was a donation in favor of Epifanio or an express trust. (3)   W/N Marcelino Gomez acquired the property through prescription. Held:  SC declared ownership in favor of plaintiffs. (1)   The fact that one of the two individuals who have constituted themselves trustees for the purpose above indicated conveys his interest in the property to his cotrustee does not relieve the latter from the obligation to comply with the trust. (2)   A trust constituted between two contracting parties for the benefit of a third person is not subject to the rules governing donations of real property. The beneficiary of the trust may demand performance of the obligation without having formally accepted the benefit of the trust in a public document, upon mere acquiescence in the formation of the trusts and acceptance under the second par. of article 1257 of the CC. Much energy has been expanded by the attorneys for the appellant in attempting to demonstrate that, if Epifanio at any time had any right in the property by virtue of the partnership agreement between Marcelino and Telesfora such right could be derived as a donation and that, inasmuch as the donation was never accepted by Epifanio in a public document, his supposed interest therein is unenforceable. The partnership should not be viewed in light of an intended donation, but as an express trust. (3)   As against the beneficiary, prescription is not effective in favor of a person who is acting as a trustee of a continuing and subsisting trust. Therefore, Marcelino cannot acquire   PARTNERSHIP Digests Atty. Cochingyan Partnership & Agency | 2B 2008-2009   ownership over the property through prescription. SALAO VS. SALAO Facts: After the death of Valentina Ignacio, her estate was administered by her daughter Ambrosia. It was partitioned extrajudically and the deed was signed by her four legal heirs namely her 3 children (Alejandra,  Juan, and Ambrosia) and Valentin Salao, in representation of his deceased father, Patricio. The Calunuran fishpond is the property in contention in this case. Prior to the death of Valentina Ignacio, her children Juan and Ambrosia secured a torrens title in their names a 47 ha. fishpond located at Sitio Calunuran, Lubao, Pampanga. A decree was also issued in the names of Juan and Ambrosia for the Pinanganacan fishpond which adjoins the Calunuran fishpond. A year before Ambrosia’s death, she donated her one-half share in the two fishponds in question to her nephew, Juan Salo Jr. He was already the owner of the other half of the fishponds having inherited it from his father, Juan Salao Sr. After Ambrosia died, the heirs of Valentin Salao, Benita Salao and the children of Victorina Salao, filed a complaint against Juan Salao Jr. for the reconveyance to them of the Canluran fishpond as Valentin Salao’s supposed one –  third share in the 145 ha. of fishpond registered in the names of Juan Salao Sr. and Ambrosia Salao. Defendant’s argument : Valentin Salao did not have any interest in the two fishponds and that the sole owners thereof were his father and his aunt Ambrosia, as shown in the Torrens titles and that he was the donee of Ambrosia’s one -half share. Plaintiff’s argument : Their action is to enforce a trust which defendant Juan Salao Jr. allegedly violated. The existence of trust was not definitely alleged in the plaintiff’s complaint but in their appellant’s brief.   RTC’s Ruling : There was no community of property among Juan, Ambrosia and Valentin when the Calunuran and the Pinanganacan lands were acquired; that co –  ownership over the real properties of Valentina Ignacio existed among her heirs after her death in 1914; that the co –  ownership was administered by Ambrosia and that it subsisted up to 1918 when her estate was partitioned among her three children and her grandson, Valentin Salao. It rationalized that Valentin’s omission during his lifetime to assail the Torrens titles of Juan and Ambrosia signified that he was not a co-owner of the fishponds. It did not give credence to the testimonies of plaint iffs’ witnesses because their memories could not be trusted and because no strong evidence supported the declarations. Moreover, the parties involved in the alleged trust were already dead.  Judgment appealed to CA but the amounts involved exceeded two hundred thousand pesos, the CA elevated the case to the SC. Issue : (1)   W/N plaintiffs’ massive oral evidence sufficient to prove an implied trust, resulting or constructive, regarding the two fishponds. Held : SC affirmed lower court’s decision.  (1)   Plaintiff’s pleadin g and evidence cannot be relied upon to prove an implied trust. The trial court’s firm conclusion that there was no community of property during the lifetime of Valentina Ignacio or before 1914 is substantiated by defendant’s documentary evidence. There was no resulting trust in this case because there never was any intention on the part of Juan, Ambrosia and Valentin to create any trust. There was no constructive trust because the registration of the 2 fishponds in the names of Juan and Ambrosia was not vitiated by fraud or mistake. This is not a case where to satisfy the demands of  justice it is necessary to consider the Calunuran fishpond as being held in trust by the heirs of Juan Salao Sr. for the heirs of Valentin Salao. And even assuming that there wa s an implied trust, plaintiffs’ action is clearly barred by prescription when it filed an action in 1952 or after the lapse of more than 40 years from the date of registration. CARANTES VS. CA Facts : A proceeding for expropriation was commenced by the government for the construction of the Loakan Airport and a portion of Lot 44, which was srcinally owned by Mateo Carantes, was needed for the landing field. The lot was subdivided into Lots Nos. 44-a (the portion which the government sought to expropriate), 44-b, 44-c, 44-d and 44-e. Negotiations were also under way for the purchase by the government of lots 44-b and 44-c. When Mateo Carantes died, his son Maximino Carantes was appointed administrator of the estate and filed a project of partition of the remaining portion of Lot 44 wherein he listed as the heirs of Mateo Carantes who were entitled to inherit the estate, himself and his brothers and sisters. An ‘Assignment of Right to Inheritance’ was executed by the children of Mateo and the heirs of Apung Carantes in favor of Maximino Carantes for a consideration of P1. Maximino sold to the government lots nos. 44-b and 44-c and divided the proceeds of the sale among himself and the other heirs of Mateo. The assignment of right to inheritance was registered by Maximino and the TCT in the names of the heirs was cancelled and a new one was issued in the name of Maximino Carantes as the sole owner of the remaining portions of lot 44. A complaint was instituted by the three children of Mateo and the heirs of Apung Carantes against Maximino praying that the deed of assignment be declared null and void and that the remaining portions of lot 44 be ordered partitioned into six equal shares and Maximino be accordingly ordered to execute the necessary deed of conveyance in favor of the other heirs. Plaintiffs’ argument : They executed the deed of assignment only because they were made to believe by Maximino that the said instrument embodied the understanding among parties that it merely authorized the defendant Maximino to convey portions of lot 44 to the government in their behalf to minimize expenses and facilitate the transaction and it was only when they secured a copy of the deed that they came to know that the same purported to assign in favor of Maximino their rights to inheritance from Mateo Carantes.   PARTNERSHIP Digests Atty. Cochingyan Partnership & Agency | 2B 2008-2009   Defendant’s argument : Filed a motion to dismiss. The plaintiffs’ cause of action is barred by the statute of limitations because the deed of assignment was recorded in the Registry of Property and that ownership over the property became vested in him by acquisitive prescription ten years from its registration in his name of Feb. 21, 1947. RTC’s ruling : Ruled in favor of defendant Maximino Carantes stating that since an action based on fraud prescribes in four years from the discovery of the fraud, and in this case the fraud allegedly perpetrated by defendant must deemed to have been discovered on march 16, 1940 when the deed of assignment was registered, the plaintiff’s right of action had already prescribed when they filed the action in 1958. And even assuming co-ownership existed, the same was completely repudiated by the said defendant by performance pf several acts such as the execution of deed of sale in favor of the government in 1939, hence ownership had vested in the defendant by acquisitive prescription. CA reversed. Issue: (1)   W/N the deed of assignment is void ab initio on the ground of fraud and the action to annul it has prescribed. (2)   W/N a constructive trust exist making an action for reconveyance based on constructive trust imprescriptable. Held : SC dismissed the complaint and set aside CA’s decision. (1)   When the consent to a contract was fraudulently obtained, the contract is voidable. Fraud or deceit does not render a contract void ab initio, and can only be a ground for rendering the contract voidable or annullable pursuant to article 1390 of the NCC by a proper action in court. The present action being one to annul a contract on the ground of fraud, its prescriptive period is 4 years from the time of discovery of fraud. The weight og authorities is the effect that the registration of an instrument in the Office of the Register of Deeds constitutes a constructive notice to the whole world, and, therefore, discovery of fraud is deemed to have taken place at the time of the registration. In this case, the deed of assignment was registered on March 16, 1940. The 4 years period within which the private respondents could have filed the present action consequently commenced on march 16, 1940, and since they filed it only in September 4, 1958, it follows that the same is barred by the statute of limitations. (2)   No express trust was created in favor of the private respondents. If trust there was, it could only be a constructive trust, which is imposed by law. In constructive trusts there is neither promise nor fiduciary relation; the so called trustee does not recognize any trust and has no intent to hold the property for the beneficiary. An action for reconveyance based on implied or constructive trust is prescriptable and prescribes in 10 years. In this case, the ten –  year prescriptive period began on march 16, 1940, when the petitioner registered the deed of assignment and secured the cancellation of the certificate of title in the joint names of the heirs of Mateo Carantes and, in lieu thereof, the issuance of a new title exclusively in his name. Since the present action was commenced only on September 4, 1958, the same in barred by extinctive prescription. MUNICIPALITY OF VICTORIAS VS. CA Facts:  Norma Leuenberger, respondent, inherited a parcel of land from her grandmother, Simeona Vda. de Ditching in 1941. In 1963, she discovered that a part of the parcel of land was being used by petitioner Municipality of Victorias as a cemetery. By reason of the discovery, respondent wrote a letter to the Mayor of Victorias demanding payment of past rentals over the land used a cemetery and requesting delivery of the illegally occupied land by the petitioner. The Mayor replied that the municipality bought the land but however refused to show the papers concerning the sale. Apparently, the municipality failed to register the Deed of Sale of the lot in dispute. Respondent filed a complaint in the Court of First Instance of Negros Occidental for recovery of possession of the parcel of land occupied by the municipal cemetery. In its answer, petitioner Municipality alleged ownership of the lot having bought it from Simeona Vda. de Ditching sometime in 1934. The lower court decided in favor of the petitioner municipality. On appeal, petitioner presented an entry in the notarial register form the Bureau of Records Management in Manila of a notary public of a sale purporting to be that of the disputed parcel of land. Included within it are the parties to the sale, Vda. de Ditching, as the vendor and the Municipal Mayor of Victorias in 1934, as vendee. The Court of Appeals however claimed that this evidence is not a sufficient Deed of Sale. It therefore reversed the ruling of the CFI and ordered the petitioner to deliver the possession of the land in question to respondents. Issue:  W/N the notary public of sale is sufficient to substantiate the municipality’s claim that it acquired the disputed land by means of a Deed of Sale. Yes. Held:  The fact that the notary public of sale showed the nature of the instrument, the subject of the sale, the parties of the contract, the consideration and the date of sale, the Court held that it was a sufficient evidence of the Deed of Sale. Thus, when Norma inherited the land from her grandmother, a portion of it has already been sold by the latter to the Municipality of Victorias in 1934. Her registration of the parcel of land did not therefore transfer ownership but merely confirmed it. As the civil code provides, where the land is decreed in the name of a person through fraud or mistake, such person is by operation of law considered a trustee of an implied
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