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IFC vs.

Lyric Films
IFC leased Monte Carlo madness film; verbal agreement re: sub-agency and keeping the film
in vault; new agent Joseph agreed to sub-agency; vault burned down; SC: defendant not
obliged to fulfill more than whats mandated; no mandate to insure against fire
FACTS:
Bernard Gabelman was the Philippine agent of the plaintiff company International Films
(China), Ltd. by virtue of a power of attorney executed in his favor on April 5, 1933 (Exhibit 1)
the International Films (China), Ltd., through its said agent, leased the film entitled "Monte
Carlo Madness" to the defendant company, the Lyric Film Exchange, Inc.,
One of the conditions of the contract was that the defendant company would answer for the
loss of the film in question whatever the cause.
Vicente Albo (chief of the film department of the Lyric Film Exchange, Inc.) informed said
agent of the plaintiff company that the showing of said film had already finished and asked, at
the sametime, where he wished to have the film returned to him.
In answer, Bernard Gabelman informed Albo that he wished to see him personally in
the latter's office.
Gabelman went to Vicente Albo's office and asked whether he could deposit the film in question in the
vault of the Lyric Film Exchange,Inc., as the International Films (China) Ltd. did not yet have a
safety vault, as required by the regulations of the fire department.
After the case had been referred to O'Malley, Vicente Albo's chief, the former answered that
the deposit could not be made in as much as the film in question would not be covered by
the insurance carried by the Lyric Film Exchange, Inc.
Bernard Gabelman then requested Vicente Albo to permit him to deposit said film in the vault of the
Lyric Film Exchange, Inc., under Gabelman's own responsibility. As there was a verbal
contract between Gabelman and the Lyric Film Exchange Inc., whereby the film "Monte Carlo Madness"
would be shown elsewhere, O'Malley agreed and the film was deposited in the vault of the
defendant company under Bernard Gabelman's responsibility.
Bernard Gabelman severed his connection with the plaintiff company, being succeeded by
Lazarus Joseph. Bernard Gabelman, upon turning over the agency to the new agent, informed
the latter of the deposit of the film "Monte Carlo Madness" in the vault of the defendant company
as well as of the verbal contract entered into between him and the Lyric Film Exchange, Inc., whereby
the latter would act as a subagent of the plaintiff company, International Films (China) Ltd., with
authority to show this film "Monte Carlo Madness" in any theater where said defendant
company, the Lyric Film Exchange, Inc., might wish to show it after the expiration of the contract
Exhibit C.
ask for the return not only of the film "Monte Carlo Madness" but also of the films "White
Devils" and "Congress Dances".
the Lyric Film Exchange, Inc., returned the films entitled "CongressDances" and "White Devils" to
Lazarus Joseph, but not the film"Monte Carlo Madness" because it was to be shown in Cebu onAugust 29
and 30, 1933. Lazarus Joseph agreed to said exhibition.
The bodega of the Lyric Film Exchange, Inc., was burned, togetherwith the film "Monte Carlo
Madness" which was not insured.
ISSUE: Whether or not the defendant company, the Lyric Film Exchange,Inc., is responsible
to the plaintiff, International Films (China) Ltd., for thedestruction by fire of the film in question,
entitled "Monte CarloMadness".
Argument of Plaintiff Company:

defendant's failure to return the film"Monte Carlo Madness" to the former was due to the
fact that the periodfor the delivery thereof, which expired on June 22, 1933, had beenextended
in order that it might be shown in Cebu on August 29 and 30,1933, in accordance with an
understanding had between Lazarus Joseph,the new agent of the plaintiff company, and the
defendant.
Argument of Defendant Company:
when it wanted to return the film "Monte Carlo Madness" to Bernard Gabelman, the former
agent of the plaintiff company, because of the arrival of the date for the return thereof, under the
contract Exhibit C, said agent, not having a safety vault, requested Vicente Albo, chief of the film
department of the defendant company, to keep said film in the latter's vault under Gabelman's own
responsibility, verbally stipulating at the same time that the defendant company, as subagent of
the International Films (China) Ltd., might show the film in question in its theaters.
HELD: NO. The defendant company, as subagent of the plaintiff in the exhibition of the film
"Monte Carlo Madness", was not obliged to insure it against fire, not having received any
express mandate to that effect, and it is not liable for the accidental destruction thereof by fire.
RATIO: It does not appear sufficiently proven that the understanding had between Lazarus Joseph,
second agent of the plaintiff company, and Vicente Albo, chief of the film department of the defendant
company, was that the defendant company would continue showing said film under the same
contract Exhibit C.
If the verbal contract had between Bernard Gabelman, the former agent of the plaintiff company,
and Vicente Albo, chief of the film department of the defendant company, was a sub-agency or
a submandate, the defendant company is not civilly liable for the destruction by fire of the film in
question because as a mere submandatary or subagent, it was not obliged to fulfill more than
the contents of the mandate and to answer for the damages caused to the principal by his
failure to do so (art. 1718, Civil Code). The fact that the film was not insured against fire does
not constitute fraud or negligence on the part of the defendant company, the Lyric Film Exchange, Inc.,
because as a subagent, it received no instruction to that effect from its principal and the
insurance of th efilm does not form a part of the obligation imposed upon it by law.

PNB vs. Welch


CHARACTERS:
PNB plaintiff, lender of money
Welch, Fairchild & Co. defendant, owner of 325 shares of La Compania, agent who borrowed money
for the principal
La Compania Naviera Inc. not a party in the case at bar, buyer of the ship, principal
Welch & Co. correspondent of Welch, Fairchild & Co. in San Francisco, USA
Mr. Fairchild president of Welch, Fairchild & Co.
Benito Juarez the ship (oo, character siya :p)
FACTS: La Compania bought Benito Juarez.
It was through the efforts of Mr. Fairchild that the consent of the proper authorities in
Washington, D.C. was obtained for the transfer of the ship to Philippine registry.

While the ship was being delivered to the agent of the buyer in San Francisco (Welch & Co., I
think), it was found out that it needed repairs before it could be transported to the Philippines. It
also became impracticable to deliver the bill of sale and insurance money to Anglo-London and
Paris National Bank, PNBs agent in San Francisco which was supposed to deliver the purchase
money(Ignore the agency between PNB ang Anglo-London. Not the subject agency in this
case.).
Because of this, defendant wrote a letter to PNB to request the latter to cable Anglo-London to
release the money and make payment for the ship upon Welch &Co.s application without
requiring the delivery of the bill of sale or insurance policy. It was written in the letter that the
Compania Naviera will deliver to you here the bill of sale also the insurance policy covering the
voyage to Manila.
La Compania also addressed a letter to PNB confirming the request and authorizing the bank to
send the necessary cablegram.
PNB sent the cablegram authorizing payment without the production of the bill of sale or
insurance policy. Anglo-London did, and the ship was delivered.
After the repair of the ship, it was insured by Welch & Co to the value of $150,000 and was
dispatched on its voyage to the Phils.
The vessel encountered a storm off the Island in Hawaii and became a total loss.
When the insurance was taken out to cover the voyage to Manila, no policy was issued by any
insurer; but the insurance was placed by Welch & Co. of San Francisco, upon the instructions of
Welch, Fairchild & Co., as agents of the Compaa Naviera, and it was taken out in the
ordinary course of business to protect the interests of all parties concerned. (copy-paste)
The risk was distributed among several companies, some in remote centers; and it was many
months before Welch & Co., of San Francisco, had collected the full amount due from the
insurers. However, as the money came to the hands of Welch & Co., of San Francisco, it was
remitted by draft or telegraphic transfer to Welch, Fairchild & Co. in Manila. (copy-paste)
The amount of $13,000 was mistakenly remitted to PNB in New York, and it was only a month
after this that PNB Manila received authority to pay defendant the said amount. This drew
the attention of the bank to the fact that the transfer was related to the proceeds of the
insurance on Benito Juarez. PNB Manila first determined to intercept the transfer and withhold
the credit from the defendant.
When the determination was communicated to defendant, it protested. Money was the credited
Welchs account and interest was even paid for the time the money was withheld.
Welch, Fairchild & Co. pointed out that it had acted throughout merely in the capacity of agent
for La Compania and was therefore not legally bound by the promise made by it in the letter to
the effect that the policy of insurance would be delivered to PNB Manila by La Compania.
PNB made demands upon La Compania, but the latter claimed that it never received any policy of
insurance upon the ship as it was insured in San Francisco by the agent in behalf of La
Compania.

Because La Compania became insolvent, PNB made formal demandupon the defendant basing it on
the letter that the defendant wrote.
The defendant refused even if it had received the proceeds of theinsurance way before.
It must be noted that the principal is indebted to the agent becauseof repeated transactions
which were the same as the one in thiscase and that the proceeds of the insurance policy was
not enough to cover the entire debt.
ISSUE/HELD: WON PNB could collect from Welch, Fairchild & Co. YES.
RATIO:
(copy-paste)
While it is true that an agent who acts for a revealed principal in the making of a contract does
not become personally bound to the other party in the sense that an action can ordinarily be
maintained upon such contract directly against the agent (art. 1725, Civ. Code), yet that rule
clearly does not control this case; for even conceding that the obligation created by the letter of
August 8, 1918, was directly binding only on the principal, and that in law the agent may stand
apart therefrom. yet it is manifest upon the simplest principles of jurisprudence that one who has
intervened in the making of a contract in the character of agent cannot be permitted to
intercept and appropriate the thing which the principal is bound to deliver, and thereby make
performance by the principal impossible. The agent in any event must be precluded from doing
any positive act that could prevent performance on the part of his principal. This much, ordinary
good faith towards the other contracting party requires. The situation before us in effect is one
where, notwithstanding the promise held out jointly by principal and agent in the letters of
August 8 and 10, 1918, the two have conspired to make an application of the proceeds of the
insurance entirely contrary to the tenor of said letters. This cannot be permitted.
The idea on which we here proceed can perhaps be made more readily apprehensible from
another point of view, which is this: By virtue of the promise contained in the letter of August
8, 1918, the bank became the equitable owner of the insurance effected on the Benito Juarez to
the extent necessary to indemnify the bank for the money advanced by it, in reliance upon that
promise, for the purchase of said vessel; and this right of the bank must be respected by all
persons having due notice thereof, and most of all by the defendant which took out the insurance itself
in the interest of the parties then concerned, including of course the bank. The
defendant therefore cannot now be permitted to ignore the right of the bank and appropriate the
insurance to the prejudice of the bank, even though the act be done with the consent of
its principal.
As to the argument founded upon the delay of the bank in asserting its right to the insurance
money, it is enough to say that mere delay unaccompanied by acts sufficient to create an
equitable estoppels does not destroy legal rights, but such delay as occurred here is in part
explained by the fact that the loan to La Compaa Naviera did not mature till May 17, 1919, and a
demand for the surrender of the proceeds of the insurance before that date would have seemed
premature. Besides, it is to be borne in mind that most of the insurance was not in fact collected
until in June of 1919. x x x the bank was not slow in asserting its right to the remittance that
came through the bank in June to Welch, Fairchild & Co., consisting of $13,000 of the proceeds
of this insurance

48. GONZALEZ and GOMEZ vs HABERER


Topic: Rights and Obligations of the Principal Nature: Appeal from a judgment of the Court of
First Instance of Manila
Facts: The plaintiff spouses executed a deed of sale over a tract of land with the defendant.It
was stipulated in their contract that if the plaintiffs were found by court to not be the owners of
the land, they would return any amount that the defendant had paid. It was also stipulated that
Gomez gave his wife Gonzalez the marital license to execute the deed. However, after making
an initial payment of Php30,000, the defendant found that the land was in the adverse
possession of many others. Thus, he stopped making payments. The plaintiffs then filed
an action to recover the sum of unpaid balance. The defendant claimed that when they entered
into this contract, the plaintiffs made false representations and mislead him into thinking they
had full ownership of the land.
Issue: WON Gonzalez was free of the liabilities that her husband incurred from the
misrepresentations in the sale of the land
Held: NO
Rationale: As to the plaintiffs contention that Gonzales cannot be charged by her husbands
misrepresentation, it is sufficient to say that the latter in negotiating for the sale of the land acted
as an agent and representative of his wife; having accepted the benefit of the representations of
her agent she cannot, of course, escape liability for them. The latter cannot accept such benefits
and at the same time deny the responsibility for them.

ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. [PRC]


1923 / Street
FACTS: Albaladejo y Cia is a limited partnership, which was engaged in the buying and selling
of copra in Legaspi, and in the conduct of a general mercantile business.
Visayan Refining Co [PRCs successor] was engaged in operating its extensive plant for the
manufacture of coconut oil. On August 1918, Albaladejo made a contract with the Visayan
Refining, wherein they agreed that VRC will buy for a period of 1 year all the copra that
Albaladejo purchased in Albay. It was also agreed upon that during the continuance of the
contract, VRC will not appoint any other agent for the purchase of copra in Legaspi, nor buy
copra from any vendor in the same place. In addition, VRC would provide transportation for the
copra delivered to it by Albaladejo. At the end of said year, both parties found themselves
satisfied with the existing arrangement, and they continued by tacit consent to govern their
future relations by the same agreement. On July 9, 1920, VRC closed down its factory at Opon
and withdrew from the copra market. After VRC ceased to buy copra, the copra supplies already
purchased by Albaladejo were gradually shipped out and accepted by the VRC, and in the
course of the next 8-10 months, the accounts between the two parties were liquidated. The last
account rendered by VRC to Albaladejo showed a balance of P288 in favor of VRC. Albaladejo
addressed a letter to the PRC (which had now succeeded to the rights and liabilities of VRC),
expressing its approval of said account. Albaladejo filed a complaint against PRC, seeking to
recover P110k, the alleged amount that Albaladejo spent in maintaining and extending its
organization.
Albaladejo alleges that such maintenance and extension was made at the express request of
PRC. On the other hand, PRC contends that the contract between them created the relation of
principal and agent; therefore, the principal should indemnify the agent for damagesincurring in
carrying out the agency.
The lower court ruled in favor of Albaladejo, but granted only 30% of the amount prayed for, in
view of the fact that Albaladejos transactions in copra amounted in the past to only about 30%
of the total business it transacted.
ISSUE & HOLDING: WON the contract is one of agency. NO
RATIO : The relation between the parties was not that of principal and agent in so far as relates
to the purchase of copra by Albaladejo. While VRC made Albaladejo one of its instruments for
the collection of copra, in making its purchases from the producers, Albaladejo was buying upon
its own account. When Albaladejo turned over the copra to VRC, a second sale was effected. In
the contract, it is declared that during the continuance of the agreement, VRC would not appoint
any other agent for the purchase of copra in Legaspi; and this gives rise indirectly to the
inference that Albaladejo was considered its buying agent. However, the use of this term in one
clause of the contract cannot dominate the real nature of the agreement as revealed in other
clauses, no less than in the caption of the agreement itself. This designation was used for
convenience. The title to all of the copra purchased by Albaladejo remained in it until it was
delivered by way of subsequent sale to VRC. Lastly, the letters from VRC to Albaladejo that the
Court quoted did not indicate anything to the effect that VRC is liable for the such expenses
incurred by Albaladejo, as the letters only noted the dire condition of VRCs copra business, as
well as its hopes to enter the market on a more extensive scale [which was unfortunately
unrealized]

Barretto v Santa Maria 26 Phil. 440


Facts: Alberto Barretto alleges that he is the owner of the whole hacienda called Balintagac. He was in
possession of the said hacienda quietly, peacefully, and continuously, as were his predecessors
since the year 1884 until May, 1912.
Later on, defendant Leonardo F. Barretto alleging himself to be the owner of a certain part of said hacienda
illegally and unduly usurped a portion of land of the said hacienda.
Since that time the defendant had been receiving two-thirds of the fruits which the usurped portion annually
produced, which amounted to 33 uyones and 145 and 33 per cent cavanes of rice at P8 per upon and P2 a
cavan, and whose value amounts to the sum P554; that the defendant refused to return that portion of land
usurped together with the fruits received, or their value, in spite of the fact that he has been required to do so
in writing by the plaintiff.
Issue:
Held: As the extinguishment of the right of the creditor and the termination of the use
and possession of the real property depend upon the entire payment of the debt and its interest, it is proper
the liquidation of accounts having been made to fix definitely the sums of the amount which the
debtors had paid on account of the capital and interests and which had been really received by
the creditor.