AGENCY

Nielson and Company, Inc. vs Lepanto Consolidated Mining Company

A management contract was executed between petitioner and respondent, wherein
petitioner's principal undertaking is to operate and develop the mine and mill of
Lepanto Consolidated Mining Company for a period of five years. Incidental to this
undertaking are the following:
- to develop and operate Lepanto's mining claims
- to market the metallic products recovered therefrom
- to hire sufficient and competent staff and laborers (pp. 547-548)
Lepanto terminated the said contract, on the ground that Nielson allegedly did not
comply with certain terms of the management contract, as stated in its pleadings with
the lower courts. This reason changed in its motion for reconsideration, wherein
Lepanto claims that the contract is one of agency and thus can be terminated at will.
ISSUE
WoN the management contract between Nielson and Lepanto is a contract of agency,
by virtue of which, Lepanto can terminate it at any time
HELD
1. NO, it is not a contract of agency, but a contract for lease and services
- no execution of juridical acts w/c would bind Lepanto
- there was compensation for Nielson's services
- In performing its principal undertaking, Nielson was not in any way executing
juridical acts for Lepanto destined to create/modify/extinguish business relations bet.
Lepanto and 3rd persons. Petitioner was performing material acts for an employer, for
compensation.1
For example, as purchasing agent, P could not purchase or sell minerals without
Lepanto's prior approval. Thus, Nielson was merely acting as an intermediary and
not an agent, since he had to first secure Lepanto's approval.
The Court made a distinction between a contract of agency and a contract of lease
and services:
Contract of Agency
Basis: representation
Preparatory contract
- Agency doesn't stop with the agency as
the purpose is to enter into other

Contract of Lease and Services

Basis: employment

1 Nielson and Co's offer: brokerage commission of 10% of the P1,050,000 capital

to be sold to
the public; P2,000/month until mining property is put on a profitable basis and P2,500/month +
10% of the net profits for a period of 5 years after

contracts
- Agent has the power to bring about
business relations between his principal
and third persons
2. NO, Lepanto cannot terminate the management contract at any time
- provision in the contract about termination
- Paragraph XI of the contract states that Lepanto may cancel the Agreement subject
to the ff conditions:
1. Cancellation preceded by 90 days written notice
2. In the event that Nielson should prosecute in bad faith and not in accordance with
approved mining practice the operation and development of Lepanto's mining
properties.
(can't terminate it by reason of acts of God, strike, and other causes beyond NIelson's
control)
Lepanto violated both conditions by not giving any written notice to Nielson, and by
terminating the contract when Nielson ceased to operate the properties due to the
war (a cause beyond his control).
Obiter
Other grounds for motion of reconsideration:
1. WoN the happening of the events below suspended the period of the
contract, or the performance of obligations of either party
In the event of inundation, flooding of the mine, typhoon, earthquake or any other
force majeure, war, insurrection, civil commotion, organized strike, riot, fire, injury to
the machinery or other event or cause reasonably beyond the control of NIELSON
and which adversely affects the work of mining and milling; NIELSON shall report
such fact to LEPANTO and without liability or breach of the terms of this
Agreement, the same shall remain in suspense, wholly or partially during the terms of
such inability.
Events suspend the period of the contract ("same" refers to Agreement) for as
long as the adverse effects of the happening of any of those events impeded or
obstructed the work of mining and milling. Happening + adverse effect on the work
must concur.
In this case, the war's adverse effect on the mining and milling work was when the
Americans ordered all the supplies and equipment destroyed to prevent the enemy
from using them. Their reconstruction and rehabilitation was finished only on June 25,
1948, years after the liberation in Aug. 1945. The reckoning date then is June 25,
1948 for the end of the period of the suspension of the contract.

AGENCY
A period equal to the period of suspension due to force majeure should be added to
the original term of the contract by way of extension, so as not to deprive the
manager-operator from the benefits of his work
Other issues:
- L: Nielson's action has prescribed ll C: no, 10 years
- L: shouldn't have been ordered to deliver to N shares of stock and their fruits ll
C: Yes, stock dividends (distribution of the shares of stock) is payable out of surplus
profits only to stock holders. Acc. to the agreement, Nielson will be paid 10% of the
cash value of the stock dividends.

Shell Co., of the Phil. Ltd. vs. Firemens Ins. of Newark

Salvador Sison brought his car to Shell for washing and greasing. The job was
undertaken by defendant Porfirio Dela Fuente and his 2 employees, Alfonso Adriano
(greaseman) and de los Reyes (helper and washer). In the process of lowering the
car on the lift (by releasing the valve) to grease a part hard to reach, it swayed and
fell.
The car was repaired and restored to running condition by Philippine Motors Co.,
upon the order of insurers and with Sison's consent. After repairs, Sison and
Firemen's Insurance Company and Commercial Casualty Insurance Company
brought an action against Shell to recover the cost of repairs (P1,651.38).
ISSUE
WoN Shell is liable for the cost of repairs
HELD
YES, Shell is liable.
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.
Porfirio Dela Fuente was a mere agent of Shell as the operator "by grace" of its
station; 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

Shell undertook to answer and see to it that the equipments are in good
running order and usable condition, but its mechanic only did a routine,
instead of a thorough, check-up of the hydraulic lifter by raising it once or
twice and leaving the place right after. Thus, the mechanic's negligence
caused the fall and Shell must answer for it.

Sevilla vs CA
A contract of lease was executed between Segundina Noguera and Tourist
World Service wherein the latter leased the former's premises as a branch
office. The branch office was run by Lina Sevilla, who held herself solidarily
liable with TWS for the prompt payment of monthly rentals of the premises
and who had a 4% commission for any fare she brought in, while the 3% was
remitted to TWS.
When TWS discovered that Sevilla was connected with a rival firm
(Philippine Travel Bureau) and since the branch office was incurring losses, it
abolished the office of "manager" and authorized its Corporate Secretary,
Gabino Canilao, to receive its properties. Canilao then padlocked the
premises to protect TWS's interests. TWS also cut the office's telephone
lines.
Lina Sevilla then filed a complaint against the appellees, on the ground that
her arrangement with TWS was not one of employer-employee relations but
rather, one of joint business venture.
ISSUE
What is the nature of the relation bet. TWS and Sevilla?
HELD:
It is a contract of agency that cannot be revoked at will. For TWS's
brazen revocation, it must pay Sevilla for damages.
- Sevilla solicited airline fares for and on behalf of her principal TWS
- She presumed her principal's authority as owner of the business in her
letter: "concedes your right to stop the operation of your branch office."
- The contract of agency cannot be revoked at will as a mutual interest was
created between the principal and agent, since Sevilla was a travel agent.
She continued the business even after TWS stopped its operations, thus her
interest was not limited to the commissions she earned but extended to the
very subject matter of the power of management delegated to her.
- not that of employer-employee
fails the right of control test (over means and end) and that of
economic circumstances:
- Sevilla ran the business, and thus the means she used was not
under TWS's control

AGENCY
- She was solidarily liable with TWS for the monthly rentals; an
employee would never be made to incur the employer's expenses
- In terms of economic conditions, she was not on TWS's payroll but
rather, was given commission
- not one of joint business venture either
- A joint venture, including a partnership, presupposes a parity of standing
bet. the parties which did not exist in this case as evidenced
by Sevilla's letter wherein she expressly stated:
"concedes your right to stop the operation of your branch office."
Lim vs CA
Lourdes Valerio Lim proposed to sell Maria Ayroso's tobacco, worth P799.50
(615 kilos at P1.30/kilo) the proceeds of which will go to Ayroso as soon as it
is sold while the overprice will go to Lim. A written agreement was made to
that effect signed by Lim and witnessed by Ayroso's sister Salud Bantug.
Of the total value of P799.50,only P240 was remitted by Lim even after
several demands. Complainant thus filed a case of estafa against Lim.
ISSUE
WoN the receipt is a contract of agency to sell or a contract of sale; if the
latter, Lim is not criminally liable
HELD
It is a contract of agency to sell.

WoN the lease executed by Nombre in favor of Escanlar is governed by the

rules of Agency, and is thus null and void
HELD: NO. The contract of lease2 in favor of Escanlar is valid,
notwithstanding the lack of prior authority and approval.
Art. 1878 states: "Special powers of attorney are necessary in the following
cases:
....
(8) to lease any real property to another person for more than one year."
Respondents contend that the lease contract bet. Nombre and Escanlar, not
having been authorized or approved by the Court, is null and void and cannot
be an obstacle to the execution of another lease contract by the new
administrator, Campanillos.
The Court ruled that the provisions on agency should not apply to a judicial
administrator, who represents the Court and the estate's heirs and creditors,
unlike the agent who is answerable only to his principal.
"The protection which the 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
thru agreements, whereas the acts of a judicial administrator are subject to
specific provisions of law and orders of the appointing court."
Thus, 1878 does not apply in this case.

The fact that Lim received the tobacco to be sold at P1.30/kilo with proceeds
to be given to complainant as soon as it is sold strongly negates transfer of
ownership of the goods to petitioner.
San Diego, Sr. vs. Nombre
Adelo Nombre was judicial administrator of an intestate estate which includes
a fishpond. In 1960, he leased the fishpond to one Pedro Escanlar for a
period of 3 years (until May 1, 1963) for a yearly rental of P3,000.
In 1961, Nombre was removed as administrator and was replaced by
Sofronio Campillanos, who filed a motion to execute a lease contract over
the same fishpond in favor of Moises San Diego (for a period of 5 years for
the yearly rental of P5,000) since Escanlar refused to surrender the fishpond
to him.
ISSUE

De la Pena vs Hidalgo
Before going to Spain, Jose de la Pea y Gomiz executed a power of attorney in
favor of Federico Hidalgo, Antonio L. Rocha, Francisco Roxas and Isidro Llado so
that they might represent him (in the order mentioned, but Hidalgo is the only one
who took charge) and administer his properties in Manila.
Federico administered the property from 1887-1893, but had to leave for Spain for
health reasons. He then sent de la Pena several letters asking him to appoint a
substitute agent, to which the former did not reply.
In March 1894, when Federico had to embark for Spain already, he sent de la Pena a
letter with the ff contents: rendering accounts of his administration, informing De la
Pena of his intended departure, and of having provisionally turned over to his cousin,
Antonio Hidalgo, a general power of attorney to administer De la Pena's properties,

Under 1647, there is no need for special authority unless the contract is to be
recorded in the Registry of Property

AGENCY
and a request that de la Pena send a new power of attorney to Antonio Hidalgo. Still,
the letter received no reply.
Antonio Hidalgo administered the properties from 1894-1902, who then turned it over
to Francisco Hidalgo, who administered the same from 1902-1904.
The administrator of the de la Peas estate, Jose de la Pena y de Ramon wants to
collect the payments received by Federico due to the property, during the time that he
was an agent, including the time he passed it on to Antonio. Federico is the only one
charged, since the charges against Antonio are dropped by the plaintiff.
Issues
1. Whether or not Federico validly renounced the agency
2. WoN Antonio became an agent of de la Pena

HELD
1. YES Hidalgo definitely renounced his agency and it was duly
terminated.
" the word "renounce" was not employed in connection with the agency or power of
attorney executed in his favor, yet when the agent informs his principal that for
reasons of health and by medical advice he is about to depart from the place where
he is exercising his trust and where the property subject to his administration is
situated, abandons the property, turns it over a third party, without stating when he
may return to take charge of the administration, renders accounts of its revenues up
to a certain date, December 31, 1893, and transmits to his principal a general
statement which summarizes and embraces all the balances of his accounts since he
began to exercise his agency to the date when he ceased to hold his trust, and asks
that a power of attorney in due form in due form be executed and transmitted to
another person who substituted him and took charge of the administration of the
principal's property, it is then reasonable and just to conclude that the said agent
expressly and definitely renounced his agency, and it may not be alleged that the
designation of Antonio Hidalgo to take charge of the said administration was that of a
mere proceed lasted for more than fifteen years, for such an allegation would be in
conflict with the nature of the agency."
Federico is only liable for the results and consequences of his administration during
the period when the said property was under his charge, and this cannot extend
beyond the period of his management. It is not enough that he render accounts
pertaining to his trust, but he must also prove that he paid his principal the balance
resulting from his accounts.
2. YES Antonio Hidalgo administered de la Pena's properties by virtue of an
implied agency
Proof of de la Pena's tacit consent:
- did not assign another administrator
- did not bother to execute or transmit another power of attorney and remained silent
for nearly nine years

Conde vs CA
The Conde siblings (Margarita, Bernardo, and Dominga) inherited two
parcels of land from Santiago Conde and sold them to spouses Casimira
Pasagui and Pio Altera on April 1938, with right of repurchase in 10 years.
On November 1945, a Memorandum of Repurchase was executed allowing
the repurchase of the lots by one Eusebio Amarille, the representative of the
Conde siblings, with P165 as consideration. It is to be noted that neither of
the vendees-a-retro (Pasagui nor Altera) signed the memorandum; it was
Paciente Cordero, the Alteras' son-in-law, who signed. Additionally, the
payment of the said consideration was made by petitioner Dominga Conde
with her own funds.
On June 1965, Pio Altera sold the lot to Ramon and Catalina Conde
(relationship to petitioners not stated in the records), which petitioner now
disputes. She claims that Paciente Cordero signed the memorandum of
repurchase in representation of Pio Altera who was sick and Casimira
Pasagui who was in Manila at that time, and that Cordero received her
payment of P165.
Private respondents claim that Cordero merely signed to show he had no
objection to the repurchase and that he did not receive the P165 from
petitioner.
ISSUE
Who is the owner of the disputed property?
HELD
Petitioner is hereby declared the disputed owner of the property.
Implied agency
- The Alteras did not repudiate the deed that their son-in-law signed.
Thus, an implied agency must be held to have been created from
their silence or lack of action, or their failure to repudiate the agency:
Art. 1869. Agency may be express, or implied from the acts of the
principal, from his silence or lack of action, or his failure to repudiate
the agency, knowing that another person is acting on his behalf
without authority.
Agency may be oral, unless the law requires a specific form. (1710a)

AGENCY
- From the execution of the repurchase document in 1945, petitioner has held
the lot in possession and has paid the land taxes due.

bill for Cenar's transportation from Manila to Iloilo plus cost of labor, belies his
claim that M installed the plant.

- Respondents Ramon and Catalina Conde cannot be said to be purchasers

in good faith. The land title had a right of redemption inscribed on it, and it
behooved said respondents to look into that.

Thus, Article 1727 "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" does not apply.

Harry E. Keller Elec. Co. vs. Rodriguez

Harry E. Keller Electric Co. is a domestic corporation in the electric business
engaged in the sale of Matthews electric plant. Montelibano approached
plaintiff offering to sell the electric plant, to which plaintiff agreed and said the
former would be paid a 10% commission for every sale he consummates.
The plant was sold to defendant Rodriguez for the price of P2,513.55, with
Juan Cenar, an employee of HKEC, installing it on defendant's premises in
Iloilo. When Cenar presented to R a statement of account, defendant said he
was going to pay the plant in Manila.
Defendant, however, paid Montelibano and claims the latter assured him
that he was authorized to collect the payment for HKEC. A receipt was issued
by Montelibano stating that payment was made to HKEC, but Montelibano
never turned over the amount to plaintiff.
Plaintiff thus commences this action.
ISSUE
WoN Montelibano is an agent of petitioner, by virtue of which payment to him
by defendant discharges his debt to petitioner for the purchase of the
Matthews plant
HELD. NO, he is not an agent of the petitioner; defendant is ordered to
pay HKEC the amount of P2,513.55 with interest.
Plaintiff never authorized Montelibano to receive money on its behalf; the
receipt he issued to defendant was a personal receipt with his own personal
signature.
Moreover, it is defendant's burden to prove that Montelibano was the
plaintiff's agent, which he failed to do given that the evidence he presented, a

Rallos vs Yangco
Teodoro Yangco invited Florentino Rallos to do business with him, to consign
to him leaf tobacco and other native products. In his invitation, he introduced
Florentino Collantes, upon whom he conferred public power of attorney to
perform in his name and behalf all acts necessary for carrying out his plans.
Rallos accepted his invitation and sent to Collantes 218 bundles of tobacco
leaf to be sold on commission, which the latter sold for the price of P1,744,
P206.96 of which was his commission.
However, Collantes converted the balance of the amount to his own use.
Plaintiff now seeks to recover the sum from defendant, but Yangco claims
that even before the tobacco was sent to Collantes, the latter no longer acted
as his agent. No notice of termination of the relationship of principal and
agency was sent to Rallos.
ISSUE:
WoN plaintiffs can recover from defendant
HELD: YES, defendant is responsible to plaintiff for said goods.
It is the defendant's duty to notify plaintiffs of the termination of the
relationship of principal and agent between him and Collantes, given that he
advertised the latter as his agent and invited plaintiffs to deal with him as
such.
Macke vs Camps
Plaintiffs B.H. Macke and W.H. Chandler, partners in the business Macke,
Chandler & Company, delivered to defendant's place of business, the
"Washington Cafe," goods worth P351.50.
The receipt of said goods was acknowledged and was paid for in the amount
of P174 by one Ricardo Flores, who represented himself to be the agent of

AGENCY
defendant, ordering the goods on defendant's credit and acting as the
manager of the business when plaintiffs went to the Washington Cafe to
collect the bill.
P177.50 still remains unpaid even after plaintiff's demand, thus leading them
to file this complaint against defendant.
ISSUE
WoN Flores was an agent of the defendant, thus binding the latter, as
principal, to pay the balance of the ordered goods
HELD. YES, costs against defendant.

Sufficient evidence was introduced to establish that Flores was the agent of
Camps:
1. written contract for the subrenting of the building where Washington Cafe
signed by defendant as sub lessee and by Flores as managing agent
2. at the time the purchases were made, Flores performed acts of an agent.
"One who clothes another with apparent authority as his agent and holds him
out to the public as such, cannot be permitted to deny the authority of such
person to act as his agent, to the prejudice of innocent third parties dealing
with such person in good faith and in the honest belief that he is what he
appears to be, for the following presumptions or deductions, which the law
expressly directs to be made from particular facts, are deemed conclusive."