AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN

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1. ORIENT SERVICES AND HOTEL REPRESENTATIVES VS. American Air in the course of terminating the Agreement as well
CA AND AMERICAN AIRLINES as the termination itself were untenable, Orient Air claiming that
American Air's precipitous conduct had occasioned prejudice to
FACTS: its business interests.

This case is a consolidation of two (2) petitions for review
on certiorari of a decision of the Court of Appeals. The antecedent
facts are as follows: On 15 January 1977, American Airlines, Inc.
(hereinafter referred to as American Air), an air carrier offering
passenger and air cargo transportation in the Philippines, and
Orient Air Services and Hotel Representatives (hereinafter
referred to as Orient Air), entered into a General Sales Agency
Agreement (hereinafter referred to as the Agreement), whereby
the former authorized the latter to act as its exclusive general
sales agent within the Philippines for the sale of air passenger
transportation. 1. Representation of American by Orient Air
Services: Orient Air Services will act on American's behalf as its
exclusive General Sales Agent within the Philippines, including
any United States military installation therein which are not
serviced by an Air Carrier Representation Office (ACRO), for the
sale of air passenger transportation.
On 11 May 1981, alleging that Orient Air had reneged on its
obligations under the Agreement by failing to promptly remit the
net proceeds of sales for the months of January to March 1981 in
the amount of US $254,400.40, American Air by itself undertook
the collection of the proceeds of tickets sold originally by Orient
Air and terminated forthwith the Agreement in accordance with
Paragraph 13 thereof (Termination). Four (4) days later, or on 15
May 1981, American Air instituted suit against Orient Air with the
Court of First Instance of Manila, averring the aforesaid basis for
the termination of the Agreement as well as therein defendant's
previous record of failures "to promptly settle past outstanding
refunds of which there were available funds in the possession of
the defendant, . . . to the damage and prejudice of
plaintiff." Defendant Orient Air denied the material allegations of
the complaint with respect to plaintiff's entitlement to alleged
unremitted amounts, contending that after application thereof to
the commissions due it under the Agreement, plaintiff in fact still
owed Orient Air a balance in unpaid overriding commissions.
Further, the defendant contended that the actions taken by
ISSUE: WON ORIENT AIR FAILED ITS OBLIGATION AS AN
AGENT TO THE PRINCIPAL (AMERICAN AIRLINES)?
HELD: NO. Orient Air was clearly justified in retaining and
refusing to remit the sums claimed by American Air. The latter's
termination of the Agreement was, therefore, without cause and
basis, for which it should be held liable to Orient Air. Orient Air
was entitled to an overriding commission based on total flown
revenue. American Air's perception that Orient Air was remiss or
in default of its obligations under the Agreement was, in fact, a
situation where the latter acted in accordance with the
Agreementthat of retaining from the sales proceeds its accrued
commissions before remitting the balance to American Air. Since
the latter was still obligated to Orient Air by way of such
commissions.
By affirming this ruling of the trial court, respondent appellate
court, in effect, compels American Air to extend its personality to
Orient Air. Such would be violative of the principles and essence
of agency, defined by law as a contract whereby "a person binds
himself to render some service or to do something in
representation or on behalf of another, WITH THE CONSENT OR
AUTHORITY OF THE LATTER . (emphasis supplied) In an agent-
principal relationship, the personality of the principal is extended
through the facility of the agent. In so doing, the agent, by legal
fiction, becomes the principal, authorized to perform all acts
which the latter would have him do. Such a relationship can only
be effected with the consent of the principal, which must not, in
any way, be compelled by law or by any court. The Agreement
itself between the parties states that "either party may terminate
the Agreement without cause by giving the other 30 days' notice
by letter, telegram or cable." (emphasis supplied) We, therefore,
set aside the portion of the ruling of the respondent appellate
court reinstating Orient Air as general sales agent of American
Air.
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WHEREFORE, with the foregoing modification, the Court AFFIRMS
the decision and resolution of the respondent Court of Appeals,
dated 27 January 1986 and 17 December 1986, respectively.
Costs against petitioner American Air.
2. RAMON RALLOS, Administrator of the Estate of
CONCEPCION RALLOS vs. FELIX GO CHAN & SONS REALTY
CORPORATION and COURT OF APPEALS
FACTS:
The following facts are not disputed. Concepcion and Gerundia
both surnamed Rallos were sisters and registered co-owners of a
parcel of land. On April 21, 1954, the sisters executed a special
power of attorney in favor of their brother, Simeon Rallos,
authorizing him to sell for and in their behalf lot 5983. On March
3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon
Rallos sold the undivided shares of his sisters Concepcion and
Gerundia in lot 5983 to Felix Go Chan & Sons Realty Corporation.
Ramon Rallos as administrator of the Intestate Estate of
Concepcion Rallos filed a complaint (1) that the sale of the
undivided share of the deceased Concepcion Rallos in lot 5983 be
d unenforceable, and said share be reconveyed to her estate; (2)
that the Certificate of 'title issued in the name of Felix Go Chan &
Sons Realty Corporation be cancelled and another title be issued
in the names of the corporation and the "Intestate estate of
Concepcion Rallos". Felix Go Chan & Sons Realty Corporation
appealed in due time to the Court of Appeals from the foregoing
judgment insofar as it set aside the sale of the one-half (1/2)
share of Concepcion Rallos.
ISSUE: What is the legal effect of an act performed by an
agent after the death of his principal?
WON THE DEATH OF THE PRINCIPAL EXTINGUISHES SUCH
AGENCY?
HELD: Out of the above given principles, sprung the creation and
acceptance of the relationship of agency whereby one party,
caged the principal (mandante), authorizes another, called the
agent (mandatario), to act for and in his behalf in transactions
with third persons. The essential elements of agency are: (1)
there is consent, express or implied of the parties to establish the
relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agents acts as a representative
and not for himself, and (4) the agent acts within the scope of his
authority. Agency is basically personal representative,
and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal; his act
is the act of the principal if done within the scope of the
authority. Qui facit per alium facit se. "He who acts through
another acts himself".
YES. By reason of the very nature of the relationship between
Principal and agent, agency is extinguished by the death of the
principal or the agent. This is the law in this jurisdiction. It is the
contention of respondent corporation which was sustained by
respondent court that notwithstanding the death of the principal
Concepcion Rallos the act of the attorney-in-fact, Simeon Rallos in
selling the former's sham in the property is valid and enforceable
inasmuch as the corporation acted in good faith in buying the
property in question. Articles 1930 and 1931 of the Civil Code
provide the exceptions to the general rule afore-mentioned. ART.
1930. The agency shall remain in full force and effect even after
the death of the principal, if it has been constituted in the
common interest of the latter and of the agent, or in the interest
of a third person who has accepted the stipulation in his
favor.ART. 1931. Anything done by the agent, without knowledge
of the death of the principal or of any other cause which
extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have contracted with him in
good. faith. Article 1930 is not involved because admittedly the
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special power of attorney executed in favor of Simeon Rallos was
not coupled with an interest.
Article 1931 is the applicable law. Under this provision, an act
done by the agent after the death of his principal is valid and
effective only under two conditions, viz: (1) that the agent acted
without knowledge of the death of the principal and (2) that the
third person who contracted with the agent himself acted in good
faith. Good faith here means that the third person was not aware
of the death of the principal at the time he contracted with said
agent. These two requisites must concur the absence of one will
render the act of the agent invalid and unenforceable.In the
instant case, it cannot be questioned that the agent, Simeon
Rallos, knew of the death of his principal at the time he sold the
latter's share in Lot No. 5983 to respondent corporation. The
knowledge of the death is clearly to be inferred from the
pleadings filed by Simon Rallos before the trial court. 12 That
Simeon Rallos knew of the death of his sister Concepcion is also a
finding of fact of the court a quo 13 and of respondent appellate
court when the latter stated that Simon Rallos 'must have known
of the death of his sister, and yet he proceeded with the sale of
the lot in the name of both his sisters Concepcion and Gerundia
Rallos without informing appellant (the realty corporation) of the
death of the former. On the basis of the established knowledge of
Simon Rallos concerning the death of his principal Concepcion
Rallos, Article 1931 of the Civil Code is inapplicable. The law
expressly requires for its application lack of knowledge on the
part of the agent of the death of his principal; it is not enough
that the third person acted in good faith.
Costs against respondent realty corporation at all
instances.
3. AIRFANCE VS. CA, GANA
FACTS: Sometime in February, 1970, the late Jose G. Gana and
his family, numbering nine (the GANAS), purchased from AIR
FRANCE through Imperial Travels, Incorporated, a duly authorized
travel agent, nine (9) "open-dated" air passage tickets for the
Manila/Osaka/Tokyo/Manila route. The GANAS paid a total of
US$2,528.85 for their economy and first class fares. Said tickets
were bought at the then prevailing exchange rate of P3.90 per
US$1.00. The GANAS also paid travel taxes of P100.00 for each
passenger. On 24 April 1970, AIR FRANCE exchanged or
substituted the aforementioned tickets with other tickets for the
same route. At this time, the GANAS were booked for the
Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970,
and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on
22 May 1970. The aforesaid tickets were valid until 8 May 1971,
the date written under the printed words "Non valuable apres de
(meaning, "not valid after the").The GANAS did not depart on 8
May 1970. Sometime in January, 1971, Jose Gana sought the
assistance of Teresita Manucdoc, a Secretary of the Sta. Clara
Lumber Company where Jose Gana was the Director and
Treasurer, for the extension of the validity of their tickets, which
were due to expire on 8 May 1971. Teresita enlisted the help of
Lee Ella Manager of the Philippine Travel Bureau, who used to
handle travel arrangements for the personnel of the Sta. Clara
Lumber Company. Ella sent the tickets to Cesar Rillo, Office
Manager of AIR FRANCE. The tickets were returned to Ella who
was informed that extension was not possible unless the fare
differentials resulting from the increase in fares triggered by an
increase of the exchange rate of the US dollar to the Philippine
peso and the increased travel tax were first paid. Ella then
returned the tickets to Teresita and informed her of the
impossibility of extension.
In the meantime, the GANAS had scheduled their departure on 7
May 1971 or one day before the expiry date. In the morning of
the very day of their scheduled departure on the first leg of their
trip, Teresita requested travel agent Ella to arrange the
revalidation of the tickets. Ella gave the same negative answer
and warned her that although the tickets could be used by the
GANAS if they left on 7 May 1971, the tickets would no longer be
valid for the rest of their trip because the tickets would then have
expired on 8 May 1971. Teresita replied that it will be up to the
GANAS to make the arrangements. Ella on his own, attached to
the tickets validating stickers for the Osaka/Tokyo flight, one a
JAL. sticker and the other an SAS (Scandinavian Airways System)
sticker. The SAS sticker indicates thereon that it was
"Reevaluated by: the Philippine Travel Bureau, Branch No. 2" (as
shown by a circular rubber stamp) and signed "Ador", and the
date is handwritten in the center of the circle. Notwithstanding
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the warnings, the GANAS departed from Manila in the afternoon
of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka, Japan.
There is no question with respect to this leg of the trip.However,
for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused
to honor the tickets because of their expiration, and the GANAS
had to purchase new tickets.
ISSUE: WON IRREGULAR ACTIONS OF TRAVEL AGENT ELLA
WAS RATIFIED BY ITS PRINCIPAL RENDERING THEM
LIABLE?
HELD: NO. The circumstances that AIR FRANCE personnel at the
ticket counter in the airport allowed the GANAS to leave is not
tantamount to an implied ratification of travel agent Ella's
irregular actuations. It should be recalled that the GANAS left in
Manila the day before the expiry date of their tickets and that
"other arrangements" were to be made with respect to the
remaining segments. Besides, the validating stickers that Ella
affixed on his own merely reflect the status of reservations on the
specified flight and could not legally serve to extend the validity
of a ticket or revive an expired one.
The conclusion is inevitable that the GANAS brought upon
themselves the predicament they were in for having insisted on
using tickets that were due to expire in an effort, perhaps, to beat
the deadline and in the thought that by commencing the trip the
day before the expiry date, they could complete the trip even
thereafter. It should be recalled that AIR FRANCE was even
unaware of the validating SAS and JAL. stickers that Ella had
affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE
merely acted within their contractual rights when they dishonored
the tickets on the remaining segments of the trip and when AIR
FRANCE demanded payment of the adjusted fare rates and travel
taxes for the Tokyo/Manila flight.
WHEREFORE, the judgment under review is hereby reversed and
set aside, and the Amended Complaint filed by private
respondents hereby dismissed.
4. IN RE: PETITION FOR ISSUANCE OF SEPARATE
CERTIFICATE OF TITLE.
JOSE A. SANTOS Y Diaz vs. ANATOLIO BUENCONSEJO, ET
AL.
FACTS: The main facts are not disputed. They are set forth in the
order appealed from, from which we quote:
It appears that the aforementioned Lot No. 1917 covered by
Original Certificate of Title No. RO-3848 (25322) was originally
owned in common by Anatolio Buenconsejo to the extent of
undivided portion and Lorenzo Bon and Santiago Bon to the
extent of the other (Exh. B); that Anatolio Buenconsejo's rights,
interests and participation over the portion abovementioned were
on January 3, 1961 and by a Certificate of Sale executed by the
Provincial Sheriff of Albay, transferred and conveyed to Atty. Tecla
San Andres Ziga, awardee in the corresponding auction sale
conducted by said Sheriff in connection with the execution of the
decision of the Juvenile Delinquency and Domestic Relations
Court in Civil Case No. 25267, entitled "Yolanda Buenconsejo, et
al. vs. Anatolio Buenconsejo"; that on December 26, 1961 and by
a certificate of redemption issued by the Provincial Sheriff of
Albay, the rights, interest, claim and/or or participation which
Atty. Tecla San Andres Ziga may have acquired over the property
in question by reason of the aforementioned auction sale award,
were transferred and conveyed to the herein petitioner in his
capacity as Attorney-in-fact of the children of Anatolio
Buenconsejo, namely, Anastacio Buenconsejo, Elena Buenconsejo
and Azucena Buenconsejo (Exh. C).
It would appear, also, that petitioner Santos had redeemed the
aforementioned share of Anatolio Buenconsejo, upon the
authority of a special power of attorney executed in his favor by
the children of Anatolio Buenconsejo; that relying upon this power
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of attorney and redemption made by him, Santos now claims to
have acquired the share of Anatolio Buenconsejo in the
aforementioned Lot No. 1917; that as the alleged present owner
of said share, Santos caused a subdivision plan of said Lot No.
1917 to be made, in which the portion he claims as his share
thereof has been marked as Lot No. 1917-A; and that he wants
said subdivision at No. 1917-A to be segregated from Lot No.
1917 and a certificate of title issued in his name exclusively for
said subdivision Lot No. 1917-A.
ISSUE: WON THE SPECIAL POWER OF ATTORNEY GIVEN TO
JOSE SANTOS VESTED HIM SUCH PROPERTY RIGHTS IN HIS
OWN NAME?
HELD: NO. As correctly held by the lower court, petitioner's claim
is clearly untenable, for: (1) said special power of attorney
authorized him to act on behalf of the children of Anatolio
Buenconsejo, and, hence, it could not have possibly vested in him
any property right in his own name; (2) the children of Anatolio
Buenconsejo had no authority to execute said power of attorney,
because their father is still alive and, in fact, he and his wife
opposed the petition of Santos; (3) in consequence of said power
of attorney (if valid) and redemption, Santos could have acquired
no more than the share pro indiviso of Anatolio Buenconsejo in
Lot No. 1917, so that petitioner cannot without the conformity
of the other co-owners (Lorenzo and Santiago Bon), or a judicial
decree of partition issued pursuant to the provisions of Rule 69 of
the new Rules of Court (Rule 71 of the old Rules of Court) which
have not been followed By Santos adjudicate to himself in fee
simple a determinate portion of said Lot No. 1917, as his share
therein, to the exclusion of the other co-owners.
Inasmuch as the appeal is patently devoid of merit, the order
appealed from is hereby affirmed, with treble cost against
petitioner-appellant Jose A. Santos y Diaz. It is so ordered.
5. ALBALADEJO Y CIA., S. en C. vs. The PHILIPPINE
REFINING CO., as successor to The Visayan Refining Co.,
FACTS:
It appears that Albaladejo y Cia. is a limited partnership,
organized in conformity with the laws of these Islands, and having
its principal place of business at Legaspi, in the Province of Albay;
and during the transactions which gave origin to this litigation
said firm was engaged in the buying and selling of the products of
the country, especially copra, and in the conduct of a general
mercantile business in Legaspi and in other places where it
maintained agencies, or sub-agencies, for the prosecution of its
commercial enterprises. The Visayan Refining Co. is a corporation
organized under the laws of the Philippine Islands; and prior to
July 9, 1920, it was engaged in operating its extensive plant at
Opon, Cebu, for the manufacture of coconut oil. On August 28,
1918, the plaintiff made a contract with the Visayan Refining Co.
Pursuant to this agreement the plaintiff, during the year therein
contemplated, bought copra extensively for the Visayan Refining
Co. At the end of said year both parties found themselves
satisfied with the existing arrangement, and they therefore
continued by tacit consent to govern their future relations by the
same agreement. In this situation affairs remained until July 9,
1920, when the Visayan Refining Co. closed down its factory at
Opon and withdrew from the copra market. When the contract
above referred to was originally made, Albaladejo y Cia.
apparently had only one commercial establishment, i.e., that at
Legaspi; but the large requirements of the Visayan Refining Co.
for copra appeared so far to justify the extension of the plaintiff's
business that during the course of the next two or three years it
established some twenty agencies, or subagencies, in various
ports and places of the Province of Albay and neighboring
provinces.
After the Visayan Refining Co. had ceased to buy copra, as above
stated, of which fact the plaintiff was duly notified, the supplies of
copra already purchased by the plaintiff were gradually shipped
out and accepted by the Visayan Refining Co., and in the course
of the next eight or ten months the accounts between the two
parties were liquidated. The last account rendered by the Visayan
Refining Co. to the plaintiff was for the month of April, 1921, and
it showed a balance of P288 in favor of the defendant.
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Upon reference to paragraph five of the contract reproduced
above it will be seen that the Visayan Refining Co. obligated itself
to provide transportation by sea to Opon, Cebu, for the copra
which should be delivered to it by the plaintiff; and the first cause
of action set forth in the complaint is planted upon the alleged
negligent failure of the Visayan Refining Co. to provide opportune
transportation for the copra collected by the plaintiff and
deposited for shipment at various places.
ISSUE: WON contract between the plaintiff and the
Visayan Refining Co. created the relation of principal and
agent between the parties, and the reliance is placed
upon article 1729 of the Civil Code which requires the
principal to indemnify the agent for damages incurred in
carrying out the agency
HELD: NO. Attentive perusal of the contract is, however,
convincing to the effect that the relation between the parties was
not that of principal and agent in so far as relates to the purchase
of copra by the plaintiff. It is true that the Visayan Refining Co.
made the plaintiff one of its instruments for the collection of
copra; but it is clear that in making its purchases from the
producers the plaintiff was buying upon its own account and that
when it turned over the copra to the Visayan Refining Co.,
pursuant to that agreement, a second sale was effected. In
paragraph three of the contract it is declared that during the
continuance of this contract the Visayan Refining Co. would not
appoint any other agent for the purchase of copra in Legaspi; and
this gives rise indirectly to the inference that the plaintiff was
considered its buying agent. But the use of this term in one
clause of the contract cannot dominate the real nature of the
agreement as revealed in other clauses, no less than in the
caption of the agreement itself. In some of the trade letters also
the various instrumentalities used by the Visayan Refining Co. for
the collection of copra are spoken of as agents. But this
designation was evidently used for convenience; and it is very
clear that in its activities as a buyer the plaintiff was acting upon
its own account and not as agents, in the legal sense, of the
Visayan Refining Co. The title to all of the copra purchased by the
plaintiff undoubtedly remained in it until it was delivered by way
of subsequent sale to said company.
6. THOMAS vs. PINEDA
June 28, 1951; Tuason, J.
FACTS OF THE CASE
Summary: Defendant managed the business as plaintiffs
employee or trustee during the Japanese occupation of the City of
Manila and on a share of the profits basis. The business burned
down. After the war, defendant established a business of the
same name, located in the same place; he also refused to make
an accounting of the business. The court held that the defendant
is obliged to account for the business while he was its manager,
and that he acted in bad faith in his failure to do so.
Plaintiff owns the bar and restaurant known as Silver Dollar Caf
located in Plaza Santa Cruz, Manila. In the course of time, the
defendant became successively cashier and manager of the
business. On the onset of the war, plaintiff made a fictitious sale
of the business to defendant to prevent the business and its
property from falling into enemy hands. Simultaneously with, or
soon after the execution of the simulated sale, the plaintiff and
defendant signed a private or secret document stating that the
deed of sale conveying the restaurant was fictitious and upon the
restoration of peace and order, the document automatically
becomes null and void and of no effect. On February 3, 1945, the
building was destroyed by fire but the defendant had been able
to remove some of its furniture. According to the defendant, all of
these goods were accounted for and turned over to the plaintiff.
On May 8, 1945, a bar was opened on Calle Bambang under the
name Silver Dollar Caf. On September of the same year, it was
transferred to its original location in Plaza Santa Cruz. It is alleged
that after liberation, plaintiff brought a certified public accountant
to the caf for the purpose of examining the books of the
business. The defendant resisted, and even pointed a gun at
them. Because of this incident, plaintiff brought the present
action to compel an accounting of the business. It also asked the
court to enjoin the defendant from using the name of that
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business, Silver Dollar Caf. The defendant avers that there was a
third, verbal agreement, the import of which was that he was to
operate the business with no liability other than to turn it over to
the plaintiff as the plaintiff would find it after the war. He insists
therefore that he was relieved of any duty to make an
accounting.
ISSUE OF THE CASE: Whether or not defendant is obliged to
render an accounting to the plaintiff. YES.
RULING OF THE COURT
The defendants contention is at war with the care and precaution
which the plaintiff took to insure his rights in the business and its
assets. Unless Thomas was willing to give away his property and
its profits, no man in his right senses would have given his
manager an outright license such as the defendant claims to
have gotten from his employer. The exact legal character of the
defendants relation to the plaintiff matters not a bit. It was
enough to show, and it had been shown, that he had been
entrusted with the possession and management of the plaintiffs
business and property for the owners benefit and had not made
an accounting.
Neither did the defendants sweeping statement at the trial that
all the proceeds from the business had been used to support the
plaintiff and his daughters to entertain or bribe Japanese officers
and civilians dispense with defendants duty to account. It was
clear error for the court to declare that there were no surplus
profits. The courts inquiry ought to have been confined to the
determination of the plaintiffs right to secure an accounting. The
defendant denied that the plaintiff had any proprietary interest in
the saloon in Bambang and at Plaza Sta. Cruz after liberation.
Thomas however said that he borrowed P2000 from a friend, and
with that amount he constructed a temporary building in
Bambang and with the stocks saved by the defendant, opened
the business there. He said that, as before, the defendant now
worked as manager, with the difference that under the new
arrangement he was to get one-half the net profits. The
defendant said that he returned several cases of whiskey, rum,
gin and other kinds of liquor to the plaintiff, and he gave the
latter P2000 in cash. He avers that this payment was in full and
complete liquidation of the Silver Dollar Caf. The court said that
this was highly improbable, to put it mildly.
The use of the old name for the bar in Bambang suggests that the
business was in fact an extension and continuation of the Silver
Dollar Caf. It was also the plaintiff who entered into a written
contract of lease with the owner of the Santa Cruz location.
Thomas was even named as its proprietor. That the defendant
was only a manager is also made evident by two sets of business
cards of the Silver Dollar Caf which he himself caused to be
printed. On the first set, David Thomas was held out as the
proprietor and Hermogenes Pineda, as manager. On the second
set, which were ordered later, the defendant was not even
mentioned as manager, but one Bill Magner, while David Thomas
name was retained as proprietor. At different times from May 8 to
December 15, 1945, the defendant handed the plaintiff averse
amounts totaling P24,100 without so much as asking Thomas to
sign a receipt for any of them. The defendant testified that these
amounts were simple loans secured by plaintiffs mining shares of
stock. The court held that the lack of any receipt is incompatible
with the hypothesis of loans. There is no escaping the conclusion
that the plaintiff was the sole owner of the post-war Silver Dollar
bar and restaurant, that the defendant was only an industrial
partner, and that the said amounts were withdrawals on account
of the profits.
As to the use of the trade name:
It appears that the defendant on September 27, 1945, registered
the business and its name as his own. He contends that in 1940,
the plaintiffs right to use this trade name expired and by
abandonment and non-use, the plaintiff ceased to have any title
thereto. The alleged abandonment or non-use is predicated on
the testimony that the plaintiff expressly allowed the defendant
to appropriate the trade name in dispute. The court held that the
defendant registered the business in bad faith. The plaintiffs non-
use of his trade name did not work as a forfeiture of his exclusive
right to the name.
As legal proposition and in good conscience, the defendants
registration of the trade name Silver Dollar Caf must be deemed
AGENCY CASE DIGEST
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to have been affected for the benefit of its owner of whom he was
a mere trustee or employee.
"The relations of an agent to his principal are fiduciary
and it is an elementary and very old rule that in regard to
property forming the subject matter of the agency, he is
estopped from acquiring or asserting a title adverse to
that of principal. His position is analogous to that of a
trustee and he cannot consistently, with the principles of
good faith, be allowed to create in himself an interest in
opposition to that of his principal or cestui que trust. A
receiver, trustee, attorney, agent or any other person
occupying fiduciary relations respecting property or
persons utterly disabled from acquiring for his own
benefit the property committed to his custody for
management. This rule is entirely independent of the fact
whether any fraud has intervened. No fraud in fact need
be shown, and no excuse will be heard from any such
inquiry that the rule takes so general form. The rule
stands on the moral obligation to refrain from placing
one's self in position which ordinarily excite conflicts
between self-interest at the expense of one's integrity
and duty to another, by making it possible to profit by
yielding to temptation"
7. PALMA vs CRISTOBAL
FACTS: In 1909, after registration proceedings under ACT 496,
the original certificate of title was issued in the names of Palma
and his wife (Luisa Cristobal). By the year 1923, said certificate
was cancelled by virtue of CFI decree, but was later substituted
by another certificate of title also in the name of Palma and his
wife. His wife died. Because of its death, a new certificate was
issued, but this time only in the name of Palma only. With such,
Palma sought to eject Cristobal from a parcel of land in Tondo
(TCT of w/c registered to Palma). Cristobal raised the question of
ownership and the case was dismissed. Palma filed w/ CFI Manila
praying he be declared owner of the land and for Cristobal to be
ordered to restore its possession to him and remove his house
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
therefrom.
The CFI dismissed the case, and when the case was brought to
the CA it was similarly dismissed.
The court of appeals concluded that the parcel of land in question
is a community property held by Palma in trust for the real
owners (respondent Cristobal being an heir of one of them), the
registration having been made in accordance with an
understanding between the coowners, by reason of the
confidence they had in Palma and his wife. This confidence, close
relationship, and the fact that co-owners were receiving their
shares in the rentals, were the reasons why no step had been
taken to partition the property. Before the death of Palma's wife,
she called her husband and enjoined him to give her co-owners
their shares and he told her not to worry about it because he
would. The CA, in dismissing the case, invoked SC rulings w/c
declared that the registration of the property in the name of the
trustees in possession thereof, must be deemed to have been
effected for the benefit of the principal/cestui que trust. Thus this
appeal by certiorari.
ISSUE OF THE CASE: Whether or not the CA erred in dismissing
the case
RULING OF THE COURT:
NO, the CA did not erred in dismissing the case. Palma contends
that if he did commit fraud, Cristobal was in fact a part of it, but
the SC held that the fact that Cristobal has been a party to the
deception which resulted in Palma's securing in his name the title
to a property not belonging to him, is not a valid reason for
changing the legal relationship between the latter and its true
owners to such an extent as to let them lose their ownership to a
person trying to usurp it.
Cristobal is not barred because his appearance as attorney for
petitioner was not a misrepresentation which would induce Palma
to believe that he recognized Palma as the sole owner of the
property in controversy. The misrepresentation could deceive the
court and outsiders, because they were not aware of the
understanding between the co-owners that the property be
registered in the name of Palma.
AGENCY CASE DIGEST
9
Palma then claimed that even granting the property was owned
by several co-owners he now owns it because of prescription. This
theory holds no water because, according to the pronouncement
of the CA, Palma held the property and secured its the
registration in his name in a fiduciary capacity, and it is
elementary that a trustee cannot acquire by prescription the
ownership of a property entrusted to him. The position of a
trustee is of representative nature. His position is the position of a
cestui que trust. It is logical that all benefits derived by the
possession and acts of the agent, as such agent, should accrue to
the benefit of his principal.
The relations of an agent to his principal are fiduciary and in
regard to property forming the subject matter of the agency, he is
estopped from acquiring or asserting a title adverse to that of the
principal. His position is analogous to that of a trustee and he
cannot consistently, with the principles of good faith, be allowed
to create in himself an interest in opposition to that of his
principal or cestui que trust.
8. FEDERICO VALERA VS. MIGUEL VELASCO
G.R. No. L-28050 March 13, 1928
FACTS OF THE CASE:
By virtue of the powers of attorney executed by the plaintiff-
appellant, the defendant-appellee was appointed attorney-in-fact
with authority to manage his property in the Philippines,
consisting of the usufruct of a real property. The liquidation of
accounts revealed that the plaintiff-appellant owed the defendant
P1,100, and as misunderstanding arose between them, the
defendant-appellee brought suit against the plaintiff-appellant .
The trial court decided in favor of agent; sheriff levied upon
plaintiff-appellants right of usufruct, sold it at public auction and
adjudicated it to defendant-appellee in payment of his claim.
Plaintiff-appellant sold his right of redemption to Eduardo
Hernandez- Hernandez conveyed the same right of redemption
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
himself-but then another person Salvador Vallejo, who had an
execution upon a judgment against the plaintiff rendered in
another case, levied upon said right of redemption- right of
redemption sold to Vallejo and was definitely adjudicated to
him. Later, he transferred the said right of redemption to
defendant-appellee. The title was consolidated in his name, thus,
the agent got the title to the right of usufruct to the
aforementioned property.
ISSUE OF THE CASE: Whether or not the agency was
terminated
RULING OF THE COURT:
YES. Art 1732- Agency is terminated by:
a) Revocation
b) Withdrawal of agent
c) Death, interdiction, bankruptcy, or insolvency of the principal
or of the agent.
While Art 1736- An agent may withdraw by giving notice
to principal. If principal suffer any damage, agent must indemnify
him unless the agents reason should be the impossibility of
continuing to act as such without serious detriment to himself.
The misunderstanding between the plaintiff and the defendant
over the payment of the balance of P1, 000 due the latter more
than prove the breach of the juridical relation between them;
For, although the agent has not expressly told his
principal that he renounced the agency, yet neither
dignity nor decorum permits the latter to continue
representing a person who has adopted such an
antagonistic attitude towards him. When the agent filed a
complaint against his principal for recovery of a sum of money
arising from the liquidation of the accounts between them in
connection with the agency, principal could not have understood
otherwise than that agent renounced the agency; because his act
was more expressive than words and could not have caused any
doubt. In order to terminate their relations by virtue of the
agency the defendant, as agent, rendered his final account on
March 31, 1923 to the plaintiff, as principal.
AGENCY CASE DIGEST
10
Briefly, then, the fact that an agent institutes an action
against his principal for the recovery of the balance in his
favor resulting from the liquidation of the accounts
between them arising from the agency, and renders and
final account of his operations, is equivalent to an express
renunciation of the agency, and terminates the juridical
relation between them.
Hence, the said agent's purchase of the aforesaid principal's right
of usufruct at public auction held by virtue of an execution issued
upon the judgment rendered in favor of the former and against
the latter, is valid and legal. Moreover, the defendant-appellee,
having acquired right of redemption from Salvador Vallejo, who
had acquired it at public auction by virtue of a writ of execution
issued upon the judgment obtained by the said Vallejo against
the said plaintiff, the latter lost all right to said usufruct. Neither
did the trial court err in not ordering the agent to render a
liquidation of accounts from March 31, 1923, inasmuch as he had
acquired the rights of the plaintiff by purchase at the execution
sale, and as purchaser, he was entitled to receive the rents from
the date of the sale until the date of the repurchase, considering
them as part of the redemption price; but not having exercised
the right repurchase during the legal period, and the title of the
re purchaser having become absolute, the latter did not have to
account for said rents.
9. JESUS MA. CUI, ET AL. v. ANTONIO MA. CUI, ET AL. [G.R.
No. L-7041. February 21, 1957.]
FACTS OF THE CASE:
Jesus and Antonio are the legitimate children of Don Mariano Cui
and Doa Antonia Perales who died intestate in1939. Jesus
alleged that during the marriage of Don Mariano and Dona
Antonia, their parents acquired certain properties in the City of
Cebu, namely, Lots Nos. 2312, 2313 and 2319. Upon the death of
their mother, the properties were placed under the administration
of their dad. that while the latter was 84 years of age, Antonio by
means of deceit, secured the transfer to themselves the said lots
without any pecuniary consideration; that in the deed of
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
sale executed on March 8, 1946, Rosario Cui appeared as one
of the vendees, but on learning of this fact she subsequently
renounced her rights under the sale and returned her portion to
Don Mariano Cui by executing a deed of resale in his favor on
October 11, 1946; that defendants, fraudulently and with the
desire of enriching themselves unjustly at the expense of their
father, Don Mariano Cui, and of their brothers and co-heirs,
secured a loan of P130,000 from the Rehabilitation properties,
and with the loan thus obtained, defendants constructed thereon
an apartment building of strong materials consisting of 14 doors,
valued at approximately P130,000 and another building on the
same parcels of land, which buildings were leased to some
Chinese commercial firms a monthly rental of P7,600, which
defendants have collected and will continue to collect to the
prejudice of the plaintiffs; Jesus alleged that the sale should be
invalidated so far as the portion of the property sold to Antonio
Cui is concerned, for the reason that when that sale was effected,
Antonio was then acting as the agent or administrator of the
properties of Don Mariano Cui. Jesus lays stress on the power of
attorney Exhibit L which was executed by Don Mariano in favor of
Antonio Cui on March 2,1946, wherein the former has constituted
the latter as his "true and lawful attorney" to perform in his name
and that of theintestate heirs of Doa Antonia Perales.
ISSUE OF THE CASE: Whether or not the sale of the property to
Antonio was valid.
RULING OF THE COURT:
YES. While under article 1459 of the old Civil Code an agent or
administrator is disqualified from purchasing property in his
hands for sale or management, and, in this case, the property in
question was sold to Antonio Cui while he was already the agent
or administrator of the properties of Don Mariano Cui, we
however believe that this question cannot now be raised
or invoked.
The prohibition of the law is contained in article 1459 of
the old Civil Code, but this prohibition has already been
removed.
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
11
Under the provisions of article 1491, section 2, of the new Civil
Code, an agent may now buy property placed in his hands for
sale or administration, provided that the principal gives his
consent thereto. While the new Code came into effect only on
August 30, 1950, however, since this is a right that is declared for
the first time, the same may be given retroactive effect if no
vested or acquired right is impaired (Article 2253, new Civil
Code). During the lifetime Don Mariano, and particularly on March
8, 1946, the herein appellants could not claim any vested or
acquired right in these properties, for, as heirs, the most they had
was a mere expectancy. We may, therefore, invoke now this
practical and liberal provision of our new Civil Code even if the
sale had taken place before its effectivity
10. ALLIED FREE WORKERS UNION VS C. MARITIMA et
al. [JAN.31, 1967]
NATURE: Petitions for review by certiorari of CIR decision
FACTS: This is a consolidation of 3 cases involving both parties
Respondent Compania Maritima (MARITIMA), a local corp.
engaged in shipping entered into a contract for lease of services
with petitioner Allied Free Workers Union (AFWU), a duly
registered legitimate labor union. In the contract, it was
stipulated that AFWU will do and perform all the work of
stevedoring and arrastre services of all vessels or boats of
MARITIMA in Iligan City; that the contract is good and valid for 1
month starting Aug.12, 1952, but may be renewed by agreement
of the parties with the reservation that MARITIMA has the right to
revoke said contract even before the expiration of the term, if and
when AFWU fails to render good service.
Towards the end of 1953, MARITIMA complained to AFWU of
unsatisfactory and inefficient service. To remedy the situation,
MARITIMA was forced to hire extra laborers from among stand-
by workers not affiliated to any union.
On July 1954, AFWU sent a written proposal to MARITIMA for a
CBA, but the latter did not reply. Thereafter, AFWU instituted an
action in the CIR praying that it be certified as the sole and
exclusive bargaining unit composed of all the laborers doing
arrastre and stevedoring work for MARITIMA, to which action
MARITIMA answered, alleging lack of EREE relationship. On
Aug.1954, MARITIMA informed AFWU of the termination of the
contract because of the inefficient service rendered by the latter
which had adversely affected its business. The termination was to
take effect as of Sept.1, 1954. MARITIMA then contracted with the
Iligan Stevedoring Union for the arrastre and stevedoring work.
The latter agreed to perform the work subject to the same terms
and conditions of the contract with AFWU. The new agreement
was to be carried out on Sept.1, 1954.
On Aug.26, 1954, AFWU charged MARITIMA of unfair labor
practices (ULPs) before the CIR. MARITIMA answered, again
denying the ER-EE relationship between the parties. On Sept.9,
1954, MARITIMA filed an action to rescind the contract, enjoin
AFWU members from doing arrastre and stevedoring work in
connection with its vessels, and for recovery of damages against
AFWU and its officers. The CFI ordered the rescission of the
contract and permanently enjoined AFWU members from
performing work in connection with MARITIMAs vessels.
AFWU was later able to secure a writ of preliminary injunction
ordering the maintenance of the status quo prior to Jan.6, 1961.
Thus, after Jan.18, 1961, AFWU laborers were again back doing
the same work as before.
On Nov.4, 1963, after almost 10 years, the CFI finally rendered its
decision: In pursuance of the provisions of Sec.12 of R.A. 875 and
the Rules of this court on certification election, the Honorable
Secretary of Labor or any of his authorized representative is
hereby requested to conduct certification election among all the
workers and/or stevedores working in the wharf of Iligan City who
are performing stevedoring and arrastre service aboard
Compania Maritima vessels docking at Iligan City port in order to
determine their representative for collective bargaining with the
employer, whether these desire to be represented by the
petitioner Allied Free Workers Union or neither; and upon
AGENCY CASE DIGEST
12
termination of the said election, the result thereof shall forthwith
be submitted to this court for further consideration. From this
ruling, both parties appealed, AFWU claiming that it should be
declared outright as the majority union while MARITIMA contends
that said court could not even have correctly ordered a
certification election considering that there was an absence of
ER-EE relationship between it and said laborers.
ISSUE OF THE CASE: Whether or not the order of a certification
election by the CIR was proper. (WON there was an ER-EE
relationship between AFWU and MARITIMA)
RULING OF THE COURT:
NO. Before a certification election can be held, there must exist
an ER-EE relationship between the ER and the petitioner union.
Ratio The duty to bargain collectively exists only between the
employer and its employees. Where there is no duty
to bargain collectively, it is not proper to hold certification
elections in connection therewith. Reasoning In its findings, the
CIR observed that after the rescission, the AFWU laborers
continued working in accordance with the cabo system, which
was the prevailing custom in the place. Under this system, the
union was an independent contractor. The CIR also made a
finding that prior to the contract between MARITIMA and AFWU,
the former had an oral arrastre and stevedoring agreement with
another union, the Iligan Laborers Union (ILU), which agreement
was also based on the cabo system. After unsatisfactory
service, MARITIMA cancelled this oral contract and entered into a
new contract with AFWU, the terms and conditions of which were
similar to the oral contract with ILU. The written contract between
AFWU and MARITIMA was signed under the assurance by AFWU
that the same arrangement previously had with the former union
regarding performance and execution of arrastre and stevedoring
contract be followed in accordance with the custom of such kind
of work in Iligan. Thus, petitioner union operated as a labor
contractor under the so-called cabo system. Now, in its all-
out endeavor to make an "employer" out of MARITIMA,
AFWU citing an impressive array of jurisprudence, even
goes to the extent of insisting that it be considered a
mere "agent" of MARITIMA. Suffice it to say on this point
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
that an agent can not represent two conflicting interests
that are diametrically opposed. And that the cases sought
to be relied upon did not involve representatives of
opposing interests.
From these findings, Insofar as the working agreement was
concerned, there was no real difference between the contract and
the prior oral agreement. Both were based on the cabo system.
Hence, since the parties observed the cabo system after the
rescission of the contract, and since the characteristics of said
system show that the contracting union was an independent
contractor, it is reasonable to assume that AFWU continued being
an independent contractor of MARITIMA. And, being an
independent contractor, it could not qualify as an employee.
With more reason would this be true with respect to the laborers.
Moreover, there is no evidence at all regarding the characteristics
of the working arrangement between AFWU and MARITIMA after
the termination of the CONTRACT. All we have to go on is the
court a quos finding that the cabo system was observed-a
system that negatives employment relationship.
Since the only function of a certification election is to determine,
with judicial sanction, which union shall be the official
representative or spokesman of the employees will be, there
being no ER-EE relationship between the parties disputants, it
follows that there is neither a duty to bargain collectively. Thus,
the order for certification election in question cannot be
sustained.
Disposition
Appealed decision of the CIR is AFFIRMED insofar as it dismissed
the charge of ULP, but REVERSED and SET ASIDE insofar as it
ordered the holding of a certification election. The petition for
certification election should be DISMISSED.
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
13
11. FAR EASTERN EXPORT & IMPORT CO., vs. LIM TECK involved was found by the court to be one of purchase and sale
SUAN; G.R. No. L-7144; May 31, 1955 and not of brokerage or agency.
FACTS OF THE CASE:
Sometime in November, 1948, Ignacio Delizalde, an agent of
the Far Eastern Export & Import Company, went to the
store of Lim Teck Suan situated at 267 San Vicente Street,
Manila, and offered to sell textile, showing samples thereof,
and having arrived at an agreement with Bernardo Lim, the
General Manager of Lim Teck Suan, Delizalde returned on
November 17 with the buyer's order. plaintiff established a letter
of credit No. 6390 (Exhibit B) in favor of Frenkel International
Corporation through the Hongkong and Shanghai Bangking
Corporation, attached to the agreed statement of facts.
On February 11, 1949, the textile arrived at Manila on board the
vessel M. S. Arnold Maersk. The plaintiff complained to the
defendant of the inferior quality of the textile received by him
and had them examined by Marine Surveyor Del Pan & Company.
Upon instructions of the defendants plaintiff deposited the goods
with the United Warehouse Corporation. As per suggestion of the
Far Eastern Export and Import Company contained in its letter
dated June 16, 1949, plaintiff withdrew from the United Bonded
Warehouse, Port Area, Manila, the fifteen cases of Ashtone
Acetate and Rayon Suiting for the purpose of offering them for
sale which netted P11,907.30. Deducting this amount from the
sum of P23,686.96 which included the amount paid by plaintiff for
said textile and the warehouse expenses, a difference of
P11,476.66 is left, representing the net direct loss.
The defense set up is that the Far Eastern Export and Import
Company only acted as a broker in this transaction; that after
placing the order the defendants took no further action and the
cargo was taken directly by the buyer Lim Teck Suan, the
shipment having been made to him and all the documents were
also handled by him directly without any intervention on the part
of the defendants; The trial court acquitted defendants. CA
reversed judgement on the case of Jose Velasco, vs. Universal
Trading Co., Inc., 45 Off. Gaz. 4504 where the transaction therein
ISSUE OF THE CASE: Whether or not Far Eastern is liable to the
direct loss and acted as an agent
RULING OF THE COURT:
In the present case, the export company acted as agent for
Frenkel International Corporation, presumably the supplier of the
textile sold. In the Velasco case, the Universal Trading Co., was
acting as agent for A. J. Wilson Company, also the supplier of the
whisky sold. In the present case, Suan according to the first part
of the agreement is said merely to be commissioning the Export
Company to procure for him the merchandise in question, just as
in the other case, Velasco was supposed to be ordering the
whisky thru the Universal Trading Co. In the present case, the
price of the merchandise bought was paid for by Suan by means
of an irrevocable letter of credit opened in favor of the supplier,
Frenkel International Corporation. In the Velasco case, Velasco
was given the choice of either opening a similar irrevocable letter
of credit in favor of the supplier A. J. Wilson Company or making a
cash deposit.
It is true that in the Velasco case, upon the arrival of the whisky
and because it did not conform to specifications, Velasco refused
to received it; but in the present case although Suan received
the merchandise he immediately protested its poor
quality and it was deposited in the warehouse and later
withdrawn and sold for the best price possible, all at the
suggestion of the Export company. The present case is in our
opinion a stronger one than that of Velasco for holding the
transaction as one of purchase and sale because as may be
noticed from the agreement (Exhibit "A"), the same speaks of the
items (merchandise) therein involved as sold, and the sale was
even confirmed by the Export company. In both cases, the agents
Universal Trading Co. and the export company dealt directly with
the local merchants Velasco and Suan without expressly
indicating or revealing their principals. In both cases there was no
privity of contract between the buyers Suan and Velasco and
AGENCY CASE DIGEST
14
the suppliers Frenkel International Corporation and A. J. Wilson
Company, respectively. In both cases no commission or monetary
consideration was paid or agreed to be paid by the buyers to the
Export company and the Universal Trading Co., proof that there
was no agency or brokerage, and that the profit of the latter was
undoubtedly the difference between the price listed to the buyers
and the net or special price quoted to the sellers, by the
suppliers. As already stated, it was held in the Velasco case
that the transaction therein entered into was one of
purchase and sale, and for the same reasons given there,
we agreed with the Court of Appeals that the transaction
entered into here is one of purchase and sale.
As was held by this Tribunal in the case of Gonzalo Puyat & Sons
Incorporated vs. Arco Amusement, 72 Phil., 402, where a
foreign company has an agent here selling its goods and
merchandise, that same agent could not very well act as
agent for local buyers, because the interests of his
foreign principal and those of the buyer would be in direct
conflict. He could not serve two masters at the same time.
In the present case, the Export company being an agent
of the Frenkel International Corporation could not, as it
claims, have acted as an agent or broker for Suan.
12. NIELSON&CO VS LEPANTO CONSOLIDATED MINING CO.
FACTS: An operating agreement was executed before World War
II (on 30 January 1937) between Nielson & Co. Inc. and the
Lepanto Consolidated Mining Co. whereby the former operated
and managed the mining properties owned by the latter for a
management fee of P2,500.00 a month and a 10% participation in
the net profits resulting from the operation of the mining
properties, for a period of 5 years.
In the latter part of 1941, the parties agreed to renew the
contract for another period of 5 years, but in the mean time, the
Pacific War broke out in December 1941.
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
In January 1942 operation of the mining properties was disrupted
on account of the war. The mill, power plant, supplies on hand,
equipment, concentrates on hand and mines, were destroyed.
The Japanese forces thereafter occupied the mining properties,
operated the mines during the continuance of the war.
After the mining properties were liberated from the Japanese
forces, LEPANTO took possession thereof and embarked in
rebuilding and reconstructing the mines and mill. On 26 June
1948 the mines resumed operation under the exclusive
management of LEPANTO.
Shortly after the mines were liberated from the Japanese invaders
in 1945, a disagreement arose between NIELSON and LEPANTO
over the status of the operating contract which as renewed
expired in 1947. Under the terms thereof, the management
contract shall remain in suspense in case fortuitous event or force
majeure, such as war or civil commotion, adversely affects the
work of mining and milling.
On 6 February 1958, NIELSON brought an action against LEPANTO
to recover certain sums of money representing damages
allegedly suffered by the former in view of the refusal of the latter
to comply with the terms of a management contract.
The Trial Court dismissed the complaint.
The Supreme Court reversed the decision. It held that the war
suspended the contract by virtue of the force majeure clause. And
that the intention of the parties regarding the meaning and usage
concerning the force majeure clause meant the extension of the
same for a period equivalent to the suspension.
In this motion for reconsideration, LEPANTO advances a new
theory. It now asserts that the management contract in question
is a contract of agency such that it has the right to revoke and
terminate the said contract, as it did terminate the same, under
the law of agency, and particularly pursuant to Article 1733 of the
Old Civil Code (Article 1920 of the New Civil Code).
ISSUE: W/N the management contract is a contract of agency or
a contract of lease of services.
HELD: Contract of lease of services
Contract of Agency v Contract of Lease of Services:
AGENCY CASE DIGEST
15
Article 1709 of the Old Civil Code, defining contract of agency,
provides that "By the contract of agency, one person binds
himself to render some service or do something for the account or
at the request of another."
Article 1544, defining contract of lease of service, provides that
"In a lease of work or services, one of the parties binds himself to
make or construct something or to render a service to the other
for a price certain."
It is true that the management contract provides that Nielson
would also act as purchasing agent of supplies and enter into
contracts regarding the sale of mineral, but the contract also
provides that Nielson could not make any purchase, or sell the
minerals, without the prior approval of Lepanto. It is clear,
therefore, that even in these cases Nielson could not execute
juridical acts which would bind Lepanto without first securing the
approval of Lepanto. Nielson, then, was to act only as an
intermediary, not as an agent.
From the provision of paragraph XI of the management contract,
Lepanto could not terminate the agreement at will. Lepanto could
terminate or cancel the agreement by giving notice of termination
ninety days in advance only in the event that Nielson should
prosecute in bad faith and not in accordance with approved
mining practice the operation and development of the mining
properties of Lepanto. Lepanto could not terminate the
agreement if Nielson should cease to prosecute the operation and
development of the mining properties by reason of acts of God,
strike and other causes beyond the control of Nielson. The
management contract in question is not revocable at the will of
Lepanto. It is not a contract of agency as defined in Article 1709
of the old Civil Code, but a contract of lease of services as defined
in Article 1544 of the same Code. This contract can not be
unilaterally revoked by Lepanto.
13. SHELL CO OF THE PHIL Ltd VS FIREMENS INSURANCE
OF NEWARK
FACTS: This case is about an action for recovery of sum of
money, based on the alleged negligence of the defendants.
A car was brought to a Shell gasoline station owned by Dela
Fuente for washing and greasing. The car was placed on a
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
hydraulic lifter for greasing. As some parts of the car couldnt be
reached by the greaseman, the lifter was lowered. Unfortunately,
for unknown reasons (probably due to mechanical failure or
human error), while the lifter was being lowered, the car swung
and fell from the platform. Said car was insured against loss or
damage by Firemen's Insurance Company of Newark, New Jersey,
and Commercial Casualty Insurance Company jointly for the sum
of P10,000. The insurance companies after paying the sum of
P1,651.38 for the damage and charging the balance of P100.00 to
Salvador Sison, in accordance with the terms of the insurance
contract, filed this action together with said Salvador Sison for the
recovery of the total amount of the damage from the defendants
on the ground of negligence.
ISSUE: W/N Dela Fuente is merely an agent of Shell Co.
HELD: Yes. De la Fuente was the operator of the station "by
grace" of the Defendant Company which could and did remove
him as it pleased; that all the equipments needed to operate the
station was owned by the Defendant Company which took charge
of their proper care and maintenance, despite the fact that they
were loaned to him; that the Defendant company did not leave
the fixing of price for gasoline to De la Fuente; That the service
station belonged to the company and bore its trade name and the
operator sold only the products of the company; that the
equipment used by the operator belonged to the company and
were just loaned to the operator and the company took charge of
their repair and maintenance.
As the act of the agent or his employees acting within the scope
of his authority is the act of the principal, the breach of the
undertaking by the agent is one for which the principal is
answerable. The latter was negligent and the company must
answer for the negligent act of its mechanic which was the cause
of the fall of the car from the hydraulic lifter.
14. SEVILLA VS CA
FACTS: On Oct. 19, 1960, the Tourist World Service, Inc. leased
an office at Mabini St., Manila for the former's use as a branch
office. When the branch office was opened, the same was run by
the herein appellant Lina O. Sevilla payable to Tourist World
AGENCY CASE DIGEST
16
Service Inc. by any airline for any fare brought in on the efforts of
Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc.
On or about November 24, 1961, the Tourist World Service, Inc.
appears to have been informed that Lina Sevilla was connected
with a rival firm, the Philippine Travel Bureau, and, since the
branch office was anyhow losing, the Tourist World Service
considered closing down its office.
This was firmed up by two resolutions of the board of directors of
Tourist World Service, Inc. dated Dec. 2, 1961, the first abolishing
the office of the manager and vice-president of the Tourist World
Service, Inc., Ermita Branch, and the second, authorizing the
corporate secretary to receive the properties of the Tourist World
Service then located at the said branch office. It further appears
that on Jan. 3, 1962, the contract with the appellees for the use of
the Branch Office premises was terminated and while the
effectivity thereof was Jan. 31, 1962, the appellees no longer used
it. As a matter of fact appellants used it since Nov. 1961. Because
of this, and to comply with the mandate of the Tourist World
Service, the corporate secretary Gabino Canilao went over to the
branch office, and, finding the premises locked, and, being unable
to contact Lina Sevilla, he padlocked the premises on June 4,
1962 to protect the interests of the Tourist World Service.
When neither the appellant Lina Sevilla nor any of her employees
could enter the locked premises, a complaint was filed by the
herein appellants against the appellees with a prayer for the
issuance of mandatory preliminary injunction. Both appellees
answered with counterclaims. For apparent lack of interest of the
parties therein, the trial court ordered the dismissal of the case
without prejudice.
ISSUE: W/N the act of Tourist World Service in abolishing its
Ermita branch proper
HELD: No. The Supreme Court held that when the petitioner,
Lina Sevilla, agreed to manage Tourist World Service, Inc.'s Ermita
office, she must have done so pursuant to a contract of agency.
In the case at bar, Sevilla solicited airline fares, but she did so for
and on behalf of her principal, Tourist World Service, Inc. As
compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself, based on her letter
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
of November 28, 1961, presumed her principal's authority as
owner of the business undertaking. We are convinced, considering
the circumstances and from the respondent Court's recital of
facts, that the parties had contemplated a principal-agent
relationship, rather than a joint management or a partnership.
But unlike simple grants of a power of attorney, the agency that
we hereby declare to be compatible with the intent of the parties,
cannot be revoked at will. The reason is that it is one coupled with
an interest, the agency having been created for the mutual
interest of the agent and the principal. Accordingly, the
revocation complained of should entitle the petitioner, Lina
Sevilla, to damages
15. LIM VS PEOPLE
FACTS: The appellant is a businesswoman. on January 10, 1966,
the appellant went to the house of Maria Ayroso and proposed to
sell Ayroso's tobacco. Ayroso agreed to the proposition of the
appellant to sell her tobacco consisting of 615 kilos at P1.30 a
kilo. The appellant was to receive the overprice for which she
could sell the tobacco. This agreement was made in the presence
of plaintiff's sister, Salud G. Bantug. Salvador Bantug drew the
document, Exh. A, dated January 10, 1966, which reads:
'To Whom It May Concern:
This is to certify that I have received from Mrs. Maria de Guzman
Vda. de Ayroso, of Gapan, Nueva Ecija, six hundred fifteen kilos of
leaf tobacco to be sold at P1.30 per kilo. The proceed in the
amount of Seven Hundred Ninety Nine Pesos and 50/100
(P799.50) will be given to her as soon as it was sold.'
This was signed by the appellant and witnessed by the
complainant's sister, Salud Bantug, and the latter's maid,
Genoveva Ruiz. The appellant at that time was bringing a jeep,
and the tobacco was loaded in the jeep and brought by the
appellant. Of the total value of P799.50, the appellant had paid to
Ayroso only P240.00, and this was paid on three different times.
Demands for the payment of the balance of the value of the
tobacco were made upon the appellant by Ayroso, and
particularly by her sister, Salud Bantug. Salud Bantug further
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
17
testified that she had gone to the house of the appellant several
times, but the appellant often eluded her; and that the 'camarin'
of the appellant was empty. Although the appellant denied that
demands for payment were made upon her, it is a fact that on
October 19, 1966, she wrote a letter to Salud Bantug which reads
as follows:
'Dear Salud,
'Hindi ako nakapunta dian noon a 17 nitong nakaraan, dahil
kokonte pa ang nasisingil kong pera, magintay ka hanggang dito
sa linggo ito at tiak na ako ay magdadala sa iyo. Gosto ko Salud
ay makapagbigay man lang ako ng marami para hindi masiadong
kahiyahiya sa iyo. Ngayon kung gosto mo ay kahit konte muna ay
bibigyan kita. Pupunta lang kami ni Mina sa Maynila ngayon.
Salud kuug talagang kailangan mo ay bukas ay dadalhan kita ng
pera.
'Medio mahirap ang maningil sa palengke ng Cabanatuan dahil
nagsisilipat ang mga suki ko ng puesto. Huwag kang mabahala at
tiyak na babayaran kita.
'Patnubayan tayo ng mahal na panginoon Dios. (Exh. B).
Ludy'
"Pursuant to this letter, the appellant sent a money order for
P100.00 on October 24, 1967, Exh. 4, and another for P50.00 on
March 8, 1967; and she paid P90.00 on April 18, 1967 as
evidenced by the receipt Exh. 2, dated April 18, 1967, or a total of
P240.00. As no further amount was paid, the complainant filed a
complaint against the appellant for estafa.
ISSUE: W/N court erred in holding that the transaction is a
contract of agency to sell
HELD: NO. It is clear in the agreement, Exhibit "A", that the
proceeds of the sale of the tobacco should be turned over to the
complainant as soon as the same was sold, or, that the obligation
was immediately demandable as soon as the tobacco was
disposed of. Hence, Article 1197 of the New Civil Code, which
provides that the courts may fix the duration of the obligation if it
does not fix a period, does not apply.
Anent the argument that petitioner was not an agent because
Exhibit "A" does not say that she would be paid the commission if
the goods were sold, the Court of Appeals correctly resolved the
matter as follows: LLpr
" . . . Aside from the fact that Maria Ayroso testified that the
appellant asked her to be her agent in selling Ayroso's tobacco,
the appellant herself admitted that there was an agreement that
upon the sale of the tobacco she would be given something. The
appellant is a businesswoman, and it is unbelievable that she
would go to the extent of going to Ayroso's house and take the
tobacco with a jeep which she had brought if she did not intend to
make a profit out of the transaction. Certainly, if she was doing a
favor to Maria Ayroso and it was Ayroso who had requested her to
sell her tobacco, it would not have been the appellant who would
have gone to the house of Ayroso, but it would have been Ayroso
who would have gone to the house of the appellant and deliver
the tobacco to the appellant." (p. 19, Rollo)
The fact that appellant received the tobacco to be sold at P1.30
per kilo and the proceeds to be given to complainant as soon as it
was sold, strongly negates transfer of ownership of the goods to
the petitioner. The agreement (Exhibit "A") constituted her as an
agent with the obligation to return the tobacco if the same was
not sold.
ACCORDINGLY, the petition for review on certiorari is dismissed
for lack of merit.
16. SAN DIEGO v NOMBRE (Yap)
Facts: Respondent Adelo Nombre was the duly constituted
judicial administrator. As such, he leased one of the properties of
the estatea fishpondto Pedro Escanlar, the other respondent.
The terms of the lease was for 3 years, with a yearly rental of
P3,000. The transaction was done without previous authority or
approval of the Court. A year after, Nombre was removed as
administrator, and was replaced by one Sofronio Campillanos.
Escalanlar was cited for contempt for allegedly refusing to
surrender the fishpond to the newly appointed administrator.
Subsequently, Campillanos filed a motion for authority to execute
a lease contract over the fishpond, in favor of petitioner Moises
AGENCY CASE DIGEST
18
San Diego, for 5 years with yearly rental of P5,000. Escalanlar was
not notified of the said motion. Nombre, on the other hand,
opposed to the motion, pointing out that the fishpond was leased
by him to Escalandar for 3 years. He alleged that the validity of
the lease contract entered into by a judicial administrator must be
recognized unless declared void in a separate action.
The lower court declared the contract in favor of Escanlar null and
void for want of judicial authority and that San Diego offered
better lease conditions than Escanlar. In light of this, Escanlar
agreed to increase the rental to P5,000 after the termination of
his original contract. However, the trial judge stated that such
contract was fraudulent and executed in bad faith because
Nombre was removed as administrator and the rentals of the
property was inadequate.
However, on appeal, the CA ruled:
No such limitation on the power of a judicial administrator to
grant lease of property placed under his custody is provided for in
the present law. Under Art. 1647, it is only when the lease is to be
recorded in the Registry of Property that it cannot be instituted
without special authority. Thus, regardless of the period of lease,
there is no need for special authority unless the contract is to be
recorded in the Registry.
Rule 85, Sec. 3 of the ROC authorizes a judicial administrator to
administer the estate of the deceased not disposed by will, for
purposes of liquidation and distribution. He may, therefore,
exercise all acts of administration without special authority of the
Court; such as the leasing the property. And where the lease has
been formally entered into, the court cannot, in the same
proceeding, annul the same. The proper remedy would be a
separate action by the administrator or the heirs to annul the
lease.
On appeal to the SC, petitioner contends that Art. 1878(8) limits
the right of a judicial administrator to lease the real property
without prior court authority and approval, if it exceeds 1 year.
The lease in favor of Escalanlar, being 3 years and without court
approval, is therefore void.
ISSUE: W/N the provisions on Agency should apply in this
case
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
HELD: No.
The provisions on agency should not apply to a judicial
administrator. A judicial administrator is appointed by the court.
He is not only the representative of said Court, but also the heirs
and creditors of the estate. Before entering into his duties, he is
required to file a bond. These circumstances are not required in
agency. The agent is only answerable to his principal. The
protection which law gives the principal in limiting the powers and
rights of an agent stems from the fact that control by the
principal can only be through agreements. Whereas, the acts of a
judicial administrator are subject to specific provisions of law and
orders of the appointing court.
17. DELA PENA VS HIDALGO
18. CONDE vs. CA
Facts: On 7 April 1938, Margarita Conde, Bernardo Conde and
Dominga Conde, as heirs of Santiago Conde, sold with right to
repurchase, within 10 years from said date, a 1 hectare parcel of
agricultural land situated in Burauen, Leyte to Casimira Pasagui
and Pio Altera for P165. Three years later, Original Certificate of
Title No. N-534 covering the land in question was issued in the
name of the Alteras subject to the stipulated right of repurchase
by the Condes. On 28 November 1945, Paciente Cordero, son-in-
law of the Alteras and their representative, signed a document in
Bisaya stating that the Memorandum of Repurchase got lost
during World War II despite all diligent searches being made; that
the two parcels of land were inherited by the Condes; that
Eusebio Amarille was authorized by the Condes to repurchase the
land; that they received P165 in consideration of the sale; and
that the Condes, by virtue of the repurchase, shall repossess the
said parcels of land. Neither the vendees-a-retro, Pio Altera nor
Casimira Pasagui, were signatories to that document. Many years
later, the pacto de retro document was found. In June 1965, Pio
Altera sold the disputed lot to Ramon and Catalina Conde, whose
relationship to Dominga does not appear on record.
Consequently, in 1969, Dominga filed with the CFI of Leyte a
complaint for quieting of title and declaration of ownership
against all the respondents. The trial court dismissed the
AGENCY CASE DIGEST
19
complaint and ordered Dominga to vacate the premises and to
deliver the disputed land to respondents. The Court of Appeals
affirmed the decision and ruled that Dominga failed to validly
exercise her right to repurchase because the Memorandum of
Repurchase was not signed by the Alteras but by Paciente, who
was not authorized to sign for the said vendees-a-retro.
ISSUE: Whether or not there was an implied agency when
Cordero signed the Memorandum of Repurchase.
HELD: Yes. Although the contending parties were legally wanting
in their respective actuations, for example Dominga did nothing
to formalize her repurchase while the Alteras did nothing to clear
their title of the encumbrance therein regarding Domingas right
to repurchase, the repurchase by Dominga is supported by her
admission that she had been in possession since 1945, the date
of the repurchase, and has been paying land taxes thereon since
then. No new agreement was entered into by the parties as
stipulated in the deed of pacto de retro, if the vendors-a-retro
failed to exercise their right of redemption within 10 years. If, as
alleged, Dominga did not exert an effort to procure Pio Alteras
signature after he had recovered from illness, neither did the
Alteras repudiate the deed signed by their son-in-law for 24 years,
from which the Alteras are deemed to have incurred in laches.
Thus, an implied agency must have been held to have been
created by their silence or lack of action, or their failure to
repudiate the agency created. (Art. 1869, New Civil Code).
Wherefore, Dominga is declared the owner of the land in
question.
19. HARRY E. KEELER ELECTRIC CO., INC., plaintiff-
appellant, vs. DOMINGO RODRIGUEZ, defendant-appellee.
Facts: The plaintiff is a domestic corporation with its principal
office in the city of Manila and engaged in the electrical business,
and among other things in the sale of what is known as the
"Matthews" electric plant, and the defendant is a resident of
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
Talisay, Occidental Negros, and A. C. Montelibano was a resident
of Iloilo.
Having this information, Montelibano approached plaintiff at its
Manila office, claiming that he was from Iloilo and lived with
Governor Yulo; that he could find purchaser for the "Matthews"
plant, and was told by the plaintiff that for any plant that he could
sell or any customer that he could find he would be paid a
commission of 10 per cent for his services, if the sale was
consummated. Among other persons. Montelibano interviews the
defendant, and, through his efforts, one of the "Matthews" plants
was sold by the plaintiff to the defendant, and was shipped from
Manila to Iloilo, and later installed on defendant's premises after
which, without the knowledge of the plaintiff, the defendant paid
the purchase price to Montelibano. As a result, plaintiff
commenced this action against the defendant, alleging that about
August 18, 1920, it sold and delivered to the defendant the
electric plant at the agreed price of P2,513.55 no part of which
has been paid, the demands judgment for the amount with
interest from October 20, 1920.
For answer, the defendant admits the corporation of the plaintiff,
and denies all other material allegations of the complaint, and, as
an affirmative defense, alleges "that on or about the 18th of
August, 1920, the plaintiff sold and delivered to the defendant a
certain electric plant and that the defendant paid the plaintiff the
value of said electric plant, to wit: P2,513.55."
Upon such issues the testimony was taken, and the lower court
rendered judgment for the defendant, from which the plaintiff
appeals, claiming that the court erred in holding that the payment
to A. C. Montelibano would discharge the debt of defendant, and
in holding that the bill was given to Montelibano for collection
purposes, and that the plaintiff had held out Montelibano to the
defendant as an agent authorized to collect, and in rendering
judgment for the defendant, and in not rendering judgment for
the plaintiff.
Issue: WON MONTELIBANO is authorized to receive payment?
Held: No. There is no evidence that the plaintiff ever delivered
any statements to Montelibano, or that he was authorized to
AGENCY CASE DIGEST
20
receive or receipt for the money, and defendant's own telegram
shows that the plaintiff "did not present bill" to defendant. He now
claims that at the very time this telegram was sent, he had the
receipt of Montelibano for the money upon the identical
statement of account which it is admitted the plaintiff did render
to the defendant.
Article 1162 of the Civil Code provides:
Payment must be made to the persons in whose favor the
obligation is constituted, or to another authorized to
receive it in his name.
And article 1727 provides:
The principal shall be liable as to matters with respect to
which the agent has exceeded his authority only when he
ratifies the same expressly or by implication.
Mechem on Agency, volume I, section 743, says:
In approaching the consideration of the inquiry whether an
assumed authority exist in a given case, there are certain
fundamental principles which must not be overlooked. Among
these are, as has been seen, (1) that the law indulges in no
bare presumptions that an agency exists: it must be
proved or presumed from facts; (2) that the agent cannot
establish his own authority, either by his representations
or by assuming to exercise it; (3) that an authority cannot
be established by mere rumor or general reputation;
(4)that even a general authority is not an unlimited one;
and (5) that every authority must find its ultimate source
in some act or omission of the principal. An assumption of
authority to act as agent for another of itself challenges
inquiry. Like a railroad crossing, it should be in itself a sign of
danger and suggest the duty to "stop, look, and listen." It is
therefore declared to be a fundamental rule, never to be lost sight
of and not easily to be overestimated, that persons dealing with
an assumed agent, whether the assumed agency be a general or
special one, are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the agency but the
nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
. . . It is, moreover, in any case entirely within the power of the
person dealing with the agent to satisfy himself that the agent
has the authority he assumes to exercise, or to decline to enter
into relations with him. (Melchem on Agency, vol. I, sec. 746.)
The person dealing with the agent must also act with ordinary
prudence and reasonable diligence. Obviously, if he knows or has
good reason to believe that the agent is exceeding his authority,
he cannot claim protection. So if the suggestions of probable
limitations be of such a clear and reasonable quality, or if the
character assumed by the agent is of such a suspicious or
unreasonable nature, or if the authority which he seeks to
exercise is of such an unusual or improbable character, as would
suffice to put an ordinarily prudent man upon his guard, the party
dealing with him may not shut his eyes to the real state of the
case, but should either refuse to deal with the agent at all, or
should ascertain from the principal the true condition of affairs.
(Mechem on Agency, vol. I, sec 752.)
And not only must the person dealing with the agent ascertain
the existence of the conditions, but he must also, as in other
cases, be able to trace the source of his reliance to some word or
act of the principal himself if the latter is to be held responsible.
As has often been pointed out, the agent alone cannot enlarge or
extend his authority by his own acts or statements, nor can he
alone remove limitations or waive conditions imposed by his
principal. To charge the principal in such a case, the principal's
consent or concurrence must be shown. (Mechem on Agency, vol.
I, section 757.)
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
21
20. RALLOS VS. YANGCO
Facts: the plaintiffs proceeded to do a considerable business with
the defendant through the said Collantes, as his factor, sending to
him as agent for the defendant a good deal of produce to be sold
on commission. Later, and in the month of February, 1909, the
plaintiffs sent to the said Collantes, as agent for the defendant,
218 bundles of tobacco in the leaf to be sold on commission, as
had been other produce previously. The said Collantes received
said tobacco and sold it for the sum of P1,744. The charges for
such sale were P206.96. leaving in the hands of said Collantes the
sum of P1,537.08 belonging to the plaintiffs. This sum was,
apparently, converted to his own use by said agent.
It appears, however, that prior to the sending of said tobacco the
defendant had severed his relations with Collantes and that the
latter was no longer acting as his factor. This fact was not known
to the plaintiffs; and it is conceded in the case that no notice of
any kind was given by the defendant to the plaintiffs of the
termination of the relations between the defendant and his agent.
The defendant refused to pay the said sum upon demand of the
plaintiffs, placing such refusal upon the ground that at the time
the said tobacco was received and sold by Collantes he was
acting personally and not as agent of the defendant. This action
was brought to recover said sum.
Issue: WON whether or not the plaintiffs, acting in good
faith and without knowledge, having sent produce to sell
on commission to the former agent of the defendant, can
recover of the defendant under the circumstances above
set forth
HELD:
YES. We are of the opinion that the defendant is liable. Having
advertised the fact that Collantes was his agent and having given
them a special invitation to deal with such agent, it was the duty
of the defendant on the termination of the relationship of
principal and agent to give due and timely notice thereof to the
plaintiffs. Failing to do so, he is responsible to them for whatever
goods may have been in good faith and without negligence sent
to the agent without knowledge, actual or constructive, of the
termination of such relationship.
21. B. H. MACKE ET AL V JOSE CAMPS
FACTS: B. H. Macke and W.H. Chandler, partners doing business
under thee firm name of Macke, Chandler And Company, allege
that during the months of February and March 1905, they sold to
Jose Camps and delivered at his place of business, known as
the :Washington Caf, various bills of goods amounting to
P351.50; that Camps has only paid on account of said goods the
sum of P174; that there is still due them on account of said goods
the sum of P177.50
Plaintiffs made demand for the payment from defendant and that
the latter failed and refused to pay the said balance or any part of
it
Macke, one of the plaintiffs, testified that on the order of one
Ricardo Flores, who represented himself to be the agent of Jose
Camps, he shipped the said goods to the defendant at the
Washington Caf; that Flores (agent) later acknowledged the
receipt of the said goods and made various payments thereon
amounting in all to P174; that believes that Flores is still the
agent of Camps; and that when he went to the Washington Caf
for the purpose of collecting his bill he found Flores, in the
absence of Camps, apparently in charge of the business and
claiming to be the business manager of Camps, said business
being that of a hotel with a bar and restaurant annexed.
AGENCY CASE DIGEST
22
A written contract was introduced as evidence, from which it
appears that one Galmes, the former of Washington Caf
subrented the building wherein the business was conducted, to
Camps for 1 year for the purpose of carrying on that business,
Camps obligating himself not to sublet or subrent the building or
the business without the consent of the said Galmes. *This
contract was signed by Camps and the name of Ricardo Flores as
a witness and attached thereon is an inventory of the furniture
and fittings which also is signed by Camps with the word
sublessee below the name, and at the foot of this inventory the
word received followed by the name Ricardo Flores with the
words managing agent immediately following his name.
ISSUE: WON Ricardol Flores was the agent of Camps
HELD: Yes
Evidence is sufficient to sustain a finding that Flores is the agent
of Camps in the management of the bar of the Washington Caf
with authority to bind Camps, his principal, for the payment of the
goods
The contract sufficiently establishes the fact that Camps was the
owner of the business and of the bar, and the title of managing
agent attached to the signature of Flores which appears on that
contract, together with the fact that at the time the purchases
were made, Flores was apparently in charge of the business
performing the duties usually intrusted to a managing agent
leave little room for doubt that he was there as the authorized
agent of Camps.
Agency by Estoppel --- One who clothes another with apparent
authority as his agent, and holds him out to the public as such,
can not be permitted to deny the authority of such person to act
as his agent, to the prejudice of innocent third persons dealing
with such person in good faith and in the honest belief that he is
what he appears to be.
Estopple---- Whenever a party has, by his own
declaration, act or omission, intentionally and deliberately
led another to believe a particular thing true, and to act
upon such belief, he can not, in any litigation arising out
of such declaration, act, or omission be permitted to
falsify; and unless the contrary appears, the authority of
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
the agent must be presumed to include all the necessary
and usual means of carrying his agency into effect.
22. LINAN VS PUNO
FACTS: Plaintiff, was the owner of a certain parcel of land
Plaintiff executed the following document, which conferred upon
the defendant Marcos Puno the power, duties, and obligations
Contract provides that: Linan, plaintiff, confers sufficient power
upon Marcos Puno, respondent, to represent him in administering
his interest that the former possess within the municipality of
Tarlac, purchase, sell, as well as sue and be sued before any
authority, appear before the courts of justice and administrative
officers in any proceeding or business concerning the good
administration and advancement of my interests and may, in
necessary cases, appoint attorneys at law or attorneys in fact to
represent him
Puno, for the sum of P800 sold and delivered parcel of land to the
other defendants
Plaintiff alleges that the said document did not confer upon Puno
the power to sell the land and prayed that the sale be set aside
and that the land be returned to him and with damages
ISSUE: WON Puno is an agent of the plaintiff and the sale
made by the former in favor of other defendants binds the
principal/plaintiff
Held:
Puno is an agent but and has authority to sell the land,
binds principal
The Document presented did not give Puno authority to sell the
land; that the sale was illegal and void; that defendants should
return the land to the plaintiff; and that defendants should pay
plaintiff the sum of P1,000 as damages, P400 of which Puno
should be responsible for, and to pay the costs.
Puno had no authority to sell the land but only to administer the
land
Contracts of agency as well as general powers of attorney must
be interpreted in accordance with the language used by the
parties. The real intention of the parties is primarily to be
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
23
determined from the language used. The intention is to be
gathered from the whole instrument. In case of doubt, resort must
be had to the situation, surroundings and relations of the parties.
Whenever it is possible, effect is to be given to every word and
clause used by the parties. It is to be presumed that the parties
said what they intended to say and that they used each word or
clause with some purpose and that purpose, if possible to be
ascertained and enforced. The intention of the parties must be
sustained rather than defeated.
If the contract be open to two constructions, one of which would
uphold while the other would overthrow it, the former is to be
chosen. So, if by one construction the contract would be illegal,
and by another equally permissible construction it would be
lawful, the latter must be adopted. The acts of the parties in
carrying out the contract will presumed to be done in good faith.
The acts of the parties will be presumed to have been done in
conformity with and not contrary to the intent of the contract
Supreme Court: The words administer, sell, purchase etc
used in the contract seem to be used coordinately. Each has equal
force with the other. There seems to be no good reason for saying
that Puno had authority to administer and not to sell when to
sell was as advantageous to the plaintiff in the administration of
his affairs as to administer. To hold that the power was to
administer only when the power to sell was equally conferred
would be to give effect to a portion of the contract only. That
would give to special words of the contract a special and limited
meaning to the exclusion of other general words of equal import
Supreme Court: No proof that Puno acted in bad faith or
fraudulently in selling the land. It will be presumed that he acted
in good faith and in accordance with his power as he understood
it. That his interpretation of his power is tenable cannot be
successfully denied.
Supreme Court: defendants should be relieved from liability
23. JULIO DANON, plaintiff-appellee, vs. ANTONIO A.
BRIMO & CO., defendant-appellant.
Facts:
The plaintiff alleges that in the month of August, 1918, the
defendant company, through its manager, Antonio A. Brimo,
employed him to look for a purchaser of its factory known as
"Holland American Oil Co.," for the sum of P1,200,000, payable in
cash; that the defendant promised to pay the plaintiff, as
compensation for his services, a commission of five per cent on
the said sum of P1,200,000, if the sale was consummated, or if
the plaintiff should find a purchaser ready, able and willing to buy
said factory for the said sum of P1,200,000; that subsequently the
plaintiff found such a purchaser, but that the defendant refused to
sell the said factory without any justifiable motive or reason
therefor and without having previously notified the plaintiff of its
desistance or variation in the price and terms of the sale.
To that complaint the defendant interposed a general denial.
Upon the issue thus presented, the Honorable Simplicio del
Rosario, judge, after hearing and considering the evidence
adduced during the trial of the cause, rendered a judgment in
favor of the plaintiff and against the defendant for the sum of
P60,000, with costs. From that judgment the defendant appealed
to this court.
The proof with regard to the authority of the plaintiff to sell the
factory in question for the defendant, on commission, is
extremely unsatisfactory. It consists solely of the testimony of the
plaintiff, on the one hand, and of the manager of the defendant
company, Antonio A. Brimo, on the other. From a reading of their
testimony we believe that neither of them has been entirely free
from prevarications. However, after giving due weight to the
finding of the trial court in this regard and after carefully
considering the inherent probability or improbability of the
testimony of each of said witnesses, we believe we are
approximating the truth in finding: (1) That Antonio A. Brimo, in a
conversation with the plaintiff, Julio Danon, about the middle of
August, 1918, informed the latter that he (Brimo) desired to sell
his factory, the Holland American Oil Co., for the sum of
P1,200,000; (2) that he agreed and promised to pay to the
AGENCY CASE DIGEST
24
plaintiff a commission of 5 per cent provided the latter could sell
said factory for that amount; and (3) that no definite period of
time was fixed within which the plaintiff should effect the sale. It
seems that another broker, Sellner, was also negotiating the sale,
or trying to find a purchaser for the same property and that the
plaintiff was informed of the fact either by Brimo himself or by
someone else; at least, it is probable that the plaintiff was aware
that he was not alone in the field, and his whole effort was to
forestall his competitor by being the first to find a purchaser and
effect the sale. Such, we believe. was the contract between the
plaintiff and the defendant, upon which the present action is
based.
Issue: WON the plaintiff is entitled to the commission?
Held: No. The rule laid down in the foregoing case was adopted
and followed in the cases of Zeimer vs. Antisell (75 Cal. 509), and
Ayres vs. Thomas (116 Cal., 140).
The undertaking to procure a purchaser requires of the party so
undertaking, not simply to name or introduce a person who may
be willing to make any sort of contract in reference to the
property, but to produce a party capable, and who ultimately
becomes the purchaser. (Kimberly vs. Henderson and Lupton, 29
Md., 512, 515, citing: Keener vs. Harrod and Brooke, 2 Md. 63;
McGavock vs. Woodlief, 20 How., 221. See also Richards,
Executor, vs. Jackson, 31 Md., 250.)
The defendant sent a proposal to a broker in these words: If you
send or cause to be sent to me, by advertisement or otherwise,
any party with whom I may see fit and proper to effect a sale or
exchange of my real estate, above described I will pay you the
sum of $200. The broker found a person who proposed to
purchase the property, but the sale was not affected. Held: That
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
the broker was not entitled to compensation. (Walker vs. Tirrel, 3
Am. Rep., 352.)
It is clear from the foregoing authorities that, although the
present plaintiff could probably have effected the sale of the
defendant's factory had not the defendant sold it to someone
else, he is not entitled to the commissions agreed upon because
he had no intervention whatever in, and much sale in question. It
must be borne in mind that no definite period was fixed by the
defendant within which the plaintiff might effect the sale of its
factory. Nor was the plaintiff given by the defendant the exclusive
agency of such sale. Therefore, the plaintiff cannot complaint of
the defendant's conduct in selling the property through another
agent before the plaintiff's efforts were crowned with success.
"One who has employed a broker can himself sell the property to
a purchaser whom he has procured, without any aid from the
broker." (Hungerford vs. Hicks, 39 Conn., 259; Wylie vs. Marine
National Bank, 61 N.Y., 415, 416.)
Take note: A leading case on the subject is that of Sibbald vs.
Bethlehem Iron Co. (83 N. Y., 378; 38 Am. Rep., 441). In the case,
after an exhaustive review of various cases, the Court of Appeals
of New York stated the rule as follows:
In all the cases, under all and varying forms of expression, the
fundamental and correct doctrine, is, that the duty assumed by
the broker is to bring the minds of the buyer and seller to an
agreement for a sale, and the price and terms on which it is to be
made, and until that is done his right to commissions does not
accrue.
24. CONSEJO INFANTE, petitioner, vs. JOSE CUNANAN, JUAN
MIJARES and THE COURT OF APPEALS, Second
Division, respondents.|||
DOCTRINE: Oral evidence is presented to the effect that while
the agents agreed to cancel the written authority given them by
their principal, they did so merely upon the principal's verbal
AGENCY CASE DIGEST
25
assurance that, should the property subject of their contract of
agency be sold to their own buyer, they would be given the
commission agreed upon. Held: The cancellation of the written
authority being in writing, parole evidence is not admissible
under section 22 of Rule 123.
If there is other evidence which would justify the agents' claim
for commission, even if such parol evidence is disregarded, they
are entitled to such commission.
The principal took advantage of the agents' services consisting
in locating a buyer for the principal's land. The principal,
perhaps by stratagem, advised the agents that she was no
longer interested in the deal and was able to prevail upon them
to sign a document agreeing to the cancellation of the written
authority she had originally given the agents, believing that she
could evade payment of their commission. Then she sold the
property to the buyer found by the agents. Held: The principals
act is unfair as would amount to bad faith, and cannot be
sanctioned without according to the agents the reward which is
due them.
FACTS: Consejo Infante (defendant), was the owner of two
parcels of land, together with a house built thereon. On or before
November 30, 1948, she contracted the services of Jose Cunanan
and Juan Mijares(Plaintiffs), to sell the above-mentioned property
for a price of P30,000 subject to the condition that the purchaser
would assume the mortgage existing thereon in favor of the
Rehabilitation Finance Corporation. She agreed to pay them a
commission of 5% on the purchase price plus whatever overprice
they may obtain for the property. Plaintiffs found one Pio S. Noche
who was willing to buy the property under the terms agreed upon
with defendant, but when they introduced him to defendant, the
latter informed them that she was no longer interested in selling
the property and succeeded in making them sign a document
stating therein that the written authority she had given them was
already cancelled.However, on December 20, 1948, defendant
dealt directly with Pio S. Noche selling to him the property for
P31,000.
Upon learning this transaction, plaintiffs demanded from
defendant the payment of their commission, but she refused and
so they brought the present action
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
Defendant admitted having contracted the services of the
plaintiffs to sell her property as set forth in the complaint, but
stated that she agreed to pay them a commission of P1,200 only
on condition that they buy her a property somewhere in Taft
Avenue to where she might transfer after selling her property.
Consejo avers that while plaintiffs took steps to sell her property
as agreed upon, they sold the property at Taft Avenue to another
party and because of this failure it was agreed that the authority
she had given them be cancelled.
TC & CA: The lower court found that the preponderance of
evidence was in favor of the plaintiffs and rendered judgment
sentencing the defendant to pay the plaintiffs the sum of P2,500
with legal interest plus the costs of action.
CONTENTION: Petitioner, however, contends that that authority
has already been withdrawn on November 30, 1948 when, by the
voluntary act of respondents, they executed a document stating
that said authority shall be considered cancelled and without any
effect, so that when petitioner sold the property to Pio S. Noche
on December 20, 1948, she was already free from her
commitment with respondents and, therefore, was not in duty
bound to pay them any commission for the transaction.
ISSUE: (1) WON the cancellation of the written authority being in
writing, parole evidence is not admissible under section 22 of Rule
123.
(2) WON the principals act is in bad faith
HELD:
(1) YES, parole evidence is not admissible. If the facts were as
claimed by petitioner, there is indeed no doubt that she would
have no obligation to pay respondents the commission which was
promised them under the original authority because, under the
old Civil Code, her right to withdraw such authority is recognized.
A principal may withdraw the authority given to an agent at will.
(Article 1733.) But this fact is disputed. Thus, respondents claim
that while they agreed to cancel the written authority given to
them, they did so merely upon the verbal assurance given by
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
26
petitioner that, should the property be sold to their own buyer, Pio
S. Noche, they would be given the commission agreed upon. True,
this verbal assurance does not appear in the written cancellation,
Exhibit 1, and, on the other hand, it is disputed by petitioner, but
respondents were allowed to present oral evidence to prove it,
and this is now assigned as error in this petition for review.
The plea that oral evidence should not have been allowed to
prove the alleged verbal assurance is well taken it appearing that
the written authority given to respondents has been cancelled in
a written statement. The rule on this matter is that "When the
terms of an agreement have been reduced to writing, it is to be
considered as containing all those terms, and, therefore, there
can be, between the parties and their successors in interest, no
evidence of the terms of the agreement other than the contents
of the writing." (Section 22, Rule 123, Rules of Court.) The only
exceptions to this rule are: "(a) Where a mistake or imperfection
of the writing, or its failure to express the true intent and
agreement of the parties, or the validity of the agreement is put
in issue by the pleadings"; and "(b) Where there is an intrinsic
ambiguity in the writing." (Ibid.) There is no doubt that the point
raised does not come under any of the cases excepted, for there
is nothing therein that has been put in issue by respondents in
their complaint. The terms of the document, Exhibit 1, seem to be
clear and they do not contain any reservation which may in any
way run counter to the clear intention of the parties
But even disregarding the oral evidence adduced by respondents
in contravention of the parole evidence rule, we are, however, of
the opinion that there is enough justification for the conclusion
reached by the lower court as well as by the Court of Appeals to
the effect that respondents are entitled to the commission
originally agreed upon. It is a fact found by the Court of Appeals
that after petitioner had given the written authority to
respondents to sell her land for the sum of P30,000, respondents
found a buyer in the person of one Pio S. Noche who was willing
to buy the property under the terms agreed upon, and this matter
was immediately brought to the knowledge of petitioner. But the
latter, perhaps by way of stratagem, advised respondents that
she was no longer interested in the deal and was able to prevail
upon them to sign a document agreeing to the cancellation of the
written authority.
(2) yes. The principal took advantage of the agents' services
consisting in locating a buyer for the principal's land. The
principal, perhaps by stratagem, advised the agents that she was
no longer interested in the deal and was able to prevail upon
them to sign a document agreeing to the cancellation of the
written authority she had originally given the agents, believing
that she could evade payment of their commission. Then she sold
the property to the buyer found by the agents. Thus, the
principals act is unfair as would amount to bad faith, and cannot
be sanctioned without according to the agents the reward which
is due them.
25. MANOTOK BROTHERS, INC., petitioner, vs. THE
HONORABLE COURT OF APPEALS, THE HONORABLE JUDGE
OF THE REGIONAL TRIAL COURT OF MANILA (Branch VI),
and SALVADOR SALIGUMBA, respondents.
FACTS: Petitioner herein (then defendant-appellant) is the owner
of a certain parcel of land and building which were formerly
leased by the City of Manila and used by the Claro M. Recto High
School. By means of a letter, petitioner authorized herein private
respondent Salvador Saligumba to negotiate with the City of
Manila the sale of aforementioned property for not less than
P425,000.00. In the same writing, petitioner agreed to pay private
respondent a five percent (5%) commission in the event the sale
is finally consummated and paid. Petitioner ,executed another
letter extending the authority of private respondent for 120 days.
Thereafter, another extension was granted to him for 120 more
days, as evidenced by another letter. Finally, through another
letter dated November 16, 1967, the corporation with Rufino
Manotok, its President, as signatory, authorized private
respondent to finalize and consummate the sale of the property
to the City of Manila for not less than P410,000.00. With this letter
came another extension of 180 days. The Municipal Board of the
City of Manila eventually, on April 26, 1968, passed Ordinance No.
6603, appropriating the sum of P410,816.00 for the purchase of
the property which private respondent was authorized to sell.
Said ordinance however, was signed by the City Mayor only on
May 17, 1968, one hundred eighty three (183) days after the last
letter of authorization. On January 14, 1969, the parties signed
the deed of sale of the subject property. The initial payment of
P200,000.00 having been made, the purchase price was fully
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
27
satisfied with a second payment on April 8, 1969 by a check in
the amount of P210,816.00. Notwithstanding the realization of the
sale, private respondent never received any commission, which
should have amounted to P20,554.50. This was due to the refusal
of petitioner to pay private respondent said amount as the former
does not recognize the latter's role as agent in the transaction.
COMPLAINT: Private respondent filed a complaint against
petitioner, alleging that he had successfully negotiated the sale of
the property. He claimed that it was because of his efforts that
the Municipal Board of Manila passed Ordinance No. 6603 which
appropriated the sum for the payment of the property subject of
the sale.
ANSWER: Petitioner denied the claim of private respondent on
the following grounds: (1) private respondent would be entitled to
a commission only if the sale was consummated and the price
paid within the period given in the respective letters of authority;
and (2) private respondent was not the person responsible for the
negotiation and consummation of the sale, instead it was
Filomeno E. Huelgas, the PTA president for 1967-1968 of the Claro
M. Recto High School.
Huelgas testified to the effect that after being inducted as PTA
president in August, 1967 he followed up the sale from the start
with Councilor Magsalin until after it was approved by the Mayor
on May 17, 1968. He. also said that he came to know Rufino
Manotok only in August, 1968, at which meeting the latter told
him that he would be given a "gratification" in the amount of
P20,000.00 if the sale was expedited.
TC & CA: rendered judgment sentencing petitioner and/or Rufino
Manotok to pay unto private respondent the sum of P20,540.00
by way of his commission fees with legal interest thereon from
the date of the filing of the complaint until payment.
It is petitioner's contention that as a broker, private respondent's
job is to bring together the parties to a transaction. Accordingly, if
the broker does not succeed in bringing the minds of the
purchaser and the vendor to an agreement with respect to the
sale, he is not entitled to a commission.
ISSUE: WON private respondent is entitled to the five percent
(5%) agent's commission.
HELD: YES. In an earlier case, this Court ruled that when there is
a close, proximate and causal connection between the agent's
efforts and labor and the principal's sale of his property, the agent
is entitled to a commission. We agree with respondent Court that
the City of Manila ultimately became the purchaser of petitioner's
property mainly through the efforts of private respondent.
Without discounting the fact that when Municipal Ordinance No.
6603 was signed by the City Mayor on May 17, 1968, private
respondent's authority had already expired, it is to be noted that
the ordinance was approved on April 26, 1968 when private
respondent's authorization was still in force. Moreover, the
approval by the City Mayor came only three days after the
expiration of private respondent's authority. It is also worth
emphasizing that from the records, the only party given a written
authority by petitioner to negotiate the sale from July 5, 1966 to
May 14, 1968 was private respondent.|||
While it may be true that Filomeno Huelgas followed up the
matter with Councilor Magsalin, the author of Municipal Ordinance
No. 6603 and Mayor Villegas, his intervention regarding the
purchase came only after the ordinance had already been passed
when the buyer has already agreed to the purchase and to the
price for which said property is to be paid. Without the efforts of
private respondent then, Mayor Villegas would have nothing to
approve in the first place. It was actually private respondent's
labor that had set in motion the intervention of the third party
that produced the sale, hence he should be amply
compensated. cdll
26. VICENTE M. DOMINGO, represented by his heirs,
ANTONIA RAYMUNDO VDA. DE DOMINGO, RICARDO,
CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and
JOSELITO, all surnamed DOMINGO, petitioners-appellants, vs.
GREGORIO M. DOMINGO, intervenor-respondent.
FACTS: In a document executed on June 2, 1956, Vicente M.
Domingo granted Gregorio Domingo, a real estate broker, the
exclusive agency to sell his lot No. 883 of Piedad Estate with an
area of about 88,477 square meters at the rate of P2.00 per
AGENCY CASE DIGEST
28
square meter (or for P176,954.00) with a commission of 5% on
the total price, if the property is sold by Vicente or by anyone else
during the 30-day duration of the agency or if the property is sold
by Vicente within three months from the termination of the
agency to a purchaser to whom it was submitted by Gregorio
during the continuance of the agency with notice to Vicente. The
said agency contract was in triplicate, one copy was given to
Vicente, while the original and another copy were retained by
Gregorio.
On June 3, 1956, Gregorio authorized the intervenor Teofilo P.
Purisima to look for a buyer, promising him one-half of the 5%
commission.
Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio
as a prospective buyer.
Oscar de Leon submitted a written offer which was very much
lower than the price of P2.00 per square meter. Vicente directed
Gregorio to tell Oscar de Leon to raise his offer. After several
conferences between Gregorio and Oscar de Leon, the latter
raised his offer to P109,000.00 on June 20, 1956, to which Vicente
agreed by signing. Upon demand of Vicente, Oscar de Leon issued
to him a check in the amount of P1,000.00 as earnest money,
after which Vicente advanced to Gregorio the sum of P300.00.
Oscar de Leon confirmed his former offer to pay for the property
at P1.20 per square meter in another letter. Subsequently,
Vicente asked for an additional amount of P1,000.00 as earnest
money, which Oscar de Leon promised to deliver to him.
Thereafter, was amended to the effect that Oscar de Leon will
vacate on or about September 15, 1956 his house and lot at
Denver Street, Quezon City which is part of the purchase price. It
was again amended to the effect that Oscar will vacate his house
and lot on December 1, 1956, because his wife was on the family
way and Vicente could stay in lot No. 883 of Piedad Estate until
June 1, 1957, in a document dated June 30, 1956 (the year 1957
therein is a mere typographical error) and marked Exhibit "D".
Pursuant to his promise to Gregorio, Oscar gave him as a gift
or propina the sum of One Thousand Pesos (P1,000.00) for of One
succeeding in persuading Vicente to sell his lot at P1.20 per
square meter or a total in round figure Hundred Nine Thousand
Pesos (P109,000.00). This gift of One Thousand Pesos (P1,000.00)
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
was not disclosed by Gregorio to Vicente. Neither did Oscar pay
Vicente the additional amount of One Thousand Pesos (P1,000.00)
by way of earnest money. When the deed of sale was not
executed on August 1, 1956 as stipulated in Exhibit "C" nor on
August 16, 1956 as extended by Vicente, Oscar told Gregorio that
he did not receive his money from his brother in the United
States, for which reason he was giving up the negotiation
including the amount of One Thousand Pesos (P1,000.00) given
as earnest money to Vicente and the One Thousand Pesos
(P1,000.00) given to Gregorio aspropina or gift. When Oscar did
not see him after several weeks, Gregorio sensed something fishy.
So, he went to Vicente and read a portion of Exhibit "A" marked
Exhibit "A-1" to the effect that Vicente was still committed to pay
him 5% commission, if the sale is consummated within three
months after the expiration of the 30-day period of the exclusive
agency in his favor from the execution of the agency contract on
June 2, 1956 to a purchaser brought by Gregorio to Vicente during
the said 30-day period. Vicente grabbed the original of Exhibit "A"
and tore it to pieces. Gregorio held his peace, not wanting to
antagonize Vicente further, because he had still the duplicate of
Exhibit "A". From his meeting with Vicente, Gregorio proceeded to
the office of the Register of Deeds of Quezon City, where he
discovered Exhibit "G", a deed of sale executed on September 17,
1956 by Amparo Diaz, wife of Oscar de Leon, over their house and
lot at No. 40 Denver Street, Cubao, Quezon City, in favor of
Vicente as down payment by Oscar de Leon on the purchase price
of Vicente's lot No. 883 of Piedad Estate. Upon thus learning that
Vicente sold his property to the same buyer, Oscar de Leon and
his wife, he demanded in writing payment of his commission on
the sale price of One Hundred Nine Thousand Pesos
(P109,000.00), Exhibit "H". He also conferred with Oscar de Leon,
who told him that Vicente went to him and asked him to eliminate
Gregorio in the transaction and that he would sell his property to
him for One Hundred Four Thousand Pesos (P104,000.00). In
Vicente's reply to Gregorio's letter, Exhibit "H", Vicente stated
that Gregorio is not entitled to the 5 % commission because he
sold the property not to Gregorio's buyer, Oscar de Leon, but to
another buyer, Amparo Diaz, wife of Oscar de Leon.
The Court of Appeals found from the evidence that Exhibit "A",
the exclusive agency contract, is genuine; that Amparo Diaz, the
AGENCY CASE DIGEST
29
vendee, being the wife of Oscar de Leon, the sale by Vicente of
his property is practically a sale to Oscar de Leon since husband
and wife have common or identical interests; that Gregorio and
intervenor Teofilo Purisima were the efficient cause in the
consummation of the sale in favor of the spouses Oscar de Leon
and Amparo Diaz; that Oscar de Leon paid Gregorio the sum of
One Thousand Pesos (P1,000.00) as "propina" or gift and not as
additional earnest money to be given to the plaintiff, because
Exhibit "66", Vicente's letter addressed to Oscar de Leon with
respect to the additional earnest money, does not appear to have
been answered by Oscar de Leon and therefore there is no writing
or document supporting Oscar de Leon's testimony that he paid
an additional earnest money of One Thousand Pesos (P1,000.00)
to Gregorio for delivery to Vicente, unlike the first amount of One
Thousand Pesos (P1,000.00) paid by Oscar de Leon to Vicente as
earnest money, evidenced by the letter Exhibit "4"; and that
Vicente did not even mention such additional earnest money in
his two replies Exhibits "I" and "J" to Gregorio's letter of demand
of the 5% commission.
ISSUE: (1) whether the failure on the part of Gregorio to disclose
to Vicente the payment to him by Oscar de Leon of the amount of
One Thousand Pesos (P1,000.00) as gift or "propina" for having
persuaded Vicente to reduce the purchase price from P2.00 to
P1.20 per square meter, so constitutes fraud as to cause a
forfeiture of his 5% commission on the sale price;
(2) whether Vicente or Gregorio should be liable directly to the
intervenor Teofilo Purisima for the latter's share in the expected
commission of Gregorio by reason of the sale; and
HELD:
The duties and liabilities of a broker to his employer are
essentially those which an agent owes to his principal. 1
Consequently, the decisive legal provisions are found in Articles
1891 and 1909 of the New Civil Code.
"Art. 1891. Every agent is bound to render an
account of his transactions and to deliver to the
principal whatever he may have received by
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
virtue of the agency, even though it may not be
owing to the principal.
"Every stipulation exempting the agent from the
obligation to render an account shall be void."
xxx xxx xxx
"Art. 1909. The agent is responsible not only for
fraud, but also for negligence, which shall be
judged with more or less rigor by the courts,
according to whether the agency was or was not
for a compensation."
Article 1891 of the New Civil Code amends Article 1720 of the old
Spanish Civil Code which provides that:
"Art. 1720. Every agent is bound to give an
account of his transaction and to pay to the
principal whatever he may have received by
virtue of the agency, even though what he has
received is not due to the principal."
Consequently, the decisive legal provisions are found in Articles
1891 and 1909 of the New Civil Code. The aforecited provisions
demand the utmost good faith, fidelity, honesty, candor and
fairness on the part of the agent, the real estate broker in this
case, to his principal, the vendor. The law imposes upon the agent
the absolute obligation to make a full disclosure or complete
account to his principal of all his transactions and other material
facts relevant to the agency, so much so that the law as amended
does not countenance any stipulation exempting the agent from
such an obligation and considers such an exemption as void. The
duly of an agent is likened to that of a trustee. This is not a
technical or arbitrary rule but a rule founded on the highest and
truest principle of morality as well as of the strictest justice.
(1) An agent who takes a secret profit in the nature of a bonus,
gratuity or personal benefit from the vendee, without revealing
the same to his principal, the vendor, is guilty of a breach of his
loyalty to the principal and forfeits his right to collect the
commission from his principal, even if the principal does not
suffer any injury by reason of such breach of fidelity, or that he
obtained better results or that the agency is a gratuitous one, or
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
30
that usage or custom allows it, because the rule is to prevent the
possibility of any wrong, not to remedy or repair an actual
damage.
By taking such profit or bonus or gift orpropina from the vendee,
the agent thereby assumes a position wholly inconsistent with
that of being an agent for his principal, who has a right to treat
him, insofar as his commission is concerned, as if no agency had
existed. The fact that the principal may have been benefited by
the valuable services of the said agent does not exculpate the
agent who has only himself to blame for such a result by reason
of his treachery or perfidy.
Because of his responsibility under the aforecited Article 1720, an
agent is likewise liable for estafa for failure to deliver to his
principal the total amount collected by him in behalf of his
principal and cannot retain the commission pertaining to him by
subtracting the same from his collections.
Where a principal has paid an agent or broker a commission while
ignorant of the fact that the latter has been unfaithful, the
principal may recover back the commission paid, since an agent
or broker who has been unfaithful is not entitled to any
compensation. If the agent does not conduct himself with entire
fidelity towards his principal, but is guilty of taking a secret profit
or commission in regard the matter in which he is employed, he
loses his right to compensation on the ground that he has taken a
position wholly inconsistent with that of agent for his employer,
and which gives his employer, upon discovering it, the right to
treat him so far as compensation, at least, is concerned as if no
agency had existed. This may operate to give to the principal the
benefit of valuable services rendered by the agent, but the agent
has only himself to blame for that result.
As a general rule, it is a breach of good faith and loyalty to his
principal for an agent, while the agency exists, so to deal with the
subject matter thereof, or with information acquired during the
course of the agency, as to make a profit out of it for himself in
excess of his lawful compensation; and if he does so he may be
held as a trustee and may be compelled to account to his
principal for all profits, advantages, rights, or privileges acquired
by him in such dealings, whether in performance or in violation of
his duties, and be required to transfer them to his principal upon
being reimbursed for his expenditures for the same, unless the
principal has consented to or ratified the transaction knowing that
benefit or profit would accrue, or had accrued, to the agent, or
unless with such knowledge he has allowed the agent so as to
change his condition that he cannot be put in status quo. The
application of this rule is not affected by the fact that the
principal did not suffer any injury by reason of the agent's
dealings, or that he in fact obtained better results; nor is it
affected by the fact that there is a usage or custom to the
contrary, or that the agency is a gratuitous one.
The duty embodied in Article 1891 of the New Civil Code will not
apply if the agent or broker acted only as a middleman with the
task of merely bringing together the vendor and vendee, who
themselves thereafter will negotiate on the terms and conditions
of the transaction. Neither would the rule apply if the agent or
broker had informed the principal of the gift or bonus or profit he
received from the purchaser and his principal did not object
thereto. Herein defendant-appellee Gregorio Domingo was not
merely a middleman of the petitioner-appellant Vicente Domingo
and the buyer Oscar de Leon. He was the broker and agent of said
petitioner-appellant only. And herein petitioner-appellant was not
aware of the gift of One Thousand Pesos (P1,000.00) received by
Gregorio Domingo form the prospective buyer; much less did he
consent to his agent's accepting such a gift.
(2) Teofilo Purisima, the sub-agent of Gregorio Domingo, can only
recover from Gregorio Domingo his one-half share of whatever
amounts Gregorio Domingo received by virtue of the transaction
as his sub-agency contract was with Gregorio Domingo alone and
not with Vicente Domingo, who was not even aware of such sub-
agency. Since Gregorio Domingo received from Vicente Domingo
and Oscar de Leon respectively the amounts of Three Hundred
Pesos (P300.00) and One Thousand Pesos (P1,000.00) or a total of
One Thousand Three Hundred Pesos (P1,300.00), one-half of the
same, which is Six Hundred Fifty Pesos (P650.00), should be paid
by Gregorio Domingo to Teofilo Purisima.
WHEREFORE, the judgment is hereby rendered, reversing the
decision of the Court of Appeals and directing the defendant-
appellee Gregorio Domingo: (1) to pay to the heirs of Vicente
Domingo the sum of One Thousand Pesos (P1,000.00) as moral
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
31
damages and One Thousand Pesos (P1,000.00) as attorney's fees;
(2) to pay Teofilo Purisima the sum of Six Hundred Fifty Pesos
(P650.00); and (3) to pay the costs.
27. PRIMITIVO SIASAT and MARCELINO
SIASAT, petitioners, vs. INTERMEDIATE APPELLATE COURT
and TERESITA NACIANCENO, respondents.
FACTS: Sometime in 1974, respondent Teresita Nacianceno
succeeded in convincing officials of the then Department of
Education and Culture (Department), to purchase without public
bidding, one million pesos worth of national flags for the use of
public schools throughout the country. The respondent was able
to expedite the approval of the purchase by handcarrying the
different indorsements from one office to another, so that by the
first week of September, 1974, all the legal requirements had
been complied with, except the release of the purchase orders.
When Nacianceno was informed by the Chief of the Budget
Division of the Department that the purchase orders could not be
released unless a formal offer to deliver the flags in accordance
with the required specifications was first submitted for approval,
she contacted the owners of the United Flag Industry on
September 17, 1974. The next day, after the transaction was
discussed, the following document (Exhibit A) was drawn up:
"Mrs. Tessie Nacianceno,
"This is to formalize our agreement for you to
represent United Flag Industry to deal with any
entity or organization, private or government in
connection with the marketing of our products -
flags and all its accessories.
"For your service, you will be entitled to a
commission of thirty (30%) percent.
Signed
Mr. Primitivo Siasat
Owner and Gen. Manager"
On October 16, 1974, the first delivery of 7,933 flags was made
by the United Flag Industry. The next day, on October 17, 1974,
the respondent's authority to represent the United Flag Industry
was revoked by petitioner Primitivo Siasat.
According to the findings of the courts below, Siasat, after
receiving the payment of P469,980.00 on October 23, 1974 for
the first delivery, tendered the amount of P23,900.00 or five
percent (5%) of the amount received, to the respondent as
payment of her commission. The latter allegedly protested. She
refused to accept the said amount insisting on the 30%
commission agreed upon. The respondent was prevailed upon to
accept the same, however, because of the assurance of the
petitioners that they would pay the commission in full after they
delivered the other half of the order. The respondent states that
she later on learned that petitioner Siasat had already received
payment for the second delivery of 7,833 flags. When she
confronted the petitioners, they vehemently denied receipt of the
payment, at the same time claiming that the respondent had no
participation whatsoever with regard to the second delivery of
flags and that the agency had already been revoked.
She filed an action in CFI to recover the following commissions:
25% as balance on the first delivery and 30% on the second
delivery. LLpr
TC & IAC: decided in favor of the respondent.
In assailing the appellate court's decision, the petition tenders the
following arguments: first, the authorization making the
respondent the petitioner's representative merely states that she
could deal with any entity in connection with the marketing of
their products for a commission of 30%. There was no specific
authorization for the sale of 15,666 Philippine flags to the
Department
ISSUE: WON respondent has no capacity to represent petitioners
in the transaction with the Department
HELD: We find petitioners' argument regarding respondent's
incapacity to represent them in the transaction with the
Department untenable. There are several kinds of agents. To
quote a commentator on the matter:
AGENCY CASE DIGEST
32
"An agent may be (1) universal; (2) general, or
(3) special. A universal agent is one authorized to
do all acts for his principal which can lawfully be
delegated to an agent. So far as such a condition
is possible, such an agent may be said to have
universal authority.
"A general agent is one authorized to do all acts
pertaining to a business of a certain kind or at a
particular place, or all acts pertaining to a
business of a particular class or series. He has
usually authority either expressly conferred in
general terms or in effect made general by the
usages, customs or nature of the business which
he is authorized to transact.
"An agent, therefore, who is empowered to
transact all the business of his principal of a
particular kind or in a particular place, would, for
this reason, be ordinarily deemed a general
agent.
"A special agent is one authorized to do some
particular act or to act upon some particular
occasion. He acts usually in accordance with
specific instructions or under limitations
necessarily implied from the nature of the act to
be done."
One does not have to undertake a close scrutiny of the document
embodying the agreement between the petitioners and the
respondent to deduce that the latter was instituted as a general
agent. Indeed, it can easily be seen by the way general words
were employed in the agreement that no restrictions were
intended as to the manner the agency was to be carried out or in
the place where it was to be executed. The power granted to the
respondent was so broad that it practically covers the
negotiations leading to, and the execution of, a contract of sale of
petitioners' merchandise with any entity or organization.
28. GERMANN & CO., plaintiffs-appellees, vs. DONALDSON,
SIM & CO., defendants-appellants.
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
The validity of a power of attorney executed in Germany
between German subjects should considered according to the
laws of that country.
The right to commence action for collection of debts owing to
principal is not an incident of strict ownership, which must be
conferred in express terms.
The power to "legally compel" the payment of debts owing to
the principal is an express grant of the right to bring suit for the
collection of such debts.
FACTS: This is an incident of want of personality of the plaintiffs
attorney. The action is to recover money said to be due for freight
under charter party. It was brought by virtue of general power of
suits, executed in Manila by Fernando Kammerzell, and purports
to be a substitution in favor of several attorneys of power given to
Kammerzell in an instrument executed in Berlin by Max Leonard
Tornow, the sole owner of the business carried on in Berlin and
Manila under the name Germann & Co. The first-named
instrument was authenticated by a notary with the formalities
required by the domestic laws. The other was not so
authenticated. Both Tornow and Kammerzell are citizens of
Germany. Tornow is a resident of Berlin and Kammerzell of Manila.
The defendants claim that the original power is invalid under
article 1280, No. 5, of the Civil Code, which provides that powers
for suits must be contained in a public instrument. No claim is
made that the document was not executed with the formalities
required by the German law in the case of such an instrument. We
see no reason why the general principle that the formal validity of
contracts is to be tested by the laws of the country where they
are executed should not apply.
The defendants also claim that the original power cannot be
construed as conferring upon Kammerzell authority to institute or
defend suits, from which contention, if correct, it would of course
follow that the delegated power is invalid. In support of this
contention reliance is placed upon article 1713 of the Civil Code,
by which it is provided that "an agency stated in general terms
only includes acts of administration," and that "in order to
compromise, alienate, mortgage, or to execute any other act of
strict ownership an express commission is required."
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
33
ISSUE: WON the original power cannot be construed as
conferring upon Kammerzell authority to institute or defend suits
HELD: YES, original power cannot be construed as conferring
upon Kammerzell authority to institute or defend suits.
By this instrument Tornow constitutes Kammerzell his "true and
lawful attorney with full power to enter the firm name of Germann
& Co. in the Commercial Registry of the city of Manila as a branch
of the house of Germann & Co. in Berlin, it being the purpose of
this power to invest said attorney with full legal powers and
authorization to direct and administer in the city of Manila for us
and in our name a branch of our general commercial business of
importation and exportation, for which purpose he may make
contracts of lease and employ suitable assistants, as well as sign
every kind of documents, accounts, and obligations connected
with the business which may be necessary, take charge in general
of the receipt and delivery of merchandise connected with the
business, sign all receipts for sums of money and collect them
and exact their payment by legal means, and in general execute
all the acts and things necessary for the perfect carrying on of the
business committed to his charge in the same manner as we
could do ourselves if we were present in the same place."
We should not be inclined to regard the institution of a suit like
the present, which appears to be brought to collect a claim
accruing in the ordinary course of the plaintiff's business, as
properly belonging to the class of acts described in article 1713 of
the Civil Code as acts "of strict ownership." It seems rather to be
something which is necessarily a part of the mere administration
of such a business as that described in the instrument in question
and only incidentally, if at all, involving a power to dispose of the
title to property.
But whether regarded as an act of strict ownership or not, it
appears to be expressly and specially authorized by the clause
conferring the power to "exact the payment" of sums of money
"by legal means." This must mean the power to exact the
payment of debts due the concern by means of the institution of
suits for their recovery. If there could be any doubt as to the
meaning of this language taken by itself, it would be removed by
a consideration of the general scope and purpose of the
instrument in which it occurs. (See Civil Code, art. 1286.) The
main object of the instrument is clearly to make Kammerzell the
manager of the Manila branch of the plaintiff's business, with the
same general authority with reference to its conduct which his
principal would himself possess if he were personally directing it.
It cannot be reasonably supposed, in the absence of very clear
language to that effect, that it was the intention of the principal
to withhold from his agent a power so essential to the efficient
management of the business entrusted to his control as that to
sue for the collection of debts.
29. THE MUNICIPAL COUNCIL OF ILOILO, plaintiff-
appellee, vs. JOSE EVANGELISTA ET AL., defendants-
appellees. TAN ONG SZE VDA. DE TAN TOCO, appellant.
FACTS: March 20, 1924: Court of First Instance of Iloilo rendered
judgment in civil case No. 3514 thereof, wherein the
appellant herein, Tan Ong Sze Vda. de Tan Toco was the plaintiff,
and the municipality of Iloilo the defendant, and the former
sought to recover of the latter the value of a strip of
land belonging to said plaintiff taken by the defendant to widen a
public street. The judgment entitled the plaintiff to recover Php
42,966.40 representing the value of said strip of land from the
municipality of Iloilo. On appeal to the SC, judgment was affirmed.
After the case was remanded to the court of origin and the
judgment rendered therein had become final and
executory. Attorney Jose Evangelista in his own behalf and as
counsel for the administratix of Jose Ma. Arroyos intestate estate
filed a claim in the said case for professional services rendered by
him, which the court acting with the consent of the appellant
widow, fixed at 15% of the amount of the judgment. At the
hearing on said claim, the claimants appeared, as did also the
Philippine National Bank, which prayed that the amount of the
judgment be turned over to it because the land taken over
had been mortgaged to it. Antero Soriano also appeared claiming
the amount of the judgment as it had been assigned to him, and
by him, in turn, assigned to Mauricio Cruz & Co., Inc. After
hearing, all the adverse claims on the amount of the judgment,
the court ordered that the attorneys lien in the amount of 15% of
the judgment be recorded in favor of Attorney Evangelistain his
own behalf and counsel for the administratix of the deceased Jose
AGENCY CASE DIGEST
34
Ma. Arroyo and directed the Municipality of Iloilo to file an action
of interpleading against the adverse claimants: the PNB,Antero
Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo.
March 29, 1928: with the approval of the auditor of the provincial
treasurer of Iloilo and with the Executive Bureau paid the late
Antero Soriano the amount of Php 6,000.00 in part payment of
the judgment mentioned above assigned to him by Tan Boon
Tiong acting as attorney-in-fact of the appellant herein, Tan Ong
Sze Vda. de Tan Toco. December 18, 1928: the municipal
treasurer of Iloilo deposited with the clerk of the CFI of Iloilo the
amount of Php 6,000.00 on account of the judgment rendered in
said civil case.
In pursuance of the resolution of the court below ordering that the
attorneys lien in the amount of15% of the judgment be recorded
in favor of Attorney Jose Evangelista. In his own behalf and as a
counsel for the late Jose Ma. Arroyo, the said clerk of court
delivered on the same date to said Attorney Evangelista the said
amount of Php 6,000.00
With these 2 payments of Php 6,000.00 each making a total
of Php 12,000.00 , the judgment forPhp 42,966.44 against the
Municipality of Iloilo was reduced to Php 30,966.40 which was
adjudicated by said court to Maurice Cruz & Co. This appeal, then
is confined to the claim of Mauricio Cruz & Co. as alleged assignee
of the rights of the late Soriano by virtue of the said judgment in
payment of professional services rendered by him to the said
widow and her co-heirs
Issue: (1) WON assignment made by Tan Buntiong, as attorney-
in-fact of Tan Ong Sze Vda. deTan Toco to Atty. Soriano, of all
the credits, rights and interests belonging to Tan Ong Sze Vda. de
TanToco in the amount of P42,966.40, plus the costs of court
against municipal council of Iloilo, inconsideration of the
professional services rendered by Soriano to the widow is valid
(2) WON the other attorney-in-facts, Tan Montanos, consent
is required to validate the actsof the other attorney-in-fact, Tan
Butiong, who assigned the amount as payment to Soriano
Held: (1) YES . Tan Boon Tiong is authorized to employ and
contract for the services of lawyers upon such conditions as he
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
may deem convenient, to take charge of any actions necessary or
expedient for the interests of his principal, and to defend suits
brought against her. This power necessarily implies the authority
to pay for the professional services thus engaged. In the present
case, the assignment made by Tan Boon Tiong, as Attorney-in-fact
for the appellant, in favor of Attorney Antero Soriano
for professional services rendered in other cases in the interests
of the appellant and her coheirs, was that credit which she had
against the municipality of Iloilo, and such assignment was
equivalent to the payment of the amount of said credit to Antero
Soriano for professional services
(2) No. With regard to the failure of the other attorney-in-fact of
the appellant, Tan Montano, authorized by Tan Toco, to consent
to the deed of assignment, the latter being also authorized to
pay, in the name and behalf of the principal, all her debts and the
liens and encumbrances her property, the very fact that different
letters of attorney were given to each of these two
representatives shows that itwas not the principal's intention that
they should act jointly in order to make their acts valid. From the
syllabus: When two letters of attorney are issued simultaneously
to two different attorneys-in-fact, but covering the same powers
shows that it was not the principals intention that they should act
jointly in order to make their acts valid; the separate act of one of
the attorney-in-fact, even when not consented to by the other
attorney-in-fact, is a valid and binding on the principal, especially
the principal did not only repudiate the act done, but continued to
retain the said attorney-in-fact.
AGENCY CASE DIGEST
35
38. THE PHILIPPINE NATIONAL BANK vs. PAZ
AGUDELO Y GONZAGA, ET AL., defendants. PAZ
AGUDELO Y GONZAGA, appellant.
FACTS: On November 9, 1920, the defendant-
appellant Paz Agudelo y Gonzaga executed in favor of her
nephew, Mauro A. Garrucho, the document Exhibit K
conferring upon him a special power of attorney sufficiently
broad in scope to enable him to sell, alienate and mortgage
in the manner and form he might deem convenient, all her
real estate situated in the municipalities of Murcia and
Bacolod, Occidental Negros, consisting in lots Nos. 61 and
207 of the cadastral survey of Bacolod, Occidental Negros,
together with the improvement thereon.
Amparo A. Garrucho executed the document Exhibit H
whereby she conferred upon her brother Mauro A Garrucho
a special power of attorney sufficiently broad in scope to
enable him to sell, alienate, mortgage or otherwise
encumber, in the manner and form he might deem
convenient, all her real estate situated in the municipalities
of Murcia and Bago, Occidental Negros.
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
Mauro A. Garrucho executed in the favor of the plaintiff
entity, the Philippine National bank, the document Exhibit
G, whereby he constituted a mortgage on lot No. 878 of the
cadastral survey of Murcia, Occidental Negros, with all the
improvements thereon.
The mortgage deeds Exhibit G and J as well as the
corresponding promissory notes for P6,000 and P16,000,
respectively, were executed in Mauro A. Garrucho's own
name and signed by him in his personal capacity,
authorizing the mortgage creditor, the Philippine National
Bank, to take possession of the mortgaged properties, by
means of force if necessary, in case he failed to comply
with any of the conditions stipulated therein.
On July 15, 1922, Mauro A. Garrucho, executed in favor of
the plaintiff entity the deed Exhibit C whereby he
constituted a mortgage on lots Nos. 61 and 207 of the
cadastral survey of Bacolod, together with the
improvements thereon, described in transfer certificates of
title Nos. 2216 and 1148, respectively, issued in the name
of Paz Agudelo y Gonzaga, and on lot No. 878 of the
cadastral survey of Murcia, described in transfer certificate
of title No. 2415, issued in the name of Amparo A. Garrucho.
In connection of the credits, loans, and commercial
overdrafts amounting to P21,000 which had been granted
him, Mauro A. Garrucho, on the said date July 15, 1922,
executed the promissory note, Exhibit B, for P21,000 as a
novation of the former promissory notes for P6,000 and
P16,000, respectively.
On November 25, 1925, Amparo A. Garrucho sold lot No.
878 described in certificate of title No. 2415, to Paz Agudelo
y Gonzaga (Exhibit M).
ISSUE: Whether or not Paz Agudelo y Gonzaga is
liable for the payment of the loans obtained by
Mauro A. Garrucho from the Philippine National Bank
AGENCY CASE DIGEST
36
for the security of which he constituted a mortgage
on the aforesaid real estate belonging to the
defendant-appellant Paz Agudelo y Gonzaga.
HELD: No.
ART. 1709. By the contract of agency, one person binds
himself to render some service, or to do something for the
account or at the request of another.
ART. 1717. When an agent acts in his own name, the
principal shall have no right of action against the persons
with whom the agent has contracted, or such persons
against the principal. In such case, the agent is directly
liable to the person with whom he has contracted, as if the
transaction were his own. Cases involving things belonging
to the principal are excepted.
The provisions of this article shall be understood to be
without prejudice to actions between principal and agent.
Aside from the phrases "attorney in fact of his sister,
Amparo A. Garrucho, as evidenced by the power of attorney
attached hereto" and "attorney in fact of Paz Agudelo y
Gonzaga" written after the name of Mauro A. Garrucho in
the mortgage deeds, Exhibits G. and J, respectively, there is
nothing in the said mortgage deeds to show that Mauro A.
Garrucho is attorney in fact of Amparo A. Garrucho and of
Paz Agudelo y Gonzaga, and that he obtained the loans
mentioned in the aforesaid mortgage deeds and constituted
said mortgages as security for the payment of said loans,
for the account and at the request of said Amparo A.
Garrucho and Paz Agudelo y Gonzaga. The above-quoted
phrases which simply described his legal personality, did
not mean that Mauro A. Garrucho obtained the said loans
and constituted the mortgages in question for the account,
and at the request, of his principals. Furthermore, the
promissory notes executed by Mauro A. Garrucho in favor of
the Philippine National Bank, evidencing loans of P6,000
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
and P16,000 have been novated by the promissory notes
for P21,000 (Exhibit B) executed by Mauro A. Garrucho, not
only without express authority from his principal Paz
Agudelo y Gonzaga but also under his own signature.
Furthermore, the records do not show that the loan
obtained by Mauro A. Garrucho, evidenced by the
promissory note, Exhibit B, was for his principal Paz Agudelo
y Gonzaga. The special power of attorney, Exhibit K, does
not authorize Mauro A. Garrucho to constitute a mortgage
on the real estate of his principal to secure his personal
obligations. Therefore, in doing so by virtue of the
document, Exhibit C, he exceeded the scope if his authority
and his principal is not liable for his acts. (2 Corpus Juris, p.
651; article 1714, Civil Code.)
It is further claimed that inasmuch as the properties
mortgaged by Mauro A. Garrucho belong to Paz Agudelo y
Gonzaga, the latter is responsible for the acts of the former
although he acted in his own name, in accordance with the
exception contained in article 1717 of the Civil Code. It
would be an exception with the properties of his own name
in connection with the properties of his principal, does so
within the scope of his authority. It is noted that Mauro A.
Garrucho was not authorized to execute promissory notes
even in the name of his principal Paz Agudelo y Gonzaga,
nor to constitute a mortgage on her real properties to
secure such promissory notes. Wherefore, it is hereby held
that the liability constructed by the aforesaid defendant-
appellant Paz Agudelo y Gonzaga is merely subsidiary to
that of Mauro A. Garrucho, limited lot No. 878 of the
cadastral survey of Murcia, Occidental Negros, described in
Torrens title No. 2415. However, inasmuch as the principal
obligator, Mauro A. Garrucho, has been absolved from the
complaint and the plaintiff- appellee has not appealed from
the judgment absolving him, the law does not afford any
remedy whereby Paz Agudelo y Gonzaga may be required
to comply with the said subsidiary obligation in view of the
AGENCY CASE DIGEST
37
legal maxim that the accessory follows the principal.
Wherefore, the defendant herein should also be absolved
from the complaint which is hereby dismissed, with the
costs against the appellee. So ordered.
39. SY-JUCO and VIARDO v. SY-JUCO
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
ISSUE: WON the properties bought by Santiago in his own
name, as an administrator, belong to him. (NO, except the
second casco.)
HELD: Judgment appealed from affirmed except in so far as
casco no. 2545 is concerned.

DOCTRINE: When an agency acts in his own name, the
principal shall have no right of action against the person
with whom the agent has contracted, cases involving things
belonging to the principal are excepted. According to this
exception (when things belonging to the principal are dealt
with) the agent is bound to the principal although he does
not assume the character of such agent and appears acting
in his own name. This means that in the case of this
exception the agent's apparent representation yields to the
principal's true representation and that, in reality and in
effect, the contract must be considered as entered into
between the principal and the third person; and,
consequently, if the obligations belong to the former, to him
alone must also belong the rights arising from the contract.
FACTS:
In 1902, Defendant Santiago Sy-juco was appointed
by plaintiffs Vicente and Cipriana as administrator of their
property, and acted as such until June 30, 1916, when his
authority was cancelled. Santiago is the son of Vicente and
Cipriana. Vicente and Cipriana allege that during Santiagos
administration, Santiago acquired the property claimed in
the complaint in his capacity as the plaintiffs administrator
with their money and for their benefit. Trial Court Ordered
Santiago to return to the plaintiffs: the launch Malabon,
two cascos , an automobile, a typewriting machine, the
house occupied by Santiago, and the price of the piano.
Both parties appealed from this judgment.
As to the launch Malabon:
Santiago bought it in his own name from the Pacific
Commercial Co., and afterwards registered it at the Custom
House. But this does not necessarily show that he bought it
for himself and with his own money. This transaction was
within the agency which he had received from the plaintiffs.
The fact that he has acted in his own name may be only, as
we believe it was, a violation of the agency on his part. The
question is not in whose favor the document of sale of the
launch is executed nor in whose name same was registered,
but with whose money was said launch bought. The
plaintiffs' testimony that it was bought with their money
and for them is supported by the fact that, immediately
after its purchase, the launch had to be repaired at their
expense, although said expense was collected from the
defendant. Santiago invoked the case of Martinez v.
Martinez:
Martinez, Jr., bought a vessel in his own name and in
his name registered it at the Custom House. This court then
said that although the funds with which the vessel was
bought belonged to Martinez Sr., Martinez Jr. is its sole and
exclusive owner.
But the Court ruled that this is not applicable to the case at
bar. In said case the relation of principal and agent, which
exists between the plaintiffs and the defendant in the
present case, did not exist between Martinez, Sr., and
Martinez, Jr. By this agency the plaintiffs herein clothed the
defendant with their representation in order to purchase the
launch in question. However, the defendant acted without
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this representation and bought the launch in his own name
thereby violating the agency. If the result of this transaction
should be that the defendant has acquired for himself the
ownership of the launch, it would be equivalent to
sanctioning this violation and accepting its consequences.
But not only must the consequences of the violation of this
agency not be accepted, but the effects of the agency itself
must be sought. If the defendant contracted the obligation
to but the launch for the plaintiffs and in their
representation, but virtue of the agency, notwithstanding
the fact that he bought it in his own name, he is obliged to
transfer to the plaintiffs the rights he received from the
vendor, and the plaintiffs are entitled to be subrogated in
these rights.
From the rule established in Article 1717 of the Civil
Code that, when an agency acts in his own name, the
principal shall have no right of action against the person
with whom the agent has contracted, cases involving things
belonging to the principal are excepted. According to this
exception (when things belonging to the principal are dealt
with), the agent is bound to the principal although he does
not assume the character of such agent and appears acting
in his own name. This means that in the case of this
exception the agent's apparent representation yields to the
principal's true representation and that, in reality and in
effect, the contract must be considered as entered into
between the principal and the third person; and,
consequently, if the obligations belong to the former, to him
alone must also belong the rights arising from the contract.
The money with which the launch was bough having come
from the plaintiff, the exception established in article 1717
is applicable to the instant case.
As to Casco no. 2584:
Santiagos allegation that it was constructed at his
instance and with his money is not supported by the
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
evidence. In fact the only proof presented to support this
allegation is his own testimony contradicted, on the on
hand, by the plaintiffs' testimony and, on the other hand,
rebutted by the fact that, on the date this casco was
constructed, he did not have sufficient money with which to
pay the expense of this construction.
As to the automobile:
There is sufficient evidence to show that its prices
was paid with plaintiffs' money. Defendant's adverse
allegation that it was paid with his own money is not
supported by the evidence.
As to Casco no. 2545:
Upon examination of the evidence relative to this
casco, it was found that it belonged to the plaintiffs but sold
it afterwards to the defendant by means of a public
instrument. The plaintiffs have not adduced sufficient proof
of such deceit (on the part of Santiago, when they signed)
which would destroy the presumption of truth which a
public document carries with it. Attorney Sevilla, who acted
as the notary in the execution of this instrument, testifying
as a witness in the case, said that he never verified any
document without first inquiring whether the parties knew
its content. Our conclusion is that this casco was lawfully
sold to the defendant by the plaintiffs. (Fun fact: This casco
had been leased and was sunk while in the lessees hands
before the complaint in this case was filed. As such, the
issue of ownership is determinative of who may enforce the
responsibility of damages for losses on the lessee.)
40. NATIONAL FOOD AUTHORITY VS. IAC
Facts:
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Medalla, as a commission agent of plaintiff Superior
Shipping Corporation, entered into a contract for hireof ship
(MV Sea Runner) with defendant NFA. The contract
obligated Medalla to transport on the MV Sea Runner 8,550
sacks of rice belonging to NFA from Occidental Mindoro to
Malabon, Metro Manila. Upon completion of the delivery,
plaintiff wrote a letter around October 1979,requesting NFA
that it be allowed to collect the amount for freightage and
other charges. Plaintiff wrote again around November 1979,
this time specifically requesting that payment be made to it
and not to Medalla because plaintiff was the owner of the
vessel. On November 16, 1979, NFA informed plaintiff that it
could not grant its request because the contract to
transport the rice was entered into by NFA and defendant
Medalla who did not disclose that he was acting as a mere
agent of plaintiff. Thereupon on November 19, 1979,
defendant NGA paid defendant Medalla the sum of
P25,974.90, for freight services. On December 4, 1979,
plaintiff wrote defendant Medalla demanding that he turn
over to plaintiff the amount of P27,000.00 paid to him by
defendant NFA. Defendant Medalla, however, "ignored the
demand."
Issue: Whether NFA is jointly and severally
liable with defendant Medalla.
Held: Yes, NFA is solidarily liable with defendant Medalla. It
is an undisputed fact that Gil Medalla was a commission
agent of respondent Superior Shipping Corporation which
owned the vessel "MV Sea Runner" that transported the
sacks of rice belonging to petitioner NFA. The context of the
law is clear. Art. 1883, which is the applicable law in the
case at bar provides:
Art. 1883. If an agent acts in his own name, the principal
has no right of action against the persons with whom the
agent has contracted; neither have such persons against
the principal. In such case the agent is the one directly
DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
bound in favor of the person with whom he has contracted,
as if the transaction were his own, except when the
contract involves things belonging to the principal.
The provision of this article shall be understood to be
without prejudice to the actions between the principal and
agent. Consequently, when things belonging to the
principal (in this case, Superior Shipping Corporation) are
dealt with, the agent is bound to the principal although he
does not assume the character of such agent and appears
acting in his own name. In other words, the agent's
apparent representation yields to the principal's true
representation and that, in reality and in effect, the contract
must be considered as entered into between the principal
and the third person. Corollarily, if the principal can be
obliged to perform his duties under the contract, then it can
also demand the enforcement of its rights arising from the
contract.
41. E. AWAD, vs. FILMA MERCANTILE CO., INC.,
FACTS: the plaintiff, doing business in the Philippine
Islands under the name of E. Awad & Co., delivered certain
merchandise of the invoice value of P11,140 to Chua Lioc, a
merchant operating under the name of Hang Chua Co. in
Manila, said merchandise to be sold on commission by Chua
Lioc. Representing himself as being the owner of the
merchandise, Chua Lioc, on September 8, 1924, sold it to
the defendant for the sum of P12,155.60. He owed the
Philippine Manufacturing Co., the sum of P3,480, which the
defendant agreed to pay, and was also indebted to the
defendant itself in the sum of P2,017.98. The total amount
of the two debts, P5,497.98, was deducted from the
purchase price, leaving a balance of P6,657.52 which the
defendant promised to pay to Chua Lioc on or before
October 9, 1924. The merchandise so purchased on
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40
September 9, was delivered to the defendant, who
immediately offered it for sale. Three days later D. J. Awad,
the representative of the plaintiff in the Philippine Islands;
having ascertained that the goods entrusted to Chua Lioc
was being offered for sale by the defendant, obtained
authorization from Chua Lioc to collect the sum of P11,707
from said defendant and informed the latter's treasurer of
the facts above set forth. On September 15, D. J. Awad, in
behalf of E. Awad & Co., wrote a letter to the defendant
corporation advising it that, inasmuch as the merchandise
belonged to E. Awad & Co., the purchase price should be
paid to them.
September 18, 1924, the Philippine Trust Company, brought
an action, civil case No. 26934, against Chua Lioc for the
recovery of the sum of P1,036.36 and under a writ of
attachment garnished the balance due Chua Lioc from the
defendant. On October 7, E. Awad also brought an action,
civil case No. 27016, against Chua Lioc for the recovery of
the sum of P11,140, the invoice value of the merchandise
above-mentioned and also obtained a writ of attachment
under which notice of garnishment of the said aforesaid
balance we served upon the herein defendant.
The complaint in the present action was filed on November
26, 1924, the plaintiff demanding payment of the same
sum of P11,140 for which action had already been brought
against Chua Lioc. The defendant, its answer, set up as
special defense that it brought the merchandise in good
faith and without any knowledge whether of the person
from whom or the condition under which the said
merchandise had been acquired by Chua Lioc or Hang
Chuan Co.; that the defendant therefore had acquired title
to the merchandise purchased; that the balance of
P6,657.52, now in the hands of the defendant had been
attached in the two actions brought on September 18, and
October 7, respectively, and garnishment served upon the
defendant, who therefore, holds the money subject to the
orders of the court in the cases above-mentioned, but
which sum the defendant is able and willing to pay at any
time when the court decides to whom the money lawfully
pertains.
HELD: The law applicable to the case is well settled. Article
246 of the Code of Commerce reads as follows: When the
agent transacts business in his own name, it shall not be
necessary for him to state who is the principal and he shall
be directly liable, as if the business were for his own
account, to the persons with whom he transacts the same,
said persons not having any right of action against the
principal, nor the latter against the former, the liabilities of
the principal and of the agent to each other always being
reserved.
The rule laid down in the article quoted is contrary to the
general rule in the United States as to purchases of
merchandise from agents with undisclosed principal, but it
has been followed in a number of cases and is the law in its
jurisdiction. But the appellant points out several
circumstances which, in his opinion, indicate that the
defendant-appellee was aware of the condition under which
the merchandise was entrusted to the agent Chua Lioc and
therefore did not purchase the goods in good faith. This, if
true, would, of course, lead to a decision of the case in
favor of the plaintiff, but there is, in our opinion, nothing
conclusive about the circumstances referred to and they are
not sufficient to overcome the presumption of good faith.
The appealed judgment is in accordance with the law and
the facts and is affirmed with the costs against the
appellant. So ordered.
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