G.R. No. 19341. January 29, 1923

STATEMENT

Plaintiff alleges that at all times since 1912 she has been and is now the
owner of the lease of those certain premises occupied as a cabaret and dancing
hall known as “Lerma Park,” in the municipality of Caloocan, Province of Rizal,
and of the business and buildings connected therewith and belonging thereto.
Since that time the defendant, as her agent, has had the control and management
of the premises and of the business, and that he has collected and expended
large sums of money in the operation thereof, the amount of which is unknown to
the plaintiff. That he has failed to account to her for the moneys received and
collected, and that on April 20, 1921, she made a demand upon him for the
possession of the business and property, and that he refused to make delivery.
Wherefore, she prays judgment for an accounting to determine the amount due and
owing1 the plaintiff, and that she have the possession of the property and
business.

For answer, the defendant made a specific denial of all of the matters
alleged in the complaint, and, as a separate defense, pleads that the plaintiff
is not and never was the owner of the business or the property; that any
documents executed tending to show that she had any interest in the property
were executed as a matter of convenience only; that in October and November,
1918, the business was in bad condition, and, for such reason, the defendant
decided to either sell it or mortgage it, but was unable to do so for the reason
that the money lenders suspected that plaintiff might have or claim to have an
interest in the property, and at their suggestion he was forced to obtain from
the plaintiff a transfer of any right, title or interest which she might have or
claim to have in the property, and that he then obtained from her a bill of sale
on November 8, 1918, for P25,000, known in the record as Exhibit 23, which is
made a part of the answer. That plaintiff never did have any interest in the
business and never did have anything to do with its administration or
management, and never at any time had possession of it. That on November 8,
1918, he paid the plaintiff the sum of P25,000, as she was leaving the
Philippine Islands, in order to induce her to sign Exhibit 23; that upon that
date she did leave; that after her return she never claimed or asserted any
interest in the property until April 21, 1921.

Upon such issues a trial was had, more than six hundred pages of testimony
were taken, a large number of exhibits were introduced in evidence, and the
lower court rendered an opinion, in substance and to the effect, that the
plaintiff was the owner of the business and property known as “Lerma Park,” and
that within thirty days the defendant should render to her an accounting of his
administration of the business as to the income, expenses, profit, and loss, in
which should be included all the debits against the plaintiff of the moneys she
may have received from the defendant, including the P20,000 paid to her as she
was leaving the Philippine Islands. From which the defendant appeals, assigning
sixteen different errors, all of which, for the purpose of this opinion, may be
included in the contention that the court erred in declaring the plaintiff to be
the owner of the business, and in not finding that the defendant at all times
had been and is now the sole and absolute owner of the business known as “Lerma
Park.”

JOHNS, J.:

For many years previous to their trouble, the plaintiff and defendant were
intimate, personal friends, and each enjoyed the confidence and respect of the
other. The testimony is not clear or convincing as to who actually furnished the
money for the initial investment in the Lerma Park property, and it may be that
the plaintiff did provide some of the money for that purpose. The evidence is
conclusive that at all times the business was carried on and conducted in the
name of the defendant, and that he personally contracted all debts and paid all
the bills, and that he was the sole manager of the business. The record shows
that there were times when the business did not pay, and was even operated at a
loss, and that the defendant was often threatened with legal proceedings to
collect claims against the property. That at different times court proceedings
were commenced to enforce the collection of claims, in all of which Yearsley was
the sole defendant. That prior to the commencement of this action the plaintiff
did not claim or assert in court that she was the owner or had any interest in
the property. Neither is it shown that at such times the plaintiff paid out or
advanced her own personal money to aid the defendant or to relieve the
situation. In other words, in the operation and management of the property, the
defendant was thrown and had to rely upon his own personal resources, and did
not receive any financial aid or support from the plaintiff. It is also
conclusive that at no time did the defendant ever render a statement or in any
way account to the plaintiff for his conduct of the business. Neither is there
any claim or pretense that she ever made any demand upon him for a statement
prior to the commencement of the action in April, 1921. The business of what is
known as “Lerma Park” was initiated some time in 1913 or 1914. Soon after that
and to protect the creditors, chattel mortgages were executed on the property in
which both the plaintiff and defendant joined, in one of which it is recited
that the plaintiff claims an interest in the property. But at no time or place
is there any evidence during all of that period that she claimed to be the sole
and absolute owner. The plaintiff admits that some time in December, 1917, the
defendant paid her P1,000, and that in January, 1918, he paid her P4,000, and
that at or about the time she left the Philippine Islands, on November 8, 1918,
he paid her the further sum of P20,000, making a total of P25,000, which she
received from the defendant. Previous to that time any surplus from the business
there may have been was used in the improvement and development of the property,
and it is very doubtful whether there were any actual profits.

The storm center in this case is the bill of sale, known in the record as
Exhibit 23. The plaintiff claims that she never signed it and that her signature
is a forgery. The defendant contends that she personally signed it. It recites
an actual consideration of P25,000 and appears to be dated November 8, 1918, but
is not witnessed. But the plaintiff does admit that at or about that time she
did receive the P20,000 from the defendant, and that at previous times she had
received P5,000, making a total of P25,000. She also admits that upon that date
and just as she was leaving for the United States, she gave the defendant a
general power of attorney. The fact that she gave the defendant a power of
attorney on that date is strong evidence that she had never given him a power of
attorney at any previous time. There is no written evidence that the defendant
was ever the agent of the plaintiff in any business, or that the defendant ever
transacted any business under the power of attorney which the plaintiff admits
that she gave him on November 8, 1918, or under any power of attorney.

Upon that date she left for the United States, and returned to Manila in
January, 1920, after an absence of more than fourteen months.

As stated, up to the time she left, the relations between plaintiff and
defendant, covering a period of more than four years, were friendly and
confidential. During that period many thousand pesos were monthly received and
paid out in the operation and management of the property. If it be a fact that
the plaintiff was the sole and absolute owner, as she now claims, and that the
defendant was her managing agent, in the very nature of things, there would have
been some understanding or agreement as to the compensation which the defendant
should receive for his services, and the plaintiff would have required at least
monthly statements of the amount received and paid out, showing the actual
condition of the business. There is no claim or pretense that there was ever any
agreement between them as to the amount defendant should receive for his
services, or that he ever made or rendered a statement of any kind of a profit
and loss account or of the operating expenses. Again, if she was the sole owner
of the business she would at least have insisted upon a statement and an
accounting before leaving for the United States, and there is no evidence that
any statement was ever rendered to her or that she ever asked for it. She
testified that during her absence for fourteen months she wrote the defendant
two letters, neither of which was ever answered. The testimony is conclusive
that upon her return she was in Manila at least eight months without ever seeing
the defendant or going near the business, or even making any inquiry about it.
If she was the owner, the most natural thing upon her return would be to go and
see the defendant and ask him for a statement and an accounting.

There is a sharp and direct conflict in the evidence as to whether the
signature of the plaintiff to Exhibit 23 is genuine, and a large amount of
evidence was taken pro and con on that question. Be that as it may, and
regardless of the bill of sale, the actions and conduct of the plaintiff, the
collateral facts and surrounding circumstances are the very strongest evidence
that plaintiff never was the sole and absolute owner ol the property.

It may be that she did have some kind of an undefined interest, and that in a
way she was a secret partner of the defendant. Assuming that to be true, any
interest which she ever had was acquired by the defendant at the time he paid
her the P20,000, the receipt of which she admits. In view of the subsequent
actions and conduct of the plaintiff, the payment of that amount at that time
and under the circumstances cannot be explained or accounted for upon any other
theory.

The stubborn fact remains that for seven long years the defendant was in the
actual, physical possession, control, and management of the business, and that
at no time prior to the commencement of this action has he ever been called upon
or required to account to the plaintiff for his actions and conduct, and all of
the money was handled by the defendant, and the bank account was kept in his own
name.

Under the theory of the lower court, the plaintiff was the sole owner of the
business, and, for such reason, it attached much importance to article 1459 of
the Civil Code which, among other things, provides:

“The following persons cannot take by purchase, even at a public or judicial
auction, either in person or through the mediation of another:

“An agent, any property of which the management or sale may have been
intrusted to him.”

As we construe the record, that article is not in point. The plaintiff was
never the sole or absolute owner of the business which, for seven years, was
conducted in defendant’s name, during all of which time he claimed, represented
and held himself out to be the sole owner. Any interest which the plaintiff may
have had at the time she received the P20,000 was more or less of an undefined,
equitable interest, and that money was paid to take over and acquire her
interest whatever it may have been.

In other words, the plaintiff received and accepted the P20,000 with the
understanding and agreement that it was in full payment of any right, title or
interest which she had or claimed to have in the property or business, and as a
full and complete settlement of all matters between them.

We have given this case the careful consideration which its importance
demands, and we find as a fact, upon which the testimony is conclusive, that in
consideration of the P20,000, the receipt of which she admits, the plaintiff
parted with and sold to the defendant all of her right, title and interest in
the property and business on November 8, 1918, at the time she left the
Philippine Islands for the United States.

The judgment of the lower court is reversed, and one will be entered here
against the plaintiff and in favor of the defendant for the costs of this
action. So ordered.

Araullo, C.J., Street, Malcolm, Avanceña, Villamor,
Ostrand, and Romualdez, JJ., concur.

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February 27, 1923.

JOHNS, J.:

In response to plaintiff’s vigorous petition for a rehearing, at the expense
of considerable time and trouble, another member of this court has carefully
read and examined the whole record consisting of about nine hundred pages of
testimony and a large number of exhibits, and has arrived at the same result. In
the petition much stress is laid upon the alleged fact that the original
decision does not take any consideration of Exhibit G and does not even mention
Exhibit J, by which the plaintiff leased the Lerma Park to O. E. Hart, and in
finding that the plaintiff did not advance her own money or come to its relief
when the business was operated at a loss, and that it failed to take any
consideration the fact that soon after her return from the United States,
plaintiff took steps to enforce her rights, and that it attached much importance
to the failure of the plaintiff to demand an accounting before she left for the
United States, and that there was no written evidence that the defendant was
ever the agent of the plaintiff, and in finding that any interest which the
plaintiff had was acquired hy the defendant at the time he paid her the
P20,000.

Speaking of Exhibits G and J, the petition for rehearing says:

“It appears affirmatively from the decision of this Honorable Court that the
said document was not taken into consideration in any way whatever, and must
therefore have been overlooked in the great mass of testimony and exhibits
offered in evidence in the case.”

The original opinion was largely founded upon plaintiff’s own admissions,
undisputed facts and the written instruments. As counsel says, the lease of the
real property itself was in the name of the plaintiff, from which he assumes
that she was the exclusive owner of the property and of the business connected
with it. But it is undisputed that the business connected with the property was
operated by, and in the sole name of, the defendant, and that to all intents and
purposes, he was the owner of the business. As the original opinion points out,
several notes and chattel mortgages were jointly signed by the plaintiff and the
defendant. Plaintiff’s own actions and conduct for six long years are
inconsistent with her exclusive ownership of the property. The record shows that
she is an intelligent woman with a knowledge of how business ought to be
transacted, and her own signature to numerous public documents is conclusive
proof that the defendant had an interest in the property, including the lease
itself, and that she recognized that interest in more ways than one, and that
such interest was recognized by the parties with whom they were doing
business.

The plaintiff and defendant joined in chattel mortgages to Findlay,
Richardson & Co. on the personal property of the business to secure the
payment of their three joint and several promissory notes, and they both joined
in other instruments and chattel mortgages pertaining to, of and concerning, the
property, in one of which it is specifically recited that upon certain
conditions “the parties of the first part may remain in possession of said
property and continue the operation of said business.”

August 10, 1914, Findlay, Richardson & Co., to whom one of the mortgages
was executed, wrote Mr. Yearsley a letter in which it is said:

“I beg herewith to confirm our understanding that the assignment executed by
yourself and Mrs. Jennie Florida, under date of August 7, 1914, in favor of
Findlay, Richardson & Company, Ltd., of your interest in the lease executed
between Mrs. Florida and Mr. Hart of the property known as Lerma Park, etc., and
that we agree to assign back to you and Mrs. Florida whatever interest we may
then have in the lease with Mr. Hart.”

The record is conclusive that, although the lease to the ground itself was in
the personal name of the plaintiff, all of the business was conducted by, and in
the name of, the defendant, and the written documents are conclusive evidence
that, although the plaintiff may have had some kind of an interest in the
business, it is also clear that it was operated by, and in the name of, the
defendant. It is true that the lease itself stood in the name of the plaintiff,
and if that fact stood alone it would be conclusive evidence that the plaintiff
was the owner of the property. But for six long years the business itself was
conducted by, and in the name of, the defendant. That fact standing alone would
be conclusive evidence that he was the exclusive owner of the business. Under
such existing conditions, the defendant claims that he paid the plaintiff
P20,000 to acquire all of her right, title and interest in the property, and the
proofs and her subsequent acts and conduct strongly support defendant’s
contention.

In his petition for a rehearing counsel has assumed that, because the lease
itself to the ground stood in the name of the plaintiff, it follows that she was
the sole owner of the business. Under the established facts that position is not
tenable. The testimony is conclusive that the business itself was conducted by,
and in the sole name of, the defendant. In a case involving such a mass of
testimony and exhibits, it is not practicable to discuss every point in detail,
and it may be true, as counsel claims, that there were some erroneous statements
of fact in the original opinion, but they were immaterial and do not in the
least affect the result.

With all due respect to the petition for a rehearing, every material point in
appellant’s brief was fully considered, the final conclusions were drawn from
our legal construction of the undisputed facts, the written instruments and
plaintiff’s own testimony.

The petition is denied. So ordered.

Araullo, C.J., Street, Malcolm,
Avanceña, Ostrand, and Romualdez, JJ., concur.