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[INTERNATIONAL FILMS v. LYRIC FILM EXCHANGE](https://lawyerly.ph/juris/view/c1ccc?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. 42465, Nov 19, 1936 ]

INTERNATIONAL FILMS v. LYRIC FILM EXCHANGE +

DECISION

63 Phil. 778

[ G. R. No. 42465, November 19, 1936 ]

INTERNATIONAL FILMS (CHINA), LTD., PLAINTIFF AND APPELLANT, VS. THE LYRIC FILM EXCHANGE, INC., DEFENDANT AND APPELLEE.

D E C I S I O N

VILLA-REAL, J.:

This is an  appeal  taken by the plaintiff company International Films (China), Ltd.  from the  judgment  of the Court of First Instance  of Manila dismissing the complaint filed by it against the defendant company the Lyric Film Exchange, Inc., with costs to said plaintiff.

In support of its appeal, the appellant assigns six  alleged errors as committed by the court a quo in its said judgment, which  will be discussed in the course of this decision.

The record shows that Bernard Gabelman was the Philippine agent of the plaintiff company International  Films (China), Ltd. by virtue of a power of attorney executed in his favor on April 5, 1933 (Exhibit 1).   On June 2, 1933, the International  Films  (China),  Ltd.,  through its said agent, leased the film entitled "Monte Carlo Madness" to the defendant company, the  Lyric  Film Exchange, Inc., to be shown in Cavite for two consecutive days, that is, on June 1 and 2,  1933, for 30 per  cent of the receipts; in the Cuartel de España for one day,  or on June 6, 1933, for F45; in the University Theater for two consecutive days, or on June 8 and  9, 1933, for 30 per cent  of the receipts; in Stotsenburg for two consecutive days, or on June 18 and 19, 1933, for 30 per cent of the receipts; and in the Paz Theater for two consecutive days, or on June  21 and 22, 1933,  for 30 per  cent of the receipts  (Exhibit C).  One  of the conditions of the contract was  that the defendant company would answer for  the  loss of the film in question  whatever  the cause.  On June 23,  1933, following the last showing of the film in question in the Paz Theater,  Vicente Albo, then chief of  the film department of the Lyric Film Exchange, Inc., telephoned said agent of the plaintiff company  informing  him  that the showing of said film had already been finished and asked, at  the same time, where he wished to have the film returned to him.   In answer, Bernard  Gabelman informed Albo that he  wished to see him personally  in the  latter's office.  At  about 11 o'clock  the next morning, Gabelman went to Vicente Albo's office and asked whether  he could deposit the film in question in the vault of the Lyric Film Exchange, Inc.,  as  the International Films (China)  Ltd.  did not yet have  a safety vault, as required toy the regulations of the fire department.  After the case had  been referred to O'Malley, Vicente Albo's chief,  the former answered that the deposit could not be made inas- much as  the film in question would not be covered by  the insurance carried by  the Lyric Film Exchange, Inc. Bernard Gabelman then requested Vicente Albo to permit him to deposit said film in the  vault of the Lyric Film Exchange, Inc., under Gabelman's own responsibility.   As there was a verbal  contract between Gabelman  and the Lyric Film Exchange, Inc.,  whereby the film "Monte Carlo Madness" would  be shown elsewhere, O'Malley agreed  and the film was deposited in the vault of the defendant company under Bernard Gabelman's responsibility.

About July 27, 1933, Bernard Gabehnan severed his connection with the plaintiff company, being succeeded by Lazarus Joseph.  Bernard Gabelman, upon turning over the agency to the new agent, informed the latter of the deposit of  the  film "Monte Carlo  Madness" in the vault of the defendant company as well as of the verbal contract entered into between  him  and the Lyric Film Exchange,  Inc., whereby the latter would act as a sub-agent  of the plaintiff company, International Films (China) Ltd., with authority to show the film "Monte  Carlo  Madness" in any theater where said defendant company, the Lyric Film  Exchange, Inc., might wish to show it after the expiration of the contract Exhibit C.   As soon as Lazarus Joseph had taken possession  of the Philippine agency of the International Films (China) Ltd., he went to the office of the Lyric Film Exchange, Inc., to ask for the return  not  only of the film "Monte Carlo Madness" but also of the films "White Devils" and "Congress Dances".  On August 13 and 19, 1933, the Lyric Film Exchange,  Inc., returned the  films  entitled "Congress Dances" and "White Devils" to Lazarus Joseph, but not the film "Monte Carlo Madness" because it was to be shown in Cebu on  August 29 and 30, 1933.  Inasmuch as the plaintiff would profit by the  showing of the film "Monte Carlo Madness", Lazarus Joseph agreed to said exhibition.  It happened, however, that the bodega of the Lyric Film Exchange,  Inc., was burned on August 19, 1933, together with the film "Monte Carlo Madness" which was not insured.

The first question to be decided in this appeal, which is raised in the first assignment of alleged error, is whether or not the court a quo erred in allowing the defendant company to amend its answer  after both parties had already rested their respective  cases.

In Torres Viuda de Nery vs. Tomacruz  (49  Phil.,  913, 915), this court, through Justice Malcolm, said:
"Sections 109 and 110 of the Philippine Code of Civil Procedure, relating to the subjects of Variance and Amendments in General, should be  equitably applied to the end that cases may be favorably and fairly presented upon their merits, and that equal and exact justice may be done between the parties.   Under code practice, amendments to pleadings are favored, and should be liberally allowed in furtherance of justice.  This liberality,  it has  been said, is greatest in the early stages of  a lawsuit, decreases  as it progresses, and changes at times to a strictness amounting to a prohibition.   The granting of leave  to file amended pleadings is a matter peculiarly within the sound discretion of the trial court.  This discretion will  not be disturbed on appeal, except in case of an  evident abuse thereof.  But the  rule allowing amendments to pleadings is subject to the general but not  inflexible limitation  that the cause of  action or defense shall not be substantially changed, or that the theory of the case shall not be  altered.   (21 R.  C. L., pp.  572  et seq.; 3 Kerr's Cyc  Codes  of California, sections 469,  470, and 473; Ramirez  vs. Murray [1855], 5 Cal., 222; Hayden vs. Hayden  [1873], 46 Cal.,  332; Hackett vs. Bank of Cali- fornia [1881],  57 Cal., 335; Hancock vs.  Board of Educa- tion of City of Santa Barbara [1903], 140 Cal., 554; Dunphy vs. Dunphy  [1911], 161 Cal., 87; 38 L. R. A.  [N. S.], 818.)"
In the  case of Gould vs. Stafford (101 Cal., 32, 34), the Supreme Court of California, interpreting  section 473 of the Code of Civil Procedure of said State, from which  section 110 of our Code was taken, stated as follows:
"The rule is that  courts  will be liberal in allowing an amendment to a pleading when it does not seriously impair the rights  of  the opposite  party and  particularly  an amendment  to an answer.   A defendant can generally set up as many defenses as he may have.  Appellant contends that the  affidavits upon which the motion  to amend was made show that it was based mainly on a mistake of law made by respondent's  attorney; but, assuming that to be so,  still the power of  a court to  allow an amendment is not limited by the character of the mistake which calls forth its  exercise.  The general  rule that a party cannot be relieved from an ordinary contract which is in its nature final, on account of a mistake of law, does not apply to proceedings in an action at law  while  it  is pending and undetermined.  Pleadings are not necessarily final until after judgment.  Section  473 of the Code of Civil  Procedure provides that the court may allow an amendment to a pleading to correct certain enumerated mistakes or  a mistake in any other respect and  'in other particulars.'  The true rule is well stated in Ward vs. Clay (82 Cal., 502).  In the case at bar evidence of the lease was given at the first trial; and we  cannot  see that the amendment before the second trial put plaintiff  in  a position any different from that which he would have occupied if the amendment had been made before the first trial."
In the case of Ward  vs. Clay (82 Cal., 502, 510), the Supreme Court of said  State stated:
"The principal purpose  of vesting  the  court with  this discretionary power is to enable it to mold and  direct its proceedings so as to  dispose of cases upon their substantial merits/ when it can be done without injustice to either party, whether the obstruction to such a disposition of cases be a mistake of  fact or a mistake as to the law; although it may be that the court should require a stronger showing to justify relief  from the effect of a mistake in law than in case of a mistake as to matter of fact.  The exercise of the power  conferred by section 473 of the code, however, should appear to have been 'in furtherance of justice and the  relief, if any, should be granted upon just terms."
Lastly, in the  case of Simpson vs. Miller  (94 Pac., 253), the  said Supreme Court of California  said:
"In an action to recover property which had vested in plaintiff's trustee in bankruptcy prior to the suit, an amendment to the answer, made after both parties had rested, but before the cause was submitted, pleading plaintiff's bankruptcy  in bar to the action, was properly  allowed in the discretion of the court."
Under the above-cited doctrines, it is discretionary in the court which has cognizance of a case to allow  or not the amendment of an answer for the purpose of questioning the personality  of the plaintiff to bring the action,  even after the parties had rested their cases, as  it causes no injustice to any of the parties, and this court will not interfere in the exercise of said discretion unless there is an evident abuse thereof, which does not exist in this case.

The second question to be decided is whether or not the defendant company, the Lyric Film Exchange, Inc., is responsible to the plaintiff, International Films (China)  Ltd., for the  destruction by fire of the film in question, entitled "Monte  Carlo Madness".

The plaintiff company claims that the defendant's failure to return the film  "Monte Carlo Madness" to  the former was due to the fact that the period for the delivery thereof, which expired on June 22, 1933, had been extended in order that it might be shown in Cebu on August 29 and 30, 1933, in accordance with an understanding had between Lazarus Joseph,  the  new agent  of the plaintiff company, and the defendant.   The defendant company,  on the other hand, claims that when it wanted to return the film "Monte Carlo Madness" to Bernard Gabelman, the  former agent of the plaintiff company, because of the arrival of the date for the return thereof, under the contract Exhibit  C, said agent, not having a safety vault, requested Vicente Albo, chief of the film  department of the defendant company, to keep said film in the latter's vault under Gabelman's own responsibility, verbally stipulating at the same time that the defendant company, as  subagent of the International Films (China) Ltd., might show the film in question in its theaters.

it does not appear sufficiently proven that the understanding had between Lazarus Joseph, second agent of the plaintiff company, and Vicente Albo, chief of the film department of the defendant company, was that the defendant company would continue showing said film under the same contract Exhibit C.  The preponderance of evidence shows that the verbal agreement shad between Bernard Gabelman, the former agent of the plaintiff company, and Vicente Albo, chief of the film department of the defendant company, was that the said film "Monte Carlo Madness" would remain deposited in  the safety  vault of the defendant company under the responsibility of said  former agent and that  the defendant company,  as his  subagent,  could  show it in  its theaters, the plaintiff company receiving 5 per cent of the receipts up to a certain amount, and 15 per cent  thereof in excess of said amount.

If,  as it has been sufficiently proven in our opinion, the verbal contract had between Bernard Gabelman, the former agent of the plaintiff company, and Vicente Albo, chief of the film department of the defendant company, was a sub-agency or a submandate, the defendant company is not civilly liable for the destruction by fire of the film in question because, as a mere submandatary or subagent, it was not obliged to fulfill more than the contents of the mandate and to answer for the  damages caused to the principal by his failure to do so (art. 1718, Civil Code).  The fact that the film was not insured against fire does not constitute fraud or negligence on the part of the defendant company, the Lyric Film Exchange, Inc., because as a subagent, it received no instruction to that effect from its principal and the insurance of the film does not form a part of the obligation imposed upon it by law.

As  to the question whether or not the defendant company having collected the entire proceeds  of the fire insurance policy of its  films  deposited  in  its  vault, should pay the part corresponding to the film in question which was deposited therein, the evidence shows that the film "Monte Carlo Madness" under consideration was not included in the insurance of the defendant company's films, as this was one of  the reasons why O'Malley  at  first refused to receive said film for deposit and  he consented thereto only  when Bernard Gabelman, the former agent; of the plaintiff company, insisted upon his request, assuming all responsibility. Furthermore, the defendant company did  not  collect from the insurance company an amount greater than that for which its films were insured, notwithstanding the fact that the film in question was included in its vault, and it would have collected the same amount even if said film had not been  deposited in its  safety vault.  Inasmuch as  the defendant company, The Lyric Film  Exchange, Inc., had not been  enriched by the  destruction  by fire of  the plaintiff company's  filmv it is not liable  to the latter.

For the foregoing considerations, we are of the  opinion and so hold:  (1) That the court a quo acted within its discretionary  power in allowing the defendant  company  to amend its  answer by pleading the special defense of the plaintiff company's lack of personality to bring the action, after both parties had already rested their respective cases; (2) that the  defendant company, as sub-agent of the plain- tiff in the  exhibition of the film "Monte Carlo Madness", was not obliged to insure it against fire, not having received any express mandate to that effect, and it is not liable for the accidental destruction thereof by fire.

Wherefore, and although on a different  ground,  the appealed judgment is affirmed, with the costs to the appellant. So ordered.

Avanceña, C. J., Abad Santos, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.

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