Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-8169 December 29, 1913

ANTONIO M. A. BARRETTO, plaintiff-appellant,

vs.
JOSE SANTA MARINA, defendant-appellee.

Hausserman, Cohn and Fisher, for appellant.

W. A. Kincaid and Thos. L. Hartigan, for appellee.

TORRES, J.:

These cases were appealed by counsel for the plaintiff, through a bill of exceptions, from the
judgment of January 17, 1912, and the order of February 5 of the same year, whereby the
Honorable S. del Rosario, judge, sentenced the defendant to pay to the plaintiff the salary to
which he was entitled for the first eight days of January, 1910, also that for the following
month, at the rate of P3,083.33 per month, without special finding as to costs, and dismissed
the second cause of action contained in the complaint presented in that case.

On January 5, 1911, for the plaintiff Antonio M.a Barretto filed suit against Jose Santa
Marina, alleging that the defendant, a resident of Spain, was then the owner and proprietor of
the business known as the La Insular Cigar and Cigarette Factory, established in these
Islands, which business consisted in the purchase of leaf tobacco and other raw material, in
the preparation of the same, and in the sale of cigars and cigarettes in large quantities; that
on January 8, 1910, and for a long time prior thereto, the plaintiff held and had held the
position of agent of the defendant in the Philippine Islands for the management of the said
business in the name and for the account of the said defendant; that the plaintiff's services
were rendered in pursuance of a contract whereby the defendant obligated himself in writing
to hire the said services for so long a time as the plaintiff should not show discouragement
and to compensate such services at the rate of P37,000 Philippine currency per annum; that,
on the aforesaid 8th day of January, 1910, the defendant, without reason, justification, or
pretext and in violation of the contract before mentioned, summarily and arbitrarily dispensed
with the plaintiff's services and removed him from the management of the business, since
which date the defendant had refused to pay him the compensation, or any part thereof, due
him and payable in full for services rendered subsequent to December 31, 1909; and that, as
a second cause of action based upon the facts aforestated, the plaintiff had suffered losses
and damages in the sum of P100,000 Philippine currency. Said counsel therefore prayed
that judgment be rendered against the defendant by sentencing him to pay to the plaintiff
P137,000 Philippine currency, and the interest thereon at the legal rate, in addition to the
payment of the costs, together with such other equitable remedies as the law allows.

By an order of March 14, 1911, the Honorable A. S. Crossfield, judge overruled the demurrer
to the first cause of action, but sustained that to the second. Counsel for the plaintiff entered
an exception to this order in so far as it sustained the demurrer interposed by the defendant
to the second cause of action.

By his written answer to the complaint, on July 19, 1911, counsel for the defendant,
reserving his exception to the order of the court overruling his demurrer filed against the first
cause of action, denied each and all of the allegations contained in the complaint, relative to
such first cause of action.

As a special defense of the latter, he set forth that the plaintiff had no contract whatever with
the defendant in which any period of time was stipulated during which the former was to
render his services as manager of the La Insular factory; that the defendant revoked for just
cause the power conferred upon the plaintiff; that subsequent to the revocation of such
power, and on the occasion of the plaintiff's having sold all his rights and interests in the
business of the La Insular factory to the defendant, in consideration of the sum received by
him, the plaintiff renounced all action, intervention and claim that he might have against the
defendant relative to the business aforementioned, whereby all the questions that might have
arisen between them were settled.

On December 19, 1911, counsel for each of the parties presented to the court as stipulation
of the following purport:

In clause 11 of the will executed by Don Joaquin Santa Marina y Perez in Madrid
before a notary public on August 4, 1901, and duly legalized in these Islands, there
appears the following:

"The testator provides that the testamentary executor who is holding office as
such shall enjoy a salary, allotment, or emolument of 4,000 pesos per annum
which shall be paid out of the testator's estate; but that in case of
consultation, the testamentary executors consulted shall not be entitled to
this allotment, nor to any other, on account of such consultation."

According to the statement of the sums collected by Antonio M.a Barretto as the judicial
administrator of the estate of Joaquin Santa Marina from November, 1908, to March, 1910,
and during twenty-three days of April of the latter year, the total amount so collected was
P5,923.28.

Antonio M.a Barretto ceased to manage the La Insular factory, as the judicial administrator of
the estate of the deceased Joaquin Santa Marina, in October, 1909, and not on November 7,
1908, as erroneously out in the stenographic notes.

The remuneration paid to Barretto as judicial administrator of the estate of Santa Marina was
independent of that which pertained to him for his services as manager of the La Insular
factory both before and after the date on which he ceased to administer the said factory as
such judicial administrator.

In the stipulation before mentioned there also appears the following: "The facts above stated
are true, but there is a controversy between the attorneys for the plaintiff and the defendant,
as to whether such facts are relevant as evidence in the said case. They therefore submit
this question to the court if it determines that they are relevant as evidence they should be
admitted as such, with exception by the defendant, but if it determines that they are not
relevant as evidence they should be excluded, with exception by the plaintiff."
After the hearing of the case, with the introduction of evidence by both parties, the court, on
January 17, 1912, rendered the judgment aforementioned, to which an exception was taken
by counsel for the plaintiff, who by written motion asked that the said judgment be set aside
and a new trial granted, because such judgment was not sufficiently warranted by the
evidence and was contrary to law and because the findings of fact therein contained were
openly and manifestly contrary to the weight of the evidence. This motion was denied, with
exception by the plaintiff. By an order of the 5th of the following month of February, issued in
view of a petition presented by counsel for the plaintiff, the court dismissed the second cause
of action set out in the complaint, to which order said counsel likewise excepted.

Upon presentation of the proper bill of exceptions, the same was approved, certified, and
forwarded to the clerk of this court.

Demand is made in this suit for the payment of the considerable sum of P137,000, together
with the legal interest thereon. Two amounts make up this sum: One of P37,000, as salary
for the year 1910, claimed to be due for services rendered by the plaintiff as agent and
manager of the tobacco factory known as La Insular; and the other of P100,000, as an
indemnity for losses and damages, on account of the plaintiff's removal without just cause
from his position as agent and manager of said factory, effected arbitrarily and in violation of
the contract of hire of services between the parties, the plaintiff claiming to be still entitled to
hold the position from which he was dismissed.

The most important fact in this case, which stands out prominently from the evidence
regarded as a whole, is that of the plaintiff Barretto's renunciation or registration of the
position he held as agent and manager of the said factory, which was freely and voluntarily
made by him on the occasion of the insolvency and disappearance of the Chinaman Uy Yan,
who had bought from the factory products aggregating in value the considerable sum of
P97,000 and, without paying this large debt, disappeared and has not been seen since.

Antonio M.a Barretto the agent and manager of the said factory, said among other things the
following, in the letter, Exhibit 3, addressed by him to Jose Santa Marina, on January 2,
1909:

I have to report to you an exceedingly disagreeable matter. This Chinaman Uy Yan,

with whose name I begin this paragraph, has failed and owes the factory the
considerable sum of P97,000. We will see that I can get from him, although when
these Chinamen fail it is because they have spent everything. I will turned the matter
over to my attorney in order that he may sue the party. I am not attempting to make
light of this matter. I acknowledge that I have been rather more generous with this
fellow than I should have been; but this is the way of doing business here. . . .

I have always thought that when the manager of a business trips up in a matter like
this he should tender his resignation, and I still think so. The position is at your
disposal to do as you like.

This letter is authentic and was neither denied nor rejected by the plaintiff, Barretto. lawphil.net

Although Santa Marina did not immediately reply and tell him what opinion he may have
formed and the decision he had reached in the matter, it is no less true that the silence and
lack of reply on the part of the chief owner of the factory were sufficient indications that the
resignation had been virtually accepted and that if he did not reply immediately it was
because he intended to act cautiously. As the addressee, the chief owner of the factory,
knew of no one at that time whom he could appoint relieve the writer, who had resigned, it
was to be presumed that he was thereafter looking for some trustworthy person who might
substitute the plaintiff in his position of agent and manager of the factory, communicated to
the plaintiff that he had revoked the power conferred upon him and had appointed Mr. J.
McGavin to substitute him in his position of manager of the La Insular factory, whereby the
plaintiff's resignation, tendered in his aforesaid letter of January 2, 1909, Exhibit 3, was
expressly accepted.

After the plaintiff had resigned the position he held, and notwithstanding the lapse of several
months before its express acceptance, it cannot be understood that he has any right to
demand an indemnity for losses and damages particularly since he ostensibly and frankly
acknowledged that he had been negligent in the discharge of his duties and that he had
overstepped his authority in the management of the factory, with respect to the Chinaman
mentioned. The record does not show that Santa Marina, his principal, required him to resign
his position as manager, but that Barretto himself voluntarily stated by letter to his principal
that, for the reasons therein mentioned, he resigned and placed at the latter's disposal the
position of agent and manager of the La Insular factory; and if the principal, Santa Marina,
deemed it suitable to relieve the agent, for having been negligent and overstepping his
authority in the discharge of his office, and furthermore because of his having expressly
resigned his position, and placed it at the disposal of the chief owner of the business, it
cannot be explained how such person can be entitled to demand an indemnity for losses and
damages, from his principal, who merely exercised his lawful right of relieving the plaintiff
from the position which he had voluntarily given up.

So, the agent and manager Barretto was not really dismissed or removed by the defendant
Santa Marina. What did occur was that, in view of the resignation rendered by the plaintiff for
the reasons which he himself conscientiously deemed to warrant his surrender of the
position he was holding in the La Insular factory, the principal owner of the establishment,
the defendant Santa Marina, had to took for and appoint another agent and manager to
relieve and substitute him in the said employment — a lawful act performed by the principal
owner of the factory and one which cannot serve as a ground upon which to demand from
the latter an indemnity for losses and damages, inasmuch as, in view of the facts that
occurred and were acknowledged and confessed by Barretto in his letters, Exhibits 3 and 6,
the plaintiff could not expect, nor ought to have expected, that the defendant should have
insisted on the unsuccessful agent's continuance in his position, or that he should not have
accepted the resignation tendered by the plaintiff in his first letter. By the mere fact that the
defendant remained silent and designated another person, Mr. J. McGavin, to, discharge in
the plaintiff's stead the powers and duties of agent and manager of the said factory, Barretto
should have understood that his resignation had been accepted and that if its acceptance
was not communicated to him immediately it was owing to the circumstance that the principal
owner of the factory did not then have, nor until several months afterwards, any other person
whom he could appoint and place in his stead, for, as soon as the defendant Santa Marina
could appoint the said McGavin, he revoked the power he had conferred upon the plaintiff
and communicated this fact to the latter, by means of the letter, Exhibit D, which was
presented to him by the bearer thereof, McGavin himself, the new manager and agent
appointed.

Omitting consideration for the moment of the first error attributed to the trial judge by his
sustaining the demurrer filed against the second cause of action, relative to the collection of
P100,000 as the amount of the losses and damages occasioned to the plaintiff, and turning
our attention to the second error imputed to him by his refusal to sentence the defendant, for
the first cause of action, to the payment of P37,000 or of any sum over P3,083.33, we shall
proceed to examine the question whether any period or term for the duration of the position
of agent and manager was fixed in the verbal contract made between the deceased Joaquin
Santa Marina, the defendant's predecessor in interest, and the plaintiff antonio M.a Barretto
— a contract which, after Joaquin Santa Marina's death was ratified by his brother and heir,
the defendant Jose Santa Marina.

The defendant acknowledged the said verbal contract and also its ratification by him after his
brother's death; but he denied any stipulation therein that Barretto should hold his office for
any specific period of time fixed by and between the contracting parties, for the deceased
Joaquin Santa Marina, in conferring power upon the plaintiff, did not do so for any specific
time nor did he set any period within which he should hold his office of agent and manager of
the La Insular factory; neither did he fix the date for the termination of such services, in the
instrument of power of attorney executed by the defendant Santa Marina before a notary on
the 25th of September, 1908. (Record, p. 20.)

From the context of the instrument just mentioned it can not be concluded that any time
whatever was fixed during which the plaintiff should hold his position of agent. The
defendant, in executing that instrument, whereby the agreement made between his brother
Joaquin and Barretto was ratified, did no more than accord to the plaintiff the same
confidence that the defendant's predecessor in interest had in him; and so long as this
merely subjective condition of trust lodged in the agent existed, the time during which the
latter might hold his office could be considered indefinite or undetermined, but as soon as
that indespensable condition of a power of attorney disappeared and the conduct of the
agent deceased to inspire confidence, the principal had a right to revoke the power he had
conferred upon his agent, especially when the latter, for good reasons, gave up the office he
was holding.

Article 1733 of the civil Code, applicable to the case at bar, according to the provisions of
article 2 of the Code of Commerce, prescribes: "The principal may, at his will, revoke the
power and compel the agent to return the instrument containing the same in which the
authority was given."

Article 279 of the Code of Commerce provides: "The principal may revoke the commission
intrusted to an agent at any stage of the transaction, advising him thereof, but always being
liable for the result of the transactions which took place before the latter was informed of the
revocation."1awphi1.net

From the above legal provisions it is clearly to be inferred that the contract of agency can
subsist only so long as the principal has confidence in his agent, because, from the moment
such confidence disappears and although there be a fixed period for the excercise of the
office of agent, a circumstance that does not appear in the present case the principal has a
perfect right to revoke the power that he had conferred upon the agent owing to the
confidence he had in him and which for sound reasons had ceased to exist.

The record does not show it to have been duly proved. notwithstanding the plaintiff's
allegation, that a period was fixed for holding his agency or office of agent and manager of
the La Insular factory. It would be improper, for the purpose of supplying such defect, to
apply to the present case the provisions of article 1128 of the Civil Code. This article relates
to obligation for which no period has been fixed for their fulfillment, but, which, from their
nature and circumstances, allow the inference that there was an intention to grant such
period to the debtor, wherefore the courts are authorized to fix the duration of the same, and
the reason why it is inapplicable is that the rights and obligations existing between Barretto
and Santa Marina are absolutely different from those to which it refers, for, according to
article 1732 of the Civil Code, agency is terminated:

1. By revocation.

2. By withdrawal of the agent.

3. By death, interdiction, bankruptcy, or insolvency of the principal or of the agent.

It is not incumbent upon the courts to fix the period during which contracts for services shall
last. Their duration is understood to be implicity fixed, in default of express stipulation, by the
period for the payment of the salary of the employee. Therefore the doctrine of the tacit
renewal of leases of property, established in article 1566 of the Civil Code, is not applicable
to the case at bar. And even though the annual salary fixed for the services to be rendered
by the plaintiff as agent and manager of the La Insular factory, was P37,000, yet, in
accordance with the custom universally observed throughout the world, salaries fixed for the
year are collected and paid in monthly installments as they fall due, and so the plaintiff
collected and was paid his remuneration; therefore, on the latter's discontinuance in his
office as agent, he would at most be entitled to the salary for one month and some odd days,
allowed in the judgment of the lower court.

Article 302 of the Code of Commerce reads thus:

In cases in which no special time is fixed in the contracts of service, any one of the
parties thereto may dissolve it, advising the other party thereof one month in
advance.

The factor or shop clerk shall be entitled, in such case, to the salary due for one
month.

From the mere fact that the principal no longer had confidence in the agent, he is entitled to
withdraw it and to revoke the power he conferred upon the latter, even before the expiration
of the period of the engagement or of the agreement made between them; but, in the present
case, once it has been shown that, between the deceased Joaquin Santa Marina and the
latter's heir, now the defendant, on the one hand, and the plaintiff Barretto, on the other, no
period whatever was stipulated during which the last-named should hold the office and
manager of the said factory, it is unquestionable that the defendant, even without good
reasons, could lawfully revoke the power conferred upon the plaintiff and appoint in his place
Mr. McGavin, and thereby contracted no liability whatever other than the obligation to pay the
plaintiff the salary pertaining to one month and some odd days, as held in the judgment
below.

Barretto himself acknowledged in his aforesaid letter, Exhibit 3, that he had exceeded his
authority and acted negligently in selling on credit to the said Chinaman a large quantity of
the products of the factory under the plaintiff's management, reaching the considerable value
of P97,000; whereby he confessed one of the causes which led to his removal, the
revocation of the power conferred upon him and the appointment of a new agent in his
place.

The defendant, Jose Santa Marina, in his letter of December 2, 1909, whereby he
communicated to the plaintiff the revocation of the power he had conferred upon him and the
appointment of another new agent, Mr. McGavin, stated among other things that the loan
contracted by the agent Barretto, without the approval of the principal, caused a great panic
among the stockholders of the factory and that the defendant hoped to allay it by the new
measure that he expected to adopt. This, then, was still another reason the induced the
principal to withdraw the confidence placed in the plaintiff and to revoke the power he had
conferred upon him. Therefore, even omitting consideration of the resignation before
mentioned, we find duly warranted the reasons which impelled the defendant to revoke the
said power and relieve the plaintiff from the position of agent and manager of the La Insular
factory.

In accordance with the provisions of article 283 of the Code of Commerce, the manager of
an enterprise or manufacturing or commercial establishment, authorized to administer it and
direct it, with more or less powers, as the owner may have considered advisable, shall have
the legal qualifications of an agent.

Article 300 of the same code prescribes: "The following shall be special reasons for which
principals may discharge their employees, even though the time of service of the contract
has not elapsed: Fraud or breach of trust in the business intrusted to them . . . "

By reason of these legal provisions the defendant, in revoking the authority conferred upon
the plaintiff, acted within his unquestionable powers and did not thereby violate any statute
whatever that may have limited them; consequently, he could not have caused the plaintiff
any harm or detriment to his rights and interests, for not only had Santa Marina a justifiable
reason to proceed as he did, but also no period whatever had been stipulated during which
the plaintiff should be entitled to hold his position; and furthermore, because, in relieving the
latter and appointing another person in his place, the defendant acted in accordance with the
renunciation and resignation which the plaintiff had tendered. If the plaintiff is entitled to any
indemnity in accordance with law, such was awarded to him in the judgment of the lower
court by granting him the right to collect salary for one month and some odd days.

As for the other features of the case, the record does not show that the plaintiff has any good
reason or legal ground upon which to claim an indemnity for losses and damages in the sum
of P100,000, for it was not proved that he suffered to that extent, and the judgment appealed
from has awarded him the month's salary to which he is entitled. Therefore that judgment
and the order of March 14 sustaining the demurrer to the second cause of action are both in
accordance with the law.

For the foregoing reasons, whereby the errors assigned to the said judgment and order are
deemed to have been refuted, both judgment and order are hereby affirmed, with costs
against the appellant.

Arellano, C.J., Johnson and Carson, JJ., concur.

Moreland, J., concurs in the result.

FIRST DIVISION

[G.R. No. 8238. December 2, 1913. ]

ANTONIO M. BARRETTO, Plaintiff-Appellee, v. JOSE SANTA MARINA, Defendant-

Appellant.

William A. Kincaid and Thomas L. Hartigan, for Appellant.

 Haussermann, Cohn & Fisher, for Appellee.

SYLLABUS

1. CONTRACTS; INTERPRETATION. — The whole contract must be interpreted or read together in

order to arrive at its true meaning. Certain stipulations cannot be segregated and then made to
control, neither do particular words and phrases necessarily determine the character of the contract.
The legal effect of the contract is not to be determined alone by any particular provision
disconnected from all other, but in the ruling intention of the parties as gathered from all the
language they have used and from their contemporaneous and subsequent acts.

2. SALES; REQUISITES OF PERFECTED SALE. — It is necessary to a perfected sale that the parties
agree upon the thing sold and that the price be fixed, it being sufficient for the latter purpose that
the price be left to the judgment of a specified person. (Articles 1450 and 1447, Civil Code.)

3. ID.; ID.; FACTS IN THIS CASE. — Plaintiff executed a document whereby he agreed to transfer to
the defendant "the whole of the right, title, and interest" he had in a joint stock association, at the
same time agreeing that the ascertainment of the price of his share should depend unreservedly
upon the appraisement made by three appraisers of the total value of the association’s property.
The appraisers occupied about six months in making the appraisement and in their report there was
no indication that any attempt had been made to segregate accumulated profits from other assets
of the association. Plaintiff had participated in the last distribution of profits made by the association
prior to the time he accepted payment for his share. Upon the completion of the defendant’s report
plaintiff executed a document whereby he acknowledged receipt of the price arrived at by the
appraisers, and further stated that he relinquished from that date all intervention, claim, right or
action that he had in said business. Held, That plaintiff sold his share of the accumulated profits.

DECISION

TRENT, J. :

The La Insular cigar and cigarette factory is a joint account association with a nominal capital of
P865,000, the plaintiff’s share being P20,000, or 4/173 of the whole. On March 14, 1910, the
plaintiff’s attorneys wrote the defendant’s local representative a letter offering to sell to the
defendant plaintiff’s participation in the factory. The result of the correspondence between the
parties and their representatives was that Exhibit G was duly executed on May 3, 1910. In
accordance with the terms of this exhibit a committee of appraisers was appointed to ascertain and
fix the actual value of La Insular. The committee rendered its report on November 14, 1910, fixing
the net value at P4,428,194.44. Of this amount 4/173 part represented the plaintiff’s share on his
P20,000 of the nominal capital. In Exhibit J which was executed on November 22, 1910, the plaintiff
acknowledged to have received from the defendant that amount.

Subsequently to the execution of Exhibit J, demand was made by the plaintiff upon the defendant
for his share of the profits from June 30, 1909, to November 22, 1910. This demand was refused
and thereupon this action was instituted to recover said profits. Upon the evidence submitted at the
hearing, the court below held: (1) That the agreement of May 3, 1910, was by its terms a contract
to sell in the future and did not pass title and (2) that the sale of plaintiff’s interests did not include
the profits in question. Judgment was rendered accordingly, with interest and costs. The defendant
appealed.

The important issue in this case is whether the sale in question included that proportionate share of
the profits due the plaintiff by reason of his investment in the concern. It is admitted that no
distribution of profits had taken place during the period from June 30, 1909, to November 22, 1910.
We will inquire (1) into the nature and character of the agreement of May 3, 1910, and (2) whether
the appraisers included in their appraisement the accumulated profits since June 30, 1909.

The plaintiff admits that if the agreement of May 3, 1910, was a perfected sale he cannot recover
any profits after that date; while on the other hand the defendant concedes that if said agreement
was only a promise to sell in the future it, standing alone, would not prevent recovery in this
action.

The plaintiff and defendant were both interested in La Insular. The plaintiff was the local general
manager from November 14, 1906, to January 8, 1910. The plaintiff’s attorneys wrote the
defendant’s representative a letter on January 14, 1910, saying: jgc:chanrobles.com.ph

"On behalf of Sr. D. Antonio M. Barretto, we beg leave to offer for sale to your principal, at their
actual market value, the participation of Sr. Barretto in the joint venture known as La Insular and
the one-half interest of the letter in the participation therein which stands in the name of Messrs.
Barreto & Co. As you are doubtless aware these participations represent nominal values of P20,000
and P69,400, making a total nominal value of P54,700 which is hereby offered." cralaw virtua1aw library

Again, the plaintiff’s attorneys after acknowledging the receipt of the balance sheet of the profits for
the year ending June 30, 1909, stated in their letter to the defendant’s representative, dated March
2, 1910, that, "Now that the accord between the interested parties no longer exists we do not deem
it feasible to subscribe a balance of this nature, unless . . ." cralaw virtua1aw library

And again, the plaintiff himself, in his letter of April 7, 1910, addressed to the defendant’s
representative, said: "In view of the relations that have come about between Mr. Santa Marina and
myself, I believe it would suit both of us that our interest in the La Insular business should be
separated, and that the only point to be discussed is that of the amount that should be paid me for
my share." cralaw virtua1aw library

From the correspondence above mentioned it appears that the plaintiff offered to sell the defendant
his participation in La Insular. This offer was made on account of the strained relations existing
between the parties at that time and the desire on the part of the plaintiff to separate himself from
that business. In the offer the plaintiff’s interest or participation was definitely defined and stated to
be P20,000 in the nominal capital of P865,000. (We are not now dealing with the plaintiff’s interest
in the P69,400 of Barretto & Company.)

Article 1450 of the Civil Code reads: "The sale shall be perfected between vendor and vendee and
shall be binding on both of them, if they have agreed upon the thing which is the object of the
contract and upon the price, even when neither has been delivered." cralaw virtua1aw library

This is supplemented by article 1447 of the Code which reads as follows: "In order that the price
may be considered fixed, it shall be sufficient that it be fixed with regard to another determine thing
also specific, or that the determination of the same be left to the judgment of a specified person."
library
cralaw virtua1aw

The contract of May 3, 1910, after reciting the fact that each of the contracting parties is a
participant in the joint account association known as La Insular, provides that: jgc:chanrobles.com.ph

"Whereas the respective contracting parties have agreed, the one to sell and the other to buy the
whole of the right, title and interest of the said Antonio Maria Barretto in and to the said joint
account association, including not only the individual participation of the said party of the second
part standing on the books of the association in the name of Antonio M. Barretto, but also one-half
of the share in the business which stands on the books in the name of Barretto & Company
constituting a total nominal share of P54,700 Philippine currency in the total nominal capital of
P865,000 Philippine currency; and

"Whereas the respective contracting parties have been unable to agree as to the true present value
of the said interest of the party of the second part, but have agreed upon the method of fixing and
determining the said value for which the party of the first part is to buy and the party of the second
part is to sell that interest;

"Wherefore, by reason and in consideration of the foregoing and of the mutual promises and
agreements hereinafter set forth, the respective parties herein contracting do hereby mutually
stipulate, agree, and provide the following: jgc:chanrobles.com.ph

"(1) That a board of assessors, composed of Enrique Barrera y Caldes, D. M. Fleming, J. H. Gibson,
all of the city of Manila, Philippine Islands, by mutual agreement is hereby appointed,
commissioned, and designated for the purpose of hearing the respective claims of the one and the
other party relative to the value of the business known and designated by the name of La Insular
tobacco factory, and the respective assets of said business; and in accordance with the proof
adduced relative to said values to fix and determine the same for the purposes of the purchase and
sale above mentioned.

x x x

"(5) That the decision and conclusion of said board with reference to the total value of the business
known and designated by the name of La Insular Cigar Factory shall be conclusive, final, and
binding upon each of the contracting parties herein; and the party of the first part will immediately
buy for cash and the party of the second part will immediately sell to the party of the first part all
the right, title and interest of the party of the second part in and to the said business; and the party
of the first part will pay therefor such proportional part of the total net value of said business as
equals the proportion that the sum of fifty-four thousand seven hundred peso (P54,700) Philippine
currency bears to the sum of eight hundred and sixty-five thousand pesos (P865,000), Philippine
currency." cralaw virtua1aw library

The following appears in the contract of November 22, 1910: "Antonio M. Barretto hereby declares
to have received from John D. MacGavin as legal representative of Jose Santa Marina as the price of
the cession and transfer of the said shares, the sum of P280,025.70 Philippine currency by check
No. 528525 drawn by the said MacGavin in his above-stated capacity upon the Hongkong &
Shanghai Bank of this city, for which sum the first named issues to him a mist legal bill of sale.
Antonio M. Barretto also acknowledges by virtue of the present sale, cession, and transfer that he
has from this date relinquished (separado) all intervention, claim, right, or action that he has in said
factory by reason of the shares under consideration." cralaw virtua1aw library

Under article 1450, supra there are two indispensable requisites in a perfected sale: (1) There must
be an agreement upon the thins which is the object of the contract; and (2) the contracting parties
must agree upon the price. The object of the contract in the case at bar was the whole of the
plaintiff’s right, title, and interest in La Insular. This whole was 4/173 of the entire net value of the
business. The parties agreed that the price should be 4/173 of the total net value. The fixing of such
net value was unreservedly left to the judgment of the appraisers. As to the thing and the price the
minds of the contracting parties met, and all questions relating thereto were settled. Nothing was
left unfinished in so far as the contracting parties were concerned. Neither party could withdraw
from the contract without the consent of the other. The result is that the two essential requisites
necessary to constitute a perfected sale were present.

But the plaintiff strongly insists that the language used in the contracts of May 3, and November 22
and the fact that the appraisers did not take into consideration in fixing the value of the business
the profits accruing after June 30, 1909, show beyond a doubt that the first named contract
constitutes an agreement to sell in the future and not a perfected sale and that this is clearly in
harmony with the intention of the parties.

In support of the above proposition the plaintiff calls our attention to the recital in the first
paragraph of the excerpt from the contract of May 3, 1910, to the effect that the parties "have
agreed, the one to sell and the other to buy" and the words of the fifth paragraph where it is stated
that "the party of the first part of the second part (the plaintiff) will immediately sell" the plaintiff’s
entire interest in the business; cites Alcantara v. Alinea Et. Al. (8 Phil. Rep., 112); and quotes the
following from the report of the appraisers: jgc:chanrobles.com.ph

". . . proceed to make a valuation of the property, stock, securities, and credits which compose the
assets of the said business known and designated as the Insular Cigar Factory, taking as a basis
therefor the assets of the said business on June 30, 1909, and in order to act with greater certainly
in the discharge of their duties have had the real estate in Manila appraised by a civil engineer, Mr.
Irureta Goyena, the machinery by an engineer, Mr. Loader, and the stocks of tobacco by tobacco
experts recommended by the managers of the cigar factories called Flor de la Isabela, La
Commercial, and Maria Cristina, and these experts have discharged the duties imposed upon them
in the manner shown in the respective reports filed by them. With respect to the real estate in the
Provinces of Cagayan and Isabela, and the steam launch Santa Marina, the undersigned, after
hearing evidence of persons whom they deem to be competent, have fixed the valuation of those
properties in a manner deemed by them to be fair and equitable. with regard to the ’Sundry
Debtors’ account, they have proceeded to make an examination of the same and have disregarded
the accounts which in their judgment may be regarded as uncollectible and deducted 25 per cent
from those which in their opinion are doubtful. In view of the difference between the value placed
by the parties on the furniture and fixtures, they have taken the average of those valuations so as
to avoid the expense of an expert appraisal. And, finally, with respect to the rest of the items which
make up the assets of the said business, they have accepted the figures at which they stand in the
said inventory as these have been accepted by both parties." cralaw virtua1aw library

For the purposes of determining the soundness of the plaintiff’s position with reference to the
intention of the parties, we will examine (1) the contract of May 3, and (2) the report of the
appraisers.

1. The recitals in the first and fifth paragraphs relied upon by the plaintiff standing alone indicate
that it was the intention of the parties to make a contract to sell in the future, but it must be
remembered that the whole contract must be interpreted or read together in order to arrive at its
true meaning. Certain stipulations cannot be segregated and then made to control, neither do
particular words and phrases necessarily determine the character of the contract. As to whether or
not the parties, when they executed the contract of May 3, made a perfected sale or only an
agreement to sell in the future is not to be determined alone by any particular provision the said
contract contains, disconnected from all others, but in the ruling intention of the parties as gathered
from all the language they have used and from their contemporaneous and subsequent acts.

In the contract of May 3, we find that the parties did not only agree "the one to sell and the other to
buy" and that "one will immediately sell and the other will immediately buy" the whole of the
plaintiff’s interest but that they were unable to agree "as to the true present value of the said
interest;" they did agree, however, upon the method of fixing and determining such value by
appointing appraisers for this purpose. It was the duty of the appraisers to hear the respective
claims of the one and the other party relative to the value and assets of the business, "and in
accordance with the proof adduced relative to said values to fix and determine the same for the
purposes of the purchase and sale above mentioned." They did not say for the purpose of a sale to
be made in the future. Is the language, "for the purposes of the purchase and sale above
mentioned" any the less significant or controlling than that relied upon by the plaintiff found in the
first and fifth paragraph? When the parties used this language they had in mind the purchase and
sale which they had just made. According to the ordinary and well-understood use of the words
"purchase" and "sale" they mean, in the absence of any expression to limit their significance, a
transmutation of property from one party to another in consideration of some price or recompense
in value; a transmission of property by a voluntary act or agreement, founded on a valuable
consideration; divesting the title out of the vendor and vesting it in the vendee. Again, not only was
the title of the plaintiff’s interest vested in the defendant on the execution of the contract of May 3
but the possession of that interest was also then transferred to the defendant. (Art. 1462, Civil
Code; Uy Piaoco v. McMicking, 10 Phil. Rep., 286.)

The total value of the business as fixed by the appraisers was final and conclusive and binding upon
each of the parties. Neither could question the correctness of such value when once thus fixed. The
only thing which either could then do was the one to tender and the other accept the cash. The one
could not "immediately sell" and the other could not "immediately buy" because the purchase and
sale had already taken place. If they could have done this then the plaintiff could have sold his
interest to any other person at any time after the execution of the contract of May 3 and before
November 22 for the reason that by a contract to sell only a jus in personam is created; while, by a
sale a jus in rem is transferred.

Now, did the parties intend to include the profits in question in the purchase and sale, and did the
appraisers include said profits when they fixed the total net value of La Insular?

In the second paragraph of the contract of May 3 this language was used: "Whereas the respective
contracting parties have been made to agree as to the true present value of said interest of the
party of the second part, . . ."
cralaw virtua1aw library

The "said interest" was the whole of the right, title, and interest of the plaintiff in the factory. The
"true present value" was the actual value of the plaintiff’s entire interest on that date, May 3. The
appraisers were appointed to ascertain and fix the total net value so that the true present value,
4/173 of the whole net value, of the plaintiff’s interest might be segregated and paid for.
The plaintiff delivered to the defendant or his predecessor in interest a sum of money in order to
participate in the profits and losses that might accrue from the business denominated La Insular. An
obligation was thereby created between the parties by virtue of which the plaintiff because the
creditor and the defendant the debtor. The plaintiff was a creditor in a double sense, to wit: (a) For
the capital invested, and (b) for the profits which that capital might produce.

This juridical relation existed on May 3, 1910, when that contract was executed and signed by the
parties. On this date the plaintiff had: jgc:chanrobles.com.ph

"1. Right to and right of action for his capital invested in the business of La Insular.

"2. Right to participate, in proportion to his investment, in the expansion and increase of the
company’s capital.

"3. Right in proportion to his capital in all the trademarks, credit, and good will of the business.

"4. Right to a proportional share in the annual dividends of the business on his capital invested,
after deduction of the 20 per cent of said dividends to which Santa Marina is entitled in his capacity
of managing partner.

"5. Right to revise, approve or impugn the annual statements rendered by the managing partner,
Santa Marina." cralaw virtua1aw library

The sum total of these constituted on May 3, 1910, the whole of the plaintiff’s right, title, and
interest in the "La Insular." In the absence of something in the contract showing that the word
"whole" (totalidad) was not used in its ordinary sense it must be understood so to have been used,
and we find nothing of that kind. All the authorities agree that when the word "whole" is thus used it
means the entire thing; the entire assemblage of parts; totality; all of a thing without defect or
exception; comprising all the parts; complete; entire. Exclude one part, the remainder would not be
the whole. "The whole of the right, title, and interest of the said Antonio Maria Barretto in and to
said joint account association" means what it says if it means anything at all. Language will not
admit of a clearer and more expressive statement of what was sold. Exclude the profits sought to be
recovered then the plaintiff did not sell the whole of his right, title, and interest, he only sold a part,
and a part is never equal to the whole. That the profits were a part of the plaintiff’s interest is self-
evident.

In the case of Alcantara v. Alinea Et. Al. (supra), the defendants borrowed P480 from the plaintiff to
be returned at the expiration of an agreed period, at the same time promised that in the event of
their failure to pay the borrowed money within that time they would sell him certain property for the
amount of the loan, the court holding that it was a contract of loan and a promise of sale of a house
and lot. In this case, however, the consummation of the contract of sale depended upon the failure
to pay the loan. If the loan was repaid the sale did not take place. It was uncertain whether the sale
of the house and lot would be consummated until after the loan was due. In the case at bar was
there any such uncertainly as to the sale of the property? The one agreed to sell and the other
agreed to buy a certain specified interest in La Insular. This agreement was carried into effect. No
subsequent contingency could affect the sale. The distinction between the two cases is apparent. It
is therefore clear that the recitals from the contract and the case cited do not support the
contention of the plaintiff.

2. The appraisers were appointed, as we have said, to ascertain and fix the total net value of the
factory for the purpose of determining the true present value of the plaintiff’s entire interest therein.
The profits for the year ending June 30, 1910, were not ascertained until some twelve days after
the appraisers submitted their report. Such profits were in the possession of the association during
the entire period from May 3 to November 22, and had not been segregated from the general mass
of property up to the latter date. It is true that the appraisers said that they made a valuation of the
assets of the business, "taking as a basis therefor the assets of said business on June 30, 1909."
The appraisers could not have based their valuation exclusively upon the assets of that date for the
reason that the books of the concern had not been balanced when they concluded their work. In
fact, we find the appraisers saying in the very same paragraph in which the above quotation
appears that "in order to act with greater certainty in the discharge of their duties they had the real
estate and the machinery appraised by civil engineers and the stock of tobacco by tobacco
experts." cralaw virtua1aw library

The value of the real estate in the provinces and a certain small launch was fixed by the appraisers
upon the testimony of competent witnesses. The appraisers disposed of the accounts of various
debtors not in accordance with the inventory or the books of the company but according to their
own judgment, excluding those which they found were uncollectible and deducting 25 per cent from
the doubtful ones. So it is clear from the quotation relied upon by the plaintiff that the appraisers
paid very little attention to the assets of the business on June 30, 1909, in fixing the valuation of
the property. The stock of tobacco which was appraised by tobacco expert was not that on hand on
June 30, 1909, but was the amount belonging to the association at the time the appraisement was
made. This item alone was fixed at P1,140,259.77. Another item of assets was the cash on hand of
P323,235.20. This was the actual amount of cash in the possession of the association at the time
the appraisement was made and was considered as part of the assets. In fact, according to the
report of the appraisers the books of the concern showed that the total assets, not including the
trade-mark and good will, amounted to P2,505,767.83 while the appraisers fixed the value at
P3,049,394.07 a difference of a little over a half million pesos. That the appraisers in fixing the total
the value included the accumulated profits we think there can be no question. These profits formed
for that purpose a part of the assets. The appraisers could not distinguish the profits from the other
personal property as such profits had not at that time been set aside and the appraisers were
instructed to ascertain and fix the total net value so that the entire present value of the plaintiff’s
interest might be ascertained.

The contracts and the report of the appraisers are so clear and cover the entire subject matter so
fully that we are convinced that the subsequent demand for the profits in question was an
afterthought. If there had been any doubt in the mind of the plaintiff about the inclusion of the
accrued profits in the sale of May 3 or that the appraisers were authorized to take into consideration
such profits in fixing the total net value of the business so that the entire present value of the
plaintiff’s interest might be ascertained, the plaintiff would certainly have raised the question at the
time. He remained perfectly quiet until after he had received the full value for the whole of his right,
title, and interest in the factory and had solemnly declared that he "relinquished all intervention,
claim, right, or action in said factory by reason of the shares under consideration." After this he
came forward for the first time and demanded his share of the profits which he had sold and
received payment therefor. Surely he does not expect to be paid twice for the same thing.

For the foregoing reasons the judgment appealed from is reversed upon the merits and the
complaint dismissed without costs in either instance.

Arellano, C.J., Torres, Johnson, and Moreland, JJ., concur.