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G.R. No. 45904 September 30, 1938 1. As to the first question, we have section 642 of the Code of Civil Procedure providing in part that "if no executor is named in the will, or if a person dies intestate, administration shall be granted" etc. This provision enunciates the general rule that when a person dies living property in the Philippine Islands, his property should be judicially administered and the competent court should appoint a qualified administrator, in the order established in the section, in case the deceased left no will, or in case he had left one should he fail to name an executor therein. This rule, however, is subject to the exceptions established by sections 596 and 597 of the same Code, as finally amended. According to the first, when all the heirs are of lawful age and there are no debts due from the estate, they may agree in writing to partition the property without instituting the judicial administration or applying for the appointment of an administrator. According to the second, if the property left does not exceed six thousand pesos, the heirs may apply to the competent court, after the required publications, to proceed with the summary partition and, after paying all the known obligations, to partition all the property constituting the inheritance among themselves pursuant to law, without instituting the judicial administration and the appointment of an administrator.
Intestate estate of the deceased Luz Garcia. PABLO G. UTULO, applicant-appellee, vs. LEONA PASION VIUDA DE GARCIA, oppositorappellant. Feliciano B. Gardiner Gerardo S. Limlingan for appellee. IMPERIAL, J.: This is an appeal taken by the oppositor from the order of the Court of First Instance of the Province of Tarlac appointing the applicant as judicial administrator of the property left by the deceased Luz Garcia. Juan Garcia Sanchez died intestate, and in the proceedings instituted in the Court of First Instance of Tarlac for the administration of his property (special proceedings No. 3475), Leona Pasion Vda. de Garcia, the surviving spouse and the herein oppositor, was appointed judicial administratrix. The said deceased left legitimate children, named Juan Garcia, jr., Patrocinio Garcia and Luz Garcia who, with the widow, are the presumptive forced heirs. Luz Garcia married the applicant Pablo G. Utulo and during the pendency of the administration proceedings of the said deceased, she died in the province without any legitimate descendants, her only forced heirs being her mother and her husband. The latter commenced in the same court the judicial administration of the property of his deceased wife (special proceedings No. 4188), stating in his petition that her only heirs were he himself and his mother-inlaw, the oppositor, and that the only property left by the deceased consisted in the share due her from the intestate of her father, Juan Garcia Sanchez, and asking that he be named administrator of the property of said deceased. The oppositor objected to the petition, opposing the judicial administration of the property of her daughter and the appointment of the applicant as administrator. She alleged that inasmuch as the said deceased left no indebtedness, there was no occasion for the said judicial administration; but she stated that should the court grant the administration of the property, she should be appointed the administratrix thereof inasmuch as she had a better right than the applicant. After the required publications, trial was had and the court, on August 28, 1936, finally issued the appealed order to which the oppositor excepted and thereafter filed the record on appeal which was certified and approved. The oppositor-appellant assigns five errors allegedly committed by the trial court, but these assigned errors raise only two questions for resolution, namely: whether upon the admitted facts the judicial administration of the property left by the deceased Luz Garcia lies, with the consequent appointment of an administrator, and whether the appellant has a better right to the said office than the appellee. for appellant.
Construing the scope of section 596, this court repeatedly held that when a person dies without leaving pending obligations to be paid, his heirs, whether of age or not, are not bound to submit the property to a judicial administration and the appointment of an administrator are superfluous and unnecessary proceedings (Ilustre vs.Alaras Frondosa, 17 Phil., 321; Malahacan vs. Ignacio, 19 Phil., 434; Bondad vs. Bondad, 34 Phil., 232; Baldemorvs. Malangyaon, 34 Phil., 367; Fule vs. Fule, 46 Phil., 317). In enunciating the aforesaid doctrine, this court relied on the provisions of articles 657, 659 and 661 of the Civil Code under which the heirs succeed to all the property left by the deceased from the time of his death. In the case of Ilustre vs. Alaras Frondosa, supra, it was said: Under the provisions of the Civil Code (arts. 657 to 661), the rights to the succession of a person are transmitted from the moment of his death; in other words, the heirs succeeded immediately to all of the property of the deceased ancestor. The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death. In the absence of debts existing against the estate, the heirs may enter upon the administration of the said property immediately. If they desire to administer it jointly, they may do so. If they desire to partition it among themselves and can do this by mutual agreement, they also have that privilege. The Code of Procedure in Civil Actions provides how an estate may be divided by a petition for partition in case they can not mutually agree in the division. When there are no debts existing against the estate, there is
In the cases of Malahacan vs. Ignacio, supra, Bondad vs. Bondad, supra, and Baldemor vs. Malangyaon, supra, the same doctrine was reiterated. And in the case of Fule vs. Fule, supra, this court amplified and ratified the same doctrine in the following language: Upon the second question Did the court a quo commit an error in refusing to appoint an administrator for the estate of Saturnino Fule? it may be said (a) that it is admitted by all of the parties to the present action, that at the time of his death no debts existed against his estate and (b) that all of the heirs of Saturnino Fule were of age. In this jurisdiction and by virtue of the provisions of articles 657, 659 and 661 of the Civil Code, all of the property, real and personal, of a deceased person who dies intestate, is transmitted immediately to his heirs. (To Guioc-Co vs. Del Rosario, 8 Phil., 546; Ilustre vs. Alaras Frondosa, 17 Phil., 321; Marin vs.Nacianceno, 19 Phil., 238; Malahacan vs. Ignacio, 19 Phil., 434; Nable Jose vs. Uson, 27 Phil., 73; Bondadvs. Bondad, 34 Phil., 232; Baldemor vs. Malangyaon, 34 Phil., 367.) If then the property of the deceased, who dies intestate, passes immediately to his heirs, as owners, and there are no debts, what reason can there be for the appointment of a judicial administrator to administer the estate for them and to deprive the real owners of their possession to which they are immediately entitled? In the case of Bondad vs. Bondad (34 Phil., 232), Chief Justice Cayetano Arellano, discussing this question, said: Under the provisions of the Civil Code (articles 657 to 661), the rights to the succession of a person are transmitted from the moment of his death; in other words, the heirs succeed immediately to
The right of the heirs in cases like the one we are discussing, also exist in the divisions of personal as well as the real property. If they cannot agree as to the division, then a suit for partition of such personal property among the heirs of the deceased owner is maintenable where the estate is not in debts, the heirs are all of age, and there is no administration upon the estate and no necessity thereof. (Jordan vs. Jordan, 4 Tex. Civ. App. Rep., 559.) It is difficult to conceive of any class or item of property susceptible of being held in common which may not be divided by the coowners. It may be of personal property as well as of real estate; of several parcels as well as of a single parcel, and of non-contiguous as well as of adjacent tracts; or of part only of the lands of the coowners as well as of the whole. (Pickering vs. Moore, 67 N. H., 533; 31 L. R. A., 698; Pipes vs.Buckner, 51 Miss., 848; Tewksbury vs. Provizzo, 12 Cal., 20.)
LEONIDES S. ASUNCION and AMADO CASTRO, petitioners-appellees, vs. CELESTINO DE LA CRUZ, oppositor-appellant. Aganon and Aganon Jaime Amor Yaneza for appellees. LABRADOR, J.: The above-entitled proceedings originated with a petition presented in the Court of First Instance of Tarlac for the summary settlement of the estate of the deceased Benedicta de la Cruz. The petition alleges that said deceased left at the time of her death five parcels of land all with original certificates of title in the name of the said deceased. When moved to dismiss the proceedings on the ground that the said oppositor had filed claims in the cadastral proceedings for three of the parcels of land mentioned in the petition. Subsequently the same oppositor filed another opposition on the ground that the said properties did not belong to the deceased Benedicta de la Cruz but to oppositor's father; that if the deceased had any right over the three parcels of land already been transferred by her to the oppositor; that an undivided two-thirds of the other two lots had also been ceded to the oppositor for a valuable consideration and the said decedent had not repurchased the same; etc. After hearing the said opposition the court found that two of the lots mentioned in the petition had been mortgaged to one Juan Cojuangco and another mortgaged also to one for appellant.
late Januaria Gonzales, Abarro vs. De Guia, 72 Phil., 245 and Intestate of Jimenez, Jimenez vs. Jimenez, 67 Phil., 263, in a summary distribution the estate of the deceased is valued; his debts, if any, are paid; his will, if any, is allowed; the heirs and legatees are declared, and distribution is made, . . .. (II Moran, Comments on the Rules of Court, 1952 ed., p. 345. In distribution proceedings, the court has no jurisdiction to adjudicate or determine title to properties claimed to be a part of the estate by the heirs and distributees and also claimed by third parties.(Mallari, et al. vs.Mallari,1 40 Off. Gaz., No. 2, p. 503).In the same manner that the court in an administration proceeding determines only in a prima facie manner if a property alleged to belong to the state really belongs to the decedent (Corodova Vda. De Maalac vs. Ocampo, 73 Phil., 661; Baquial vs. Amihan,2 49 Off. Gaz., No. 2, p. 511),so also the court in a summary settlement proceeding only determines prima facie the ownership and possession of the properties; but such determination does not prevent the heirs or third parties from claiming title adverse to the decedent's, which title or claims must be decided in a separate suit. (Intestate estate of Miguel Guzman. Guzman vs. Anog and Anog, 37 Phil., 61.) In consonance with these principles the orders appealed from found prima facie that the lots sought to be distributed among the heirs of the decedent belong to and were in the possession of the said decedent at the time of her death. The orders do not deprive the oppositor-appellant of his right to claim said properties as his own and to institute a separate action to assert his title thereto as against the decedent or her heirs. The claim of the appellant that the trial court had no power to enter the decree of distribution is, therefore, without merit. The appeal is hereby dismissed and the order appealed from affirmed, with costs against oppositor-appellant. G.R. No. L-27876 April 22, 1992 ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the late Margarita Suri Santos, plaintiff-appellee, vs. JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN, defendant-appellant.
DAVIDE, JR., J.: The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an intestate estate made pursuant to a petition for authority to sell and an order granting it which were filed and entered, respectively, without notice to the heirs of the decedents. The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived by her husband Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the settlement of her estate was
In arriving at the said disposition, the trial court held that: (a) Under Rule 90 of the Rules of Court, 8 which is similar to the provisions of Section 722 of the Code of Civil Procedure, it is essential and mandatory that the interested parties be given notices of the application for authority to sell the estate or any portion thereof which is pending settlement in a
Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said decision is
the surviving spouse, Severo Maneclang, was notified through his counsel. Two of the heirs, Hector Maneclang and Oscar Maneclang, who were then of legal age, were not represented by counsel. The remaining seven (7) children were still minors with no guardian ad litem having been appointed to represent them. Obviously then, the requirement of notice was not satisfied. The requisite set forth in the aforesaid sections of Rule 89 are mandatory and essential. Without them, the authority to sell, the sale itself and the order approving it would be null and void ab initio. 19 The reason behind this requirement is that the heirs, as the presumptive owners 20 since they succeed to all the rights and obligations of the deceased from the moment of the latter's death, 21 are the persons directly affected by the sale or mortage and therefore cannot be deprived of the property except in the manner provided by law. Consequently, for want of notice to the children, the Order of 9 September 1949 granting the application, the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the sale are all void ab initio as against said children. Severo Maneclang, however, stands on different ground altogether. Having been duly notified of the application, he was bound by the said order, sale and approval of the latter. However, the only interest which Severino Maneclang would have over the property is his right of usufruct which is equal to that corresponding by way of legitime pertaining to each of the surviving children pursuant to Article 834 of the Civil Code of Spain, the governing law at that time since Margarita Suri Santos died before the effectivity of the Civil Code of the Philippines. 2 Estoppel is unavailable as an argument against the administratrix of the estate and against the children. As to the former, this Court, in Boaga vs. Soler, supra, reiterated the rule "that a decedent's representative is not estopped to question the validity of his own void deed purporting to convey land; 22 and if this be true of the administrator as to his own acts, a fortiori, his successor can not be estopped to question the acts of his predecessor are not conformable to law." 23 Not being the party who petitioned the court for authority to sell and who executed the sale, she cannot be held liable for any act or omission which could give rise to estoppel. Under Article 1431 of the Civil Code, through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. In estoppel by pais,as related to the party sought to be estopped, it is necessary that there be a concurrence of the following requisites: (a) conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced by the other party; and (c) knowledge, actual or constructive of the actual facts. 24 In estoppel by conduct, on the other hand, (a) there must have been a representation or concealment of material facts; (c)
the party to whom it was made must have been ignorant of the truth of the matter; and (d) it must have been made with the intention that the other party would act upon it. 25 As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in his capacity as judicial administrator, the rest of the heirs did not participate in such sale, and considering further that the action was filed solely by the administratrix without the children being impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in estoppel. For having executed the deed of sale, Oscar Maneclang is deemed to have assented to both the motion for and the actual order granting the authority to sell. Estoppel operates solely against him. 3 As to prescription, this Court ruled in the Boaga case that "[a]ctions to declare the inexsistence of contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the new Civil Code (Eugenio, et al. vs. Perdido, et al., supra, citing Tipton vs. Velasco, 6 Phil. 67, and Sabas vs. Germa , 66 Phil. 471 )." 4. Laches is different from prescription. As the court held in Nielsen & Co. Inc . vs. Lepanto Consolidated Mining Co., 26 the defense of laches applies independently of prescription. While prescription is concerned with the fact of delay, laches is concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is based on fixed time, laches is not. The essential elements of laches are the following: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. 27 In the instant case, from time the deed of sale in favor of the City of Dagupan was executed on 4 October 1952, up to the time of the filing of the complaint for annulment on 28 September 1965, twelve (12) years, ten (10) months and twenty-four (24) days had elapsed. The respective ages of the children of Margarita Suri Santos on these two dates were, more or less, as follows: Upon execution At the filing of the deed of sale of the complaint
It is an undisputed fact that the City of Dagupan immediately took possession of the property and constructed thereon a public market; such possession was open, uninterrupted and continuous. Obviously, Hector, Cesar, Oscar and Amanda were already of legal age when the deed of sale was executed. As it was Oscar who executed the deed of sale, he cannot be expected to renounce his own act. With respect to Hector, Cesar and Amanda, they should have taken immediate steps to protect their rights. Their failure to do so for thirteen (13) years amounted to such inaction and delay as to constitute laches. This conclusion, however, cannot apply to the rest of the children who were then minors and not represented by any legal representative. They could not have filed an action to protect their interests; hence, neither delay nor negligence could be attributed to them as a basis for laches. Accordingly, the estate is entitled to recover 5/9 of the questioned property. 5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the effect that it was Mayor Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers, who induced him to sell the property and that the execution of the sale was witnessed by the City Fiscal. We are unable to agree. While the order granting the motion for authority to sell was actually issued on 9 September 1949, the same was secured during the incumbency of the then judicial administrator Pedro Feliciano. Even if it is to be assumed that Mayor Fernandez and Councilor Guadiz induced Oscar Maneclang to sell the property, the fact remains that there was already the order authorizing the sale. Having been issued by a Judge who was lawfully appointed to his position, he was disputably presumed to have acted in the lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It was not incumbent upon them to go beyond the order to find out if indeed there was a valid motion for authority to sell. Otherwise, no order of any court can be relied upon by the parties. Under Article 526 of the Civil Code, a possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful or difficult question of law may be the basis of good faith. It implies freedom from knowledge and circumstances which ought to put a person on inquiry. 29 We find no circumstance in this case to have alerted the vendee, the City of Dagupan, to a possible flaw or defect in the authority of the judicial
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estate taxes the latter had paid for the lot corresponding to 5/9 thereof effective taxable year 1965 and until the latter shall have delivered to said intestate estate. SO ORDERED. G.R. No. L-15717 June 30, 1961
JULIAN BOAGA, plaintiff-appellant, vs. ROBERTO SOLER, ET AL., defendants-appellants. Luis Contreras for plaintiff-appellant. Segismundo Garga, Luis Isaac and Augusto Pardalis for defendants-appellants. REYES, J.B.L., J.: From the order dated April 30, 1959 dismissing the complaint in Civil Case No. 2123 of the Court of First Instance f Camarines Sur, Julian Boaga, Administrator of the state of the deceased spouses Alejandro Ros and Maria Isaac, appeals directly to this Court. It appears that following the death of the spouses Alejandro Ros and Maria Isaac in 1935 and 1940, respectively, intestate proceedings for the settlement of their estate were commenced in the Court of First Instance of Camarines Sur, Special Proceeding No. 7194 of that court. In time Juan Garza was appointed administrator of the estate Upon application, Juan Garza was authorized by he probate court on August 29, 1944 (Annex "X") to sell certain parcels of land pertaining to the estate. Pursuant hereto, Garza sold said parcels of land on August 30, 944 in favor of appellee Roberto Soler (Annex "A"), which sale was subsequently approved on October 9, 1944 (Annex "B"). On October 14, 1944, the heirs of the deceased wife, Maria Isaac, after having been declared as such (Annex "B"), sold all their shares and interests over certain parcels of land in favor of appellee Soler (Annex "C"). Sometime during the war, the records of Special Proceeding No. 7194 were destroyed. Upon reconstitution of these records by court order, Julian Boaga was issued letters of administration on September 6, 1951. On May 1952, the instant action was filed by Boaga in his capacity as administrator, seeking to annul the sales of August 30, 1944 and October 14, 1944 in favor of Roberto Soler on the ground that said transactions were fraudulent made without notice to the heirs of Alejandro Ros of the hearing of the application to sell, and that the sales were not beneficial to the heirs for various reasons, and praying for reconveyance of the lands sold, since they were fraudulently registered under Act 496 in the name of Roberto Soler on December 17, 1949 and on January 2, 1952, and for recovery of damages. A motion to dismiss interposed by Soler on August 29, 1952, alleging lack of legal capacity to sue and failure to
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ZALDIVAR, J.: Appeal from the decision, dated, February 10, 1967, of the Court of First Instance of Rizal (Branch V, Quezon City) in its Civil Case No. Q-6561. On November 17, 1959, plaintiff-appellee Octavio A. Kalalo hereinafter referred to as appellee), a licensed civil engineer doing business under the firm name of O. A. Kalalo and Associates, entered into an agreement (Exhibit A ) 1 with defendant-appellant Alfredo J . Luz (hereinafter referred to as appellant), a licensed architect, doing business under firm name of A. J. Luz and Associates, whereby the former was to render engineering design services to the latter for fees, as stipulated in the agreement. The services included design computation and sketches, contract drawing and
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technical specifications of all engineering phases of the project designed by O. A. Kalalo and Associates bill of quantities and cost estimate, and consultation and advice during construction relative to the work. The fees agreed upon were percentages of the architect's fee, to wit: structural engineering, 12-%; electrical engineering, 2-%. The agreement was subsequently supplemented by a "clarification to letter-proposal" which provided, among other things, that "the schedule of engineering fees in this agreement does not cover the following: ... D. Foundation soil exploration, testing and evaluation; E. Projects that are principally engineering works such as industrial plants, ..." and "O. A. Kalalo and Associates reserve the right to increase fees on projects ,which cost less than P100,000 ...." 2 Pursuant to said agreement, appellee rendered engineering services to appellant in the following projects: (a) Fil-American Life Insurance Building at Legaspi City; (b) Fil-American Life Insurance Building at Iloilo City; (c) General Milling Corporation Flour Mill at Opon Cebu; (d) Menzi Building at Ayala Blvd., Makati, Rizal; (e) International Rice Research Institute, Research center Los Baos, Laguna; (f) Aurelia's Building at Mabini, Ermita, Manila; (g) Far East Bank's Office at Fil-American Life Insurance Building at Isaac Peral Ermita, Manila; (h) Arthur Young's residence at Forbes Park, Makati, Rizal; (i) L & S Building at Dewey Blvd., Manila; and (j) Stanvac Refinery Service Building at Limay, Bataan. On December 1 1, '1961, appellee sent to appellant a statement of account (Exhibit "1"), 3 to which was attached an itemized statement of defendant-appellant's account (Exh. "1-A"), according to which the total engineering fee asked by appellee for services rendered amounted to P116,565.00 from which sum was to be deducted the previous payments made in the amount of P57,000.00, thus leaving a balance due in the amount of P59,565.00.
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1. In support of his first assignment of error appellant argues that in Exhibit 1-A, which is a statement of accounts dated December 11, 1961, sent by appellee to appellant, appellee specified the various projects for which he claimed engineering fees, the precise amount due on each particular engineering service rendered on each of the various projects, and the total of his claims; that such a statement barred appellee from asserting any claim contrary to what was stated therein, or from taking any position different from what he asserted therein with respect to the nature of the engineering services rendered; and consequently the trial court could not award fees in excess of what was stated in said statement of accounts. Appellant argues that for estoppel to apply it is not necessary, contrary to the ruling of the trial court, that the appellant should have actually relied on the representation, but that it is sufficient that the representations were intended to make the defendant act there on; that assuming arguendo that Exhibit 1-A did not put appellee in estoppel, the said Exhibit 1-A nevertheless constituted a formal admission that would be binding on appellee under the law on evidence, and would not only belie any inconsistent claim but also would discredit any evidence adduced by appellee in support of any claim inconsistent with what appears therein; that, moreover, Exhibit 1-A, being a statement of account, establishes prima facie the
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accuracy and correctness of the items stated therein and its correctness can no longer be impeached except for fraud or mistake; that Exhibit 1-A furthermore, constitutes appellee's own interpretation of the contract between him and appellant, and hence, is conclusive against him. On the other hand, appellee admits that Exhibit 1-A itemized the services rendered by him in the various construction projects of appellant and that the total engineering fees charged therein was P116,565.00, but maintains that he was not in estoppel: first, because when he prepared Exhibit 1-A he was laboring under an innocent mistake, as found by the trial court; second, because appellant was not ignorant of the services actually rendered by appellee and the fees due to the latter under the original agreement, Exhibit "A." We find merit in the stand of appellee. The statement of accounts (Exh. 1-A) could not estop appellee, because appellant did not rely thereon as found by the Commissioner, from whose Report we read: While it is true that plaintiff vacillated in his claim, yet, defendant did not in anyway rely or believe in the different claims asserted by the plaintiff and instead insisted on a claim that plaintiff was only entitled to P10,861.08 as per a separate resume of fees he sent to the plaintiff on May 18, 1962 (See Exhibit 6). 4 The foregoing finding of the Commissioner, not disputed by appellant, was adopted by the trial court in its decision. Under article 1431 of the Civil Code, in order that estoppel may apply the person, to whom representations have been made and who claims the estoppel in his favor must have relied or acted on such representations. Said article provides: Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. An essential element of estoppel is that the person invoking it has been influenced and has relied on the representations or conduct of the person sought to be estopped, and this element is wanting in the instant case. InCristobal vs. Gomez, 5 this Court held that no estoppel based on a document can be invoked by one who has not been mislead by the false statements contained therein. And in Republic of the Philippines vs. Garcia, et al., 6 this Court ruled that there is no estoppel when the statement or action invoked as its basis did not mislead the adverse party-Estoppel has been characterized as harsh or odious and not favored in law. 7 When misapplied, estoppel becomes a most effective weapon to accomplish an injustice, inasmuch
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he can establish an estoppel by proving a material change of position made in good faith. The rule as to practical construction does not nullify the equitable rules with respect to performance by mistake." 1 8 In the instant case, it has been shown that Exhibit 1-A was written through mistake by appellee and that the latter is not estopped by it. Hence, even if said Exhibit 1-A be considered as practical construction of the contract by appellee, he cannot be bound by such erroneous interpretation. It has been held that if by mistake the parties followed a practice in violation of the terms of the agreement, the court should not perpetuate the error. 1 9 2. In support of the second assignment of error, that the lower court erred in holding that the balance from appellant on the IRRI project should be paid on the basis of the rate of exchange of the U.S. dollar to the Philippine peso at the time of payment of the judgment, appellant contends: first, that the official rate at the time appellant received his architect's fees for the IRRI project, and correspondingly his obligation to appellee's fee on August 25, 1961, was P2.00 to $1.00, and cites in support thereof Section 1612 of the Revised Administrative Code, Section 48 of Republic Act 265 and Section 6 of Commonwealth Act No. 699; second, that the lower court's conclusion that the rate of exchange to be applied in the conversion of the $28,000.00 is the current rate of exchange at the time the judgment shall be satisfied was based solely on a mere presumption of the trial court that the defendant did not convert, there being no showing to that effect, the dollars into Philippine currency at the official rate, when the legal presumption should be that the dollars were converted at the official rate of $1.00 to P2.00 because on August 25, 1961, when the IRRI project became due and payable, foreign exchange controls were in full force and effect, and partial decontrol was effected only afterwards, during the Macapagal administration; third, that the other ground advanced by the lower court for its ruling, to wit, that appellant committed a breach of his obligation to turn over to the appellee the engineering fees received in U.S. dollars for the IRRI project, cannot be upheld, because there was no such breach, as proven by the fact that appellee never claimed in Exhibit 1-A that he should be paid in dollars; and there was no provision in the basic contract (Exh. "A") that he should be paid in dollars; and, finally, even if there were such provision, it would have no binding effect under the provision of Republic Act 529; that, moreover, it cannot really be said that no payment was made on that account for appellant had already paid P57,000.00 to appellee, and under Article 125 of the Civil Code, said payment could be said to have been applied to the fees due from the IRRI project, this project being the biggest and this debt being the most onerous. In refutation of appellant's argument in support of the second assignment of error, appellee argues that notwithstanding Republic Act 529, appellant can be compelled to pay the appellee in dollars in view of the fact that appellant received his fees in dollars, and appellee's fee is 20% of appellant's fees; and that if said amount is be converted into Philippine Currency, the
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rate of exchange should be that at the time of the execution of the judgment. 2 0 We have taken note of the fact that on August 25, 1961, the date when appellant said his obligation to pay appellee's fees became due, there was two rates of exchange, to wit: the preferred rate of P2.00 to $1.00, and the free market rate. It was so provided in Circular No. 121 of the Central Bank of the Philippines, dated March 2, 1961. amending an earlier Circular No. 117, and in force until January 21, 1962 when it was amended by Circular No. 133, thus: 1. All foreign exchange receipts shall be surrendered to the Central Bank of those authorized to deal in foreign exchange as follows: Percentage of Total to be surrendered at Preferred: Free Market Rate: Rate: (a) Export Proceeds, U.S. Government Expenditures invisibles other than those specifically mentioned below. ................................................ 25 75 (b) Foreign Investments, Gold Proceeds, Tourists and Inward Remittances of Veterans and Filipino Citizens; and Personal Expenses of Diplomatic Per personnel ................................. 100" 2 1 The amount of $140,000.00 received by appellant foil the International Rice Research Institute project is not within the scope of sub-paragraph (a) of paragraph No. 1 of Circular No. 121. Appellant has not shown that 25% of said amount had to be surrendered to the Central Bank at the preferred rate because it was either export proceeds, or U.S. Government expenditures, or invisibles not included in sub-paragraph (b). Hence, it cannot be said that the trial court erred in presuming that appellant converted said amount at the free market rate. It is hard to believe that a person possessing dollars would exchange his dollars at the preferred rate of P2.00 to $1.00, when he is not obligated to do so, rather than at the free market rate which is much higher. A person is presumed to take ordinary care of his concerns, and that the ordinary course of business has been followed. 2 2 Under the agreement, Exhibit A, appellee was entitled to 20% of $140,000.00, or the amount of $28,000.00. Appellee, however, cannot oblige the appellant to pay him in dollars, even if appellant himself had received his fee for the IRRI project in dollars. This payment in dollars is prohibited by Republic Act 529 which was enacted on June 16, 1950. Said act provides as follows:
17
in 5 pesos (Philippine
In the Commissioner's report, it is spetifically recommended that the appellant be ordered to pay the plaintiff the sum of "$28,000. 00 or its equivalent as the fee of the plaintiff under Exhibit A on the IRRI project." It is clear from this report of the Commissioner that no payment for the account of this $28,000.00 had been made. Indeed, it is not shown in the record that the peso equivalent of the $28,000.00 had been fixed or agreed upon by the parties at the different times when the appellant had made partial payments to the appellee. 3. In his third assignment of error, appellant contends that the lower court erred in not declaring that the aggregate amount due from him to appellee is only P15,792.05. Appellant questions the propriety or correctness of most of the items of fees that were found by the Commissioner to be due to appellee for services rendered. We believe that it is too late for the appellant to question the propriety or correctness of those items in the present appeal. The record shows that after the Commissioner had submitted his report the lower court, on February 15, 1966, issued the following order: When this case was called for hearing today on the report of the Commissioner, the counsels of the parties manifested that they have no objection to the findings of facts in the report. However, the report poses only legal issues, namely: (1) whether under the facts stated in the report, the doctrine of estoppel will apply; and (2) whether the recommendation in the report that the alleged payment of the defendant be made in dollars is permissible by law and, if not, in what rate it should be paid in pesos (Philippine Currency). For the purpose of resolving these issues the parties prayed that they be allowed to file their respective memoranda which will aid the court in the determination of said issues. 2 6 In consonance with the afore-quoted order of the trial court, the appellant submitted his memorandum which opens with the following statements: As previously manifested, Memorandum shall be confined to: this
(a) the finding in the Commissioner's Report that defendant's defense of estoppel will not lie (pp. 17-18, Report); and (b) the recommendation in the Commissioner's Report that defendant be ordered to pay plaintiff the sum of '$28,000.00 (U.S.) or its equivalent as
18
It is clear, therefore, that what was submitted by appellant to the lower court for resolution did not include the question of correctness or propriety of the amounts due to appellee in connection with the different projects for which the appellee had rendered engineering services. Only legal questions, as above enumerated, were submitted to the trial court for resolution. So much so, that the lower court in another portion of its decision said, as follows: The objections to the Commissioner's Report embodied in defendant's memorandum of objections, dated March 18, 1966, cannot likewise be entertained by the Court because at the hearing of the Commissioner's Report the parties had expressly manifested that they had no objection to the findings of facts embodied therein. We, therefore hold that the third assignment of error of the appellant has no merit.
19
LUIS G. DE CASTRO, petitioner, vs. JULIAN G. GINETE and UBALDO Y. ARCANGEL Judge of the Court of First Instance of Sorsogon, 10th Judicial District, Branch I, respondents. ZALDIVAR, J.: Petitioner Luis G. De Castro and respondent Julio G. Ginete were opposing candidates for the office of municipal mayor of the municipality of Bulan, province of Sorsogon, in the general elections held on November 14, 1967. On January 1, 1968 the board of canvassers, as constituted by the Commission on Elections, proclaimed petitioner as the winning candidate with a margin of 12 votes over respondent. On January 8, 1968 Ginete filed a motion of protest against the election of De Castro before the Court of First Instance of Sorsogon, alleging the commission of frauds and irregularities to favor the candidacy of De Castro. In due time De Castro, as protestee in the election ease, filed a counter-protest, also alleging the commission of frauds and irregularities to favor the candidacy of Ginete.
20
Petitioner De Castro invited respondent Ginete to attend the ceremony on his inauguration as municipal mayor scheduled for January 6, 1968, and said respondent accepted the invitation. During the inauguration respondent Ginete accompanied the petitioner to the municipal building and to the plaza where the inaugural program was held. Respondent Ginete went up the inaugural stage along with other officials. Before turning over the symbolic key of responsibility to petitioner De Castro, respondent Ginete delivered a speech saying that the mayor elect had been proclaimed with a majority vote and that the people of Bulan should cooperate with his administration. The outgoing mayor Ginete pleaded with the people that if he had any shortcomings during the four years of his incumbency that he be forgiven by the people. We do not consider that the acts or conduct, or utterances, of respondent Ginete, as mentioned in the foregoing paragraph, had placed him in estoppel to protest the election of petitioner De Castro. We view the conduct and utterances of respondent as simply a laudable gesture of sportsmanship and a manifestation of his respect for the proclamation made by the board of canvassers. There is no showing that Ginete had admitted that De Castro had won in an election that was clean and honest, or free from irregularities. Ginete, as a law-abiding citizen, had to abide by the proclamation of the board of canvassers. But, certainly, his having recognized De Castro as the winner in virtue of the proclamation by the board of canvassers did not preclude him from questioning the validity of De Castro's election in the manner prescribed by law, if he had grounds to show that the election of De Castro was brought about through the commission of frauds and other election irregularities. We cannot sustain the contention of De Castro that Ginete is in estoppel to contest his election. Estoppel rests on this rule: "Whenever a party has, by his own declaration, act or omission, intentionally 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 it. 2 The elements of estoppel by conduct are: (1) that there must have been a representation or concealment of material facts; (2) that the representation must have been made with knowledge of the faculty (3) that the party to whom it was made must have been ignorant of the truth of the matter; and (4) that it must have been made with intention that the other party would act upon it. 3
21
NIELSON & COMPANY, INC., plaintiff-appellant, vs. LEPANTO CONSOLIDATED MINING COMPANY, defendant-appellee. W. H. Quasha and Associates for plaintiff-appellant. Ponce Enrile, Siguion-Reyna, Montecillo and Belo for defendant-appellee. ZALDIVAR, J.: On February 6, 1958, plaintiff brought this action against defendant before the Court of First Instance of Manila to recover certain sums of money representing damages allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract entered into between them on January 30, 1937, including attorney's fees and costs.
22
Defendant in its answer denied the material allegations of the complaint and set up certain special defenses, among them, prescription and laches, as bars against the institution of the present action. After trial, during which the parties presented testimonial and numerous documentary evidence, the court a quorendered a decision dismissing the complaint with costs. The court stated that it did not find sufficient evidence to establish defendant's counterclaim and so it likewise dismissed the same. The present appeal was taken to this Court directly by the plaintiff in view of the amount involved in the case. The facts of this case, as stated in the decision appealed from, are hereunder quoted for purposes of this decision: It appears that the suit involves an operating agreement executed before World War II between the plaintiff and the defendant whereby the former operated and managed the mining properties owned by the latter for a management fee of P2,500.00 a month and a 10% participation in the net profits resulting from the operation of the mining properties. For brevity and convenience, hereafter the plaintiff shall be referred to as NIELSON and the defendant, LEPANTO. The antecedents of the case are: The contract in question (Exhibit `C') was made by the parties on January 30, 1937 for a period of five (5) years. In the latter part of 1941, the parties agreed to renew the contract for another period of five (5) years, but in the meantime, the Pacific War broke out in December, 1941. In January, 1942 operation of the mining properties was disrupted on account of the war. In February of 1942, the mill, power plant, supplies on hand, equipment, concentrates on hand and mines, were destroyed upon orders of the United States Army, to prevent their utilization by the invading Japanese Army. The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and who were ousted from the mining properties only in August of 1945. After the mining properties were liberated from the Japanese forces, LEPANTO took possession thereof and embarked in rebuilding and reconstructing the mines and mill; setting up new organization; clearing the mill site; repairing the mines; erecting staff quarters and bodegas and repairing existing structures; installing new machinery and equipment; repairing roads and maintaining the same; salvaging equipment and storing the same within the bodegas; doing police work necessary to take care of the
23
On the other hand, the record shows that the defendant admitted that the occupation forces operated its mining properties subject of the management contract, 2 and from the very report submitted by President DeWitt it appears that the date of the liberation of the mine was August 1, 1945 although at the time there were still many booby traps.3 Similarly, in a report submitted by the defendant to its stockholders dated August 25, 1948, the following appears: "Your Directors take pleasure in reporting that June 26, 1948 marked the official return to operations of this Company of its properties in Mankayan, Mountain Province, Philippines."4 It is, therefore, clear from the foregoing that the Lepanto mines were liberated on August 1, 1945, but because of the period of rehabilitation and reconstruction that had to be made as a result of the destruction of the mill, power plant and other necessary equipment for its operation it cannot be said that the suspension of the contract ended on that date. Hence, the contract must still be deemed suspended during the succeeding years of reconstruction and rehabilitation, and this period can only be said to have ended on June 26, 1948 when, as reported by the defendant, the company officially resumed the mining operations of the Lepanto. It should here be stated that this period of suspension from February, 1942 to June 26, 1948 is the one urged by plaintiff.5 It having been shown that the operation of the Lepanto mines on the part of Nielson had been suspended during the period set out above within the purview of the management contract, the next question that needs to be determined is the effect of such suspension. Stated in another way, the question now to be determined is whether such suspension had the effect of extending the period of the management contract for the period of said suspension. To elucidate this matter, we again need to resort to the evidence. For appellant Nielson two witnesses testified, declaring that the suspension had the effect of extending the period of the contract, namely, George T. Scholey and Mark Nestle. Scholey was a mining engineer since 1929, an incorporator, general manager and director of Nielson and Company; and for some time he was also the vicepresident and director of the Lepanto Company during the pre-war days and, as such, he was an officer of both appellant and appellee companies. As vice-president of Lepanto and general manager of Nielson, Scholey participated in the negotiation of the management contract to the extent that he initialed the same both as witness and as an officer of both corporations. This witness testified in this case to the effect that the
24
standard force majeure clause embodied in the management contract was taken from similar mining contracts regarding mining operations and the understanding regarding the nature and effect of said clause was that when there is suspension of the operation that suspension meant the extension of the contract. Thus, to the question, "Before the war, what was the understanding of the people in the particular trend of business with respect to the force majeure clause?", Scholey answered: "That was our understanding that the suspension meant the extension of time lost."6 Mark Nestle, the other witness, testified along similar line. He had been connected with Nielson since 1937 until the time he took the witness stand and had been a director, manager, and president of the same company. When he was propounded the question: "Do you know what was the custom or usage at that time in connection with force majeure clause?", Nestle answered, "In the mining world the force majeure clause is generally considered. When a calamity comes up and stops the work like in war, flood, inundation or fire, etc., the work is suspended for the duration of the calamity, and the period of the contract is extended after the calamity is over to enable the person to do the big work or recover his money which he has invested, or accomplish what his obligation is to a third person ."7 And the above testimonial evidence finds support in the very minutes of the special meeting of the Board of Directors of the Lepanto Company issued on March 10, 1945 which was then chairmaned by Atty. C. A. DeWitt. We read the following from said report: The Chairman also stated that the contract with Nielson and Company would soon expire if the obligations were not suspended, in which case we should have to pay them the retaining fee of P2,500.00 a month. He believes however, that there is a provision in the contract suspending the effects thereof in cases like the present, and that even if it were not there, the law itself would suspend the operations of the contract on account of the war. Anyhow, he stated, we shall have no difficulty in solving satisfactorily any problem we may have with Nielson and Company.8 Thus, we can see from the above that even in the opinion of Mr. DeWitt himself, who at the time was the chairman of the Board of Directors of the Lepanto Company, the management contract would then expire unless the period therein rated is suspended but that, however, he expressed the belief that the period was extended because of the provision contained therein suspending the effects thereof should any of the case of force majeure happen like in the present case, and that even if such provision did not exist the law would have the effect of suspending it on account of the war. In substance, Atty. DeWitt expressed the opinion that as a result of the suspension of the mining operation because
25
26
The question to determine is whether appellant Nielson is guilty of laches within the meaning contemplated by the authorities on the matter. In the leading case of Go Chi Gun, et al. vs. Go Cho, et al., 96 Phil. 622, this Court enumerated the essential elements of laches as follows: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. Are these requisites present in the case at bar? The first element is conceded by appellant Nielson when it claimed that defendant refused to pay its management fees, its percentage of profits and refused to allow it to resume the management operation. Anent the second element, while it is true that appellant Nielson knew since 1945 that appellee Lepanto has refused to permit it to resume management and that since 1948 appellee has resumed operation of the mines and it filed its complaint only on February 6, 1958, there being apparent delay in filing the present action, We find the delay justified and as such cannot constitute laches. It appears that appellant had not abandoned its right to operate the mines for even before the termination of the suspension of the agreement as early as January 20, 194612 and even before March 10, 1945, it already claimed its right to the extension of the contract, 13 and it pressed its claim for the balance of its share in the profits from the 1941 operation 14 by reason of which negotiations had taken place for the settlement of the claim15 and it was only on June 25, 1957 that appellee finally denied the claim. There is, therefore, only a period of less than one year that had elapsed from the date of the final denial of the claim to the date of the filing of the complaint, which certainly cannot be considered as unreasonable delay. The third element of laches is absent in this case. It cannot be said that appellee Lepanto did not know that appellant would assert its rights on which it based suit. The evidence shows that Nielson had been claiming for some time its rights under the contract, as already shown above. Neither is the fourth element present, for if there has been some delay in bringing the case to court it was mainly due to the attempts at arbitration and negotiation made by both parties. If Lepanto's
27
28
at the special meeting of the Board of Directors on August 21, 1940 (Exh. B), whereby it was provided that Nielson would be entitled to 10% of any dividends to be declared and paid during the period of the contract. With regard to the second claim, Nielson admits that there is no evidence regarding the amount set aside by Lepanto for depletion reserve for 1941 31 and so the 10% participation claimed thereon cannot be assessed. Anent the third claim relative to the 10% participation of Nielson on the sum of P197,647.08, which appears in Lepanto's annual report for 1948 32 and entered as profit for prior years in the statement of income and surplus, which amount consisted "almost in its entirety of proceeds of copper concentrates shipped to the United States during 1947," this claim should to denied because the amount is not "dividend declared and paid" within the purview of the management contract. The fifth assignment of error of appellant refers to the failure of the lower court to order Lepanto to pay its management fees for January, 1942, and for the full period of extension amounting to P150,000.00, or P2,500.00 a month for sixty (60) months, a total of P152,500.00 with interest thereon from the date of judicial demand. It is true that the claim of management fee for January, 1942 was not among the causes of action in the complaint, but inasmuch as the contract was suspended in February, 1942 and the management fees asked for included that of January, 1942, the fact that such claim was not included in a specific manner in the complaint is of no moment because an appellate court may treat the pleading as amended to conform to the evidence where the facts show that the plaintiff is entitled to relief other than what is asked for in the complaint (Alonzo vs. Villamor, 16 Phil. 315). The evidence shows that the last payment made by Lepanto for management fee was for November and December, 1941. 33 If, as We have declared, the management contract was suspended beginning February 1942, it follows that Nielson is entitled to the management fee for January, 1942. Let us now come to the management fees claimed by Nielson for the period of extension. In this respect, it has been shown that the management contract was extended from June 27, 1948 to June 26, 1953, or for a period of sixty (60) months. During this period Nielson had a right to continue in the management of the mining properties of Lepanto and Lepanto was under obligation to let Nielson do it and to pay the corresponding management fees. Appellant Nielson insisted in performing its part of the contract but Lepanto prevented it from doing so. Hence, by virtue of Article 1186 of the Civil Code, there was a constructive fulfillment an the part of Nielson of its obligation to manage said mining properties in accordance with the contract and Lepanto had the reciprocal obligation to pay the corresponding management fees and other benefits that would have accrued to Nielson if Lepanto
29
500,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 2,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00
1,000,000.0
P14,000,000.0
According to the terms of the management contract as modified, appellant is entitled to 10% of the P14,000,000.00 cash dividends that had been distributed, as stated in the above-mentioned report, or the sum of P1,400,000.00.
With regard to the second category, the stock dividends declared by Lepanto during the period of extension of the contract are: On November 28, 1949, the stock dividend declared was 50% of the outstanding authorized capital of P2,000,000.00 of the company, or stock dividends worth P1,000,000.00; and on August 22, 1950, the stock dividends declared was 66-2/3% of the standing authorized capital of P3,000,000.00 of the company, or stock dividends worth P2,000,000.00. 40 P 200,000.00 Appellant's claim that it should be given 10% of the cash value of said stock dividends with interest thereon at 6% 300,000.00 from February 6, 1958 cannot be granted for that would not be in accordance with the management contract which entitles Nielson to 10% of any dividends declared
30
paid, when and as paid. Nielson, therefore, is entitled to 10% of the stock dividends and to the fruits that may have accrued to said stock dividends pursuant to Article 1164 of the Civil Code. Hence to Nielson is due shares of stock worth P100,000.00, as per stock dividends declared on November 28, 1949 and all the fruits accruing to said shares after said date; and also shares of stock worth P200,000.00 as per stock dividends declared on August 20, 1950 and all fruits accruing thereto after said date. Anent the third category, the depletion reserve appearing in the statement of income and surplus submitted by Lepanto corresponding to the years covered by the period of extension of the contract, may be itemized as follows: In 1948, as per Exh. F, p. 36 and Exh. Q, p. 5, the depletion reserve set up was P11,602.80. In 1949, as per Exh. G, p. 49 and Exh. Q, p. 5, the depletion reserve set up was P33,556.07. In 1950, as per Exh. H, p. 37, Exh. Q, p. 6 and Exh. I, p. 37, the depletion reserve set up was P84,963.30. In 1951, as per Exh. I, p. 45, Exh. Q, p. 6, and Exh. J, p. 45, the depletion reserve set up was P129,089.88. In 1952, as per Exh. J, p. 45, Exh. Q, p. 6 and Exh. K p. 41, the depletion reserve was P147,141.54. In 1953, as per Exh. K, p. 41, and Exh. Q, p. 6, the depletion reserve set up as P277,493.25. Regarding the depletion reserve set up in 1948 it should be noted that the amount given was for the whole year. Inasmuch as the contract was extended only for the last half of the year 1948, said amount of P11,602.80 should be divided by two, and so Nielson is only entitled to 10% of the half amounting to P5,801.40. Likewise, the amount of depletion reserve for the year 1953 was for the whole year and since the contract was extended only until the first half of the year, said amount of P277,493.25 should be divided by two, and so Nielson is only entitled to 10% of the half amounting to P138,746.62. Summing up the entire depletion reserves, from the middle of 1948 to the middle of 1953, we would have a total of P539,298.81, of which Nielson is entitled to 10%, or to the sum of P53,928.88. Finally, with regard to the fourth category, there is no figure in the record representing the value of the fixed assets as of the beginning of the period of extension on June 27, 1948. It is possible, however, to arrive at the amount needed by adding to the value of the fixed assets as of December 31, 1947 one-half of the amount
31