776 SUPREME COURT REPORTS ANNOTATED Philippine National Bank vs. Manila Surety & Fidelity Co., Inc.

No. L-20567. July 30, 1965. PHILIPPINE respondents. Agency; Duty of agent to act with the care of a good father of a family.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. Same; Same; Bank liable for neglect in collecting sums due its debtor. 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. Suretyship; Surety released when assigned funds permitted by creditor to be exhausted without notifying former.By allowing the assigned funds to be exhausted without notifying the surety, the creditor deprives the surety of any possibility of recoursing against that security, and therefore the surety is released. PETITION for review of a decision of the Court of Appeals. NATIONAL BANK, petitioner, vs. MANILA SURETY &

777

VOL. 14, JULY 30, 1965 777 Philippine National Bank vs. Manila Surety & Fidelity Co., Inc. REYES, J.B.L., J.:

FIDELITY CO., INC. and THE COURT OF APPEALS (Second Division),

The Philippine National Bank petitions for the review and reversal of the decision rendered by the Court of Appeals (Second Division), in its case CA-G.R. No. 24232-R, dismissing the Banks complaint against respondent Manila Surety & Fidelity Co., Inc., and modifying the judgment of the Court of First Instance of Manila in its Civil Case No. 11263. The material facts of the case, as found by the appellate Court, are as follows: The of Philippine hot asphalt. and National Of this Bank had opened tons Taguba a letter of credit and were as

advanced thereon $120,000.00 to Edgington Oil Refinery for 8,000 tons amount, to Adams 2,000 & worth P279,000.00 (known released delivered Corporation

ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. up to the amount of P75,000.00. To pay for the asphalt, ATACO constituted the Bank its assignee and attorney-infact to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor under Purchase Order No. 71947. This assignment (Exhibit A) stipulated that: The conditions of this assignment are as follows:

The facts are stated in the opinion of the Court. Besa, Galang & Medina for petitioner. De Santos & Delfino for respondents.

is fully liquidated.

Page

1. The same shall remain irrevocable until the said credit accommodation

2. to

The

PHILIPPINE the

NATIONAL to be

BANK made

is by

hereby virtue

appointed of the

as

our

On October 4, 1958, the trial court rendered a decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered as follows: 1. Ordering defendants, Adams & Taguba Corporation and Manila Surety & Fidelity Co., Inc., to pay plaintiff, Philippine National Bank, the sum of P174,462.34 which as of February 24, 1956, Co., minus paid the amount March, of P8,000 1956 to defendant, Manila Surety Inc. from

Attorney-in-Fact for us and in our name, place and stead, to collect and receive payments aforesaid Purchase Order, with full power and authority to execute and deliver on our behalf, receipt for all payments made to it; to endorse for deposit or encashment checks, money order and treasury warrants which said Bank may receive, and to apply said payments to the settlement of said credit accommodation. This power of attorney shall also remain irrevocable until our total

October, 1956 with interest at the rate of 5% per annum from February 25, 1956, until fully paid provided that the total amount that should be paid by defendant Manila Surety Co., Inc., on account of this case shall not exceed P75,000.00, and to pay the costs; 2. Ordering and cross-defendant, Adams plaintiff, Manila Surety & Taguba & Fidelity Corporation, and Co , Inc., third-

indebtedness to the said Bank have been fully liquidated. (Exhibit E) ATACO delivered to the Bureau of Public Works, and the latter

accepted, asphalt to the total value of P431,466.-52. Of this amount the Bank regularly collected, from 778

party defendant, Pedro A. Taguba, jointly and severally, to pay cross third-party whatever amount the latter has paid or shall pay under this judgment; 3. Dismissing the complaint insofar as the claim for 17% special tax is concerned; and 4. Dismissing the counterclaim of defendants Adams & Taguba

778 SUPREME COURT REPORTS ANNOTATED Philippine National Bank vs. Manila Surety & Fidelity Co., Inc. April 21, 1948 to November the Bank 18, 1948, to P106,382.01. collect, until Thereafter, in 1952 for its

Corporation and Manila Surety & Fidelity Co., Inc. From said decision, only the defendant Surety Company has duly

unexplained

reasons,

ceased

perfected its appeal. The Central Bank of the Philippines did not appeal, while defendant ATACO failed to perfect its appeal. The the Bank suretys recoursed liability. to Its the Court of for Appeals, which rendered having an

investigators found that more moneys were payable to ATACO from the Public Works office, because the latter had allowed another creditor to collect funds due to ATACO under the same purchase order, to a total of P311,230.41. Its demands on the principal debtor and the Surety having been refused, the Bank sued both in the Court of First Instance of Manila to recover the balance of P158,563.18 as of February 15, 1950, plus interests and costs.

adverse decision and modified the judgment of the court of origin as to motions reconsideration proved unavailing, the Bank appealed to this Court. 779

Page

VOL. 14, JULY 30, 1965 779 Philippine National Bank vs. Manila Surety & Fidelity Co., Inc. The Court of Appeals found the Bank to have been negligent in having stopped collecting from the Bureau of Public Works the moneys falling due in favor of the principal debtor, ATACO, from and after November 18, 1948, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety, and held that the Banks negligence resulted in exoneration of respondent Manila Surety & Fidelity Company. This holding is now assailed by the Bank. It contends the power of attorney obtained from ATACO was merely an additional security in its favor, and that it was the duty of the surety, and not that of the creditor, to see to it that the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any sum from the principal debtor, citing Judge Advocate General vs. Court of Appeals, G.R. No. L-10671, October 23, 1958. This argument of appellant Bank misses the point. The Court of Appeals did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). Certainly, the Bank could not expect that the Bank would diligently perform its duty under its power of attorney, but because they could not have collected from the Bureau even if they had attempted to do so. It must not be forgotten that the Banks power to collect was expressly made irrevocable, so that the Bureau of Public

Works could very well refuse to make payments to the principal debtor itself, and a fortiori reject any demands by the surety. Even if the assignment with power of attorney from the principal debtor were considered as mere additional secu780

780 SUPREME COURT REPORTS ANNOTATED Philippine National Bank vs. Manila Surety & Fidelity Co., Inc. rity, still, by allowing the assigned funds to be exhausted without

notifying the surety, the Bank deprived the former of any possibility of recoursing against that security. The Bank thereby exonerated the surety, pursuant to Article 2080 of the Civil Code: ART. 2080.The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. (Italics supplied.) The appellant points out to its letter of demand, Exhibit K, addressed to the Bureau of Public Works, on May 5, 1949, and its letter to ATACO, Exhibit G, informing the debtor that as of its date, October 31, 1949, its outstanding balance was P156,374.83. Said Exhibit G has no bearing on the issue whether the Bank has exercised due diligence in collecting from the Bureau of Public Works, since the letter was addressed to ATACO, and the funds were to come from elsewhere. As to the letter of demand on the Public Works office, it does not appear that any reply thereto was made; nor that the demand was pressed, nor being made. The fact remains that because of the Banks inactivity the that the debtor or the surety were ever apprised that payment was not

Page

other creditors were enabled to collect P173,870.31, when the balance due to appellant Bank was only P158,563.18. The finding of negligence made by the Court of Appeals is thus not only conclusive on us but fully supported by the evidence. Even if the Court of Appeals erred on the second reason it advanced in support of the decision now under appeal, because the rules on application of payments, giving preference to secured obligations are only operative in cases where there are several distinct debts, and not where there is only one that is partially secured, the error is of no importance, since the principal reason based on the Banks negligence furnishes adequate support to the decision of the Court of Appeals that the surety was thereby released. WHEREFORE, the appealed decision is affirmed, with costs against

o0o [Philippine National Bank vs. Manila Surety & Fidelity Co., Inc., 14 SCRA 776(1965)]

appellant Philippine National Bank. 781

VOL. 14, JULY 30, 1965 781 Free Employees and Workers Asso. (FEWA) vs. Court of Industrial

Relations Bengzon, C.J., Concepcion, Paredes, Dizon, Regala, Makalintal,

Bengzon, J.P., and Zaldivar, JJ., concur. Bautista Angelo, J., took no part. Barrera, J., on leave, did not take part

Page

Decision affirmed.

2. d. ; Id.El corredor efecta la transaccin con un tercero a nobre Wallace comisin PHILIPPINE REPORTS ANNOTATED Kerr & Co vs. Administrador de Rentas Internas con las costas a la recurrente. As se ordena. Avancea, conformes. Se confirma la decisin. __________ [No. 46667. KERR & apelado. 1. Impuesto de Comerciante; Distincion entre UN Corredor Y UN Comerciante.El corredor nunca contrata en nombre propio, sino en el de su mandante. En el presente caso, Kerr & Compaa al contratar con Shaw, Wallace & Compaa ofreciendo comprar ciertas mercancas a un precio que ha ofrecido y quo Shaw, Wallace & Compaa ha aceptado, o a un precio que Shaw, Wallace & Compaa ha cotizado y que Kerr & Compaa ha (Art. 1460 del Cdigo Civil.) aceptado, ha celebrado un contrato de compraventa perfecto. Junio 20, 1940] LTD., demandante y apelante, contra El y un negocio o negocios en asuntos mercantiles o de navegacin. (Behn, Meyer & Co. contra Nolting y Garcia, 35 Jur. Fil., 284; Pacific Commercial Company contra Yatco, R. G. No. 45976, julio 20, 1939.) En el presente caso, Kerr & Company garantizo a Shaw, Wallace & Company el pago de la letra girada por esta compaa contra los compradores locales. APELACION contra una sentencia del Juzgado de Primera Pres., Imperial, Laurel, y Moran, MM., estn de & a su mandante, en la a base de una comisin fija y una la determinada. En el presente caso, Kerr & Compaa y Shaw, Compaa base de ningn cual Kerr tiempo & haban fijado efectuara Compaa

venta de mercancas a los comerciantes locales. 3.Id. ; Id.El corredor no garantiza el pago de las mercancas quevende a un tercero, porque solamente es un mediador que se ocupa en hacer que las partes interesadas se entiendan en

COMPANY, DE

ADMINISTRADOR

RENTAS

INTERNAS,

demandado

Instancia de Manila.

De la Costa, J.

Los hechos aparecen relacionados en la decisin del Tri-bunal. Sres. Ross, Lawrence, Delphi y Carrascoso y D. Robert Janda en representacin de la apelante. 37

37

Page

VOL. 70, JUNE 20, 1940

Kerr & Co vs. Administrador de Rentas Internas El Procurador General General Sres. Sr. Ozaeta y y los Auxiliares en del

the price agreed upon between plaintiff and the Calcutta firm, and the price for which the mer-chandise was actually sold to the local buyers". El Juzgado decidi el caso declarando que la apelante en las transacciones arriba mencionadas debe ser considerada como comerciante, de acuerdo con las provisiones del artculo 1459 del Cdigo Administrativo Revisado que dispone: "Sec. 1459. Percentage 38 tax on merchants sale's.All

Procurador

Concepcin

Amparo

repre-

sentacion del apelado. CONCEPCION, M.: Esta es una apelacin que tiene por objeto determinar si un impuesto de comerciante pagado por la apelante, bajo protesta, era o no legalmente exigible segn los hechos que en la decision apelada se relacionan como sigue: "It appears from the stipulation of facts that in effect-ing the sales under consideration or asking for the plaintiff sent The a cable to firm Shaw, either Wallace & Co. of Calcutta, India, offering a price for certain merchandise quotation. Cal-cutta accepted the offer or gave its quotation of the price. After the price was thus agreed upon, plaintiff entered into a contract of sale with local buyers quoting a price higher than that agreed upon or fixed of by the Calcutta firm; and the price of the merchandise for local buyers was fixed by the plaintiff. After the contract sale was thus entered into, plaintiff instructed the Calcutta firm to send the goods to, and draw a draft on, the local buyers. This draft bore the price agreed upon between the plaintiff and local buyers, and was drawn against a local bank in ac-cordance with the letter of guarantee executed in the form of the local the bank draft by and the buyer and by the plaintiff. local After bank receiving shipping documents, the

38 PHILIPPINE REPORTS ANNOTATED Kerr & Co vs. Administrador de Rentas Internas merchants not herein specifically exempted shall pay a tax of one per centum on the wares, gross and value in money sold, of the com-modities, goods, merchandise bartered,

exchanged, or consigned abroad by them, such tax to be based on the actual selling price or value of the things in question at the time they are disposed of or consigned, whether consisting of raw material and or of manufactured of domestic or or partially manufactured The tax products, whether foreign origin.

upon things consigned abroad shall be refunded upon satisfactory proof of the return thereof to the Philippine Islands unsold. "The following shall be exempt from this tax:

released the merchandise to the buyer against a trust re-ceipt. In due course, the draft was paid by the buyers to the local bank and after the proceeds of the draft were re-ceived by the Calcutta firm, the latter paid the plaintiff the difference between

Page

(a)

Persons at

engaged retail, and

in

public other

market

in

the

sale

of

food gross

39 Kerr & Co vs. Administrador de Rentas Internas como tal deba pagar el impuesto correspondiente. La contencin de la apelante es que ella actu en dichas transacciones como un corredor de comercio. La cuestin a determinar en el presente caso es, pues, en que capacidad la ape-lante efectu las ventas de las mercancas en cuestin a los compradores locales. Para resolver esta cuestin, debemos considerar no las relaciones jurdicas entre la apelante y los compradores locales sino firma las y relaciones terminaron que con mediaron la entre la apelante claro, y hubo Shaw, dos Wallace & Co.; porque las transacciones empezaron con dicha misma. Ms transacciones:- la, entre Kerr & Company y Shaw, Wallace & Co.; y la 2.a entre Kerr & Company y los compradores locales; pero la actuacin de Kerr & Company no se termin con los compradores locales, sino con Shaw, Wallace & Co. En ltimo anlisis, de los hechos, se hallan en la transaccin con la firma de Calcutta ciertas circunstancias que son pruebas concluyentes de que la apelante obro en el pre-sente caso

products

small

merchants

whose

quarterly sales do not exceed two hundred pesos. (b) Peddlers and sellers at fixed stands of fruit, pro-duce, and

food, raw or otherwise, the total selling value whereof does not exceed three pesos per day and who do not renew their stock oftener than once every twenty-four hours. (c) own Producers of commodities of all classes working in their homes, consisting of parents and children living as one

family, when the value of each day's production by each person capable of working is not in excess of one peso. "Merchants, as here used, means a person engaged in the sale, barter, or exchange of personal property of whatever character. Except who and as specially articles having of of provided, their of the owh of which term their sales includes and for own or manufacturers commission the keeping are sell production,

merchants

establishments goods

disposal

exchanges

effected, but does not include merchan-dise brokers." La apelante que contiende ella haba que el Juzgado las incurri en error de al

declarar

comprado

mercancas

Shaw,

como un comerciante. Ante todo conviene tener presente, que "al corredor se le define en le trminos atae; el generales que como el como es que negocia para de y otros otros, en en sin contratos de comisin relativos a fincas, cuya custodia en nada negocia intermediario un mediador, negociar jams en nombre propio sino en el de aquellos que le utilizan; estrictamente hablando cierto modo el mandatorio de ambas partes. (19 Cyc. 186; Henderson

Wallace & Co. de Calcuta, India, y las haba vendido a los compradores locales por su propia cuenta, y que actu como comerciante en las transacciones arriba mencionadas y que, 39

es el que se ocupa en hacer que los interesados se entiendan

Page

VOL. 70, JUNE 20, 1940

vs. The State, 50 Ind., 234 Black's Law Dictionary.) El corredor

en un negocio o en negocios para ellos en asuntos mercantiles o de navegacin. (Mechem on Agency, section 13, Wharton on Agency, sec-tion 695.) El Juez Storey en su obra titulada Agency, define al corredor, diciendo que es un mandatorio que se utiliza para realizar negocios y contratos con otras personas, en asuntos mercantiles o de navegacin, mediante una compensacin que generalmente se llama corretaje. (Storey on Agency, section 28.)" Behn, Meyer & Co., Ltd., contra Nolting y Garcia, 35 Jur. Fil., 284. 40

Company,

en

su locales

propio

nombre,

convino

en

vender

los Tan con &

comerciantes loca-les en

las mercancas propio,

que haba

comprado. y Wallace

cierto es que Kerr & Company, contrato con los comerciantes nombre a la independientemente habida con Shaw, posterioridad transaccin

Company, que Kerr & Company fijo el precio de las ventas a los compradores locales, precio que no era el precio convenido con Shaw, a Wallace Shaw, & Company & sino mayor o al que que haba haba sido ofrecido Wallace Company,

aceptado por dicha compaa. 2. El corredor efecta la transaccin con un tercero a nombre de su mandante, a base de una comisin fija y determinada.

40 PHILIPPINE REPORTS ANNOTATED Kerr & Co vs. Administrador de Rentas Internas Desprenderse de lo transcrito. l. Que el corredor nunca contrata en nombre propio, sino en el de su mandante. En el presente caso, Kerr & Company al contratar con Shaw, Wallace & Company ofreciendo comprar ciertas mercancas a un precio que ha ofrecido y que Shaw, Wallace & Company ha aceptado, o a un precio que Shaw, Wallace & Company ha cotizado y que Kerr & Company ha aceptado, ha celebrado un contrato de & no de compra-venta Company para su perfecto. porque la (Art. 1450 del Cdigo Civil.) No importa que las mercancas no hayan pasado a la posesin de Kerr del contrato de de compra-venta, el pero tradicin de la cosa comprada es necesaria para la consumacin perfeccin. Kerr & Despus efectuado contrato compraventa,

En

el

presente

caso,

Kerr

&

Company

Shaw,

Wallace

&

Company en ningn tiempo haban fijado una comisin a base de la cual Kerr & Company efectuara la venta de mercancas a los comerciantes locales. Kerr & Company despus de efectuada la venta de las

mercancas a los compradores locales por un precio mayor del que haba convenido con Shaw, Wallace & Company, cobro la diferencia en su beneficio, diferencia que no puede conceptuarse como una comisin, porque, 1., las partes no convinieron en ninguna comisin; y 2., porque la cantidad as cobrada dependa nica y exclusivamente de Kerr & Company, segn el precio que ella hubiese fijado a las mer41

Page

VOL. 70, JUNE 20, 1940

41 Kerr & Co vs. Administrador de Rentas Internas cancas por ella vendidas. La comisin es un tanto de dinero que se estipula entre el corredor y el mandante y se paga por este a aquel, de su propio peculio, cosa que no ocurre en el presente caso, porque la diferencia de precio que Kerr & Company cobra, no es dinero de Shaw, Wallace & Company. 3. El corredor no garantiza el pago de las mercancas que vende a un tercero, porque solamente es un mediador que se ocupa en hacer que las partes interesadas se entiendan en un negocio o negocios en asuntos mercantiles o de navegacin. (Behn, Meyer & Co., Ltd. contra Nolting y Garca, supra; Pacific Commercial Company contra Alfredo L. Yatco, R. G. No. 45976, Julio 20, 1939.) En el presente caso Kerr & Company garantiz a Shaw, Wallace & Com-pany el pago de la letra girada por esta compaa contra los compradores locales. Se arguye por la apelante, que ella no era la compradora de las mercancas, porque, si lo fuese, la letra se habra girado contra ella y no no tiene contra peso, los compradores una locales, vez y ella no las garantizara el pago del importe de la letra. Este argumento, sin embargo, porque compradas mercancas por Kerr & Company, ella podra ordenar que las mercancas fuesen enviadas a cualquier otra persona, puesto que lo ms importante para Shaw, Wallace & Company es que se pague el importe de las mercancas, y esta obligacin la ha asumido Kerr & Company para el caso de que los compradores locales no pagasen la letra a su vencimiento.

El hecho de que en el contrato celebrado por Kerr y Com-pany con el comprador local Lim Ki Choa & Company,Kerr & Company, segun el Exhibit D, haya hecho constar que en esta transaccin con Lim Ki Choa & Company ella actuaba en la capacidad de corredor solamente y que ella no asume ninguna responsabilidad, era un mero no demuestra que realmente Kerr & corredor cuando con-trato con Lim Ki Company Choa &

Company, porque para determinar la naturaleza de la transaccin que Kerr & Company tuvo con Shaw, Wallace & Company, y para juzgar si Kerr 42

42 PHILIPPINE REPORTS ANNOTATED Kerr & Co vs. Administrador de Rentas Internas & Company contrato en nombre propio con la firma de Calcutta, o si contrato en nombre de Shaw, Wallace & Com-pany y con los compradores locales, no vamos a tener en cuenta lo que Kerr & Company haya dicho o dejado de decir a Lim Ki Choa & Co., sino los trminos y condiciones del contrato mismo que realmente se ha celebrado entre Shaw, Wallace & Company y Kerr & Company. Adems, en el caso de incumplimiento de Kerr & Com-pany del contrato otorgado con los compradores locales, estos no tendran

puesto que ninguno han celebrado con Shaw, Wallace & Co.,

Page

para

exigir

de

esta

compaa

el

cumplimiento

del

contrato,

accin alguna para dirigirse contra Shaw, Wallace & Company

pues los hechos revelan que Kerr & Company primero contrato en nombre propio con Shaw, Wallace & Company, y despus contrato tambin en nom-bre propio con los compradores locales. Todas las anteriores consideraciones demuestran una misma y una sola proposicin: que Kerr & Company contrato en nombre propio como y por cuenta propia y con Shaw, en Wallace & Company como comerciante, vendi nombre propio

comerciante; y por tanto est sujeta al pago del impuesto de comerciante. Se confirma la decisin apelada, con las costas a la apelante. As se ordena. Avancea, conformes. Se confirma la sentencia. ________ [Kerr & Co. vs. Administrator de Rentas Internas, 70 Phil., 36(1940)] Pres., Imperial, Diaz, Laurel y Morn, MM., estn

Page

10

710 SUPREME COURT REPORTS ANNOTATED Mindanao Motor Line, Inc. vs. Court of Industrial Relations No. L-18418. November 29, 1962. MINDANAO MOTOR LINE,INC., ET AL., petitioners, vs. HON.

rule

the

payment

of

back

wages

follows

as

necessary

consequence of an order for reinstatement, it does not follow that if reinstatement can not be ordered, as when the service is discontinued, the employees illegally laid off should be deprived of the wages they are entitled to, as should be the case when the company or employer is found guilty of unfair labor practice. The industrial court found respondents guilty of the unfair labor practice imputed to them and so it is but fair that they be paid their wages for the period they had been deprived of their employment. Same; Same; Agents who acted within scope of authority, not liable.Two of the respondents were merely agents who acted vs. HON.COURT OF within the scope of their corporate positions as resident manager and general manager, respectively, of the aforesaid company. Since they were impleaded merely as officers of the company and have acted only as such within the scope of their authority, if any one should be held responsible for the consequence of their acts as such officers it is their employer, unless of course

COURT OF INDUSTRIAL RELATIONS, ET AL., respondents. No. L-18419. November 29, 1962. ABOITIZ & Co., INC., petitioner,

INDUSTRIAL RELATIONS, ET AL., respondents. _______________

3 Salmon & Pacific Commercial Co. v. Tan Cueco, 36 Phil 556. 711

it is shown that they have acted negligently or in bad faith. The evidence discloses nothing in this respect. It is a wellknown principle of law that an agent who acts in behalf of a disclosed principal within the scope of his authority cannot be held liable to third persons (Article 1897, new Civil Code;

VOL. 6, NOVEMBER 29, 1962 711 Mindanao Motor Line, Inc. vs. Court of Industrial Relations Employer and Employees; Back Wages; Employees entitled to

Banque Generale Belge, et al. vs. Walter Bull & Co., Inc., et al., 47 O.G. 138; Zialcita-Yuseco vs. Simmons, L-7912, Aug. 30, 1955). Same; Same; Employees who were re-employed in other lines not entitled to back wages during period of re-employment.Of the 71 employees of the who alleged were unfair laid off on February 31 1, were 1955 rebecause labor practice,

Page

back wages although reinstatement cannot be ordered.While as

11

employed on other lines operated by the company. It is unfair to order the company to pay them back wages even during the period of their re-employment, for the result would be that they will receive double compensation during that period. The order should, to the therefore, date of or be of be their modified in the sense Same; court did of ordering Set-off make of may said the of any have In payment of back wages only from the date of their separation re-employment. industrial set-off or Same; not whatever wages the employees may have obtained during their period wages should separation.The relative to the the for, earnings rectified, provision compensation employees has separation, Court whatever

The facts are stated in the opinion of the Court. Carlos Dominguez, Jr., Ambrosio Padilla and Ciriaco

Lopez, Jr., for petitioners. Victor Clapano for respondents. BAUTISTA ANGELO, J.:

complaining their this as

On May 5, 1955, the Mindanao Federation of Labor, together with some laid off employees, filed a complaint for unfair labor practice Manager as well against Jesus as the Mindanao Aboitiz & Motor Co., Line, Inc., Inc., its General with Moraza and Resident Manager Enrique Ponce, them

obtained during the period of

which omission aptly

estimating the damages in an action of this character for the period of time already past the employer may show in mitigation of damages that the discharged employee obtained 712

against

charging

having interfered with the complaining employees in their exercise of their right to organize as guaranteed by the Magna Charta of Labor. Respondents, in their answer, stated that the Mindanao Motor Line, Inc. is a corporate entity distinct and separate from the

712 SUPREME COURT REPORTS ANNOTATED Mindanao Motor Line, Inc. vs. Court of Industrial Relations remunerative employment elsewhere or that in the exercise of due diligence he might have obtained such employment. PETITIONS Relations. for review of an order of the Court of Industrial

Aboitiz & Co., Inc., and that if the operation of the CotabatoParang-Iligan line was suspended on February 1, 1955, it was merely to protect the interest of the Mindanao Motor Line, Inc. which had incurred heavy losses in its operation, which suspension resulted in the laying off of the employees working on that line. They further averred that they never interfered with the union activities of the complaining employees who were laid off only for the above reason and were given due notice of to one month salary.

Page

12

their separation and payment of their separation pay equivalent

After

due trial,

the Court

of

Industrial

Relations, in an

order

Both

complainants

and

respondents

filed

motion

for

issued on January 4, 1961, ordered respondent Mindanao Motor Line, Inc. to pay back wages to the laid-off employees without reinstatement from February 1, 1955, the date of separation, up to and until June 10, 1958, the date prior to the cancellation of the certificate of public convenience covering the line that was suspended. The full tenor of the dispositive part of the order reads as follows: 713

reconsideration of the above order, complainants inviting attention to the fact that, if they were to be accorded back wages the ones responsible would be not only the Mindanao Motor Line, Inc., but all the respondents jointly and severally. Both motions were denied. However, alleging that a clerical error has been committed in issuing the dispositive part of the order because not all the respondents were included in the payment of the pecuniary liability, the industrial court modified said dispositive part so as to read as follows: x x x the the Ponce, corrected Aboitiz portion and should read in Line, Jesus the Inc., following and/or are

VOL. 6, NOVEMBER 29, 1962 713 Mindanao Motor Line, Inc. vs. Court of Industrial Relations IN VIEW OF THE FOREGOING, the Court believes that the respondents are guilty of the unfair labor practice as charged, thus violating sec. 4(a), subsections 1 and 4 of R.A. No. 875. Due to the fact that the certificate of public convenience of respondent Mindanao Motor Line, Inc., which has been issued for the operation of its TPU service has already been cancelled on June 11, 1958, as per Exh. 17, the respondent company is hereby ordered to pay complainants to the exclusion of Antonio Actub, Orlando Siasico, Feliciano Legaspi and Nieves Mendoza, back wages from February 1, 1955, the day of dismissal up to and until June 10, 1958, the day before the cancellation of the certificate of public convenience without the necessity of reinstatement.

manner: Enrique

respondents,

Mindanao Co.

Motor

and/or

Moraza,

hereby ordered to pay complainants to the exclusion of Antonio Actub, Orlando Siasico, Feliciano Legaspi and Nieves Mendoza, back wages from February 1, 1955 the day of dismissal up to and until June 10, 1958, the day before the cancellation of the certificate of public convenience without the necessity of reinstatement. Respondents again filed a motion for reconsideration, and the

same having been denied, they interposed separately a petition for review. The petition filed by Mindanao Motor Line, Inc., with respondents Enrique Ponce and Jesus Moraza was docketed as G.R. No. L-18418, whereas the petition filed by Aboitiz & Co., Inc. was docketed as G.R. No. L-18419. Because of their close interrelation, these two petitions were consolidated in one single decision. It is contended that respondents cannot be ordered to 714

Page

13

714 SUPREME COURT REPORTS ANNOTATED Mindanao Motor Line, Inc. vs. Court of Industrial Relations pay back wages to the complaining employees for the reason that the operation has by that the of was Public the the transportation and for such line where they of has a were public been of employed cancelled fact, they been suspended issued Service the certificate operation As said where they of line

respondents guilty of the unfair labor practice imputed to them and so it is but fair that they be paid their wages for the period they had been deprived of their employment. We find, however, merit in the contention that respondent

Enrique Ponce and Jesus Moraza who were included as such should not be made solidarily responsible for the payment of back wages, together with their employer the Mindanao Motor Line, Inc., for it clearly appears from the record that they were merely agents who acted within the scope of their corporate positions as resident manager and general manager, respectively, of the aforesaid com715

convenience

Commission.

matter

contend, the

reinstatement of In the

complaining they if were no

employees was not ordered by the court for the same was not possible employed because was operation resumed. never short, argue,

reinstatement can be ordered no back wages can be granted because from the phraseology of the law, the payment of back wages presupposes an accompanying order for reinstatement. And continuing with his argument, counsel says: An award for the payment of back wages necessarily implies reinstatement, or, at least, the possibility of reinstatement of the discharged employees. It is implicit then that when the court does not or can not order the reinstatement of employees, there is absolutely no factual or legal basis for the payment of back wages. We disagree. as as laid to, is While a when off as as a rule the payment of of an the back wages for VOL. 6, NOVEMBER 29, 1962 715 Mindanao Motor Line, Inc. vs. Court of Industrial Relations pany. Since if they any were one impleaded should be merely held as officers of for the the

company and have acted only as such within the scope of their authority, responsible consequence of their acts as such officers it is their employer, unless of course it is shown that they have acted negligently or in bad faith. The evidence discloses nothing in this respect. It is a well-known principle of law that an agent who acts in behalf of a disclosed principal within the scope of his authority cannot be held liable to third persons (Article 1897, new Civil Code; Banque Generate Belge, et al. vs. Walter Bull & Co.,

follows ordered, illegally entitled employer situation

necessary the

consequence is

order

reinstatement, it does not follow that if reinstatement cannot be service be be of the discontinued, of the when employees they is are or the should should guilty obtains deprived case The unfair wages the

company This court

that

herein.

industrial

found

Page

found

labor

practice.

14

Inc., et al., 47 O.G. 138; Zialcita-Yuseco v. Simmons, G.R. No. L-7912, August 30, 1955). We also find that of the 71 employees who were laid off on February 1, 1955, because of the alleged unfair labor practice, 31 were re-employed on other lines operated by the company. If this is true, which apparently is, because it is not denied, it is unfair that the to they order will the company double wages to pay them back during the wages that of even period. their during the period of their re-employment, for the result would be receive of back compensation only from The order should therefore, be modified in the sense of ordering payment date separation to the date of their re-employment. We likewise notice that the industrial court did not make any provision wages should relative or be to the the for, set-off or compensation employees has aptly separation, Court of whatever have In earnings rectified, complaining their this as may said,

v. Estefani, L-7690, July 27, 1955; Western Mindanao Lumber Co. v. Mindanao Federation of Labor, L-10170, April 25, 1957; 716

716 SUPREME COURT REPORTS ANNOTATED Mindanao Motor Line, Inc. vs. Court of Industrial Relations Finally, we find no merit in the of contention that respondent Motor show Line, the

Aboitiz & Co., Inc. should not have been included as such not being the operator Inc., for there is nor financier the Mindanao on record to enough evidence

connection between the two companies. In the first place, having been included as respondent, Aboitiz & Co., Inc. did not file any answer denying the acts constituting the unfair labor practice charged one of which is the fact that the Land Transportation Division of Aboitiz & Co., Inc., of which Jesus Moraza is the general manager controls and supervises the management and operation of the Mindanao Motor Line, Inc. In the second place, the record of the case discloses that the central office of the Mindanao Motor Line, Inc. and the office of the Aboitiz & Co., Inc.. are located in the same place and have the same postal address, namely, P. O. Box 65. It also appears that the thing that sparked the separation of the complainants is the letter of

obtained during the period of

which omission

estimating the damages in an action of this character for the period of time already past the employer may show in mitigation of damages that the discharged employee obtained remunerative employment elsewhere or that in the exercise of due diligence he might have obtained such employment.1 _______________

1 Garcia Palomar v. Hotel de France Co., 42 Phil., 660; See also MaCleod & Company of the Philippines v. Progressive Federation of Labor, G.R. No. L-7887, May 31, 1955; Potenciano

one Ramon Aboitiz, apparently the manager of Aboitiz & Co., loss because of the funds it had advanced to the Mindanao Motor Line, Inc. for which reason he recommended that the

Page

15

Inc., where it is shown that said company has suffered a heavy

operation

of

the

line

in

question

be

suspended.

Indeed,

the

Rebodos vs. Workmens Compensation Commission WHEREFORE, the order of respondent court dated March 8,

following argument advanced by the counsel of respondent court is very impressive. The fact that Ramon Aboitiz admits that the Aboitiz & Company had advanced the funds, x x x for the operation of respondent Mindanao Motor Line, Inc.; the fact that he had even decided for Aboitiz & Company to discontinue this financial assistance; and the further fact that the common principal address of the principal actors responsible in the dismissal of respondent-workers herein is P.O. as the Box alleged 65, in Cebu the City, and all show a quo, of that Aboitiz & Company supervises records of complaint controls and

1961, is hereby amended with regard to the following respects: (1) the 31 employees who were re-employed should be given back wages only from February 1, 1955, the day of dismissal, up to the date they were reemployed; (2) respondents Enrique Ponce and Jesus Moraza should not be made responsible for the back wages that were ordered paid to the complaining employees; (3) respondent companies are hereby authorized to set off from the back wages they were ordered to pay whatever earnings the complaining employees may have obtained during the period of their separation. In all other respects, the said order is hereby affirmed. No pronouncement as to costs. Bengzon, J.B.L., concur. Order affirmed with modifications. Note.See annotation on Jurisdiction of the Court of Industrial Relations in 19 SCRA 136-146. Barrera, C.J., Padilla, Dizon, Labrador, Regala Concepcion, and Reyes, JJ.,

management

operation

respondent

Mindanao Motor Line, Inc. These facts were dug out from the the case a quo to show how truly unfounded is claim that there is a x x x total and petitioner-appellants x. _______________

complete absence of any evidence supporting this charge; x x

Paredes,

Makalintal,

Philippine

Air

Lines,

Inc.

v.

Philippine

Air

Lines

Employees

Association, L-15544, July 26, 1960. 717

______________

[Mindanao

Motor

Line,

Inc.

vs.

Court

of

Industrial Relations, 6 SCRA 710(1962)]

Page

717

16

VOL. 6, NOVEMBER 29, 1962

[No. 38479. November 20, 1933] QUINTIN DE BORJA, judicial administrator of the intestate estate of the deceased Marcelo de Borja, plaintiff and appellant, vs. FRANCISCO DE BORJA, defendant and appellant. 1.PLEADING AND PRACTICE; PERIOD FOR FILING that based but OF the on ten

PHILIPPINE REPORTS ANNOTATED De Borja vs. De Borja The facts are stated in the opinion of the court. M. H. de Joya and Quintin Paredes for plaintiff-appellant. Jose de Borja for defendant-appellant. IMPERIAL, J.:

COUNTERCLAIMS.The is untenable. The

plaintiff-appellant's in

contention are

counterclaims presented by the defendant have already prescribed counterclaims is not six (6) question as instruments in writing marked Exhibits 1 to 6. The period of prescription thereof years, claimed, (10) years, in accordance with the provisions of section 43 (1) of the Code of Civil Procedure. 2.DEBTS AND DEBTORS; PAYMENT OF INTEREST.Neither is the plaintiff entitled of to the money interest loaned claimed to and by him upon by the the alleged sums collected

The plaintiff herein, in his capacity as judicial administrator of the estate of the deceased Marcelo de Borja, instituted this action in the Court of First Instance of Rizal, to recover from the defendant the sum of P61,376.56 which, according to the amended him from complaint, other the said with defendant the owed the to aforesaid render an deceased, for certain sums of money loaned to and collected by persons obligation accounting thereof to the said deceased. In his amended for answer, alleged the sums defendant of money interposed owed him various by the

defendant from various persons for his deceased father. In all the aforesaid transactions, the defendant acted in his capacity as attorney-in-fact to his own of use, his he deceased is not father liable and, for there being thereon no in evidence showing that he converted the money entrusted to him interest accordance with the provisions of article 1724 of the Civil Code. APPEAL from a judgment of the Court of First Instance of

counterclaims

aforesaid deceased. After the trial thereof and the presentation of voluminous

Rizal. Carballo. J. 812

evidence therein, the trial court reached the conclusion and held that, from his various causes of action, the plaintiff was entitled to recover the sum of P33,218.86 from the defendant, and that, to collect the sum of P39,683 from the plaintiff, and rendered judgment in favor of the def endant in the sum of P6,464.14

Page

812

17

by way of counterclaim, the said defendant, in turn, was entitled

with legal

interest

thereon from

the date of

the

counterclaim,

as attorney-in-fact of his deceased father, and there being no evidence showing that he converted the money entrusted to him to his own use, he is not liable for interest thereon, in accordance with the provisions of article 1724 of the Civil Code. The defendant-appellant's claim to the effect that he is entitled to collect the rents for the use of the earthen jar factory and the buildings thereof, is, likewise, unfounded. The trial court held that all there existed between the parties was a mere gratuitous commodatum and that the most that the deceased bound himself to do was to pay the taxes on the properties in question. There is nothing in the records of the case to justify reversing the judgment rendered therein. The judgment with of appealed the the law from and being, presented in our opinion, by it is in a

with the costs. Both parties appealed therefrom. The trial court made a very careful analysis of the oral and documentary evidence presented therein, and from the preponderance thereof, inferred the findings of fact stated in its decision. We are convinced that, from the evidence presented, the liquidation made by the trial court is the nearest approach to its findings of fact, and for this reason we do not feel inclined to alter or modify it. The plaintiff-appellant's contention that the counterclaims presented by the defendant in have already are prescribed, on is untenable. in The counterclaims question based instruments writing

marked Exhibits 1 to 6. The period 813

accordance

sufficiently

supported

preponderance

evidence

therein,

hereby

affirmed, without special pronouncement as to the costs of this instance. So ordered. VOL. 58, NOVEMBER 21, 1933 813 In the Matter of the Estate of Goulette of prescription thereof is not six (6) years, as claimed, but ten (10) years, in accordance with the provisions of section 43 (1) of the Code of Civil Procedure. Neither is the plaintiff entitled to the interest claimed by him from various persons for his deceased father. In all the Avancea, C. J., Malcolm, Villa-Real, and Hull, JJ., concur. Judgment affirmed. __________ [De Borja vs. De Borja, 58 Phil. 811(1933)]

aforementioned transactions, the defendant acted in his capacity

Page

18

upon the alleged sums loaned to and collected by the defendant

[No. 49219. December 11, 1946] PABLO D. PALMA, petitioner, vs. EDUARDO REYES

EXCEPTION.Whether obtaining a decree

or with

not

there to

is a

bad

faith

or

fraud

in the

respect

registered

property,

CRISTOBAL, respondent. 1.PRINCIPAL AND AGENT; FIDUCIARY RELATIONS; AGENT

same does not belong to the person in whose favor it was issued, and the real owners would be entitled to recover the ownership of the property so long as the same has not been transferred to a third person who had acquired it in good faith and for a valuable consideration. This right to recover is sanctioned by section 58 of Act No. 496, as amended by Act No. 3322. 4.ID.; ID.; ESTOPPEL; FOR APPEARANCE OF CO-OWNER AS

CANNOT ACQUIRE TlTLE TO SUBJECT MATTER OF AGENCY ADVERSE TO THAT OF PRINCIPAL.The relations of an agent to his principal 713

ATTORNEY VOL. 77, DECEMBER 11, 1946 713 Palma vs. Cristobal are fiduciary and in regard to property forming the subject because his

PERSON as would the

SECURING for the were that

REGISTRATION. was not of of a the the be

Respondent is not barred from claiming that he is a co-owner appearance which recognized outsiders, between attorney induce as former petitioner to sole not the misrepresentation respondent court and petitioner believe that

owner aware

property in controversy. The misrepresentation could deceive the because the they understanding co-owners property

matter of the agency, he is estopped from acquiring or asserting a title adverse to that of 'the principal. His position is analogous to that of of a trustee faith, and be he cannot to consistently, create in with himself the an principles good allowed

registered in the name of petitioner. 5.TRUSTS AND TRUSTEES; TRUSTEE CANNOT ACQUIRE BY PRESCRIPTION PROPERTY HELD IN TRUST.A trustee cannot acquire by prescription the ownership of a property entrusted to him. The position of a trustee is of representative nature. It is logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to the benefit of his principal.

interest in opposition to that of his principal or cestui que trust. 2.TRUSTS AND IN TRUSTEES; NAME OF LAND TRUSTEES REGISTRATION FOR BENEFIT ; OF

REGISTRATION

"CESTUI QUE TRUST."The registration of the property in the name of the trustees in possession thereof, must be deemed to have been effected for the benefit of the cestui que trust. 3.LAND REGISTRATION LAND ; RIGHT IN OF REAL OWNERS OF TO

RECOVER

DECREED

FAVOR

ANOTHER;

Page

The facts are stated in the opinion of the court..

19

ORIGINAL ACTION in the Supreme Court. Certiorari.

Vicente J. Francisco and Guillermo B. Guevara for petitioner. 714

Justice Padilla, concurred in by Mr. Justice Jose G. Generoso and Mr. Justice Pedro Tuason. The case is now before us on appeal by certiorari.

714 PHILIPPINE REPORTS ANNOTATED Palma vs. Cristobal Antonio Gonzales for respondent. PERFECTO, J.:

In 1909,

after

registration proceedings

under

the

provisions

of

Act No. 496, original certificate of title No. 1627 was issued in the names of petitioner and his wife Luisa Cristobal. In 1923, said certificate was cancelled and substituted by certificate of title No. 20968 by virtue of a decree issued by the Court of First Instance of Manila in connection with the Manila cadastre. It was later substituted by certificate of title No. 26704, also in the name of petitioner and his wife. After the latter's death in 1922, a new certificate of title was issued in 1923 only in the name of petitioner, substituted in 1928 by certificate of title No. 31073. The Court of Appeals, upon the evidence, concluded with the Court of First Instance of Manila that the parcel of land in question is a community property held by petitioner 715

A of

parcel Deeds

of of

land

located

in

Quesada in favor

Street, of

Tondo

Manila, D.

covered by transfer certificate of title No. 31073 of the Register Manila, issued petitioner Pablo Palma, is the subject of contention between the parties. Petitioner sought, at first, to eject respondent Eduardo Cristobal Reyes from the land in question in a complaint filed with the Municipal Court of Manila. As respondent raised the question of ownership, the complaint was dismissed, and petitioner filed with the Court this of First case, Instance petitioner of Manila that the he complaint be which the initiated praying declared

VOL. 77, DECEMBER 11, 1946 715 Palma vs. Cristobal

owner of the land and that respondent be ordered to restore its possession and to remove his house therefrom. The complaint was dismissed and petitioner brought the case to the Court of Appeals, been where affirmed he by again a failed, the appealed by Mr. judgment having decision penned

with an understanding between the co-owners, by reason of the

Page

one of them), the registration having been made in accordance

20

in trust for the real owners (the respondent being an heir of

confidence they had in petitioner and his wife. This confidence, close relationship, and the fact that the co-owners were receiving their shares in the rentals, were the reasons why no step had been taken to partition the property. The Court of Appeals explains' that it was only after the death of Luisa Cristobal and petitioner had taken a second wife that trouble on religious matters arose between petitioner and respondent, and it gives credence to the testimony of Apolonia Reyes and respondent to the effect that Luisa, before her death, called her husband, the petitioner, and enjoined him to give her co-owners their shares in the parcel of land; but respondent told her then not to worry about it, for it was more important to them to have her cured of the malady that affected her. Petitioner answered his wif e that she should not worry because he would take care of the matter by giving the co-owners their respective shares. Petitioner assigns as first error of the Court of Appeals the fact that it considered the oral testimony adduced in behalf of respondent sufficient to rebut the legal presumption that petitioner is the owner of the land in controversy. In Severino vs. Severino (43 Phil., 343), this court declared that "the relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property forming the subject-matter of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal. His position is analogous with the to that of of a trustee faith, and be he cannot to consistently, principles good allowed

Tuason

(50 Phil.,

888),

the Supreme Court

declared that

the

registration of the property in the name of the trustees 716

716 PHILIPPINE REPORTS ANNOTATED Palma vs. Cristobal in possession thereof, must be deemed to have been effected for the benefit of the cestui que trust. In Palet vs. Tejedor (55 Phil., 790), it was declared that whether or not there is bad faith or fraud in obtaining a decree with respect to a registered property, the same does not belong to the person in whose favor it was issued, and the real owners would be entitled to recover the ownership of the property so long as the same has not been transferred to a third person who has acquired it in good faith and for a valuable consideration. This right to recover is sanctioned by section 55 of Act No. 496, as amended by Act No. 3322. There is no showing why the conclusions of facts of the Court of Appeals should be disturbed, and upon said facts petitioner's first assignment of error appears to be untenable in the light of law and of the decisions of this court. Petitioner alleged that the Court of Appeals erred in not holding the respondent estopped from claiming that petitioner is not the absolute owner of the property in question because, after Luisa Cristobal, petitioner's wife, died in 1922, instead of moving for

create in himself an interest in opposition to that of his principal or cestui que trust" Affirming the said doctrine in Barretto vs.

Page

21

the partition of the property, considering specially that petitioner had promised such a partition at the deathbed of the deceased, respondent appeared as attorney for petitioner and prayed that a new certificate of title be issued in the name of said petitioner as the sole owner of the property. Petitioner insisted with energy that respondent himself was a

Respondent is not barred because his appearance as attorney for the they petitioner sole were was owner not of the not of of a misrepresentation which would induce respondent the the recognized the former in controversy. between not it the as The coproperty petitioner to believe that

misrepresentation could deceive the court and outsiders, because aware Appeals rle of of the that understanding and the party to instrument owners that the property be registered in the name of petitioner. The Court issue, that assumed found, was an a finding is the to and make now in and effective. could not or petitioner understanding

party to the fraud upon the court, as guilty as petitioner himself, and that estops him from asserting that he is the co-owner of the land involved herein. There is no merit in in petitioner's his name contention. the title to The a fact that not

Respondent's appearance, as attorney for petitioner in 1923, was a consequence understanding, it had the petitioner of legitimately assume effect breaking

respondent has been a party to the deception which resulted in petitioner's securing property belonging to him, is not a valid reason for changing the legal relationship between the latter and its true owners to such an extent as to let them lose their ownership to a person trying to usurp it. 717

reversing said understanding. Lastly, it is contended by petitioner that, even conceding that the controverted property was owned in common by several coowners, yet the Court of Appeals erred in not holding that, as against respondent, petitioner had acquired absolute ownership of the same through prescription. Upon the premise that the registration in 1909 in the name of

VOL. 77, DECEMBER 11, 1946 717 Palma vs. Cristobal Whether petitioner and respondent are or are not jointly

petitioner and his wife, Luisa Cristobal, was in accordance with an agreement that and among he, the upon co-owners, the death petitioner of his advances wife in the 1922, his the an theory 1923, "he when

caused the trust property to be registered in his sole name in subsequently breached shares," the partitioned agreement that between of 1909 "that himself as well and as was daughter, Ildefonsa Cristobal Ditangco, as heirs of the decedent, openly promise made to his dying wife of giving the co-owners their respective concluding breach

responsible for any fraud upon a court of justice, cannot affect the substantial rights of the real owners of the title of a real property.

Page

22

assumption of prescription." 718

ownership,

and could be the basis

of

title by

____________ [Palma vs. Cristobal, 77 Phil. 712(1946)]

718 PHILIPPINE REPORTS ANNOTATED Arcilla vs. David This theory holds of the no water of because, Appeals, according upon the to the

pronouncement

Court

evidence,

petitioner held the property and secured its cannot acquire by prescription the

registration in his of a property

name in a fiduciary capacity, and it is elementary that a trustee ownership entrusted to him. The position of a trustee is of representative nature. His position is the position of a cestui que trust. It is logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to the benefit of his principal. Petitioner's pretension of building his right to claim ownership by prescription countenanced upon by his any own court, breach being of a trust cannot of be subversive generally

accepted ethical principles. The decision of the Court of Appeals is affirmed. No costs.

Decision of Court of Appeals affirmed

Page

JJ., concur.

23

Moran, C. J., Pars, Feria, Pablo, Hilado, Bengzon, and Briones,