MANUEL ORMACHEA TIN-CONGCO vs. SANTIAGO TRILLANA

March 18, 1909

FACTS:

Plaintiff Manuel Ormachea Tin-Congco and Luis Vizmanos Ong Queco were engaged in business in Hagonoy, Malolos. Defendant Santiago Trillana purchased from them merchandise amounting to P4,000. The partnership was later on dissolved and the business was divided up between the partners and all the accounts and debts belonging to defendant were allotted to plaintiff.

Plaintiff filed a complaint against defendant praying that he be ordered to pay the amount plus interest which makes the total debt to P5,500. The indebtedness was proven by documents signed by defendant and his agents in favor of the partnership or their agent named Lawa.

Defendant contended that he had already settled his obligations by means of periodical payments in tuba or the liquor of nipa palm. Defendant used as evidence the document execute by Jose R. Lopez (Lawa), who used to be the manager of the partnership, declaring that defendant has no outstanding debt with the distillery which used to be under his management. Lawa admitted that he executed the document but because the latter was not indebted to him but to Manuel Ormachea, to whom the credits standing against Trillana was transferred.

ISSUE:

Whether or not a manager of a business, after definite dissolution of partnership, has authority to release debtors

RULING:

No authority. After the close of the business, the management of which was entrusted to a certain person, and after expiration of two years from the date of his withdrawal, he could not legally issue a document of warrant which would fatally exempt the debtor from the payment of the debt existing in favor of the partner to whom the credit claimed to have been extinguished may belong, because he has no authority for such an act.

After the close of the business of the distillery owned by Or-machea and Vizmanos, and after Lawa had ceased for two years to

act in the administration and management thereof, he was not au-thorized to sign the document marked "A," made out by the debtor, by which the credit of Ormachea should be considered as settled, and the obligation contracted by Santiago Trillana, as shown by the vales which appear in the record, extinguished.

Since the vales existed, and were in the possession of the creditor, it was because the amounts they called for had not pre-sumed to have been fulfilled when the proofs of its existence have been returned to the debtor. (Sec. 334, par. 8, Code of Civil Proce-dure.)

Seeing that the amounts stated in the vales acknowledged by the debtor were advanced to him in part payment of the price of certain quantities of tuba or liquor of the nipa palm which he had contracted to deliver at the distillery, and as long as he is able to comply with these stipulations within a reasonable time, the defen-dant cannot be compelled to pay his debt in cash. The amounts stated in the vales were advanced under the condition that the same would be paid or satisfied with the value of the tuba received by the distillery; therefore, the decision of the court below, which moreover appears to have been acquiesced in by the appellee for the reason that it was undoubtedly so stipulated, is in accordance with the law. (Art. 1278, Civil Code.)

BENITO LIWANAG and MARIA LIWANAG REYES vs. WORKMEN'S COMPENSATION COMMISSION, ET AL.

May 22, 1959

FACTS:

Appellants Benito Liwanag and Maria Liwanag Reyes are partners of Liwanag Auto Supply, a commercial establishment located at Sampaloc, Manila. They employed Roque Balderama as security guard who died in a criminal incident while on duty. The widow and minor children filed a claim for compensation before the Workmen's Compensation Commission which granted their claim and holding the appellants solidarily liable to pay the claim.

The appellants do not question the right of appellees to compensation what they are questioning is their solidary liability, they claim that the compensation is divisible because there is nothing in the Compensation Act which provides that the obligation of an employer arising from an injury or death of an employee should be solidary and that if the legislative intent in enacting the law is to impose solidary obligation, the same should have been specifically provided, in the absence of such clear provision, the responsibility of appellants should not be solidary but merely jointly.

ISSUE:

Whether or not the co-partners are solidarily or jointly liable

RULING:

At first blush appellants' contention would seem to be well, for ordinarily, the liability of the partners in a partnership is not solidary; but the law governing the liability of partners is not applicable to the case at bar wherein a claim for compensation by dependents of an employee who died in line of duty is involved. And although the Workmen's Compensation Act does not contain any provision expressly declaring solidary obligation of business partners like the herein appellants, there are other provisions of law from which it could be gathered that their liability must be solidary. Arts. 1711 and 1712 of the new Civil Code provide:

ART. 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or

entirely due to a fortuitous cause, if the death or personal in-jury arose out of and in the course of the employment. . . . .

ART. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable for compensation. . . . .

And section 2 of the Workmen's Compensation Act, as amended reads in part as follows:

. . . The right to compensation as provided in this Act shall not be defeated or impaired on the ground that the death, in-jury or disease was due to the negligence of a fellow servant or employee, without prejudice to the right of the employer to proceed against the negligence party.

The provisions of the new Civil Code above quoted taken together with those of Section 2 of the Workmen's Compensation Act, rea-sonably indicate that in compensation cases, the liability of busi-ness partners, like appellants, should be solidary; otherwise, the right of the employee may be defeated, or at least crippled. If the responsibility of appellants were to be merely joint and solidary, and one of them happens to be insolvent, the amount awarded to the appellees would only be partially satisfied, which is evidently con-trary to the intent and purposes of the Act. In the previous cases we have already held that the Workmen's Compensation Act should be construed fairly, reasonably and liberally in favor of and for the ben-efit of the employee and his dependents; that all doubts as to the right of compensation resolved in his favor; and that it should be in-terpreted to promote its purpose. Accordingly, the present contro-versy should be decided in favor of the appellees.

Moreover, Art. 1207 of the new Civil Code provides:

. . . . There is solidary liability only when the obligation ex-pressly so states, or when the law or the nature of the obli-gation requires solidarity.

Since the Workmen's Compensation Act was enacted to give full protection to the employee, reason demands that the nature of the obligation of the employers to pay compensation to the heirs of their employee who died in line of duty, should be solidary; other-wise, the purpose of the law could not be attained.

Wherefore, finding no error in the award appealed from, the same is hereby affirmed, with costs against appellants.

ADRIANO MIRASOL vs. THE MUNICIPALITY OF TABACO, ALBAY,

July 10, 1922

FACTS:

Sometime in 1916, the defendant municipality decided to have an artesian well drilled in the central portion of the town. Plaintiff's lot is one of those included in the project, he interposed no objection, thus, the project was started. After the machinery were installed but before the drilling actually begun, the plaintiff objected the continuation of the work and whereupon, the operations were immediately suspended. The acting president talked to the plaintiff and again the plaintiff gave his consent to its being drilled on his lot, the well was completed without any further obligation on the part of the plaintiff.

The plaintiff later on filed an action in ejectment and for damages, alleging that the defendant municipality, without his consent, caused an artesian well to be bored on a building lot owned by him thereby rendering the land unserviceable for the uses to which it was to be devoted by the plaintiff. The trial court rendered a decision absolving the defendant from the complaint.

ISSUE:

Whether or not the defendant municipality has the right over the land?

RULING:

The defendant municipality has acquired no title to the land occupied by the well nor even easement therein; its interest can only be regarded as mere license. Ordinarily, a license is revocable at the pleasure of the licensor, but it has been held in most jurisdictions in the United States that where the licensee has entered upon land under a license and has with the express and implied consent of the owner expended money or labor for extensive improvements on the strength of such license, the owner is estopped from revoking the license.

The doctrine of estoppel having its origin in equity and there-fore being based on moral right and natural justice, its applicability to any particular case depends, to a very large extent, upon the

special circumstances of the case. In the present case the plaintiff is a participant in the benefits of the well in question; he gave his express consent to the boring of the well upon the premises and thereby led the defendant to believe that the license would not be revoked. Acting upon this belief, the defendant caused the well to be bored and incurred large expenses. We doubt that any authori-tative judicial decision will be found where upon such or similar facts the applicability of the doctrine of estoppel has been denied.

To hold that under the circumstances stated the license might be revoked, would be putting a premium upon fraud and deception which equity will not tolerate and would also be in conflict with the provisions of subsection 1 of the section 333 of the Code of Civil Procedure, which reads:

Whenever a party has, by his own declaration, act, or omission, in-tentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify its.

We therefore hold that not only upon the general principles of eq-uity, but also under subsection 1 of section 333 of the Code of Civil Procedure, is the plaintiff estopped from revoking the license in question without first reimbursing the defendant for the expendi-tures incurred upon the strength of said license.

The judgment appealed from is affirmed with the costs against the appellant. So ordered.

LIM TONG LIM V. PHILIPPINE FISHING GEAR INDUSTRIES

JULY 10, 1922

FACTS:

It was established that Lim Tong Lim requested Peter Yao to engage in commercial fishing with him and one Antonio Chua. The three agreed to purchase two fishing boats but since they do not have the money they borrowed from one Jesus Lim (brother of Lim Tong Lim).

They again borrowed money and they agreed to purchase fishing nets and other fishing equipments. Now, Yao and Chua rep-resented themselves as acting in behalf of “Ocean Quest Fishing Corporation” (OQFC) they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets amounting to more than P500k.

They were however unable to pay PFGI and so they were sued in their own names because apparently OQFC is a non-exis-tent corporation. Chua admitted liability and asked for some time to pay. Yao waived his rights. Lim Tong Lim however argued that he’s not liable because he was not aware that Chua and Yao repre-sented themselves as a corporation; that the two acted without his knowledge and consent.

ISSUE: 

Whether or not Lim Tong Lim is liable.

HELD:

  Yes. From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had decided to engage in a fishing busi-ness, which they started by buying boats worth P3.35 million, fi-nanced by a loan secured from Jesus Lim. In their Compromise Agreement, they subsequently revealed their intention to pay the loan with the proceeds of the sale of the boats, and to divide equally among them the excess or loss. These boats, the purchase and the repair of which were financed with borrowed money, fell un-der the term “common fund” under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangi-ble like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be divided

equally among them also shows that they had indeed formed a partnership.

Lim Tong Lim cannot argue that the principle of corporation by estoppels can only be imputed to Yao and Chua. Unquestion-ably, Lim Tong Lim benefited from the use of the nets found in his boats, the boat which has earlier been proven to be an asset of the partnership. Lim, Chua and Yao decided to form a corporation. Al-though it was never legally formed for unknown reasons, this fact alone does not preclude the liabilities of the three as contracting parties in representation of it. Clearly, under the law on estoppel, those acting on behalf of a corporation and those benefited by it, knowing it to be without valid existence, are held liable as general partners.