Finals Casesdocx

AGENCY IN GENERAL
1. CUI vs. CUI

CASE NUMBER: L-7041 DATE: August 31, 1964
FACTS: The Hospicio is a charitable institution established by
the spouses Don Pedro Cui and Doa Benigna Cui, now
deceased, "for the care and support, free of charge, of indigent
invalids, and incapacitated and helpless persons." It was
incorporated under Act No. 3239 of the Philippine Legislature in
1925 and endowed with extensive properties by the said spouses
through a series of donations, principally the deed of donation
executed in 1926.
Section 2 of Act No. 3239 gave the initial management to the
founders jointly and, in case of their incapacity or death, to
"such persons as they may nominate or designate, in the order
prescribed to them."
Don Pedro Cui died in 1926, while his widow died in 1929. The
administration passed to Mauricio Cui and Dionisio Jakosalem.
The former died on 8 May 1931 and the latter on 1 July 1931.
On 2 July 1931 Dr. Teodoro Cui, only son of Mauricio Cui,
became the administrator. Beginning 1932, a series of
controversies and court litigations ensued concerning the
position of administrator.
Plaintiff Jesus Ma. Cui and defendant Antonio Ma. Cui are
brothers, being the sons of Mariano Cui, one of the nephews of
the spouses Don Pedro Cui and Doa Benigna Cui. In 1960, the
then incumbent administrator, Dr. Teodoro Cui, resigned in
favor of Antonio Ma. Cui pursuant to a "convenio" entered into
between them. On February 28, Antonio Ma. Cui took his oath
of office. Jesus Ma. Cui, had no prior notice of either the
"convenio" or of his brother's assumption of the position.
Dr. Teodoro Cui died on 27 August and the plaintiff wrote a
letter to the defendant demanding that the office be turned over
to him. The demand remained unheeded, the plaintiff filed the
complaint. Romulo Cui later on intervened, claiming a right to
the same office, being a grandson of Vicente Cui, one of the
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nephews mentioned by the founders of the Hospicio in their

deed of donation.
As between Jesus and Antonio the main issue turns upon their
respective qualifications to the position of administrator. Jesus is
the older and under equal circumstances would be preferred
pursuant to section 2 of the deed of donation. However, before
the test of age may be, applied the deed gives preference to the
one, among the legitimate descendants of the nephews named,
"que posea titulo de abogado, o medico, o ingeniero civil, o
farmaceutico, o a falta de estos titulos el que pague al estado
mayor impuesto o contribucion."
What is being disputed is the meaning of the term "titulo de
abogado." Jesus Ma. Cui holds the degree of Bachelor of Laws
from the University of Santo Tomas (Class 1926) but is not a
member of the Bar, not having passed the examinations. Antonio
Ma. Cui is a member of the Bar and although disbarred by the
Court but was reinstated by resolution about two weeks before
he assumed the position of administrator of the Hospicio.
The Court a quo, decied in favor of the plaintiff and held that the
phrase "titulo de abogado," taken alone, means that of a fullfledged lawyer, but that has used in the deed of donation and
considering the function or purpose of the administrator, it
should not be given a strict interpretation but a liberal one," and
therefore means a law degree or diploma of Bachelor of Laws.
Jesus Ma. Cui believed he was entitled to the office in as long
ago as 1932. On January 26 of that year he filed a complaint in
quo warranto against Dr. Teodoro Cui, who assumed the
administration of the Hospicio. Mariano Cui, the plaintiff's
father and Antonio Ma. Cui came in as intervenors. The case
was dismissed by the Court of First Instance upon a demurrer by
the. Upon appeal to the Supreme Court from the order of
dismissal, the case was remanded. The plaintiff, did not
prosecute the case as decided by the Court, but entered into an
arrangement whereby Teodoro Cui continued as administrator,
Mariano Cui was named "legal adviser" and plaintiff Jesus Ma.
Cui accepted a position as assistant administrator.
The plaintiff tried to get the position by a series of extra-judicial
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maneuvers. However, the Commissioner to the Secretary of

Justice ruled that the plaintiff, not being a lawyer, was not
entitled to the administration of the Hospicio.
Defendant Antonio Ma. Cui was reinstated by this Court as
member of the Bar, and succeeded Dr. Teodoro Cui when he
resigned as administrator pursuant to the "convenio" between
them.
ISSUE: WON the administrator should only have possession of
the academic degree of Bachelor of Laws.
HELD: NO. The Court is of the opinion, that whether taken
alone or in context the term "titulo de abogado" means not mere
possession of the academic degree of Bachelor of Laws but
membership in the Bar after due admission, qualifying one for
the practice of law. In Spanish the word "titulo" is defined as
"testimonies o instrumento dado para ejercer un empleo,
dignidad o profesion" and the word "abogado," as follows:
"Perito en el derecho positivo que se dedica a defender en juicio,
por escrito o de palabra, los derechos o intereses de los
litigantes, y tambien a dar dictmen sobre las cuestiones o puntos
legales que se le consultan (Id., p.5) A Bachelor's degree alone,
conferred by a law school upon completion of certain academic
requirements, does not entitle its holder to exercise the legal
profession. The English equivalent of "abogado" is lawyer or
attorney-at-law. This term has a fixed and general signification,
and has reference to that class of persons who are by license
officers of the courts, empowered to appear, prosecute and
defend, and upon whom peculiar duties, responsibilities and
liabilities are devolved by law as a consequence.
ISSUE: WON Jesus Cui is disqualified as being an
administrator. YES.He only has the academic degree of
Bachelor of Laws. The founders of the Hospicio de San Jose de
Barili provided in the deed of donation that if not a lawyer, the
administrator should be a doctor or a civil engineer or a
pharmacist, in that order; or failing all these, should be the one
who pays the highest taxes among those otherwise qualified. A
lawyer, first of all, because under Act No. 3239 the managers or
trustees of the Hospicio shall "make regulations for the
government of said institution (Sec. 3, b); shall "prescribe the
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conditions subject to which invalids and incapacitated and

destitute persons may be admitted to the institute" (Sec. 3, d);
shall see to it that the rules and conditions promulgated for
admission are not in conflict with the provisions of the Act; and
shall administer properties of considerable value for all of
which work, it is to be presumed, a working knowledge of the
law and a license to practice the profession would be a distinct
asset.
ISSUE: WON Antonio Cui is entitled as administrator despite
his past disbarment. YES.
It is argued that although the latter (Antonio) is a member of the
Bar he is nevertheless disqualified by virtue of paragraph 3 of
the deed of donation, which provides that the administrator may
be removed on the ground, among others, of ineptitude in the
discharge of his office or lack of evident sound moral character.
Reference is made to the fact that the defendant was disbarred
by this Court in1957 for immorality and unprofessional conduct.
It is also a fact, however, that he was reinstated in 1960, before
he assumed the office of administrator. His reinstatement is a
recognition of his moral rehabilitation, upon proof no less than
that required for his admission to the Bar in the first place.
As far as moral character is concerned, the standard required of
one seeking reinstatement to the office of attorney cannot be less
exacting than that implied in paragraph 3 of the deed of donation
as a requisite for the office which is disputed in this case. When
the defendant was restored to the roll of lawyers the restrictions
and disabilities resulting from his previous disbarment were
wiped out.
This action must fail on one other ground: it is already barred by
lapse of time amounting the prescription or laches. Under
Section 16 of Rule 66, this kind of action must be filed within
one (1) year after the right of plaintiff to hold the office arose.
ISSUE: WON the action of the plaintiff for administrator has
prescribed. YES.
The failure of the plaintiff to prosecute his claim judicially after
this Court decided the first case of Cui v. Cui in 1934 remanding
it to the trial court for further proceedings; his acceptance
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instead of the position of assistant administrator, allowing Dr.

Teodoro Cui to continue as administrator and his failure to file
an action in quo warranto against said Dr. Cui after 31 July
1956, when the appeal in Civil Case No. R-1216 of the Cebu
Court was dismissed upon motion of the parties precisely so that
the conflicting claims of the parties could be ventilated in such
an action all these circumstances militate against the
plaintiff's present claim in view of the rule that an action in quo
warranto must be filed within one year after the right of the
plaintiff to hold the office arose. The excuse that the plaintiff did
not file an action against Dr. Teodoro Cui after 31 July 1956
because of the latter's illness did not interrupt the running of the
statutory period. And the fact that this action was filed within
one year of the defendant's assumption of office in September
1960 does not make the plaintiff's position any better, for the
basis of the action is his own right to the office and it is from the
time such right arose that the one-year limitation must be
counted, not from the date the incumbent began to discharge the
duties of said office.
ISSUE: WON Romulo Cui is entitled as administrator. NO.
Now for the claim of intervenor and appellant Romulo Cui. This
party is also a lawyer, grandson of Vicente Cui, one of the
nephews of the founders of the Hospicio mentioned by them in
the deed of donation. He is further, in the line of succession,
than defendant Antonio Ma. Cui, who is a son of Mariano Cui,
another one of the said nephews. The deed of donation provides:
"a la muerte o incapacidad de estos administradores (those
appointed in the deed itself) pasara a una sola persona que sera
el varon, mayor de edad, que descienda legitimamente de
cualquiera de nuestros sobrinos legitimos Mariano Cui,
Mauricio Cui, Vicente Cui, Victor Cui, y que posea titulo de
abogado ... En igualdad de circumstancias, sera preferido el
varon de mas edad descendiente de quien tenia ultimamente la
administration." Besides being a nearer descendant than Romulo
Cui, Antonio Ma. Cui is older than he and therefore is preferred
when the circumstances are otherwise equal. The intervenor
contends that the intention of the founders was to confer the
administration by line and successively to the descendants of the
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nephews named in the deed, in the order they are named. Thus,
he argues, since the last administrator was Dr. Teodoro Cui, who
belonged to the Mauricio Cui line, the next administrator must
come from the line of Vicente Cui, to whom the intervenor
belongs. This interpretation, however, is not justified by the
terms of the deed of donation.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the
judgment appealed from is reversed and set aside, and the
complaint as well as the complaint in intervention are dismissed,
with costs equally against plaintiff-appellee and intervenorappellant.
2. RALLOS vs. FELIX GO CHAN & SONS REALTY
CORPORATION
FACTS: Concepcion and Gerundia Rallos were sisters and
registered co-owners of a parcel of land known as Lot No. 5983
of the Cadastral Survey of Cebu covered by Transfer Certificate
of Title No. 11116 of the Registry of Cebu.
They executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell such land for and
in their behalf.
After Concepcion died, Simeon Rallos sold the undivided shares
of his sisters Concepcion and Gerundia to Felix Go Chan &
Sons Realty Corporation for the sum of P10,686.90. New TCTs
were issued to the latter.Petitioner Ramon Rallos, administrator
of the Intestate Estate of Concepcion filed a complaint praying
(1) that the sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be unenforceable, and said share
be reconveyed to her estate; (2) that the Certificate of 'title
issued in the name of Felix Go Chan & Sons Realty Corporation
be cancelled and another title be issued in the names of the
corporation and the "Intestate estate of Concepcion Rallos" in
equal undivided and (3) that plaintiff be indemnified by way of
attorney's fees and payment of costs of suit.
CFI: [Plaintiffs Complaint]
Sale of land was null and void insofar as the one-half proindiviso share of Concepcion Rallos Ordered the issuance of
new TCTs to respondent corporation and the estate of
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Concepcion in the proportion of 12 share each pro-indiviso and

the payment of attorneys fees and cost of litigation.[Respondent
filed cross claim against Simon Rallos(*Simon and Gerundia
died during pendency of case)]
Juan T. Borromeo, administrator of the Estate of Simeon Rallos
was ordered to pay defendant the price of the 12 share of the
land (P5,343.45) plus attorneys fees [Borromeo filed a third
party complaint against Josefina Rallos, special administratrix of
the Estate of Gerundia]. Dismissed without prejudice to filing
either a complaint against the regular administrator of the Estate
of Gerundia Rallos or a claim in the Intestate- Estate of
Cerundia Rallos, covering the same subject- matter
CA: CFI Decision reversed, upheld the sale of Concepcions
share.
MR: denied.
ISSUES & RULING:
1) WON sale was valid although it was executed after the death
of the principal, Concepcion.
Sale was void. No one may contract in the name of another
without being authorized by the latter, or unless he has by law a
right to represent him (Art. 1317 of the Civil Code). Simons
authority as agent was extinguished upon Concolacions death
2) WON sale fell within the exception to the general rule that
death extinguishes the authority of the agent
The sale did not fall under the exceptions to the general rule that
death ipso jure extinguishes the authority of the agent Art. 1930
inapplicable: SPA in favor of Simon Rallos was not coupled
with interest
Art. 1931 inapplicable:
Simon Rallos knew (as can be inferred from his pleadings) of
principal Concepcions death. For Art 1931 to apply, both
requirements must be present
3) WON agents knowledge of the principals death is a material
factor.
Yes, agents knowledge of principals death is material.
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Respondent asserts that: there is no provision in the Code which

provides that whatever is done by an agent having knowledge of
the death of his principal is void even with respect to third
persons who may have contracted with him in good faith and
without knowledge of the death of the principal. Court says: this
contention ignored the ignores the existence of the general rule
enunciated in Article 1919 that the death of the principal
extinguishes the agency. Article 1931, being an exception to the
general rule is to be strictly construed
3. CONDE v CA
FACTS:
Margarita Conde, Bernardo Conde and the petitioner Dominga
Conde, as heirs of Santiago Conde, sold with right of
repurchase, within ten (10) years, a parcel of agricultural land
with to Casimira Pasagui, married to Pio Altera), for P165.00.
On 17 April 1941, the Cadastral Court of Leyte adjudicated Lot
No. 840 to the Alteras "subject to the right of redemption by
Dominga Conde. Original Certificate of Title No. N-534 in the
name of the spouses Pio Altera and Casimira Pasagui was then
transcribed in the "Registration Book" of the Registry of Deeds
of Leyte.
On 28 November 1945, private respondent Paciente Cordero,
son-in-law of the Alteras, signed a document in the Visayan
dialect. Neither of the vendees-a-retro, Pio Altera nor Casimira
Pasagui, was a signatory to the deed. Petitioner maintains that
because Pio Altera was very ill at the time, Paciente Cordero
executed the deed of resale for and on behalf of his father-inlaw. Petitioner further states that she redeemed the property with
her own money as her co-heirs were bereft of funds for the
purpose. Afterwhich, Pio Altera sold the disputed lot to the
spouses Ramon Conde and Catalina T. Conde (not related to
petitioner). Contending that she had validly repurchased the lot
in question in 1945, Dominga Conde filed, a Complaint against
the respondents for quieting of title to real property and
declaration of ownership.
ISSUE: WON there was an implied agency when Cordero
signed the repurchase document
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HELD: YES. If petitioner had done nothing to formalize her

repurchase, by the same token, neither have the vendees-a-retro
done anything to clear their title of the encumbrance therein
regarding petitioner's right to repurchase. No new agreement
was entered into by the parties as stipulated in the deed of pacto
de retro, if the vendors a retro failed to exercise their right of
redemption after ten years. If, petitioner exerted no effort to
procure the signature of Pio Altera after he had recovered from
his illness, neither did the Alteras repudiate the deed that their
son-in-law had signed.
Thus, an implied agency must be held to have been created
from their silence or lack of action, or their failure to repudiate
the agency. Possession of the lot in dispute having been
adversely and uninterruptedly with petitioner from 1945 when
the document of repurchase was executed, to 1969, when she
instituted this action, or for 24 years, the Alteras must be
deemed to have incurred in laches.
4. BA FINANCE CORPORATION vs. COURT OF

APPEALS
FACTS: On December 17, 1980, Renato Gaytano, doing
business under the name Gebbs International, applied for and
was granted a loan with respondent Traders Royal Bank in the
amount of P60,000.00. As security for the payment of said loan,
the Gaytano spouses executed a deed of suretyship whereby they
agreed to pay jointly and severally to respondent bank the
amount of the loan including interests, penalty and other bank
charges.
In a letter dated December 5, 1980 addressed to respondent
bank, Philip Wong as credit administrator of BA Finance
Corporation for and in behalf of the latter, undertook to
guarantee the loan of the Gaytano spouses.
Partial payments were made on the loan leaving an unpaid
balance in the amount of P85,807.25. Since the Gaytano spouses
refused to pay their obligation, respondent bank filed with the
trial court complaint for sum of money against the Gaytano
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spouses and petitioner corporation as alternative defendant.

The Gaytano spouses did not present evidence for their defense.
Petitioner corporation, on the other hand, raised the defense of
lack of authority of its credit administrator to bind the
corporation.
On December 12, 1988, the trial court: judgment in favor of
plaintiff and against defendants/Gaytano spouses, ordering the
latter to jointly and severally pay the plaintiff the following
among others P85,807.25
Not satisfied with the decision, respondent bank appealed with
the Court of Appeals. On March 13, 1990, respondent appellate
court rendered judgment modifying the decision of the trial
court ordering the defendants Gaytano spouses and alternative
defendant BA Finance Corporation, jointly and severally, to pay
the plaintiff the amount of P85,807.25
Hence this petition was filed with the petitioner assigning the
following errors committed by respondent appellate court:
ISSUE: Whether the plaintiff was guilty of estoppels despite the
fact that it never knew of such alledged letter-guaranty.
RULING:
Persons dealing with an assumed agent, whether the assumed
agency be a general or special one are bound at their peril, if
they would hold the principal liable, to ascertain not only the
fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to
establish it (Harry Keeler v. Rodriguez, 4 Phil. 19).
that a power of attorney or authority of an agent should not be
inferred from the use of vague or general words. Guaranty is not
presumed, it must be expressed and cannot be extended beyond
its specified limits (Director v. Sing Juco, 53 Phil. 205).
We find that the said conclusion has no basis in fact. Respondent
bank had not shown any evidence aside from the testimony of
the credit administrator that the disputed transaction of guaranty
was in fact entered into the official records or files of petitioner
corporation, which will show notice or knowledge on the latter's
part and its consequent ratification of the said transaction. In the
absence of clear proof, it would be unfair to hold petitioner
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corporation guilty of estoppel in allowing its credit administrator

to act as though the latter had power to guarantee.
ACCORDINGLY, the petition is GRANTED and the assailed
decision of the respondent appellate court dated March 13, 1990
is hereby REVERSED and SET ASIDE and another one is
rendered dismissing the complaint for sum of money against BA
Finance Corporation.
OBLIGATIONS OF THE AGENT
1. PNB V. MANILA SURETY & FIDELITY CO., INC.
FACTS: Adams & Taguba Corporation (ATACO) constituted
PNB as its assignee and attorney-in-fact to receive and collect
from the Bureau of Public Works the amount to pay for the
asphalt delivered to it under a trust receipt guaranteed by Manila
Surety. ATACO delivered to BPW asphalt worth P431,466.52.
Of this amount, PNB was able to regularly collect a total of
P106,382.01. However, due to unexplained reasons, PNB was
not able to collect until the investigators found out that more
money were payable to ATACO from BPW. The latter allowed
another creditor to collect funds due to ATACO under the same
purchase order, to a total of P311,230.41.
An agent is required to act with the care of a good father of a
family and becomes liable for the damages, which the principal
may suffer through his non-performance. A bank is answerable
for negligence in failing to collect the sums due its debtor from
the latters own debtor, contrary to said banks duty as holder of
an exclusive and irrevocable power of attorney to make such
collections. The general rule under A1883 is that an agent who
acts in his own name is a bar against the right of action of the
principal against the person to whom the agent has contracted
with. In this case, the agent is the one primarily bound.
Exception: When the contract involves things belonging to the
principal.
Thus, PNB sued both ATACO and Manila Surety to recover the
balance of P158,563.18, plus interests and damages. CA ruled
that PNB was negligent in having stopped collecting from BPW
before ATACOs debt is fully collected, thereby allowing funds
to be taken by other creditors to the prejudice of the surety. PNB
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asserts that the power of attorney executed in it is favor from

ATACO was merely an additional security; that it was the duty
of the surety to see to it that the obligor fulfills his obligation;
and that PNB has no obligation to the surety to collect any sum
from ATACO.
ISSUE: W/N PNB is negligent as an agent-creditor of ATACO
in collecting sums due to it
HELD: YES. The CA did not hold PNB responsible for its
negligence in failing to collect from ATACO for its debt to PNB,
but for ITS NEGLECT IN COLLECTING SUMS DUE TO
ATACO FROM BPW. An agent is required to act with the care
and diligence of a good father of a family and becomes liable for
the damages, which the principal may suffer through its nonperformance. PNBs power to collect was expressly made
irrevocable so that BPW could very well refuse to make
payments to ATACO itself, and reject any demands by the
surety.
2. Ramos vs. Caoibes, 94 Phil. 440
FACTS: Concepcion Ramos appointed Caoibes through a power
of attorney to collect an amount due him from the Philippine
War Damage Commission. Half of that amount will then be
given to the sister of Concepcion and half to her niece and
nephew as evidenced by an affidavit. Days after Concepcion
died, a Check was issued to Caoibes when he presented the
power of attorney and affidavit and later on encashed it for
himself. The administratrix discovered the collection made by
Caoibes. The administratrix filed to the court asking Caoibes to
deposit the money to the clerk of court. Caoibes contended that
he will deliver half of the amount to the clerk of court and then
said that he had the right to retain half of the money by virtue of
the power of attorney and the Affidavit.
ISSUE: Whether Caoibes is correct with her contention that he
had the right to retain the money by virtue of the power of
attorney?
RULING: No. Caoibes as an agent had the obligation to deliver
the amount collected by virtue of the power of attorney to his
principla, Concepcion or the administratrix since she died. No
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where in the in power of attorney did it state that the was a

cession of rights made in favour of Caoibes. And the prevailing
provision during the time of the transaction stated that a contract
of agency is deemed gratuitous unless the agent is a professional
agent and there was no showing that Caoibes was such. Lastly,
an agency is terminated by death of the principal or of the agent.
When Caoibes made use of the power of attorney, the principal
was already dead.
3. Gutierrez Hermanos vs Oria Hermanos
FACTS: Gutierrez Hermanos and Oria Hermanos entered into a
contract wherein GH bound itself to acquire for and forward to
OH certain goods such as rice, cash, petroleum, etc. Because of
this, GH and OH decided to open a mutual current account
under Oria Hermanos on the books of Gutierrez Hermanos
with 8% interest. Gutierrez Hermanos informed Oria Hermanos.
that said current account would be closed within 30 days, after
which, Oria Hermanos would have to settle the balance due to
Gutierrez Hermanos, if any. However, despite repeated demands
from Gutierrez Hermanos to Oria Hermanos, the latter never
paid which led to the filing of this suit.
Up until the closing of the account, GH had sent OH various
quantities of salt, petroleum, tobacco, groceries, and beverages
and had collected a commission on the sale. The semiannual
accounts rendered by GH were never questioned. However, OH
claims that GH had set higher prices than the price actually paid,
thereby defrauding OH. OH prayed that GH render an account
as well as the vouchers used to determine the purchase price of
the said goods. OH also claimed that GH had kept the discount
in addition to collecting commission on the sale of goods.
Issue: whether or not OH is liable to GH for its unsettled
account?
Held:Yes, but only upon proper accounting of the expenses for
the shipment of rice and petroleum which were claimed to be
overpriced.When an agent in executing the orders and
commissions of his principal carries out the instructions he has
received from his principal, and does not appear to have
exceeded his authority or to have acted with negligence, deceit,
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or fraud, he cannot be held responsible for the failure of his

principal to accomplish the object of the agency.Since it was not
proven that the price of the goods were overstated, thereby
defrauding OH, OH cannot escape the liability of paying GH for
performing the task given to him by OH as his principal.
A. PARTNERSHIP IN GENERAL
1. In The Matter of the Petition for Authority to Continue
Use of the Firm Name Ozaeta,
Romulo, De Leon etc.
Facts: The surviving parters of Atty. Herminio Ozaeta filed a
petition praying that they be
allowed to continue using, in the name of their firm, the names
of their partner who
passed away. One of the petitioners arguments stated that no
local custom prohibits the
continued use of a deceased partners name in a professional
firms name in so far as
Greater Manila Area is concerned. No custom exists which
recognizes that the name of a
law firm necessarily identifies the individual members of the
firm. They also stated that
the continued use of a deceased partners name in the firm name
of law partnerships has
been consistently allowed by U.S. Courts and is an accepted
practice in the legal
profession of most countries in the world.
Issue: Whether or not the law firm Ozaeta, Romulo, De Leon,
Mabanta & Reyes is allowed to
sustain the name of their deceased partner, Atty. Herminio
Ozaeta, in the name of their firm.
Held: NO. Canon 33 of the Canons of Professional Ethics
adopted by the American Bar
Association stated the following:
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The continued use of the name of a deceased or former partner

when permissible by local custom,
is not unethical but care should be taken that no imposition or
deception is practiced through this use.
No local custom permits or allows the continued use of a
deceased or former partners name in the firm names of law
partnerships. Firm names, under Philippine custom, identify the
more active or senior partners in a firm. Firm names in the
Philippines change and evolve when partners die, leave or a new
one is added. It is questionable to add the new name of a partner
and sustain the name of the deceased one since they have never
been, technically, partners in the first place. When it comes to
the arguments of the petitioners stating that U.S. Courts grant
the continued use of the deceased partners name, this is so
because in the U.S., it is a sanctioned custom as stated in the
case of
Mendelsohn v. Equitable Life Assurance Society (33 N.Y.S 2d
733). This does not apply in the Philippines. The petition filed
herein is denied and petitioner is advised to drop the name
OZAETA from the firm name
2. Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin

Bacorro v. CA, SEC and
Joaquin Misa
Facts: On December 19, 1980, respondent Misa associated
himself together, as senior partner with petitioners Ortega, del
Castillo, Jr., and Bacorro, as junior partners. On Feb. 17, 1988,
respondent Misa wrote a letter stating that he is withdrawing and
retiring from the firm and asking for a meeting with the
petitioners to discuss the mechanics of the liquidation. On June
30, 1988, petitioner filed a petition to the Commision's
Securities Investigation and Clearing Department for the formal
dissolution and liquidation of the partnership. On March 31,
1989, the hearing officer rendered a decision ruling that the
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withdrawal of the petitioner has not dissolved the partnership.

On appeal, the SEC en banc reversed the decision and was
affirmed by the Court of Appeals. Hence, this petition.
Ortega, then a senior partner in the law firm Bito, Misa, and
Lozada withdrew in said firm. He filed with SEC a petition for
dissolution and liquidation of partnership. SEC en banc ruled
that withdrawal of Misa from the firm had dissolved the
partnership.
Reason: since it is partnership at will, the law firm could be
dissolved by any partner at anytime, such as by withdrawal
therefrom, regardless of good faith or bad faith, since no partner
can be forced to continue in the partnership against his will.
Issue:
1. WON the partnership of Bito, Misa & Lozada (now Bito,
Lozada, Ortega & Castillo) is a partnership at will; 2. WON the
withdrawal of Misa dissolved the partnership regardless of his
good or bad faith;
Held:
1. Yes. The partnership agreement of the firm provides that
[t]he partnership shall continue so long as mutually satisfactory
and upon the death or legal incapacity of one of the partners,
shall be continued by the surviving partners.
2. Yes. Any one of the partners may, at his sole pleasure, dictate
a dissolution of the partnership at will (e.g. by way of
withdrawal of a partner). He must, however, act in good faith,
not that the attendance of bad faith can prevent the dissolution of
the partnership but that it can result in a liability for damages.
B. OBLIGATINS OF
THEMSELVES
1. Lozana vs. Depakakibo
THE
PARTNERS
AMONG
FACTS: Lozana and Depakakibo established a partnership for

the purpose of maintaining, operating, and distributing electric
light and power in the Municipality of Dumangas. The
partnership is capitalized at the sum of P30, 000.00 where
Lozana agreed to furnish 60% while Depakakibo, 40%.
However, the franchise for venture in favor of Buenaflor was
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cancelled and revoked by the Public Service Commission.

Lozana thereafter sold Generator Buda [Lozanas contribution to
the partnership; no liquidation made] to Decologon. When the
decision was appealed, a temporary certificate of public
convenience was issued in the name of Decolongon.
Depakakibo sold one Crossly Diesel Engine [Depakakibos
contribution to the partnership] to Spouses Jimenea and Harder.
Lozana brought action against Depakakibo alleging the latter
wrongfully detained the Generator Buda and wooden posts to
which he is entitled to the possession of. Lozano prayed the
properties be delivered back to him. CFI ordered sheriff to take
possession of the properties and the delivery thereof to Lozano.
Depakakibo alleged properties have been contributed to the
partnership and therefor he is not unlawfully detaining them. In
addition, Lozano sold his contribution to partnership in violation
of terms of their agreement.
CFI declared Lozano owner of and entitled to the equipment.
Depakakibo appealed decision to the Supreme Court.
ISSUE:
W/N partnership is void or the act of the partnership in
furnishing electric current to the franchise holder without
previous approval of Public Service Commission render the
partnership void?
W/N disposal of contribution of parties is allowed.
RULING:
Validity of the Partnership
Partnership is valid. The fact of furnishing the current to the
holder of the franchise alone, without the previous approval of
the Public Service Commission, does not per se make the
contract of partnership null and void from the beginning and
render the partnership entered into by the parties for the purpose
also void and non-existent
Disposal of Contributed Property to the Partnership.
Facts show that parties entered into the contract of partnership,
Lozana contributing the amount of P18, 000, and there has not
been liquidation prior to the sale of the contributed properties:
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Buda Diesel Engine and 70 posts. It necessarily follows that the

Buda diesel engine contributed by the plaintiff had become the
property of the partnership. As properties of the partnership, the
same could not be disposed of by the party contributing the
same without the consent or approval of the partnership or of the
other partner. (Clemente vs. Galvan, 67 Phil., 565).
2.
MAXIMILIANO SANCHO,
vs. SEVERIANO
LIZARRAGA
FACTS: The plaintiff brought an action for the rescission of the
partnership contract between himself and the defendant and the
reimbursement of his investment worth 50,000php with interest
at 12 per cent per annum form October 15, 1920, with costs, and
any other just and equitable remedy against said defendant. The
defendant denies generally and specifically all the allegations of
the complaint and asked for the dissolution of the partnership,
and the payment to him as its manager and administrator P500
monthly from October 15, 1920 until the final dissolution with
interest.
The CFI found that the defendant had not contributed all the
capital he had bound himself to invest hence it demanded that
the defendant liquidate the partnership, declared it dissolved on
account of the expiration of the period for which it was
constituted, and ordered the defendant, as managing partner, to
proceed without delay to liquidate it, submitting to the court the
result of the liquidation together with the accounts and vouchers
within the period of thirty days from receipt of notice of said
judgment. The plaintiff appealed from said decision praying for
the rescission of the partnership contract between him and the
defendant in accordance with Art. 1124.
ISSUE:
WON plaintiff acquired the right to demand rescission of the
partnership contract according to article 1124 of the Civil Code.
HELD:
The SC ruled that owing to the defendants failure to pay to the
partnership the whole amount which he bound himself to pay, he
became indebted to the partnership for the remainder, with
interest and any damages occasioned thereby, but the plaintiff
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did not thereby acquire the right to demand rescission of the

partnership contract according to article 1124 of the Code.
Article 1124 cannot be applied to the case in question, because it
refers to the resolution of obligations in general, whereas articles
1681 and 1682 specifically refer to the contract of partnership
in particular. And it is a well known principle that special
provisions prevail over general provisions. Hence, SC dismissed
the appeal left the decision appealed from in full force.
3. Uy vs. Puzon
FACTS: Puzon entered into a contract with the Republic of the
Philippines for the construction of a road and 5 bridges.
However,
Puzon found difficulty in accomplishing both projects, so he
established a partnership with Uy as sub-contractor of the
projects for financial assistance and the profits shall be divided
equally between them; the resulting partnership is UP
Construction
Company.
The partners agreed to contribute P50, 000 each as capital.
However, Puzon failed to pay but promised to contribute his
share as soon as his application of loan with the PNB shall be
approved. Uy gave Puzon advance contribution of his share in
partnership for Puzon top pay his obligations with PNB. Uy was
entrusted with the management of the project since Puzon is
busy with his other projects; whatever expense Uy may incur
shall be considered part of his contribution. Upon approval of
Puzons loan with the PNB, he gave Uy P60, 000 for
reimbursement of Uys contribution and Puzons contribution to
the partnership capital.
To guarantee the payment of the loan, Puzon assigned to PNB
all payments to be received on account of the contracts with the
Bureau of Public Highways for the construction; this was done
without the knowledge and consent of Uy. Financial demands of
the project increased, thus, Uy called on Puzon to place his
capital contribution; Puzon failed to do so. Uy thereafter sent
letters of demand to which Puzon replied that hes not capable of
putting additional capital.
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Puzon wrote UP Construction Company terminating their

subcontract agreement. Uy was then not allowed in the office of
UP Construction Company and his authority to deal with BPH
was revoked. Hence, he instituted an action against Puzon
seeking the dissolution of the partnership and payment of
damages for the violation of the latter of the terms of their
partnership agreement.
RTC found that Puzon failed to contribute his share in the
capital of the partnership and caused the failure of partnership to
realize expected profits. The court ordered the dissolution of the
partnership and Puzon to pay Uy a certain sum. Franco Puzon
substituted Bartolome Puzon on the appeal of the case before the
Supreme Court.
ISSUE/S:
W/N the amount of money ordered by the trial court for the
failure to contribute his share in the capital of the
partnership is proper.
RULING:
The award of P200,000.00 as his share in the unrealized profits
of the partnership is proper. Under Article 2200 of the Civil
Code, indemnification for damages shall comprehend not only
the value of the loss suffered, but also that of the profits which
the obligee failed to obtain. In other words lucrum cessans is
also a basis for indemnification. There is no doubt Uy failed to
make profits because of Puzon's breach of contract. The
partnership showed some profits even though the profit and loss
statement showed net loss; it may be due to error in accounting.
Had the appellant not been remiss in his obligations as partner
and as prime contractor of the construction projects in question
as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total
contract amount of these two projects is P2,327,335.76, it is
reasonable to expect that the partnership would have earned
much more than the P334,255.61 We have hereinabove
indicated. The award, therefore, made by the trial court of the
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amount of P200,000.00, as compensatory damages, is not

speculative, but based on reasonable estimate.
As cited in Moran vs. CA The rule is, when a partner who has
undertaken to contribute a sum of money fails to do so, he
becomes a debtor of the partnership for whatever he may have
promised to contribute (Art. 1786, Civil Code) and for interests
and damages from the time he should have complied with his
obligation (Art. 1788, Civil Code). Thus in Uy v. Puzon (79
SCRA 598), which interpreted Art. 2200 of the Civil Code of the
Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein
was remiss in his obligations as a partner and as prime
contractor of the construction projects in question. This case was
decided on a particular set of facts. We awarded compensatory
damages in the Uy case because there was a finding that the
constructing business is a profitable one and that the UP
construction company derived some profits from its contractors
in the construction of roads and bridges despite its deficient
capital. Besides, there was evidence to show that the
partnership made some profits during the periods from July 2,
1956 to December 31, 1957 and from January 1, 1958 up to
September 30, 1959. The profits on two government contracts
worth P2,327,335.76 were not speculative. In the instant case,
there is no evidence whatsoever that the partnership between the
petitioner and the private respondent would have been a
profitable venture. In fact, it was a failure doomed from the start.
There is therefore no basis for the award of speculative damages
in favor of the private respondent. Furthermore, in the Uy case,
only Puzon failed to give his full contribution while Uy
contributed much more than what was expected of him.
OBLIGATIONS OF THE PARTNERS TO A THIRD
PERSON
PNB v. Lo
Facts:
1916 Severo Eugenio Lo and Ng Khey Ling together with J.A.
Say Lian Ping, Ko Tiao Hun, On Yem Ke Lam and Co Sieng
Peng formed a commercial partnership under the name of Tai
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Sing Co., with a capital of P40,000 contributed by said

partners. Articles of Copartnership states that:
Partnership was to last for 5 years from after the date of its
organization
Purpose: to do business in the City of Iloilo or in any other part
of the Philippines the partners
might desire; purchase and sale of merchandise, goods, and
native, as well as Chinese and
Japanese products J.A. Say Lian Ping was appointed general
manager A. Say Lian Ping executed a power of attorney in favor
of A. Y. Kelam, authorizing him to act in his stead as manager
and administrator of Tai Sing & Co. and to obtain a loan of
P8,000 in current account from PNB.
Kelam mortgaged certain personal property of the partnership.
The credit was renewed several times and Kelam, as attorney-infact of Tai Sing & Co., executed a chattel mortgage in favor of
PNB as security as security for a loan P20,000. This mortgage
was again renewed and Kelam as attorney-in-fact of Tai Sing &
Co. executed another chattel mortgage for the said sum of
P20,000. 1920 Yap Seng, Severo Lo, Kelam and Ng Khey
Ling, the latter represented by M. Pineda Tayenko, executed a
power of attorney in favor of Sy Tit. By virtue of the power of
attorney, Sy Tit representing Tai Sing & Co. obtained a credit
of P20,000 from PNB in 1921 and executed a chattel mortgage
on certain personal property belonging to the partnership.
Defendants had been using this commercial credit in a current
account with the plaintiff bank from 1918 1922 and as of
December 31, 1924 the debit balance of this account P 20, 239.
PNB claims in the complaint this amount and an interest of P16,
518.74.
Eugenio Los defense:
Tai Sing & Co. was not a general partnership. Commercial
credit in current account which Tai Sing & Co. obtained from
PNB had not been authorized by the board nor was the person
who subscribed said contract authorized under the articles of
copartnership
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Trial Court: in favor of PNB

ISSUE: Whether or not Tai Sing & Co. is a general
partnership in that the appellants can be held liable to pay PNB
HELD: Yes. Tai Sing & Co. is a general partnership
RATIO:
Appellants admit and it appears from the articles of
copartnership that Tai Sing & Co. is a general partnership and
it was registered in the mercantile register of Iloilo. The fact that
the partners opt to use Tai Sing & Co. as the firm name does
not affect the liability of the general partners to third parties
under Article127 of the Code of Commerce. Jurisprudence states
that:
The object of article 126 of the Code of Commerce in requiring
a general partnership to transact business under the name of all
its members, of several of them, or of one only, is to protect the
public from imposition and fraud. It is for the protection of the
creditors rather than of the partners themselves. The law must be
unlawful and unenforceable only as between the partners and at
the instance of the violating party, but not in the sense of
depriving innocent parties of their rights who may have dealt
with the offenders in ignorance of the latter having violated the
law. Contracts entered into by commercial associations
defectively organized are valid when voluntarily executed by the
parties, and the only question is whether or not they complied
with the agreement. Therefore, the defendants cannot invoke in
their defense the anomaly in the firm name which they
themselves adopted. As to the alleged death of the manager, Say
Lian Ping before Kelam executed the contracts of mortgage with
PNB, this would not affect the liability of the partnership Kelam
was a partner who contracted in the name of the partnership and
the other partners did not object Lo, Khey Ling, and Yap Seng
appointed Sy Tit as manager, and he obtained from PNB the
credit in current account. Trial Court correctly held defendants
to be jointly and severally liable to PNB. This is in accordance
with Article 127 of the Code of Commerce all the members of
a general partnership, be they managing partners thereof or not,
shall be personally and solidarily liable with all their property,
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for the results of the transactions made in the name and for the
account of the partnership, under the signature of the latter, and
by a person authorized to use it.
E. DISSOLUTION AND WINDING UP
Benjamin Yu v. National Labor Relations Commission &
Jade Mountain Products
Co. Ltd., Willy Co, Rhodora Bendal, Lea Bendal, Chiu
Shian Jeng and Chen Ho-Fu
Facts: Yu ex-Assistant General Manager of the marble
quarrying and export business operated
by a registered partnership called Jade Mountain Products Co.
Ltd. partnership was originally organized with Bendals as
general partners and Chin Shian Jeng, Chen Ho-Fu and Yu
Chang as limited partners; partnership business consisted of
exploiting a marble deposit in Bulacan
Yu, as Assistant General Manager, had a monthly salary of 4000.
Yu, however, actually received only half of his stipulated salary,
since he had accepted the promise of the partners that the
balance would be paid when the firm shall have secured
additional operating funds from abroad. Yu actually managed
the operations and finances of the business; he had overall
supervision of the workers at the marble quarry in Bulacan and
took charge of the preparation of papers relating to the
exportation of the firms products. General partners Bendals sold
and transferred their interests in the partnership to Co and
Emmanuel Zapanta partnership was constituted solely by Co and
Zapanta; it continued to use the old firm name of Jade Mountain.
Yu dismissed by the new partners
Issues:
1. WON the partnership which had hired Yu as Asst. Gen.
Manager had been extinguished and replaced by a new
partnership composed of Co and Zapanta; 2. if indeed a new
partnership had come into existence, WON Yu could
nonetheless assert his rights under his employment contract with
the old partnership as against the new partnership
Held:
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1. Yes. Changes in the membership of the partnership resulted in

the dissolution of the old partnership which had hired Yu and the
emergence of a new partnership composed of Co and Zapanta.
Legal bases:
Art. 1828. The dissolution of a partnership is the change in the
relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding
up of the business.
Art. 1830. Dissolution is caused:
(1) without violation of the agreement between the partners;
(b) by the express will of any partner, who must act in good
faith, when no definite term
or particular undertaking is specified;
(2) in contravention of the agreement between the partners,
where the circumstances do not permit a dissolution under any
other provision of this article, by the express will of any
partner at any time; No winding up of affairs in this case as
contemplated in Art. 1829: on dissolution the partnership is not
terminated, but continues until the winding up of partnership
affairs is completed the new partnership simply took over the
business enterprise owned by the old partnership, and continued
using the old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing its
net assets, and then re-assembling the said assets or most of
them and opening a new business enterprise
2. Yes. the new partnership is liable for the debts of the old
partnership
Legal basis: Art. 1840 (see codal)
Yu is entitled to enforce his claim for unpaid salaries, as well as
other claims relating to his
employment with the previous partnership, against the new
partnership, But Yu is not entitled to reinstatement. Reason: new
partnership was entitled to appoint and hire a new gen. or asst.
gen. manager to run the affairs of the business enterprise take
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over. An asst. gen. manager belongs to the most senior ranks of

management and a new partnership is entitled to appoint a top
manager of its own choice and confidence. The non-retention of
Yu did not constitute unlawful termination. The new partnership
had its own new General Manager, Co, the principal new owner
himself. Yus old position thus became superfluous or redundant.
Yu is entitled to separation pay at the rate of one months pay for
each year of service that he had rendered to the old partnership,
a fraction of at least 6 months being considered as a whole year.
TRUST IN GENERAL
1. Salao vs. Salao, 70 SCRA 65
FACTS: Manuel Salao and Valentina Ignacio has four children
Patricio, Alejandra, Juan and Ambrosia. Manuel Salao and
Patricio died. No documentary evidence as to what properties
formed part of Manuel Salaos estate. Valentina also died and
her estate was administered by Ambrosia. Patricio died and
being represented by Valentin (his son). Therefore, the estate
will be divided to Valentin, Alejandra, Juan and Ambrosia.
Valentina left a lot of properties and the distributive share of
each was P8,135 but Valentin got more than the said amount so
he was forced to pay his coheirs the difference.
Before Valentina died, Juan and Ambrosia secured a torrens title
in their name 47ha of fishpond in Calunaran, Pampanga which is
also known as Lot 540 of Hermosa cadastre and exercised
dominical rights over it to the exclusion of Valentin. It was
contended that Juan and Ambrosia used the common fund to buy
the said fishpond but was denied by the other party. The said
fishpond was sold under pacto de retro sale to two persons but
was redeemed in due time. Juan and Ambrosia also bought a
swampland in Lewa, Pampanga and registered it under their
names, it became cadastral lot no. 544 of Hermosa Cadastre it
adjoins the Calunuran fishpond. Juan and valentin died. Valentin
has two daughters Benita and Victorina. Valentins estate
consisted of 2 fishponds inherited from Valentina.
Ambrosia donated to Benita 3 lots and a deed of donation was
signed. It was only after Abrosias death benita filed an action
for reconveyance of the caluran fishpond which was allegedly
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held in trust and which had become the sole property of Juani
(son of juan).
Before ambrosias death, she donated share of the fishpond to
Juani. Benita and children of victorina contends that they had a
1/3 share in the 2 fishponds that Juani took possession. Juani
refused to give Benita and children their respective shares. Juani
then contends that the fishponds were only owned by Juan and
ambrosia - Valentin has no interest on the said fishpond.
Benita and children filed for an annulment of the donation to
Juani and reconveyance to them. But as a defense of juani, he
pleaded the indefeasibility of the Torrens title secured by Juan
and ambrosia and prescription and laches. Juani died and
substituted by his wife (pascual) and children. The court ruled
that there was no co-ownership and the said fishpond was
properly donated to Juani. In addition, the parties involved in
the alleged trust were dead.
ISSUE:
W/N the fishfpond was held in trust for Valentin by Juan and
Ambrosia and W/N their action for reconveyance had already
prescribed.
HELD:
No. And if ever there was a trust, action has already prescribed.
RATIO:
Trust is the right enforceable solely in equity, to the beneficial
enjoyment of the property indicate duties, relations, and
responsibilities. It can be either express or implied. No express
trust concerning an immovable or any interest therein may be
proven by parol evidence. It is created by writing or deed or
will. Resulting trust is created by the act or construction of law.
Constructive trust arise by operation of law. Trust must be
proven by clear, satisfactory and convincing evidence.
No documentary evidence was presented by benita and children
to prove that there was an express trust over the calunuran
fishpond in favor of valentin. Purely parol evidence was offered.
There was also no resulting trust because there were never was
any intention on the part of Juan, ambrosia and valentin to create
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any trust. No constructive trust because the consent of juan and

ambrosia wan not vitiated by fraud or mistake.
And assuming there is implied trust, it was already barred by
prescription (10 yrs supposedly but filed after 40 yrs from the
date of registration) and laches. The court said that there was no
community of property during the lifetime of valentina (great
grandmother) is substantiated by benita and childrens
documentary evidence.
The fact that Valentin never bothered for 40 years to procure any
documentary evidence to establish his supposed interest in the 2
fishponds is very suggestive of the absence of such interest.
Torrens title is generally a conclusive evidence of the ownership
of the land and in order to maintain an action for reconveyance,
proof as to the fiduciary relation of the parties must be clear and
convincing.
In addition, benita cannot represent valentin because in the
collateral line, representation takes place only in favor of the
children of brothers and sisters whether full or half blood and
this excludes grand niece like benita.
2. Mindanao Development Authority vs. Court of Appeals
(1982)
FACTS:
It is not disputed that Francisco Ang Bansing was the owner of a
big tract of land with an area of about 300,000 sq.m., situated in
Barrio Panacan Davao City.
February 25, 1939, Ang Bansing sold a portion thereof, with an
area of about 5 hectares to Juan Cruz Yap Chuy The contract
provided, among others, the following:
That I hereby agree to work for the titling of the entire
area of my land under my own expenses and the
expenses for the titling of the portion sold to me shall
be under the expenses of the said Juan Cruz Yap Chuy.
After the sale, the land of Ang Bansing was surveyed and
designated as Lot 664-B, Psd-1638. Lot 664-B was further
subdivided into five (5) lots
The portion sold to Juan Cruz Yap Chuy shortened to Juan Cruz,
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was designated as Lot 664B-3, with an area of 61.107 square

meters, more or less.
June 15-17 and December 15, 1939, a cadastral survey was
made and Lot 664-B-3 was designated as Lot 1846-C of the
Davao Cadastre.
December 23, 1939, Juan Cruz sold Lot 1846-C to the
Commonwealth of the Philippines for the amount of P6,347.50.
On that same day, Juan Cruz, as vendor, and C.B. Cam and
Miguel N. Lansona as sureties, executed a surety bond in favor
of the vendee to guarantee the vendor's absolute title over the
land sold.
Cadastral survey plan was approved by the Director of Lands on
July 10, 1940
March 7, 1941, Original Certificate of Title No. 26 was issued in
the means of Victoriana Ang Bansing, Orfelina Ang Bansing
and Francisco Ang Bansing as claimants of the land, pursuant to
Decree No. 745358 issued on July 29, 1940. On March 31,
1941, OCT No. 26 was cancelled pursuant to a Deed of
Adjudication and TCTNo. 1783 was issued in the name of
Francisco Ang Bansing.
February 25, 1965, the President of the Philippines issued
Proclamation No. 459, transferring ownership of certain parcels
of land situated in Sasa Davao City, to the Mindanao
Development Authority, now the Southern Philippines
Development Administration, subject to private rights, if any.
Lot 1846-C, the disputed parcel of land, was among the parcels
of land transferred to the Mindanao Development Authority in
said proclamation.
March 31, 1969, Atty. Hector L. Bisnar counsel for the
Mindanao Development Authority, wrote Ang Bansing
requesting the latter to surrender the Owner's duplicate copy of
TCT No. 2601 so that Lot 1846-C could be formally transferred
to his client but Ang Bansing refused.
Consequently, on April 11, 1969, the MDA filed a complaint
against Francisco Ang Bansing before the CFI of Davao City,
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for the reconveyance of the title over Lot 1846-C, alleging,

among others, the following:
ISSUE:
1. WON Francisco Ang Bansing as vendor and the one who
worked to secure the title of his entire tract of land which
included the portion sold by him. to Juan Cruz Yap Chuy
acted in the capacity of and/or served as trustee for any
and all parties who become successor-in-interest to Juan
Cruz Yap Chuy
2. WON Ang Bansing was bound and obligated to give,
deliver and reconvey to Juan Cruz Yap Chuy and/or his
successor-in-interest the title pertaining to the portion of
land sold and conveyed by him to Juan Cruz Yap Chuy by
virtue of the deed of sale and his affidavit.
HELD:
No express trust had been created between Ang Banging and
Juan Cruz over Lot 1846-C of the Davao Cadastre.
"Trusts are either express or implied. Express trusts are created
by the intention of the trustor or of the parties. Implied trusts
come into being by operation of law."
It is fundamental in the law of trusts that certain requirements
must exist before an express trust will be recognized. Basically,
these elements include
1. Competent trustor and trustee,
2. Ascertainable trust res, and sufficiently certain
beneficiaries. Stilted formalities are unnecessary, but
nevertheless each of the above elements is required to be
established, and, if any one of them is missing, it is fatal to
the trusts.
3. Present and complete disposition of the trust property,
notwithstanding that the enjoyment in the beneficiary will
take place in the future.
4. The purpose be an active one to prevent trust from being
executed into a legal estate or interest, and one that is not in
contravention of some prohibition of statute or rule of
public policy.
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5. Some power of administration other than a mere duty to

perform a contract although the contract is for a third-party
beneficiary.
6. Declaration of terms which must be stated with reasonable
certainty in order that the trustee may administer, and that
the court, if called upon so to do, may enforce, the trust.
In this case, the herein petitioner relies mainly upon the
following stipulation in the deed of sale executed by Ang
Bansing in favor of Juan Cruz to prove that an express trust had
been established with Ang Bansing as the settlor and trustee and
Juan Cruz as the cestui que trust or beneficiary:
That I hereby agree to work for the titling of the entire
area of my land under my own expenses and the
expenses for the titling of the portion sold to me shall
be under the expenses of said Juan Cruz Yap Chuy.
The above-quoted stipulation, however, is nothing but a
condition that Ang Bansing shall pay the expenses for the
registration of his land and for Juan Cruz to shoulder the
expenses for the registration of the land sold to him. The
stipulation does not categorically create an obligation on the part
of Ang Bansing to hold the property in trust for Juan Cruz.
Hence, there is no express trust.
It is essential to the creation of an express trust that the settlor
presently and unequivocally make a disposition of property and
make himself the trustee of the property for the benefit of
another.
In case of a declaration of trust, the declaration must
be clear and unequivocal that the owner holds property
in trust for the purposes named.
While Ang Bansing had agreed in the deed of sale that he will
work for the titling of "the entire area of my land under my own
expenses," it is not clear therefrom whether said statement refers
to the 30-hectare parcel of land or to that portion left to him after
the sale. A failure on the part of the settlor definitely to describe
the subject-matter of the supposed trust or the beneficiaries or
object thereof is strong evidence that he intended no trust.
09/12/2016, 3G27 PM
Page 31 of 33
The intent to create a trust must be definite and particular. It

must show a desire to pass benefits through the medium of a
trust, and not through some related or similar device.
Clear and unequivocal language is necessary to create a trust and
mere precatory language and statements of ambiguous nature,
are not sufficient to establish a trust. As the Court stated in the
case of De Leon vs. Packson,
a trust must be proven by clear, satisfactory and convincing
evidence; it cannot rest on vague and uncertain evidence or on
loose, equivocal or indefinite declarations. Considering that the
trust intent has not been expressed with such clarity and
definiteness, no express trust can be deduced from the
stipulation aforequoted.
Nor will the affidavit executed by Ang Bansing on April 23,
1941, be construed as having established an express trust. As
counsel for the herein petitioner has stated, "the only purpose of
the Affidavit was to clarify that the area of the land sold by Ang
Bansing to Juan Cruz Yap Chuy is not only 5 hectares but
61,107 square meters or a little over six (6) hectares."
That no express trust had been agreed upon by Ang Bansing and
Juan Cruz is evident from the fact that Juan Cruz, the supposed
beneficiary of the trust, never made any attempt to enforce the
alleged trust and require the trustee to transfer the title over Lot
1846-C in his name.
Despite numerous transfers of portions of the original 30-hectare
parcel of land of Ang Bansing to Juan Cruz and the issuance of
certificates of title in the name of Juan Cruz, the latter never
sought the transfer of the title to Lot 1846-C in his name. For
sure, if the parties had agreed that Ang Bansing shall hold the
property in trust for Juan Cruz until after the former shall have
obtained a certificate of title to the land, the latter would have
asked for the reconveyance of the title to him in view of the
surety bond executed by him in favor of the Commonwealth
Government wherein he warrants his title over the property. The
conduct of Juan Cruz is inconsistent with a trust and may well
have probative effect against a trust.
But, even granting, arguendo, that an express trust had been
09/12/2016, 3G27 PM
Page 32 of 33
established, as claimed by the herein petitioner, it would appear

that the trustee had repudiated the trust and the petitioner herein,
the alleged beneficiary to the trust, did not take any action
therein until after the lapse of 23 years.
Needless to say, only an implied trust may have been impressed
upon the title of Ang Banging over Lot 1846-C of the Davao
Cadastre since the land in question was registered in his name
although the land belonged to another. In implied trusts, there is
neither promise nor fiduciary relations, the so-called trustee does
not recognize any trust and has no intent to hold the property for
the beneficiary." It does not arise by agreement or intention, but
by operation of law. Thus, if property is acquired through
mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the
person from whom the property comes.
If a person obtains legal title to property by fraud or
concealment, courts of equity will impress upon the title a socalled constructive trust in favor of the defrauded party.
There is also a constructive trust if a person sells a parcel of land
and thereafter obtains title to it through fraudulent
misrepresentation.
Such a constructive trust is not a trust in the technical sense and
is prescriptible; it prescribes in 10 years. Here, the 10-year
prescriptive period began on March 31, 1941, upon the issuance
of Original Certificate of Title No. 26 in the names of Victoriana
Ang Bansing Orfelina Ang Bansing and Francisco Ang
Banging. From that date up to April 11, 1969, when the
complaint for reconveyance was filed, more than 28 years had
passed. Clearly, the action for reconveyance had prescribed.
1
09/12/2016, 3G27 PM
Page 33 of 33

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AGENCY IN GENERAL

1. CUI vs. CUI

nephews mentioned by the founders of the Hospicio in their

maneuvers. However, the Commissioner to the Secretary of

conditions subject to which invalids and incapacitated and

instead of the position of assistant administrator, allowing Dr.

Concepcion in the proportion of 12 share each pro-indiviso and

Respondent asserts that: there is no provision in the Code which

HELD: YES. If petitioner had done nothing to formalize her

4. BA FINANCE CORPORATION vs. COURT OF

spouses and petitioner corporation as alternative defendant.

corporation guilty of estoppel in allowing its credit administrator

asserts that the power of attorney executed in it is favor from

where in the in power of attorney did it state that the was a

or fraud, he cannot be held responsible for the failure of his

The continued use of the name of a deceased or former partner

2. Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin

withdrawal of the petitioner has not dissolved the partnership.

FACTS: Lozana and Depakakibo established a partnership for

cancelled and revoked by the Public Service Commission.

Buda Diesel Engine and 70 posts. It necessarily follows that the

did not thereby acquire the right to demand rescission of the

Puzon wrote UP Construction Company terminating their

amount of P200,000.00, as compensatory damages, is not

Sing Co., with a capital of P40,000 contributed by said

Trial Court: in favor of PNB

1. Yes. Changes in the membership of the partnership resulted in

over. An asst. gen. manager belongs to the most senior ranks of

any trust. No constructive trust because the consent of juan and

was designated as Lot 664B-3, with an area of 61.107 square

for the reconveyance of the title over Lot 1846-C, alleging,

5. Some power of administration other than a mere duty to

The intent to create a trust must be definite and particular. It

established, as claimed by the herein petitioner, it would appear

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