Digests

The SC initiated disbarment proceedings against Attorney Vicente Sotto after complaints were referred to the Attorney-General for investigation. The Attorney-General found the charges well-founded and recommended proceedings under the Code of Civil Procedure. The core allegations stemmed from Sotto's representation of clients in property disputes, where he allegedly used threats, public defamation via his newspaper, and other coercive tactics for personal gain.

An attorney who engages in a pattern of misconduct—including intimidation, breach of confidence, conflict of interest, and libel against the court—demonstrates a character unfit for the legal profession and will be disbarred to protect the public and maintain ethical standards.

This case involves a dispute over a fire insurance claim for an automobile. The core legal tension is between an insurer's right to avoid a policy for misrepresentation and the binding nature of a "valued policy" where the parties have agreed in advance on the insured property's value.

The valuation in a policy of fire insurance is conclusive between the parties in case of a total loss, provided the insured had an insurable interest and was not guilty of fraud. Furthermore, an insurer is estopped from denying the truth of statements in an application that its own agent prepared or assisted in preparing.

The case involves a debt originally incurred by Rev. Anastasio C. Cruz. His testamentary heirs (the Alano brothers) executed a document acknowledging the debt and promising to pay it. The document also contained an alternative obligation: if they failed to pay the money, they would convey a specific house and lot to the creditor. After the death of one heir (Anastasio Alano), the creditor sought to recover the debt from his estate and from the other heirs personally.

A partial payment made by one joint (mancomunada) debtor does not interrupt the running of the statute of limitations with respect to the other joint debtors. Obligations are presumed conjoint (divided pro rata) unless expressly stipulated to be solidary.

P.J. O'Brien sued Leung Ben to recover P15,000 allegedly lost in gambling games conducted by Leung Ben. O'Brien obtained a writ of attachment against Leung Ben's property, claiming Leung Ben was about to depart from the Philippines with intent to defraud his creditors. Leung Ben then filed a petition for certiorari with the SC to annul the attachment.

An action to recover money lost in gambling, authorized by statute, is an action arising upon an "implied contract" under Section 412 of the Code of Civil Procedure, and a writ of attachment may therefore issue in its aid if the statutory grounds (like the defendant's intent to depart and defraud creditors) are present.

The case arose from the government's assessment of a percentage tax (merchant's tax) on the sales of Jacinto Molina, a producer of fish raised in artificial ponds. Molina claimed exemption under the law, which excluded "agricultural products when sold by the producer or owner of the land where grown" from the tax computation.

The term "agricultural products" in the tax exemption statute is not limited to vegetable growth from soil tillage but includes animal products, such as fish, that are artificially propagated and raised on the land, as this interpretation best serves the law's purpose of encouraging the development of the country's resources.

The case arises from a mortgage foreclosure action. After a judgment of foreclosure, the property was sold at public auction. The procedural irregularity of confirming the sale without notice to the mortgagor prompted the core dispute regarding the rights of a bidder versus the mortgagor's equity of redemption.

A bidder at a foreclosure sale acquires no ownership right or vested interest in the property; the bidder holds a mere expectancy contingent upon judicial confirmation of the sale. Therefore, if the mortgagor discharges the debt before a valid confirmation order, the bidder is entitled only to a return of the bid deposit, not to interest thereon.

The defendant corporation's charter authorized it to engage in various mercantile and industrial enterprises and to invest in property. However, this authority was limited by the Philippine Bill (Act of Congress of July 1, 1902, §75) and the Corporation Law (Act No. 1459, §13), which prohibited corporations from conducting the business of buying and selling real estate, except as reasonably necessary for its corporate purposes.

A corporation that enters into a contract which, in substance, makes it a participant in a prohibited business (here, buying and selling real estate) is exercising a franchise in contravention of law, warranting the annulment of its charter unless it ceases the offending activity.

Engracio Palanca executed a mortgage on real property in Manila to secure a debt to El Banco Español-Filipino. After executing the mortgage, Palanca returned to China, where he later died. The bank initiated foreclosure proceedings.

In an action to foreclose a mortgage against a non-resident defendant, the court exercises jurisdiction quasi in rem, deriving its authority from its power over the property located within its territory. Jurisdiction over the person of the non-resident is not required, and due process is satisfied by compliance with the statutory requirement of publication in a newspaper, even if additional notice by mail fails.

The case involves a motor vehicle accident in 1912, during the early adoption of automobiles in the Philippines. It addresses the standard of care required of drivers and the apportionment of liability when both parties are negligent.

The test for negligence is whether the defendant, in acting as he did, used the reasonable care and prudence that an ordinary person would have used in the same situation. If the defendant had the last clear chance to avoid the accident but failed to take it, he is liable for the resulting damages, notwithstanding the prior negligence of the plaintiff.

The case arose from a libel prosecution against several citizens who had signed a petition and affidavits charging the justice of the peace of Macabebe and Masantol, Pampanga, with malfeasance in office. The petition was submitted to the Executive Secretary. An administrative investigation was conducted; while a Judge of First Instance initially found some charges credible and recommended removal, the justice was later acquitted after a motion for new trial. Subsequently, the signatories to the petition were criminally charged with libel.

A communication or petition made in good faith to the proper governmental authority, concerning the conduct of a public official and seeking redress, is a qualifiedly privileged communication. The presumption of malice is destroyed, and the burden shifts to the prosecution to prove actual malice.

The Compañia Agricola Filipina purchased rice-cleaning machinery from the Frank L. Strong Machinery Company and executed a chattel mortgage over the machinery and the building of strong materials in which it was installed to secure the debt. The building was not attached to the land in the mortgage deed. After default, the sheriff sold the mortgaged property to the Machinery Company. This mortgage and sale were annotated in the Chattel Mortgage Registry. Later, the Compañia Agricola sold the land itself to the Machinery Company via an unregistered deed. Concurrently, the Compañia had given Leung Yee a separate mortgage on the same building to secure a construction debt. After default, Leu…

In a conflict involving immovable property, Article 1473 of the Civil Code applies. Good faith is an essential requisite for a subsequent registration to confer a preferential right. A purchaser with knowledge of a prior sale or defect in title is not a purchaser in good faith, and his registration does not give him priority over a prior possessor in good faith.

The dispute arose from a commercial transaction where a sugar seller delivered goods to a buyer who subsequently failed to pay. The buyer had also purportedly pledged the same (or similar) goods to a bank to secure a loan. The buyer's insolvency triggered a contest between the seller, the bank, and the buyer's insolvency assignee over the rights to the sugar or its proceeds.

When a seller delivers goods to a buyer without an express stipulation that title is reserved until payment, ownership transfers upon delivery. The seller's remedy for non-payment is a personal action for the price or a judicial rescission, not a replevin suit to recover the goods. A pledge not documented in a public instrument cannot prejudice third parties.

Simeona F. Naval executed two wills. The later will (1915) was presented for probate first but was disallowed due to defective execution (testatrix did not sign in the presence of three witnesses; witnesses did not sign in each other's presence). The earlier will (1914) was then presented. The opponents (some heirs) contended the 1914 will was revoked by the revocatory clause in the 1915 will.

A will that is not executed in accordance with the formalities required by law is invalid and cannot produce any legal effect, including the effect of revoking a prior will. For a subsequent will to revoke a former one, the subsequent instrument must itself be a valid will.

The case arose from the arrest of Gelasio Tabiana under a warrant procured by a political rival for a minor trespass complaint. The arrest was executed by policemen under the direction of a chief of police who had political grievances against Tabiana. The confrontation escalated into physical altercations between Tabiana, his brother-in-law Justice Canillas, and the arresting officers.

The SC held that the force employed in resisting an arrest must be of a serious, aggressive character to constitute the crime of "attack upon agents of public authority" under Article 249 of the Penal Code; lesser force, even if physical, constitutes only "resistance and serious disobedience" under Article 252.

The case involves a contract for the sale of land where the seller initially lacked full legal title because the property was co-owned with minors. The seller later acquired the minors' interests but then attempted to cancel the sale due to the land's increased value.

A person may validly bind themselves to sell property they do not yet fully own, and if they later acquire full title, they are obligated to perform the contract. Rescission is not permitted when the party seeking it was the one in default.

Cadastral proceedings were instituted to settle land titles in Iloilo. The Martinez sisters and Julio Salvador filed competing claims over Lots Nos. 873 and 450. The core dispute was whether the sisters had sold the lots to Antonio Domenech, who then sold them to Salvador.

The Best Evidence Rule requires that before secondary evidence of a document's contents is admissible, the proponent must first establish the former existence of the document, its due execution, and its loss or destruction through no fault of the proponent, using reasonable diligence.

The case arose from a domestic altercation in 1915 where the intoxicated deceased, Luis Antonio, physically abused the accused, his stepson, upon finding household chores undone. A struggle ensued, resulting in the accused stabbing Antonio, who later died from the wound.

For self-defense to be complete, the means employed must be reasonably necessary to prevent or repel an unlawful aggression. Retaliation for a past or completed aggression does not qualify as legitimate self-defense.

The case arose from the conflicting claims of ownership over a pilot boat. The original co-owners were Bonifacio Gelito (2/3 share) and the Chinaman Sy Qui (1/3 share). Gelito sold his share to Sy Qui, making Sy Qui the sole owner. Sy Qui then sold the vessel to Florentino Rivera. Subsequently, a creditor of Sy Qui, Fausto Rubiso, acquired the same vessel at a sheriff's public auction to satisfy a court judgment against Sy Qui.

For transactions involving merchant vessels, the purchaser who first registers the acquisition with the proper registry (the Bureau of Customs) gains superior ownership rights against third parties, even if their purchase occurred later in time.

This case arose under the strict provisions of the Philippine Opium Law (Act No. 2381), which criminalized the unauthorized importation, possession, and sale of opium and other prohibited drugs. The prosecution needed to establish the elements of illegal importation beyond reasonable doubt.

The unlawful importation of a prohibited drug into the Philippine Islands is complete when the drug is found under a person's control on a vessel that has come directly from a foreign country and is within Philippine jurisdictional waters.

The case involves a robbery committed on May 5, 1915, in Catarman, Misamis, by an armed band of seven men. Six members were tried in the Court of First Instance of Misamis. Nicolas Macamay, a man of some substance in the community, was identified as a participant and convicted.

The credible and straightforward testimony of a co-accused who admits participation in the same crime is sufficient to sustain a conviction, even if uncorroborated, provided it meets the standard of proof beyond reasonable doubt.

The case arose from a homicide committed during a personal dispute. The defendant killed a soldier using a baston (stick) during a quarrel over a game of cards.

The mitigating circumstance of "lack of intent to commit so grave a wrong" under Article 9(3) of the Penal Code requires a notable and evident disproportion between the means employed and the resulting injury. When the means used are adequate to produce the resulting harm, the circumstance cannot be appreciated.

The case involves a prosecution for estafa under the Spanish Penal Code of 1887 (as then in force in the Philippines). The core legal issue was the scope of the "imprisonment for debt" prohibition found in the Philippine Bill of Rights (Act of Congress of July 1, 1902).

The constitutional prohibition against imprisonment for debt does not apply to civil liability arising from a criminal act (ex delicto). Subsidiary imprisonment imposed for failure to pay such civil indemnity is a valid part of the criminal penalty.

The case arose from the enforcement of laws prohibiting the maintenance of opium dens in the Philippines during the American colonial period. The prosecution aimed to prove that the defendant's house was a known location for opium use.

A conviction can be sustained based on sufficient oral evidence establishing the elements of the crime, even if corroborating documentary evidence is omitted from the appellate record, provided the appellant's substantial rights are not prejudiced.

The case arose from a criminal complaint for theft filed by Ignacio Arroyo against Marcela Juaneza. During the appeal stage, Arroyo and Juaneza's lawyer, Alfred Berwin, entered into a private settlement. Arroyo agreed to have the criminal case dismissed in exchange for Juaneza recognizing his land ownership and not opposing his land registration application.

A contract whose consideration is the stifling or suppression of a criminal prosecution is void for being contrary to public policy and the due administration of justice.

The case involves a criminal prosecution for a violent attack. The accused, incensed that the victim had filed a criminal complaint against him for rape and causing her pregnancy, assaulted her with a bolo.

A felony is frustrated when the offender performs all acts of execution which should produce the felony as a consequence, but the felony is not produced due to causes independent of the perpetrator's will. The crime is not merely attempted if the subjective phase of the offense is completely passed.

The case arose from the defendant's testimony in a prior criminal trial for estafa. To avoid conviction based on his extrajudicial confession, Soliman testified under oath that the confession was involuntary and procured by torture. The trial court acquitted him in the estafa case, finding reasonable doubt about the confession's voluntariness. Subsequently, the government charged Soliman with perjury for that false testimony.

The repeal of a penal statute by a general repealing clause does not extinguish criminal liability if the repealing law itself is later repealed, thereby reviving the original penal provisions; furthermore, a defendant in a criminal case who testifies under oath in his own behalf is a "witness" and can be prosecuted for perjury.

During the American colonial period, adultery was governed by the Spanish Penal Code (Articles 433-435). Act No. 1773 (1907) had made adultery a public crime but maintained the requirement that prosecution be initiated upon the complaint of the offended husband. The case involved a married woman who separated from her husband and lived with another man for several years, producing children, and raised questions regarding the divisibility of criminal responsibility in adultery and the admissibility of confessions taken before non-judicial officers.

In a prosecution for adultery, the acquittal of the married woman does not necessarily require the acquittal of her paramour, as the crime does not require a joint criminal intent; each party may be judged separately based on their individual culpability, mens rea, and the evidence against them, provided the joint physical act is proven.

Following a devastating earthquake in Manila in 1863, a public subscription was raised in Spain. The funds were sent to the Philippines for distribution to victims. A balance remained after partial distribution. In 1883, the financially strained Monte de Piedad petitioned the Spanish Governor-General for a portion of these funds. The Governor-General ordered $80,000 to be transferred to it as a loan, conditional on return if the Spanish Crown disapproved.

The Philippine Government, as the successor sovereign and parens patriae, has the right and duty to recover funds held in trust for a public charitable purpose, and such an action is not barred by the statute of limitations.

The case arises from the complex administration of the estate of Mariano Nable Jose and his first wife, Paz Borja, who died in 1898. Mariano subsequently remarried. During his second marriage, he executed several mortgages on properties acquired during his first marriage to secure personal and business debts. The children from his first marriage (Remedios, Feliciano, Rocio, and Mariano Jr.) intervened, claiming that the mortgaged properties were conjugal assets of the first marriage and that the mortgages were invalid as to their one-half share.

The surviving husband, as the administrator of an unliquidated conjugal partnership, has the implied power to sell or mortgage any part of the conjugal property, real or personal, for the purpose of paying the debts of the partnership, and can give a good and valid title to an innocent purchaser for value. The heirs of the deceased wife have no legal or equitable estate in the specific conjugal property until after liquidation and determination of the "net remainder."

The case arose under the American colonial period in the Philippines, governed by the Spanish Civil Code and the Law of Civil Marriage of 1870. The legal framework outlined mutual duties of support and cohabitation but contained limited grounds for divorce (only adultery). The central tension was whether a spouse could obtain separate support without first obtaining a legal separation or divorce.

The husband's legal obligation to support his wife is not absolute in the sense that he may always choose to fulfill it solely by receiving her into his home. When the husband's own wrongful acts make the conjugal dwelling intolerable and force the wife to leave, he loses the option under Article 149 of the Civil Code and may be compelled to pay support even while the spouses live separately.

The case arose from a fatal altercation fueled by jealousy. The accused was about to marry a woman whom the deceased, Raymundo Briones, had also been courting. On the night in question, the deceased confronted and attacked the accused without warning.

The SC established that the element of "reasonable necessity for the means employed" in self-defense is assessed based on the circumstances at the time of the assault, not with the benefit of hindsight. A person unexpectedly attacked from behind at night by an armed assailant is justified in using an available weapon (like a pocketknife) to repel the aggression, even if the initial blow with a cane was struck.

The Philippine Legislature enacted laws (Acts Nos. 2339, 2432, 2445) imposing an annual tax on electric signs, billboards, and similar structures. The plaintiffs, operating a billboard advertising business, paid the tax under protest and sued the Collector of Internal Revenue to recover the amount, claiming the tax was unconstitutional.

A tax is uniform, as required by the Philippine Bill, if it operates with the same force and effect in every place where the subject of it is found (geographical uniformity). It need not be graded according to value. The judiciary will not invalidate a tax as confiscatory unless it is so extreme as to amount to a destruction of property rights.

The case involves the criminal liability of an employee who manipulated tax documents to defraud his employer and the government. The broader context is the enforcement of internal revenue laws and the classification of documents used for official government purposes.

A document prepared by a private individual on an official government form, which is later filed with a public office, becomes a public document. Falsifying such a document to misappropriate funds constitutes the complex crime of estafa through falsification of a public document.

The case involves a dispute over the termination of an employment contract for an indefinite period. The contract contained two key provisions: (1) a requirement for six months' written notice for termination, and (2) a broad post-employment restrictive covenant (non-compete clause).

A contractual clause that prohibits an employee from engaging in any employment in the Philippines for a fixed period after termination, without limitation to a specific trade or business, is an unreasonable restraint of trade and void as against public policy.

This case involves a classic scam where the accused used a purported "money-making machine" (a simple piece of paper) to exploit the superstition and credulity of the complainant, resulting in the loss of his carabao.

The elements of estafa under Article 315(2)(a) of the Revised Penal Code are met when an accused, through false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud, induces a complainant to part with property.

The case arose from a private cockfighting wager in Tabaco, Albay. Disputes of this nature were common, but the legal framework governing them was not explicitly codified, leading to judicial uncertainty.

A court cannot dismiss a case due to a lack of specific statutory law on the subject matter. It is obligated to decide the dispute by applying, in order: (1) applicable customs of the place, and (2) in the absence of custom, the general principles of law.

Benito Legarda owned the Nagtajan Hacienda in Manila. His attorney-in-fact, Benito Valdes, negotiated with real estate agent W. Borck regarding its sale. On December 4, 1911, Valdes sent Borck a letter (Exhibit E) giving him "an option for three months to buy the property... for the price of its assessed government valuation." Borck later claimed he accepted this offer, but the defendants refused to convey the property, leading to a suit for specific performance or damages.

An acceptance that varies or modifies the terms of an offer does not create a binding contract; it constitutes a counter-offer, which the original offeror is not bound to accept. For a contract to be perfected by consent, the acceptance must be absolute and unequivocal, conforming strictly to the terms of the offer.

The case arises from a motor vehicle collision in 1913 between E. Merritt (on a motorcycle) and an ambulance of the General Hospital, operated by the Government. Merritt suffered severe, permanent injuries. The Legislature passed Act No. 2457, authorizing Merritt to sue the Government to "fix the responsibility" and determine damages.

The Government (state) is not liable for the tortious acts of its officers, agents, or employees unless they act as a "special agent" within the meaning of Article 1903(5) of the Civil Code. A special agent is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office.

The case arises from a construction contract in Manila. The central legal question is whether the property owner becomes liable to material suppliers when it exercises a contractual right to take over an incomplete project from the original builder.

An owner is not liable for materials purchased by an independent contractor, even if the owner later takes possession of the unfinished building and unused materials, absent a statute (like a mechanics' lien) or a direct agency relationship creating such liability.

The case involves a dispute over a 65-balita parcel of land in Pampanga. In 1875, Estefania Bustos executed a deed of sale over the land in favor of Agapito Geronimo Cruzado. The sale was intended only to make Cruzado appear to own property so he could post a bond required for his appointment as a procurador (a court officer). The land remained in Bustos's possession. She later sold it to Manuel Escaler in 1891. Cruzado's son, Santiago, filed an action in 1910 to recover the land from Bustos and Escaler.

A contract of sale that is simulated and where the purchase price is not paid and the thing sold is never delivered does not transfer ownership. The buyer acquires only a personal right to demand fulfillment, which is subject to prescription.

The Philippine internal revenue system (Act No. 2339) imposed a percentage tax on merchants' gross sales. The Collector of Internal Revenue, citing his regulatory powers under the Act, issued Circular Letter No. 467, which required most merchants to keep a bound, certified record of daily sales in English or Spanish. Non-compliance was punishable under Section 185 of the Act.

The Collector of Internal Revenue exceeded his delegated authority under Act No. 2339 by prescribing English or Spanish as the mandatory language for merchants' daily sales records, as this requirement was not essential for tax collection and constituted an unauthorized imposition of a burden touching upon a matter of public policy.

Municipalities under the Philippine Municipal Code (Act No. 82) exercise both governmental and proprietary (corporate/business) functions. The distinction is critical for determining liability. While municipalities (and their officers) enjoy immunity for torts committed in the performance of governmental functions, they can be held liable for breaches of contract or torts arising from the exercise of proprietary functions.

Municipal councilors exercising proprietary functions are not immune from personal liability for damages if their actions constitute a willful and malicious breach of a valid municipal contract, as opposed to an honest error in judgment.

The City of Manila assessed and levied real property tax on the YMCA's building and grounds. The YMCA paid the tax under protest and filed an action for recovery, arguing the property was exempt under Section 48 of the Manila Charter, which exempted property used exclusively for religious, charitable, or educational purposes.

An institution whose property is used exclusively for a combination of religious, charitable, and educational purposes, and not for profit, is entitled to tax exemption under the Manila Charter, even if it is not exclusively devoted to any single one of those purposes.

This case arose from the enactment of Act No. 2339 (the Internal Revenue Law of 1914). The plaintiffs, engaged in the billboard business, challenged two aspects of the law: (1) Section 139, which prohibited courts from issuing injunctions to restrain the collection of any internal revenue tax, and (2) Section 100(b), which authorized the Collector of Internal Revenue to order the removal of any sign or billboard deemed "offensive to the sight or is otherwise a nuisance" after due investigation.

The statutory remedy of paying a tax under protest and thereafter filing an ordinary action for recovery is an adequate and exclusive remedy; therefore, the legislature may validly prohibit the use of injunctions to restrain tax collection without violating due process. Additionally, the state's police power extends to regulating and removing objects, such as billboards, that are offensive to the public's sense of sight, as this pertains to public comfort and welfare.

The Manila Railroad Company, vested with the power of eminent domain, constructed a branch line on a parcel of land it mistakenly believed it had purchased. The true landowners (the Alandys) later filed an action for recovery of possession (ejectment) and damages. The company answered and filed a cross-complaint for expropriation.

A property owner who stands by without protest while a public service corporation with the power of eminent domain constructs its works on the owner's land is deemed to have acquiesced, thereby forfeiting the remedies of ejectment or injunction and being restricted to an action for damages. Additionally, in expropriation proceedings where the condemnor appeals, execution of the judgment may be stayed by the filing of a sufficient bond.

The case involves a dispute over a stone wall situated on a boundary between two adjoining lots in Ermita, Manila. Both lots were brought under the Torrens system (Act No. 496) through separate proceedings in the Court of Land Registration. Through an error, the same physical wall was included in the technical descriptions and thus in the certificates of title issued to both the plaintiffs and the defendant's predecessor.

In cases of double or overlapping registration under the Torrens system (Act No. 496), the holder of the original certificate of title with the earlier registration date is the owner of the land, as the prior decree is conclusive against all the world and serves as constructive notice.

The case arose from a complaint filed in 1914 against Silvestre Pompeya for failing to render patrol duty as required by a municipal ordinance of Iloilo. The ordinance was enacted pursuant to Act No. 1309, which amended the Municipal Code (Act No. 82) to empower municipal councils, with the provincial governor's approval when an area was "infested with ladrones or outlaws," to require able-bodied male residents aged 18-50 to assist in apprehending lawbreakers and acting as patrols.

A statute authorizing municipalities to require able-bodied male residents to perform patrol duty for public order is a valid exercise of the state's police power and does not violate constitutional liberty guarantees. However, a criminal complaint under such a law must specifically allege the facts bringing the defendant within its terms, including his eligibility and the existence of conditions justifying the service requirement.

• Mariano R. Barretto built a house for Placida A. Jose.
• Jose later sold the house to Antonina Lampano.
• Barretto had insured the house in his own name, with Jose's consent, to protect his financial interest (as Jose still owed him for construction).
• The house was destroyed by fire after the sale.

An insurance policy is a personal contract between the insured and the insurer. Where a person with an insurable interest procures and pays for insurance in his own name, he is not required to account for the proceeds to another party who has an interest in the property, in the absence of an express or implied agreement that the insurance was taken for the benefit of that other party.

Following the death of Zoilo Ibañez de Aldecoa (the father), his widow, Isabel Palet, acting for herself and as guardian of her three minor children, entered into a new partnership contract in 1896. This new firm, also named Aldecoa & Co., took over the business of the old firm. The widow became a capitalistic partner, while the three minor children were listed as industrial partners. The partnership later incurred significant debts to the Hongkong & Shanghai Banking Corporation.

A parent, under the guise of parental authority, cannot validly bind minor children as industrial partners in a new mercantile partnership, as this constitutes an unauthorized encumbrance on the children's property, requiring judicial approval under Article 164 of the Civil Code.

• Cuddy, a film owner in Manila, contracted to lease the film "Zigomar" to Gilchrist, a theater owner in Iloilo, for the week of May 26, 1913.
• Cuddy later breached this contract by leasing the same film to Espejo and Zaldarriaga (appellants) for the same week at a higher price (P350 vs. P125).
• Gilchrist filed a complaint seeking specific performance and damages. He obtained an ex parte mandatory injunction ordering Cuddy to deliver the film to him and a preliminary injunction restraining the appellants from receiving or exhibiting it.

A third party who knowingly induces a breach of contract is liable for damages, and a preliminary injunction may issue to restrain such interference if the injured party's remedy at law is inadequate, even if the third party did not know the identity of the other contracting party.