SHARRUF AND CO. VS BALOISE FIRE INSURANCE CO. G.R. No.

44119, March 30, 1937 FACTS: The plaintiffs Salomon Sharruf and Elias Eskenazi were doing business under the firm name of Sharruf & Co, they insured their stocks with Aloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co. raising it to P40,000. Elias Eskenazi having paid the corresponding premiums. The plaintiffs executed a contract of partnership between themselves wherein they substituted the name of Sharruf & Co. with the Sharruf & Eskenazi. A fire ensued at their building at Muelle de la Industria street where petroleum was spilt lasting 27 minutes and the merchandise insured was subsequently destroyed by fire. Sharuff and Eskenazi filed their claim against the insurance company. But Baloise refused to pay on the ground that the policy was issued in the name of Sharuff and Co. and not Sharuff and Eskenazi. The lower court ordered Baloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co., to pay the partners Salomon Sharruf and Elias Eskenazi P40,000 plus 8% interest. ISSUE: Whether or not the partnership can claim the proceeds of the policy to the herein defendant insurance companies? HELD: YES. That when the partners of a general partnership doing business under the firm name of "Sharruf & Co." obtain insurance policies issued to said firm and the latter is afterwards changed to "Sharruf & Eskenazi", which are the names of the same and only partners of said firm "Sharruf & Co.", continuing the same business, the new firm acquires the rights of the former under the same policies; the membership of the partnership in question remained unchanged, the same and only members of the former, Salomon Sharruf and Elias Eskenazi, being the ones composing the latter, and it does not appear that in changing the title of the partnership they had the intention of defrauding the herein defendant insurance companies. ISLAND SALES, INC. VS UNITED PIONEERS GENERAL CONSTRUCTION CO., ET AL. G.R. No. L-22493 July 31, 1975 FACTS: United Pioneers General Construction Company is a general partnership formed by Benjamin Daco, Daniel Guizona, Noel Sim, Augusto Palisoc and Romulo Lumauig. In 1961, United Pioneers purchased by installment a motor vehicle from Island Sales, Inc. And United Pioneers defaulted in its payment, hence it was sued and the 5 partners were impleaded as co-defendants. Upon motion of Island Sales, Lumauig was removed as a defendant. United Pioneers lost the civil case and the trial court rendered judgment ordering United Pioneers to pay the outstanding balance plus interest and costs. It further decreed that the remaining 4 co-defendants shall pay Island Sales in case United Pioneers property will not be enough to satisfy its indebtedness to Island Sales. ISSUE: What is the extent of the liability of the partners considering that one partner was removed as a codefendant on motion of Island Sales? HELD: Their liability is pro-rata pursuant to Article 1816 of the Civil Code which states that All partners including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership. However, any partner may enter into a separate obligation to perform a partnership contract. But it should be noted that there were five (5) general partners when the promissory note in question was executed for and in behalf of the partnership, the liability of each partner should be 1/5th (of the companys obligation) each. The fact that the complaint against Lumauig was dismissed, upon motion of the Island Sales, does not unmake Lumauig as a general partner in the company. In so moving to dismiss the complaint, Island Sales merely condoned Lumauigs individual liability to them.

AGENCY Quiroga vs. Parsons Hardware; 38 Phil 501 August 1918 FACTS: On January 24, 1911, herein plaintiff-appellant Andres Quiroga and J. Parsons, both merchants, entered into a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, among others, that Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J. Parsons, subject to some conditions provided in the contract. They agreed on the following terms: a) Quiroga shall furnish the beds and shall give a 25% discount on the invoiced prices as commission sales and Parsons shall order by the dozen; b) Payment shall be made within 60 days from date of shipment; c) Transportation and shipment expenses shall be borne by Quiroga while freight, insurance, and cost of unloading by Parsons; d) If before an invoice falls due, Quiroga should request payment, payment made shall be prompt payment and a deduction of 2% shall be given; same discount if payment is in cash; e) Notice from Quiroga shall be given at least 15 days before any change in price; f) Parsons binds himself not to sell any other kind of bed; and g) Contract is for an unlimited period. Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. He alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. ISSUE: Whether or not Parsons, by reason of the contract, was a purchaser or an agent of Quiroga for the sale of the latters beds. HELD: NO, Parsons was not an agent. In order to classify a contract, due regard must be given to the essential clauses. In this case, there was an obligation on Quirogas part to supply beds while an obligations on Parsons part to pay the price. These are essential features of a contract of purchase and sale. None of the clauses conveys the idea of an agency where an agent received the thing to sell it and does not pay the price but delivers to the principal the price he obtains from the sale to a third person, and if he does not sell it, he returns it. The word agency used in the contract only expresses that Parsons was the only one who could sell the petitioners beds in the Visayan Islands. A contract is what the law defines it to be and not what the parties call it. BICOL SAVINGS AND LOAN ASSOCIATIONS VS CA, ET AL. GR NO 85302, MARCH 31, 1989 FACTS:

Juan de Jesus was the owner of a parcel of land, containing an area of 6,870 sq. ms. in Naga City. He executed a Special Power of Attorney in favor of his son, Jose de Jesus, stating "To negotiate, mortgage my real property in any bank either private or public entity preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon between the bank and my attorney-in-fact."
By virtue thereof, Jose de Jesus obtained a loan of P20,000.00 from petitioner bank, to secure payment, Jose de Jesus executed a deed of mortgage on the real property referred to in the Special Power of Attorney, as Juan de Jesus died. By reason of his failure to pay the loan obligation even during his lifetime, petitioner bank caused the mortgage to be extrajudicially foreclosed. In the subsequent public auction, the mortgaged property was sold to the bank as the highest bidder to whom a Provisional Certificate of Sale was issued. Private respondents herein, including Jose de Jesus, who are all the heirs of the late Juan de Jesus, failed to redeem the property within one year from the date of the registration of the Provisional Certificate of Sale. Hence, a Definite Certificate of Sale was issued in favor of the bank. Notwithstanding, private respondents still negotiated with the bank for the repurchase of the property. But no agreement was reached, as a consequence of which, the bank sold the property instead to other parties in installments. Conditional deeds of sale were

executed between the bank and these parties. A Writ of Possession prayed for by the bank was granted by the Regional Trial Court. Private respondents filed a Complaint with the then Court of First Instance of Naga City for the annulment of the foreclosure sale or for the repurchase by them of the property. That Court dismissed the case, ruling that the title of the bank over the mortgaged property had become absolute upon the issuance and registration of the said deed and private respondents were guilty of laches. On appeal, the Trial Court was reversed by respondent Court of Appeals, applied Article 1879 of the Civil Code and stated that since the special power to mortgage granted to Jose de Jesus did not include the power to sell, it was error for the lower Court not to have declared the foreclosure proceedings -and auction sale is null and void because the Special Power of Attorney given by Juan de Jesus to Jose de Jesus was merely to mortgage his property, and not to extrajudicially foreclose the mortgage and sell the mortgaged property in the said extrajudicial foreclosure. Issue: Whether or not there is a valid extrajudicial foreclosure sale of the mortgaged property instituted by petitioner bank. HELD: YES. Article 1879 of the Civil Code which states that: A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell is inapplicable herein. The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential or inseparable part of that bilateral agreement.

Petitioner bank, therefore, in effecting the extrajudicial foreclosure of the mortgaged property, merely availed of a right conferred by law. The auction sale that followed in the wake of that foreclosure was but a consequence thereof.

NEPOMUCENO, ET AL VS HEREDIA; 7 PHIL 563 FACTS: (GUIDE: HEREDIA - Business adviser of MARCIANA CANON Paid P1,500.00 from Marcianas account on Sept. 22, 1904 NEPOMUCENO -has unsecured debt receivable from Leao, P500.00 - Leao proposed to give a deed of conditional sale to a tract of land w/ buildings and improvements thereon for P2,000 less the P500; P1,500 balance - proposed to MARCIANA CANON an investment on the land discussing it with HEREDIA and directed him to make the Deed of Conditional Sale. MARCIANA CANON - principal of HEREDIA made a joint investment on Leaos land)

Defendant Heredia is the business adviser of the plaintiff, Marciana Canon, and as such had in his hands 1,500 pesos paid to him on her account on the 22d of September, 1904; that about the same time Felisa Nepomuceno, the other plaintiff, had an unsecured debt due her of 500 pesos from one Marcelo Leao; that on demand for security her debtor proposed to give her a deed of conditional sale to a certain tract of land, together with the buildings and improvements thereon, in consideration of 2,000 pesos, she to be credited with 500 pesos on the purchase price and that to advance the balance of 1,500 pesos; that knowing that the defendant had in his hands that amount of money, the property of her co-plaintiff, Marciana Canon, she proposed to the said

Marciana Canon that they make a joint investment in the land; that together they discussed the proposition with the defendant and later directed him to draw up the necessary documents. The Deed of Conditional Sale was executed on Sept. 24, 1904 with a right to repurchase at the end of 1yr and obligating himself to make monthly payments in considerations of the right to retain the land in possession in sufficient amount to bring 17% interest per annum on Nepomuceno and Canons investments (proponents opinion is that this could effectively be called rent). Canon and Nepomuceno indeed paid the P1,500 price evidenced by a notarized memorandum. The title was placed in the name of Heredia. Leao continued to pay for more than a year to plaintiffs. There was recovery of possession instituted by 3rd parties prompting herein plaintiffs to seek recovery of the whole amount of the money invested from Heredia and alleging that the purchase of the land was not made in accordance with their instructions. The RTC ruled in favor of Nepomuceno and Canon. On appeal, the plaintiffs wanted modification of the RTCs judgment on the grounds that Heredia invested their money under his name and account and not as their agent. ISSUE: Whether or not the defendant failed to exercise reasonable care and diligence in the performance of his duty as an agent. HELD: The Court reverses the lower courts decision. It was clearly established at the trial that the defendant was acting merely as the agent for the plaintiffs throughout the entire transaction; that the purchase of the land was made not only with their full knowledge and consent, but at their suggestion; and that after the purchase had been effected, the plaintiffs, with full knowledge of the facts, approved and ratified the actions of their agent in the premises. There is nothing in the record which would indicate that the defendant failed to exercise reasonable care and diligence in the performance of his duty as such agent, or that he undertook to guarantee the vendors title to the land purchased by direction of the plaintiffs.