2012-71650 1-C ObliCon Incentive
A. Title and citation of case.
B. Reason why the case should be included.
C. Brief narration (in your own words) of material facts. (Facts relevant to the
relevant portion of the court’s discussion)
D. Excerpt of relevant portion.
1. Excellent Essentials International Corp. v. Extra Excel International
Philippines, Inc. G.R. No. 192797, [April 18, 2018]) — inducement to
violate
Reason why the case should be included
The most recent case in the string of peculiar jurisprudence attempting to
explain the Civil Code provision on inducement to violate. In this case, it
seems that the Court equates malice with bad faith and no longer differentiates
the two as in previous jurisprudence. They further reiterated the elements of
tortuous interference as enumerated in So Ping Bun.
Facts
The present controversy started from a complaint filed by E. Excel
International, Inc. (Excel International) and Excellent Essentials against
Excel Philippines for damages and to enjoin the latter from selling,
distributing, and marketing E. Excel products in the Philippines.
On 9 August 1996, Excel International and Excel Philippines entered into an
exclusive rights contract wherein the latter was granted exclusive rights to
distribute E. Excel products in the Philippines. Under the same contract, Excel
International reserved the right to discontinue or alter their agreement at any
time.
Over the span of four (4) years, Excel International experienced intra-
corporate struggle over the control of the corporation and the operations of its
various exclusive distributors in Asia. Eventually, the conflict between the
principal stakeholders of Excel International, Jau-Hwa Stewart (Stewart) and
Jau-Fei Chen (Chen), took a turn and Stewart somehow succeeded in gaining
control of the company.
On 1 December 2000, Stewart, in her capacity as president of Excel
International, revoked Excel Philippines' exclusive rights contract and
appointed Excellent Essentials as its new exclusive distributor in the
Philippines.
Despite the revocation of its exclusive rights contract and the appointment of
Excellent Essentials, Excel Philippines continued its operation in violation of
the new exclusive distributorship agreement. Thus, on 26 January 2001, Excel
Aristoza, Ann Julienne
International, through counsel, demanded that Excel Philippines cease from
selling, importing, distributing, or advertising, directly or indirectly, any and
all of E. Excel products.
Excerpt of Relevant Provisions
Under the principle of relativity of contracts, only those who are parties to a
contract are liable to its breach. Under Article 1314 of the Civil Code,
however, any third person who induces another to violate his contract shall be
liable to damages to the other contracting party. Said provision of law
embodies what we often refer to as tortuous or contractual interference. In So
Ping Bun v. CA, we laid out the elements of tortuous interference: (1)
existence of a valid contract; (2) knowledge on the part of the third person of
the existence of contract; and (3) interference of the third person is without
legal justification or excuse.
To sustain a case for tortuous interference, the defendant must have acted with
malice or must have been driven by purely impure reasons to injure plaintiff;
otherwise stated, his act of interference cannot be justified. We further
explained that the word induce refers to situations where a person causes
another to choose one course of conduct by persuasion or intimidation.
A duty which the law of torts is concerned with is respect for the property of
others, and cause of action ex delicto may be predicated by an unlawful
interference by any person of the enjoyment of the other of his private
property. This may pertain to a situation where a third person induces a person
to renege on or violate his undertaking under a contract.
2. Thomas v Pineda, 89 Phil. 312 (1951), [Estoppel-Agent; Simulated
Contracts]
Reason why the case should be included
The case discussed that fraud need not be proven nor shown for the rule that
an agent is utterly disabled from acquiring to their own benefit the property
entrusted to them by the principal. It also discussed how agents are estopped
from acquiring adverse titles to that of their principals
Facts
Plaintiff (David Thomas), owner of the Silver Dollar Cafe in Manila,
employed defendant (Hermogenes Pineda) as bartender. Defendant soon
became the cashier and manager of the place. To prevent the business from
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falling into enemy hands, the plaintiff executed a simulated sale in favor of
defendant. Such simulation was evidenced by the deed of sale: “…the said
document was prepared and executed only for the purpose of avoiding the
seizure of the said establishment” and “…upon the restoration of peace and
order and the absence of the danger above mentioned, the said document
automatically becomes null and void and of no effect.”
During the war, defendant registered the trade name and took care of the
business, but conflict soon arose after the war ended when the plaintiff
decided to get back his business but the defendant (violently) refused. Exhibit
F shows that the business clearly belonged to the plaintiff and that the
defendant was only the manager.
Relevant Issue
W/N defendant can continue using the trade name Silver Dollar Cafe/manage
the business — NO
Excerpt of Relevant Provisions
"The relations of an agent to his principal are fiduciary and it is an elementary
and very old rule that in regard to property forming the subject matter of the
agency, he is estopped from acquiring or asserting a title adverse to that of the
principal.”
“A receiver, trustee, attorney, agent, or any other person occupying fiduciary
relations respecting property or persons, is utterly disabled from acquiring for
his own benefit the property committed to his custody f or management. This
rule is entirely independent of the fact whether any fraud has intervened. No
fraud in fact need be shown, and no excuse will be heard from the trustee. It
is to avoid the necessity of any such inquiry that the rule takes so general a
form.”
3. Morales vs. Court of Appeals, 274 SCRA 282 [1997], [Proof of Implied
Trust]
Reason why the case should be included
The case is an all-in-one and in-depth discussion of trusts, specifically implied
trusts. First, it defines trust, then it discusses the (1) kinds of trusts, (2)
recognized exceptions to the establishment of an implied resulting trust, (3)
burden of proving the existence of a trust
Facts
Aristoza, Ann Julienne
Celso Avelino (predecessor-in-interest) bought land, on behalf of his parents,
and built a house on it. While he was working in Cebu, the defendant, without
Celso’s knowledge and consent, constructed a small beauty shop on said land.
Following the sale of said properties to the plaintiff, the plaintiffs asked the
defendant to vacate the premises and demolish the beauty shop, but the latter
refused unless he be reimbursed (he asked for more than 7 times the value of
the beauty shop). They soon found out that the defendant had taken up the
house that Celso had built and was renting it out to lodgers. Dispute arose as
to who truly owned the land, with the plaintiffs asserting that Celso Avelino
owned it while defendant claimed ownership.
Court said that the case falls under the third sentence of Art. 1448:
“. . . However, if the person to whom the title is conveyed is a child, legitimate
or illegitimate, of the one paying the price of the sale, no trust is implied by
law, it being disputably presumed that there is a gift in favor of the child.
(Italics supplied).”
The theory of implied trust (Celso as trustor, his parents as trustees) was not
even alleged by the defendant.
Relevant Issue
Did Celso Avelino purchase the land in question from the Mendiolas on 8
July 1948 as a mere trustee for his parents and siblings or, simply put, is the
property the former acquired a trust property? — NO
Excerpt of Relevant Provisions
The characteristics of a trust are
1. it is a relationship;
2. it is a relationship of fiduciary character;
3. it is a relationship with respect to property, not one involving merely
personal duties;
4. it involves the existence of equitable duties imposed upon the holder of
the title to the property to deal with it for the benefit of another; and
5. it arises as a result of a manifestation of intention to create the
relationship.
Kinds of trust
“Express trusts are created by the intention of the trustor or of the parties,
while implied trusts come into being by operation of law, either through
implication of an intention to create a trust as a matter of law or through the
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imposition of the trust irrespective of, and even contrary to, any such
intention.”
Analysis of Art. 1448
The trust created under the first sentence of Article 1448 is sometimes referred
to as a purchase money resulting trust. The trust is created in order to
effectuate what the law presumes to have been the intention of the parties in
the circumstances that the person to whom the land was conveyed holds it as
trustee for the person who supplied the purchase money.
There are recognized exceptions to the establishment of an implied
resulting trust. The first is stated in the last part of Article 1448 itself. Thus,
where A pays the purchase money and title is conveyed by absolute deed to
A’s child or to a person to whom A stands in loco parentis and who makes no
express promise, a trust does not result, the presumption being that a gift was
intended. Another exception is, of course, that in which an actual contrary
intention is proved. Also where the purchase is made in violation of an
existing statute and in evasion of its express provision, no trust can result in
favor of the party who is guilty of the fraud.
As to evidence required
“…burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily show the existence
of the trust and its elements. While implied trusts may be proved by oral
evidence, the evidence must be trustworthy and received by the courts with
extreme caution, and should not be made to rest on loose, equivocal or
indefinite declarations. Trustworthy evidence is required becaus oral evidence
can easily be fabricated.
4. Vda. De Gulaberto v Go, G.R. No. 139843, July 21, 2005 [Implied trusts
and Prescription]
Reason why the case should be included
This case specifies that while the general rule is that the right to an action for
reconveyance based on an implied or constructive trust prescribes in 10 years
from the date of issuance of decree of registration, but there exists an
exception in that when the person is in actual possession, their right does not
prescribe.
Facts
Aristoza, Ann Julienne
Petitioners are the heirs of the late Generoso Gualberto, former registered
owner of a parcel of land situated at Redor Street, Barangay Redor, Siniloan,
Laguna under Transfer Certificate of Title (TCT) No. 9203, containing an area
of 169.59 square meters, more or less, and declared for taxation purposes
under Tax Declaration No. 4869.
Sometime in 1965, the subject parcel of land was sold by Generoso Gualberto
and his wife, herein petitioner Consuelo Natividad Vda. De Gulaberto
(Consuelo, for brevity), to respondents’ father Go S. Kiang for P9, 000.00, as
evidenced by a deed entitled “Kasulatan ng Bilihang Tuluyan” dated January
15, 1965 (“Kasulatan”, for brevity), which deed appears to have been duly
notarized by then Municipal Judge Pascual L. Serrano of the Municipal Court
of Siniloan, Laguna and recorded in his registry as Doc. No. 9, Page No. 12,
Book No.12, Series of 1965. On April 1, 1973, petitioner Consuelo executed
an Affidavit attesting to the fact that the aforementioned parcel of land had
truly been sold by her and her husband Generoso to the spouses Go S. Kiang
and Rosa Javier Go, as borne by the said “Kasulatan”. Evidently, the affidavit
was executed for purposes of securing a new tax declaration in the name of
the spouses Go.
In December, 1973, in a case for Unlawful Detainer filed by a certain
Demetria Garcia against herein petitioners, the latter alleged that therein
plaintiff Garcia “is not a real party in interest and therefore has no legal
capacity and cause of action to sue the defendants; that the real parties in
interest of the parcel of commercial land and the residential apartment in
question are Generoso Gualberto and Go S. Kiang respectively as shown by
TCT No. 9203 issued by the Register of Deeds of Laguna. In a Forcible Entry
case filed by respondents against petitionersbefore the Municipal Circuit Trial
Court of Siniloan-Famy, Siniloan, Laguna docketed as Civil Case No. 336, a
decision was rendered in favor of respondents, which decision was affirmed
in toto by the RTC of Siniloan, Laguna. When elevated to the Court of
Appeals, that same decision was affirmed by the latter court, saying that “the
Court finds that the judgment of the court a quo affirming the previous
judgment of the municipal court is supported by sufficient and satisfactory
evidence and there is no reason for the Court to hold otherwise.
Excerpt of Relevant Provisions
Petitioners insist that their action for reconveyance is imprescriptible.
An action for reconveyance of real property based on implied or constructive
trust is not barred by the aforementioned 10-year prescriptive period only if
the plaintiff is in actual, continuous and peaceful possession of the property
involved. Generally, an action for reconveyance based on an implied or
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constructive trust, such as the instant case, prescribes in 10 years from the
date of issuance of decree of registration. However, this rule does not apply
when the plaintiff is in actual possession of the land. Thus, it has been held:
An action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten years, the point of reference being the date
of registration of the deed or the date of the issuance of the certificate of title
over the property, but this rule applies only when the plaintiff or the person
enforcing the trust is not in possession of the property, since if a person
claiming to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in
effect seeks to quiet title to the property, does not prescribe. The reason for
this is that one who is in actual possession of a piece of land claiming to be
the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the adverse
claim of a third party and its effect on his own title, which right can be claimed
only by one who is in possession.”
Here, it was never established that petitioners remained in actual possession
of the property after their father’s sale thereof to Go S. Kiang in 1965 and up
to the filing of their complaint in this case on August 10, 1995. On the
contrary, the trial court’s factual conclusion is that respondents had actual
possession of the subject property ever since. The action for reconveyance in
the instant case is, therefore, not in the nature of an action for quieting of title,
and is not imprescriptible.