CODAL QUIZ: ARTICLES 1336-1350
o CIFC filed a motion for leave of court to file 3 rd party complaint
ESSAY QUIZ:
STATUTE OF FRAUDS Article 1403 (2)
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a secondary evidence of its
contents:
a) An agreement that by its terms is not to be performed within a year from the
making thereof;
b) A special promise to answer for the debt, default, or miscarriage of another;
c) An agreement made in consideration of marriage, other than a mutual
promise to marry;
d) An agreement for the sale of goods, chattels or things in action, at a price
not less than five hundred pesos, unless the buyer accept and receive part
of such goods and chattels, or the evidences, or some of them, of such
things in action or pay at the time some part of the purchase money; but
when a sale is made by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and kind of property sold,
terms of sale, price, names of the purchasers and person on whose account
the sale is made, it is a sufficient memorandum;
e) An agreement for the leasing for a longer period than one year, or for the
sale of real property or of an interest therein;
f) A representation as to the credit of a third person.
1317 Cebu International Finance vs CA [G.R. No. 123031. October 12, 1999]
FACTS:
Cebu International Finance Corp. (CIFC) is a quasi-banking institution,
engaged in money market operations where Vicente Alegre invested
500,000.00 in cash.
o CIFC issued a promissory note in favor of Alegre to mature on May
27, 1991, in the amount of Php 516,328.67 which included interest
of 20.5% for 32 days.
On the day of maturity, CIFC issued a BPI check for 514,390.94 in favor of
Alegre as proceeds of his matured investment plus interest.
Upon deposit of the check, BPI dishonored it with the annotation, that the
Check is a subject of an investigation.
o BPI took custody of the check pending an investigation of several
counterfeit checks drawn against CIFCs checking account.
Alegre demanded on several occasions from CIFC that he be paid in cash,
but CIFC refused, and instead asked the former to wait for its on going
reconciliation with BPI.
CIFC promised to replace the check, but required an impossible condition,
that the original check first be surrendered which was in the custody of BPI.
Alegre filed a complaint for recovery of sum of money against CFCI.
against BPI
o CFCI asserted that the check it issued in favor of Alegre was
genuine, valid and sufficiently funded.
CIFC then filed a separate civil action against BPI for the collection of a sum
of money alleging that BPI unlawfully deducted from CIFCs checking
account, counterfeit checks amounting to 1,724,364.58 and included the
prayer to collect the amount of the check paid to Vicente Alegre but
dishonored by BPI.
During the trial for the collection of money filed by Alegre, the manager of
BPI testified that the bank encashed and deducted the BPI check issued to
Alegre from the account of CIFC but such remained in BPIs custody
pursuant to the compromise agreement entered into by CIFC and BPI:
o BPI shall pay CIFC the amount of 1.7M.
o BPI shall debit the check issued to Alegre from the current account
of CIFC
o BPI shall not be liable to CIFC in case the former is found liable to
Alegre
BPI filed separate suit against Alegre: Alegre connived with certain persons
in forging several checks of CIFC.
RTC as affimed by CA ruled in favor of Alegre
ISSUE: W/N the compromise agreement between BPI and CIFC binds Alegre
RULING: NO. The stipulations in the compromise agreement is unenforceable
against Alegre, not a party thereto.
RATIO:
A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced.
o It is an agreement between two or more persons who, for
preventing or putting an end to a lawsuit, adjust their difficulties by
mutual consent in the manner which they agree on, and which
everyone of them prefers in the hope of gaining, balanced by the
danger of losing.
o The compromise agreement could not bind a party who did not sign
the compromise agreement nor avail of its benefits.
Following Art. 1317 of the Civil Code, Alegres money could not be the
subject of an agreement between CIFC and BPI. Although Alegres
money was in the custody of BPI, its possession was not in the
concept of owner thus it cannot validly appropriate the money as its
own.
BPIs confiscation of Alegres money constitutes garnishment without the
parties going through a valid proceeding in court.
o Garnishment is an attachment by means of which the plaintiff seeks
to subject to his claim the property of the defendant in the hands of
a third person or money owed to such third person or a garnishee
to the defendant.
CIFC has not yet tendered a valid payment of its obligation to the private
respondent.
 o Tender of payment involves a positive and unconditional act by the
obligor of offering legal tender currency as payment to the obligee
for the formers obligation and demanding that the latter accept the
same.
o Tender of payment cannot be presumed by a mere inference from
surrounding circumstances.
GEORGE LITTON, petitioner and appellant, vs. HILL & CERON
ET AL., respondents and appellees.
FACTS:
February 14, 1934: the plaintiff sold and delivered to Carlos Ceron, who is
one of the managing partners of Hill & Ceron, a certain number of mining
claims, and by virtue of said transaction, the defendant Carlos Ceron
delivered to the plaintiff a document reading as follows:
"Feb. 14, 1934.
"Received from Mr. George Litton share certificates Nos. 4428, 4429 and
6699 for 5,000, 5,000 and 7,000 shares respectivelytotal 17,000 shares of
Big Wedge Mining Company, which. we have sold at P0.11 (eleven
centavos) per share or P1,870.00 less 1/2 per cent brokerage.
"HILL & CERON
"By: (Sgd.) CARLOS CERON"
Ceron paid to the plaintiff the sum of P1,150 leaving an unpaid balance of
P720, and unable to collect this sum either from Hill & Ceron or from its
surety Visayan Surety & Insurance Corporation, Litton filed a complaint in
the Court of First Instance of Manila against the said defendants for the
recovery of the said balance.
Respondent: argues in its brief that even admitting that one of the partners
could not, in his individual capacity, engage in a transaction similar to that in
which the partnership is engaged without binding the latter, nevertheless
there is no law which prohibits a partner in the stock brokerage business for
engaging in other transactions different from those of the partnership, as it
happens in the present case, because the transaction made by Ceron is a
mere personal loan
CFI: ordered Carlos Ceron personally to pay the amount claimed and
absolved the partnership Hill & Ceron, Robert Hill and the Visayan Surety &
Insurance Corporation.
CA: affirmed the decision of the court on May 29, 1937, having reached the
conclusion that Ceron did not intend to represent and did not act for the firm
Hill & Ceron in the transaction involved in this litigation. Ceron individually
entered into the transaction with the plaintiff.
ISSUE: W/N the transaction made by Ceron with the plaintiff should be understood in
law as effected by Hill & Ceron and binding upon it
RULING: YES. The appealed decision is reversed and the defendants are ordered to
pay to the plaintiff, jointly and severally, the sum of P720, with legal interest, from the
date of the filing of the complaint, minus the commission of one-half per cent (%)
from the original price of P1,870, with the costs to the respondents.
RATIO:
In the first place, it is an admitted fact by Robert Hill, when he testified at the
trial that he and Ceron, during the partnership, had the same power to buy
and sell; that in said partnership Hill as well as Ceron made the transaction
as partners in equal parts; that on the date of the transaction, February 14,
1934, the partnership between Hill and Ceron was in existence.
After this date, or on February 19th, Hill & Ceron sold shares of the Big
Wedge; and when the transaction was entered into with Litton, it was neither
published in the newspapers nor stated in the commercial registry that the
partnership Hill & Ceron had been dissolved.
Hill testified that a few days before February 14th he had a conversation with
the plaintiff in the course of which he -advised the latter not to deliver shares
for sale or on commission to Ceron because the partnership was about to be
dissolved; but what importance can be attached to said advice if the
partnership was not in fact dissolved on February 14th, the date when the
transaction with Ceron took place?
Under article 226 of the Code of Commerce, the dissolution of a commercial
association shall not cause any prejudice to third parties until it has been
recorded in the commercial registry.
In its decision the Court of Appeals states: "But there is a stronger objection
to the plaintiff's attempt to make the firm responsible to him. According to the
articles of copartnership of 'Hill & Ceron,' filed in the Bureau of Commerce
the sixth paragraph of the articles of partnership of Hill & Ceron above
quoted that the management of the business of the partnership has been
entrusted to both.
But SC dissents from the view of the Court of Appeals that for one of the
partners to bind the partnership the consent of the other is necessary.
Third persons, like the plaintiff, are not bound in entering into a contract with
any of the two partners, to ascertain whether or not this partner with whom
the transaction is made has the consent of the other partner.
The public need not make inquiries as to the agreements had between the
partners. Its knowledge is enough that it is contracting with the partnership
which is represented by one of the managing partners.
The kind of business in which the partnership Hill & Ceron is to engage
being thus determined, none of the two partners, may legally engage in the
business of brokerage in general as stock brokers, security brokers and
other activities pertaining to the business of the partnership.
Ceron, therefore, could not have entered into the contract of sale of shares
with Litton as a private individual, but as a managing partner of Hill & Ceron.