SECUNDINO MENDEZONA, PLAINTIFF AND APPELLANT, VS. THE PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY, LIMITED, AND MANUEL DE GARAY, DEFENDANTS. THE PHILIPPINE SUGAR ESTATES DEVELO…

This action was instituted on June 19,
1914, in the Court of First Instance of the city of Manila by the
plaintiff Secundino Mendezona against the “The Philippine Sugar Estates
Development Company, Limited” and the defendant Manuel de Garay to
recover of the defendant company by way of damages the sum of
P228,023.36 arising from a breach of contract.

The plaintiff alleges that he entered into that contract with the
defendant company on July 14, 1913, the corresponding document copied
in the complaint having been executed in which the name of Manuel de
Garay was made to appear as the tenant on shares for the sole purposes
of satisfying the scruples of one of the directors of the company, but
with the understanding between the parties that the plaintiff was to be
the real tenant on shares; that by virtue of that mutual understanding,
and in order to carry it into effect, he entered with the defendant
Manuel de Garay on July 14, 1913, with the consent of the
representatives of the defendant company, into a contract in which the
said Manuel de Garay admitted that he was merely a subordinate of the
plaintiff, with a right to only 10 per cent of the plaintiff’s share in
the profits which as tenant he might receive from the Hacienda de
Bucal, which the defendant had in Calamba, Laguna; and that, said
defendant Manuel de Garay, conniving with the defendant company,
attempted to defraud him, claiming to be the true tenant, for which
reason he lost his right to the share otherwise accruing to him under
said contract.

The defendant corporation answered the complaint of the plaintiff
Secundino Mendezona, denying his claims, and alleging, by way of
special defense: That the defendant company had not entered into any
rental contract on shares with the plaintiff and that the latter
intervened in the work of cultivation of the Hacienda de Bucal as a
mere attorney in fact of the defendant Manuel de Garay, who was
discharged from that place when the company learned that the plaintiff
had entered it in violation of the rental contract on shares which the
defendant Manuel de Garay had with the defendant company.

The defendant Manuel de Garay denies all of the allegations of the
complaint and by way of special defense alleges: (1) That the contract
which he entered into with the plaintiff on July, 1913, was to the
effect that he would sign a contract of rental on shares which said
plaintiff had arranged with the defendant company, and in return, the
plaintiff would make him an employee on the Hacienda de Bucal, with the
right to receive 10 per cent of the profits which might accrue to the
plaintiff, as tenant on shares; that, later, when he found out that the
contract which he was to sign absolutely prohibited the transfer of the
rental contract and required him to give a bond, then, at his instance
and with the consent of the plaintiff, the terms of his contract were
altered, in the sense that between them the work of the hacienda would
be divided, De Gray acting as tenant on shares and Mendezona as his
attorney in fact, and the profits were to be divided equally among
them; (2) that they took possession of the hacienda to cultivate it
under this contract, but on January 9, 1914, Mendezona left the
hacienda at the instance of the company because he had violated the
terms of his obligation; (3) that in March, 1914, when the crops were
being harvested the plaintiff Mendezona required him to take steps to
have the defendant company pay 30 per cent of the harvest in payment
for his services, and that he took steps to that end but failed to get
it because said share of 30 per cent had not yet been liquidated at the
time that the rental contract came to an end at the will of the
defendant company.

The defendant Manuel de Garay also filed a complaint in
intervention against “The Philippine Sugar Estates Development Company,
Limited” to recover the sum of P217,660 as damages alleged to have been
caused to him because of the unjustified rescission by the defendant of
the rental contract on shares which was entered into with him.

The defendant company in its answer denied generally the
allegations of the complaint, except the fact that the rental contract
was entered into with Manuel de Garay, and by way of counterclaim, the
defendant alleged: (1) That by virtue of said contract the defendant
made advances to Manuel de Garay as required by the terms thereof,
which, together with the stipulated interest thereon, amount to
P59,745.09, and delivered all the material for work to him which
existed on the hacienda, as well as other sums used in the purchase of
animals and materials for work, the value of all of which amounting to
P1,285.05 on which the tenant De Garay should pay to the defendant
company 6 per cent interest a year as agreed upon; (2) that the
defendant company spent for the milling of the harvest for the first
months of 1914, the sum of P26,245.50, of which the tenant De Garay
should pay 30 per cent according to the terms of the contract; (3) that
the tenant De Garay did not comply with his obligations, as tenant of
the hacienda to handle the same with due care and diligence, and the
investments made by him with the money advanced to him did not produce
any satisfactory results to the company; and (4) .that to comply with
the obligations contracted by said Manuel de Garay, the latter
mortgaged a launch belonging to him and named Gora Jell. In
view of its allegations the defendant company asked that it be absolved
from the complaint of Manuel de Garay, and that judgment be rendered
ordering the latter to pay to the defendant company the advances
referred to together with the stipulated interest, and that upon
failure to do so the launch mortgaged be ordered sold and the proceeds
applied to the payment of said sums.

Upon trial, at which evidence was introduced by the plaintiff
Secundino Mendezona and the defendant corporation, the defendant De
Garay not having offered any, he having limited himself to appearing in
the case on February 6, 1917, that is, one month after the termination
of the trial, the court, on October 17, 1917, rendered judgment,
absolving each party from the complaint of all the others, whether
original, in intervention or counterclaim, and without any special
pronouncement as to costs.

To this decision exception was taken by the plaintiff Mendezona and
the defendant company, both of whom asked for a new trial, on the
ground that the decision was against the weight of the evidence and the
law. Said motion having been denied, they excepted against and took the
appeal to this court.

The plaintiff assigns in his brief, as errors committed by the trial court, the following:

1. In not declaring that the plaintiff Secupdino Mendezona
   was the true tenant, on shares, by virtue of the rental contract and
   the other evidence adduced in support of his claim, and in declaring
   that the evidence did not show the existence of any juridical relation
   between the plaintiff and the defendant corporation,

2. In declaring that neither the acts of the officers of the corporation
   recognizing the plaintiff as such tenant on shares, nor the knowledge
   that the members of the board of directors of the company had to the
   effect that he was acting as such tenant and was in fact the person
   managing the hacienda, nor the public knowledge that he was such, which
   obligated the corporation to consider him as the tenant on shares of
   the hacienda.

3. In not declaring that by
   virtue of the contract entered into between the defendant De Garay and
   the plaintiff with the knowledge and consent of the defendant, the
   plaintiff became a partner, or interested party in the rental contract
   on shares with the right to ask for the rescission thereof by reason of
   noncompliance therewith and to require a rendering of accounts and the
   consequent indemnity for damages.

4. In not
   declaring that the defendant corporation had violated the rental
   contract with the plaintiff and that the latter had suffered the
   damages claimed by him as well as in dismissing the complaint and in
   denying the motion for a new trial.

The principal question raised in the briefs of the parties is
whether the juridical bond created by the contract of rental on shares,
which is transcribed in their pleadings, really existed between the
plaintiff Mendezona and the defendant corporation, or between the
latter and the defendant Manuel de Garay.

The facts which gave rise to the present litigation are the following:

On June 9, 1913, the plaintiff Secundino Mendezona addressed a
letter to the manager of “The Philippine Sugar Estates Development
Company, Limited,” proposing to rent, on shares, the Hacienda de Bucal
which said company had in the municipality of Calamba, Laguna, with the
conditions which are mentioned in detail in his letter. This
communication having been submitted to the board of directors of the
defendant corporation, said board rejected the proposition by
resolution of July 3, 1913, which was transmitted to the plaintiff by
the manager.

Upon being notified of said resolution, Mendezona addressed the following letter to the president of the corporation :

“MR. PRESIDENT OF ‘THE PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY, LIMITED.’

“DEAR SIR: Having been informed by your manager that my proposition of
rental, on shares, has been rejected by the Board of Directors, of
which you are the president, due to my connection therewith, and as my
only object is to cultivate the land, I take the liberty of suggesting
that a contract be entered into, not with me, but with Manuel de Garay,
in order that it may not be said that I am in your service. Mr. Garay,
in whom I have absolute confidence, has been manager of a hacienda of
the Tabacalera in Negros as well as having been connected with their
sugar warehouse in Shanghai, which company, I understand, can give him
the best of recommendations.

“Hoping that the board will reconsider my proposition in the form herewith submitted, I remain,

“Very sincerely,
	“S. MENDOZA.”

This letter having been submitted to the board of directors of the
company, said board in its session of July 7, 1913, agreed to the
following:

‘The president asked the board if it was willing to reconsider the
contract of rental, on shares, of the Hacienda de Bucal proposed by Mr.
Mendezona but rejected in the preceding meeting, on condition that the
execution of said contract should be with Mr. Garay. The board
reconsidered said contract of Mendezona and decided that the manager
investigate the said Garay and that the result be submitted to the
board for its action.”

On July 9, 1913, the manager of the corporation sent the following letter to the plaintiff Mendezona:

“Mr. SECUNDINO MENDEZONA.

“DEAR SIR: In
answer to your letter I have the honor to state that the
vice-president, acting president of this corporation, informs me in his
letter of yesterday, that the board has decided to reconsider the
proposition of rental, on shares, offered by you in the name of Mr.
Garay. The Board also discussed the matter of a bond, the number of
hectares to be cultivated, etc., which will be taken up with you later.

“Very respectfully,
	“JOSE MA. SUAREZ.”

In its session of July 11, 1913, the Board of Directors of the defendant corporation approved the following resolution:

“The acting president reported favorably as to the
qualifications and efficiency of Mr. Manuel de Garay given by the
manager on the 7th instant. In view of such information, and after
proposing and approving several amendments to the rental proposition as
to the haciendas of Bucal and of Calamba, it was decided to vote on
said rental proposition with Mr. Manuel de Garay. The result was the
approval, by a unanimous vote, of said rental proposition together with
the following rental contract of Bucal and Calamba between ‘The
Philippine Sugar Estates Development Co., Ltd/ and D. Manuel de Garay.
“* * * “

On July 13, 1913, the president of the company sent to the manager the letter Exhibit L which is as follows:

“MANILA, July 13, 1913.

“THE MANAGER OF THE ‘THE PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY LIMITED, INC.’

“DEAR SIR: I wish to inform you that the Board of Directors of this
Company in its session of the 7th instant, in view of the new policy to
be established in the hacienda de Bucal and as a result of the last
agricultural harvest, decided to cancel the appointment of D. Manuel
Guazo as administrator of Bucal and Calamba.

“You will,
therefore, as soon as possible communicate this resolution of the Board
of Directors to him, requesting him to deliver an inventory to the
person named below, settle his accounts at the proper time, and lastly
to express to him, in the name of our company, our appreciation of his
faithful service.

“I also wish to inform you that the
board, in its session of the 11th instant, decided to reconsider the
rental proposition of Bucal made by Mr. Mendezona, but rejected at the
preceding session, on condition that the contract be made with D.
Manuel de Garay, it having been agreed upon to give him the contract as
to Bucal and Calamba under the following conditions:

General contract of rental on shares of Bucal in favor of Manuel de Garay:

“First. * * *

* * * * * * *

“Sixteenth. * * *

“I would be very much obliged if you will inform me of the conformity of Manuel de Garay to this contract.

“M. G. GRANDE, Vice-President,
	“Acting President.”

At the foot of said letter appear these words: “Having read and
understood the foregoing communication I accept it in all its parts.
Manila, July 14, 1913. M. de Garay.”

Subsequently the parties executed the following contract of rental on shares:

“GENERAL CONTRACT OF RENTAL ON SHARES EXECUTED
BETWEEN THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., LIMITED,
INCORPORATED, AND MANUEL DE GARAY.

“First. That D. Jose Ma.
Garcia Suarez, in the representative capacity in which he acts, grants
to D. Manuel de Garay in general rental contract on shares, the
Hacienda de Bucal, which includes the parcels denominated Bucal,
Lecheria, Real, Najada, Mayapa and houses at Calamba, subject to the
following conditions:

“(a) Manuel de Garay will assume the agricultural part of the exploitation of the hacienda.

“(b)
It shall be a necessary condition that the tenant shall permanently
live and reside on the hacienda, the company having the right to be
indemnified for damages suffered on account of lack of inspection and
vigilance due to continuous and long absences.

“(c)
The period of this contract shall be for one year, from the time of
planting to that of harvesting, the period still lacking of the former
being counted as the period for the taking of possession of and the
preparation of the soil.

“(d) The company reserves
the right to sell or dispose of, wholly or partly, the lots which are
the object of this contract, during the period of its duration, with
the understanding that the new owner shall recognize the contract of
rental on shares or otherwise compensate the tenant.

“(e)
The general tenant cannot transfer, or cede to another person this
contract of rental, on shares, without the permission of the company.

“(f)
The corporation shall make advances in cash to the tenant at the rate
of seventy-five pesos (P75) for each hectare actually planted or which
may hereafter be planted. Provided that this bonus of P75 for each
hectare shall be from the time of planting to that of harvesting. These
advances constitute the maximum amount which the tenant may dispose of
during the year, and he shall make use thereof as the work on the
hacienda may require, subject to weekly inspection and approval of the
manager. In these advances are included the expenses of administration,
traveling expenses of the tenant, compensation of subordinates,
ordinary expenses for the preservation of the house of the hacienda and
those of Calamba, fines for the violation of municipal ordinances, fees
for the branding and transfer of cattle and expenses incident to
compliance with municipal health ordinances with respect to persons and
animals.

“For the purposes of the bonus granted amounting
to P75, by one hectare of land newly cultivated, shall be understood
all surface area of that extent, cleaned and harrowed, without trunks
or roots, and plowed two or three times, so that it may be ready for
immediate planting.

“(g) These advances shall bear interest at 10 per cent per annum.

“(h)
At the expiration of each year there shall be a settlement of interest,
all that which may be due from the tenant being capitalized up to the
time of the harvest, at which time it shall be paid, with interest due
from December 31, to the date of payment. During said harvest time the
capital advanced for animals and agricultural implements shall also be
settled.

“(i) The company shall furnish all work
animals and materials which may, in its opinion, be necessary in
connection with the cultivated hectares, or which are to be cultivated.
The tenant shall take possession of all the cattle on the hacienda at
the time of the execution of this contract, and shall be responsible
for their assessed value. He shall also take possession of those which
may afterwards be acquired and be responsible for them at their cost
price. He shall also take charge and be responsible for the farm
implements at their assessed value and cost price. Of the animals and
materials thus capitalized an account shall be kept on which the tenant
shall pay to the company interest at the rate of 6 per cent per annum.

“(j) With respect to the loss of animals, the following: rules shall be observed:

“(a) The loss of animals which may imply abandonment, as disappearance, robbery, etc., shall be for the account of the tenant.

“(b) The loss of animals due to epidemic or plague shall be for the account of the company.

“(c) The loss of animals for other causes shall be equally apportioned among the parties.

“Furthermore:

” (a)
The disappearance of agricultural implements, furniture and fixtures of
the house and the hacienda which imply lack of care or abandonment
shall be for the account of the tenant.

“(b) The
disappearance of agricultural implements, furniture and fixtures of the
house on the hacienda, for wear and tear, and use shall be equally
borne by both parties.

“(c) The rents of the
houses of Calamba and others, the annuities on the land, the rent of
animals, proceeds of the sale of timber, bamboo, and other forest
products and of every other kind of products shall be for the account
of the company as well as of the general tenant.

“(k)
The sugar and alcohol which may be obtained, as well as any other
harvest which may be produced, shall be divided half and half between
the company and the tenant, who at the same time obligates himself to
mill his part of the cane harvest in the central of the company.

“(l)
The means of transportation from the fields to the road shall be for
the account of the tenant, and from that place to the central for the
account of the company. It shall also be the duty of the tenant to
furnish the personnel, animals and fire materials needed at the central
during the milling season.

“(m) At any time before
the expiration of this contract the company shall have the right to
inspect the exploitation and investment of the advances, and if, in its
opinion, the result is not satisfactory, it may rescind the contract,
take possession of the guaranty, without any right on the part of the
tenant to indemnification of any kind, and all the improvements on the
land shall be for the benefit of the company.

“(n)
With respect to the existing plants, which are of different seasons and
represent to the company an investment of more than thirty thousand
pesos, the following shall be followed:

” (a) The
share of the general tenant in the actual harvest of sugar and alcohol
shall be 30 per cent, the remaining 70 per cent being for the company.

” (b)
The advances given for the time which may remain of the actual harvest
until the time of gathering it, shall not be more than P10 for each
hectare, and this sum shall be reduced according to the greater or less
delay of the harvesting. These advances shall be the maximum which the
tenant may dispose of during the actual harvest, including * * *. See
letter (f).

“(ñ) The tenant obligates
himself to cultivate at least fifty hectares. The company reserves the
right to order the tenant not to cultivate or work a greater number of
hectares or not to cultivate any, if the company deems it for its
benefit.

“(o) The tenant shall pay one-half of the
taxes on the lands rented by him and on the houses of Calamba, and also
the other provincial and municipal taxes?

“Secondly. As a
guaranty for the fulfillment of the obligations imposed by this
contract and especially of the reimbursement of the advances and
payment of interest thereon and of the capital and interest represented
by the animals and the materials for work, D. Manuel de Garay gives a
first special mortgage upon a launch belonging to him, valued at P5,700
and known as Gora Jell, which measures 42 feet long, 8 feet
deep, 9 feet wide, made of teak wood and supplied with a petroleum
motor of 15-horse power. He also obligates himself to insure it against
all risk for that sum and to indorse the policy or policies of
insurance in favor of the company, as well as to deposit with the
company the title deeds thereof. This guaranty is without prejudice to
the responsibility of the part pertaining to the tenant of the harvest
of cane and other profits belonging to him.

“Thirdly. D.
Jose Maria Garcia Suarez, in the representative capacity in which he
acts, accepts this guaranty in favor of the company as good.”

On the same day, July 14, 1913, the plaintiff Mendezona and the
defendant Manuel de Garay executed a contract, in writing, in which
Manuel de Garay delivered to Secundino Mendezona the direction and
management of the work to be performed on the hacienda for the
fulfillment of the contract of rental, executed by Manuel de Garay with
the company, and he acknowledged himself as a mere subordinate of
Secundino Mendezona, with the right to receive only 10 per cent of the
profits which may belong to the tenant. In the contract the subscribing
witnesses were two employees of the company.

The contracting parties immediately established themselves on the
hacienda to begin the agricultural work. On July 15 and 22, 1913, the
manager of the corporation sent to the plaintiff two letters in which
he stated that the latter should show activity and that if the
administrator did not like to deliver the hacienda through peaceful
means he would get it by force and that he would not be afraid because
the “company and the Vicar” were one and all on his side.

Secundino Mendezona has been receiving money from the company for
the work on the hacienda, but he signed the receipts from July 14,
1913, until December of that year, as follows: “Pp. Manuel de Garay,
(Sgd.) S. Mendezona.”

About October, 1913, the acting
president of the defendant corporation, Miguel Garcia Grande, left the
Philippines, and before leaving, he sent Mendezona a card advising him
of his departure and a gift as a testimonial of gratitude for the
services he rendered to the Hacienda de Bucal, and during his voyage he
sent the plaintiff post cards in which, after greeting him and his
family, he goes on to praise his work and belittle that of Manuel de
Garay.

Miguel Garcia Grande was succeeded by Valentin Marin as president.
The latter inspected the hacienda several times, and after a month of
observation, he reported to the board on the condition of things on the
hacienda and stated that Mendezona was usurping the powers of the
tenant De Garay and that the latter was being ignored. As a result of
said report the Board of Directors agreed on January 7, 1914, to end
that state of affairs and the resolution was transmitted by the manager
to Manuel de Garay on January 8th of that year. Nevertheless Mendezona
continued to stay on the hacienda until May 7, 1914, when Manuel de
Garay addressed him the letter Exhibit 31 in which he told him to leave
the house on the Hacienda de Bucal.

Finally, the conduct of De Garay was not satisfactory to the
company, and the latter on May 20, 1914, agreed to advise De Garay as
was in effect done by the acting president Valentin Marin, but the
situation did not seem to change, and, by a resolution of the Board of
Directors of the corporation, the rental contract, on shares, with De
Garay was rescinded, said resolution having been sent by letter on June
10, 1914, signed by the acting president and the manager of the company
and addressed to Manuel de Garay.

Under the circumstances stated which unquestionably result from the
documents in the record, the plaintiff Mendezona claims that the rental
contract, on shares, was in reality entered into between him and the
defendant corporation, and in support of his claim he took the stand as
a witness and testified extensively on the acts performed by him and
the representatives of the defendant corporation, which he alleges show
an acknowledgment that in reality the contract of rental, on shares,
was entered into with him and not with Manuel de Garay. But his claim

In the same letter in which Mendezona asked the president of the
defendant corporation to reconsider his proposition, stating that he
had no objection to the execution of the contract with Manuel de Garay,
he stated that the latter was a person in whom he had great confidence
and that as to his personal ability the Tabacalera Company could give
information. If his intention was that Manuel de Garay was to be merely
a fictitious tenant, there was no need of such information. The
defendant company on the other hand did not immediately execute the
contract with De Garay, and only after having received favorable
information as to him did it decide to execute the contract of rental
on shares. And in order to make it clearly appear that it was
contracting with De Garay and not with Mendezona, it took special care
to insert in the document containing the contract paragraph (e)
of the first clause in which it forbids the general tenant to transfer
or cede the contract to another without the knowledge of the
corporation, from which it is seen that the company wanted to avoid
Mendezona from being put in the place of De Garay one way or another to
avoid having to deal with him as tenant, when he could not give to the
corporation any guaranty for the fulfillment of the obligation created
by the contract, he being an insolvent merchant who had been convicted
of estafa and served his sentence in prison.

In the correspondence had between the plaintiff Mendezona and the
defendant corporation, no word, not even the slightest indication, can
be found to the effect that Manuel de Garay was to be a mere fictitious
tenant. In the letters from which Mendezona infers the idea that the
corporation treated him as the real tenant, the only thing that can be
found is an indication that certain officers and employees of the
defendant corporation considered him as the attorney in fact of Manuel
de Garay, but this cannot be understood in the sense that they
considered him as the real tenant, inasmuch as on July 14, 1913, he
took money from the company to be spent on the hacienda and he signed a
receipt as attorney in fact of Manuel de Garay, from which it is
evident that the officers of the corporation could not have considered
him as tenant, but as a mere attorney in fact of Manuel de Garay. And
as he had also signed many other receipts in the same or identical
form, whatever capacity was conceded to him by the officers of the
company, he could not be more than an attorney in fact of De Garay, it
not appearing in a clear manner in the documents issued by said
officers or in their acts that they considered Mendezona as the true
tenant connected with the corporation by virtue of the contract
executed with Manuel de Garay.

The plaintiff lays stress upon the alleged attitude of the
president Miguel Garcia Grande and of the manager Jose Ma. Suarez in
consenting to the contract of partnership executed between the
plaintiff Mendezona and the defendant Manuel de Garay, in which
contract Manuel de Garay was recognized as a mere subordinate of
Secundino Mendezona.

With respect to this, it should be noted, in the first place, that
the contract of partnership between Mendezona and De Garay contains no
indication that said Garay was a fictitious tenant; on the contrary, it
is stated therein that in order to effect the rental contract which De
Garay had executed with the defendant corporation, he and Mendezona
associated themselves, and in order that Mendezona might supervise the
work on the field, De Garay gave him ample powers and recognized
himself as a subordinate of Mendezona. It here expressly appears that
the real tenant was De Garay, and that Mendezona was a mere
subordinate. That De Garay recognized Mendezona as technician is
perfectly compatible with the proposition that De. Garay was the real
tenant, for although Mendezona was the one to superintend the work in
the field, nevertheless, it appears in the same contract, that
Mendezona was a mere agent of De Garay and that the latter was the
tenant. The fact that De Garay was the subordinate of Mendezona because
of the nature of the work which each had to do does not prove that De
Garay was not the tenant; and the fact that the company permitted the
services of Mendezona on the hacienda does not prevent this conclusion,
for it is proved that said company, having no confidence that Mendezona
would fulfill his obligations to whom it would have to make advances in
great sums, it did not like to deal with him but with Manuel de Garay,
who, according to its information, was a person of responsibility.

In the second place, it is hard to believe that said officers of
the corporation, if they had any intervention in this contract between
Mendezona and De Garay, should have made it to be understood that the
real tenant was Mendezona and not De Garay, because the letter Exhibit
L signed by president Garcia, addressed to manager Suarez, read by
Mendezona and approved by Manuel de Garay, clearly states that the
hacienda was to be delivered to Manuel de Garay as tenant. These two
officers of the corporation had full knowledge that the board of
directors did not like to contract with Mendezona and if it adjudicated
the rental contract to De Garay, it was merely because of the good
information which the company received as to him which was furnished by
the manager himself, and which must have brought to their knowledge the
fact that the board of directors wanted to contract with De Garay and
not with Mendezona; and therefore it can not be believed that, as they
acted contrary to the will of the board of directors, they had made it
understood that Mendezona was the real, and De Gasay the fictitious,
tenant. But supposing that they had acted against the will of the
board, then their conduct does not bind the corporation, because “The
declarations of an individual director relating to the affairs of the
corporation, but not made in the course of, or connected with, the
performance of the authorized duties of such director, are held not
binding on the corporation. So, false statements made by a single
director, for the purpose of defrauding the creditors of the
corporation, including the corporation itself, could not affect or bind
it.” (2 Thompson, paragraph 1073.) “The general rule is that officers
of corporations acting within the scope of their authority may bind the
corporation in the same way and to the same extent as if they were the
agents of natural persons, unless the charter or by-laws otherwise
provide. They cannot, in general, bind the corporation by acts in
excess of the authority with which they are clothed unless such acts
are ratified * * *.” (2 Thompson, paragraph 1408.) Under these
well-settled principles of law, whatever be the nature of the acts
performed by president Garcia Grande and manager Suarez, they can not
prejudice the corporation in the sense that it is estopped to deny that
they ever contracted with Mendezona, because said officers, in
executing such acts, acted outside of their sphere of action and
contrary to the resolutions of the board of directors of the defendant
corporation, the terms of which are so clear and explicit as not to
leave any doubt that they wanted to enter into a contract with Manuel
de Garay and not with Secundino Mendezona.

The cards which president Garcia Grande had sent to the plaintiff
Mendezona appear to the latter as another proof that he has been
considered as the true tenant, but these cards far from justifying this
conclusion rather imply that it was Manuel de Garay who was the real
tenant. In effect, while president Garcia Grande praises, in said
cards, the services of Mendezona on the hacienda, he also discredits
those of De Garay. Now, if the tenant really was Mendezona, there was
no reason for discrediting or mentioning the services of De Garay,
inasmuch as if he was not the tenant but merely an ordinary subordinate
of Mendezona, there was no reason why president Garcia Grande should
recall him. He was the officer of the corporation who favored the
proposition of Mendezona and therefore was against that of De Garay, as
stated by the witness Valentin Marin, hia successor; hence, when the
services of Mendezona became satisfactory and those of De Garay did
not, he attempted to criticise indirectly the resolution of the board
of directors of which he had been a member and which approved the
proposition of De Garay against his opposition and he also discredited
the services of the latter.

Lastly, the true and incontrovertible fact is that it appears in a
clear and unequivocal manner in a public document that the tenant with
whom the defendant corporation contracted was Manuel de Garay and not
Secundino Mendezona. In order to contradict this, as the plaintiff
attempted to do, it was incumbent upon him to prove his claim with
clear, convincing and more than merely preponderant evidence (Camacho vs. Municipality of Baliuag, 28 Phil., 466 and Centenera vs. Garcia Palicio, 29 Phil., 470), something which the appellant Mendezona did not do.

That the agreement of October 17, 1916, between the plaintiff and
the defendant De Garay, attached to the record on February 6, 1917,
folio 610 of the third part, cannot favor the plaintiff, is beyond
question for the following reasons: (1) Said document was attached to
the record without the knowledge of the opposing party and after the
close of the evidence, for the order of December 16,1916, ordered a new
trial for the only purpose of taking the testimony of the witness
Nickelson and the evidence in rebuttal of the latter; (2) because the
defendant De Garay cannot agree with the plaintiff, recognizing him as
the real tenant, when in his answer to the complaint he denies this
fact, alleging that he (De Garay) was the real tenant; and (3) because,
after having subscribed the rental contract, Exhibit A, as such tenant,
he cannot legally say, as he does, in said stipulation, that the tenant
is the plaintiff Mendezona.

What has been said disposes of the first two errors assigned in the plaintiff’s brief.

Errors Nos. 3 and 4 refer to the right, which the plaintiff alleges
he has, to ask for the rescission of the contract, the rendering of
accounts by the defendant corporation and the consequent
indemnification for damages. These last two assignments of error are
based upon the supposition that the plaintiff is the tenant in the
contract in question. As it has been shown that he is a party to said
contract, said errors have no foundation. Therefore, we conclude that
there is no merit in the action instituted by the plaintiff Mendezona
against “The Philippine Sugar Estates Development Company, Limited,”
and the judgment of the trial court must be affirmed.

We will now pass to the appeal interposed by the defendant
corporation. This appeal is limited to that part of the trial court’s
decision which dismisses the counterclaim for the sum of P61,030.15
filed by said defendant against the intervenor and tenant De Garay. The
latter did not appeal, and therefore, the judgment has become final and
subject to execution in so far as it declares that he had given
sufficient motives for the defendant corporation to rescind the
contract, that his claim for damages on account of the loss of expected
profits can not be granted, and that he has not shown that the
defendant corporation ‘was guilty of negligence to such extent as to
entitle him to damages for the loss of the profits from the harvest
collected while he was yet a tenant.

The defendant company, as appellant, makes the following assignment of errors in its brief:

1. In finding that the sum of P59,745.09 received by the
   tenant as advances has been wholly used in the improvement of the
   hacienda and the purchase of animals and tools.

2. In finding that the expenses of maintenance of the plaintiff and of the
   intervenor De Garay may be charged against the improvements as expenses
   of supervision.

3. In not adjudicating in its favor the balance of P44,593.85 against the tenant.
4. In dismissing the counterclaim filed by said defendant corporation.

The errors assigned by the corporation refer principally to the
interpretation of the contract in question and this requires a revision
of its most pertinent parts. By subdivision (f) of said
contract, the company bound itself to make advances in cash to the
tenant at the rate of per hectare actually cultivated or which may
thereafter be cultivated. With these advances it is believed that the
corporation gave the tenant facilities for the cultivation of the
hacienda, which the latter should repay at the time of the harvest with
interest at 10 per cent per annum. (Subdivision g.) By subdivision (h) the liquidation of the capital advanced during the year is provided. By subdivision (i)
the tenant takes charge of the animals on the hacienda at the time of
the signing of the contract at their assessed value as well as of those
which may afterwards be acquired at their cost price, an annual
interest of 6 per cent being paid to the corporation on the capital
invested in animals and agricultural implements. By subdivision (k)
the parties agree to divide half and half the harvest for the year
1914-1915; and by subdivision (n) the tenant shall receive only 30 per
cent of the harvest for the year 1913-1914.

From the examination which we have made of the evidence it appears
that the following should be charged to the debit and credit of the
tenant De Garay:

	Debit	Credit.
Advances in accordance with letter (g) of the contract, with interest at 10 per cent…………	P59,745.10
Interest at 6 per cent on 939,658.18 invested in the purchase of animals and work materials, from the taking effect of the contract until Dec. 31, 1913. (Letter [i] of the contract) ……………………………………………………	941.45
Interest at 6 per cent on PI 1,010.56 invested in the purchase of animals, work materials, from Jan. 1 to the termination of the contract. (Letter [i] of the contract)………..	293.60
Amounts to be proved from April 2 until June 10, 1914. (P. 495 et seq., s. n., third part)..	10,650.00
Fifty per cent of the expenses of transportation and commission on the sale of the harvest of 1913-1914 which amounts to P416.60.(P. 486, s. n., third part)…………………………..	208.30
Fifty per cent of the expenses of transportation and commission on the sale of the harvest of 1914-1915 which amounts to P2,708.78.(P. 540, s. n., third part)…………………………..	1,354.39
Thirty per cent of the harvest of 1913-1914 Debit. Credit. amounting to P6,072.34, subdivision (a) of the division (n) of the contract……………………………………..		P1,821.70
Fifty per cent of P33,555.90, the value of the harvest of 1914-1915, subdivision (c) of divisions (j) and (k) of the contract………………………………….		16,777.95
Fifty per cent of P250.29 the value of the maize harvested in 1914-1915…………………………………………		125.14
Fifty per cent of P1,023.36, the amount of rents collected during the terms of the contract ………………………………………………………………………………		512.68
	___________	___________
Total ……………………………………………………	P73,192.84	19,237.47
Balance against the tenant M. de Garay……….	P53,955.37

There is nothing in the contract which provides that all the
incidental expenses of commission and transportation of the sugar sold
shall be charged to the tenant only, and we believe it equitable to
divide this item between the tenant and the corporation, as stated in
the preceding liquidation, made in view of the evidence adduced at the
trial. The defendant corporation includes in its counterclaim the 30
per cent of P26,245.50, or, P7,273.50, which it alleges was spent in
the milling of the cane harvested during the first months of 1914, a
sum which the tenant should pay according to the contract. We are of
the opinion that this claim is not maintainable, because we do not find
any evidence which shows that the tenant had assumed the responsibility
of paying for the expenses incurred in the preparation and planting of
the plants existing on the hacienda at the time of the signing of the
contract; that the share of the tenant of 30 per cent of the harvest of
1914, instead of the 50 per cent assigned to him in the harvest of
1915, was undoubtedly determined in view of his having to take care
only of the existing plants until the period of harvesting, for which
purpose the amount which he was to receive as advances was limited to
P10 per hectare (subsection [b] of section [n] of the contract) for the time that still remained for the harvesting of the crops in 1914 when the contract took effect.

The preceding liquidation shows that the counterclaim presented
against the intervenor De Garay for the sum of P61,030.15 should be
reduced to P53,955.37, which the defendant corporation is entitled to
be paid by the tenant De Garay. The judgment appealed from should be
reversed in this respect.

From what has been said, the judgment should be affirmed, in so far
as it absolves the defendant “The Philippine Sugar Estates Development
Company, Limited” from the claims of the plaintiff Secundino Mendezona,
and reversed, in so far as it dismisses the counterclaim of the
defendant corporation against the other defendant, tenant, and
intervenor, Manuel de Garay, who is sentenced to pay to said
corporation the sum of P53,955.37, with legal interest from the date of
the judgment appealed from, without special pronouncement as to costs.
So ordered.

Mapa, C. J., Street, and Avancena, JJ., concur. Malcolm, J., concurring in part:

I would affirm the judgment without modification.

MALCOLM, J., concurring in part:

I would affirm the judgment without modification.