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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 ISSUE: WON ORIENT AIR FAILED ITS OBLIGATION AS AN
on certiorari of a decision of the Court of Appeals. The antecedent AGENT TO THE PRINCIPAL (AMERICAN AIRLINES)?
facts are as follows: On 15 January 1977, American Airlines, Inc. HELD: NO. Orient Air was clearly justified in retaining and
(hereinafter referred to as American Air), an air carrier offering refusing to remit the sums claimed by American Air. The latter's
passenger and air cargo transportation in the Philippines, and termination of the Agreement was, therefore, without cause and
Orient Air Services and Hotel Representatives (hereinafter basis, for which it should be held liable to Orient Air. Orient Air
referred to as Orient Air), entered into a General Sales Agency was entitled to an overriding commission based on total flown
Agreement (hereinafter referred to as the Agreement), whereby revenue. American Air's perception that Orient Air was remiss or
the former authorized the latter to act as its exclusive general in default of its obligations under the Agreement was, in fact, a
sales agent within the Philippines for the sale of air passenger situation where the latter acted in accordance with the
transportation. 1. Representation of American by Orient Air Agreementthat of retaining from the sales proceeds its accrued
Services: Orient Air Services will act on American's behalf as its commissions before remitting the balance to American Air. Since
exclusive General Sales Agent within the Philippines, including the latter was still obligated to Orient Air by way of such
any United States military installation therein which are not commissions.
serviced by an Air Carrier Representation Office (ACRO), for the
sale of air passenger transportation. By affirming this ruling of the trial court, respondent appellate
court, in effect, compels American Air to extend its personality to
On 11 May 1981, alleging that Orient Air had reneged on its Orient Air. Such would be violative of the principles and essence
obligations under the Agreement by failing to promptly remit the of agency, defined by law as a contract whereby "a person binds
net proceeds of sales for the months of January to March 1981 in himself to render some service or to do something in
the amount of US $254,400.40, American Air by itself undertook representation or on behalf of another, WITH THE CONSENT OR
the collection of the proceeds of tickets sold originally by Orient AUTHORITY OF THE LATTER . (emphasis supplied) In an agent-
Air and terminated forthwith the Agreement in accordance with principal relationship, the personality of the principal is extended
Paragraph 13 thereof (Termination). Four (4) days later, or on 15 through the facility of the agent. In so doing, the agent, by legal
May 1981, American Air instituted suit against Orient Air with the fiction, becomes the principal, authorized to perform all acts
Court of First Instance of Manila, averring the aforesaid basis for which the latter would have him do. Such a relationship can only
the termination of the Agreement as well as therein defendant's be effected with the consent of the principal, which must not, in
previous record of failures "to promptly settle past outstanding any way, be compelled by law or by any court. The Agreement
refunds of which there were available funds in the possession of itself between the parties states that "either party may terminate
the defendant, . . . to the damage and prejudice of the Agreement without cause by giving the other 30 days' notice
plaintiff." Defendant Orient Air denied the material allegations of by letter, telegram or cable." (emphasis supplied) We, therefore,
the complaint with respect to plaintiff's entitlement to alleged set aside the portion of the ruling of the respondent appellate
unremitted amounts, contending that after application thereof to court reinstating Orient Air as general sales agent of American
the commissions due it under the Agreement, plaintiff in fact still Air.
owed Orient Air a balance in unpaid overriding commissions.
Further, the defendant contended that the actions taken by
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WHEREFORE, with the foregoing modification, the Court AFFIRMS ISSUE: What is the legal effect of an act performed by an
the decision and resolution of the respondent Court of Appeals, agent after the death of his principal?
dated 27 January 1986 and 17 December 1986, respectively.
Costs against petitioner American Air. 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
2. RAMON RALLOS, Administrator of the Estate of and not for himself, and (4) the agent acts within the scope of his
CONCEPCION RALLOS vs. FELIX GO CHAN & SONS REALTY authority. Agency is basically personal representative,
CORPORATION and COURT OF APPEALS and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal; his act
FACTS: is the act of the principal if done within the scope of the
authority. Qui facit per alium facit se. "He who acts through
The following facts are not disputed. Concepcion and Gerundia another acts himself".
both surnamed Rallos were sisters and registered co-owners of a
parcel of land. On April 21, 1954, the sisters executed a special YES. By reason of the very nature of the relationship between
power of attorney in favor of their brother, Simeon Rallos, Principal and agent, agency is extinguished by the death of the
authorizing him to sell for and in their behalf lot 5983. On March principal or the agent. This is the law in this jurisdiction. It is the
3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon contention of respondent corporation which was sustained by
Rallos sold the undivided shares of his sisters Concepcion and respondent court that notwithstanding the death of the principal
Gerundia in lot 5983 to Felix Go Chan & Sons Realty Corporation. Concepcion Rallos the act of the attorney-in-fact, Simeon Rallos in
Ramon Rallos as administrator of the Intestate Estate of selling the former's sham in the property is valid and enforceable
Concepcion Rallos filed a complaint (1) that the sale of the inasmuch as the corporation acted in good faith in buying the
undivided share of the deceased Concepcion Rallos in lot 5983 be property in question. Articles 1930 and 1931 of the Civil Code
d unenforceable, and said share be reconveyed to her estate; (2) provide the exceptions to the general rule afore-mentioned. ART.
that the Certificate of 'title issued in the name of Felix Go Chan & 1930. The agency shall remain in full force and effect even after
Sons Realty Corporation be cancelled and another title be issued the death of the principal, if it has been constituted in the
in the names of the corporation and the "Intestate estate of common interest of the latter and of the agent, or in the interest
Concepcion Rallos". Felix Go Chan & Sons Realty Corporation of a third person who has accepted the stipulation in his
appealed in due time to the Court of Appeals from the foregoing favor.ART. 1931. Anything done by the agent, without knowledge
judgment insofar as it set aside the sale of the one-half (1/2) of the death of the principal or of any other cause which
share of Concepcion Rallos. 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 US$1.00. The GANAS also paid travel taxes of P100.00 for each
not coupled with an interest. passenger. On 24 April 1970, AIR FRANCE exchanged or
substituted the aforementioned tickets with other tickets for the
Article 1931 is the applicable law. Under this provision, an act same route. At this time, the GANAS were booked for the
done by the agent after the death of his principal is valid and Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970,
effective only under two conditions, viz: (1) that the agent acted and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on
without knowledge of the death of the principal and (2) that the 22 May 1970. The aforesaid tickets were valid until 8 May 1971,
third person who contracted with the agent himself acted in good the date written under the printed words "Non valuable apres de
faith. Good faith here means that the third person was not aware (meaning, "not valid after the").The GANAS did not depart on 8
of the death of the principal at the time he contracted with said May 1970. Sometime in January, 1971, Jose Gana sought the
agent. These two requisites must concur the absence of one will assistance of Teresita Manucdoc, a Secretary of the Sta. Clara
render the act of the agent invalid and unenforceable.In the Lumber Company where Jose Gana was the Director and
instant case, it cannot be questioned that the agent, Simeon Treasurer, for the extension of the validity of their tickets, which
Rallos, knew of the death of his principal at the time he sold the were due to expire on 8 May 1971. Teresita enlisted the help of
latter's share in Lot No. 5983 to respondent corporation. The Lee Ella Manager of the Philippine Travel Bureau, who used to
knowledge of the death is clearly to be inferred from the handle travel arrangements for the personnel of the Sta. Clara
pleadings filed by Simon Rallos before the trial court. 12 That Lumber Company. Ella sent the tickets to Cesar Rillo, Office
Simeon Rallos knew of the death of his sister Concepcion is also a Manager of AIR FRANCE. The tickets were returned to Ella who
finding of fact of the court a quo 13 and of respondent appellate was informed that extension was not possible unless the fare
court when the latter stated that Simon Rallos 'must have known differentials resulting from the increase in fares triggered by an
of the death of his sister, and yet he proceeded with the sale of increase of the exchange rate of the US dollar to the Philippine
the lot in the name of both his sisters Concepcion and Gerundia peso and the increased travel tax were first paid. Ella then
Rallos without informing appellant (the realty corporation) of the returned the tickets to Teresita and informed her of the
death of the former. On the basis of the established knowledge of impossibility of extension.
Simon Rallos concerning the death of his principal Concepcion
Rallos, Article 1931 of the Civil Code is inapplicable. The law In the meantime, the GANAS had scheduled their departure on 7
expressly requires for its application lack of knowledge on the May 1971 or one day before the expiry date. In the morning of
part of the agent of the death of his principal; it is not enough the very day of their scheduled departure on the first leg of their
that the third person acted in good faith. trip, Teresita requested travel agent Ella to arrange the
revalidation of the tickets. Ella gave the same negative answer
Costs against respondent realty corporation at all and warned her that although the tickets could be used by the
instances. GANAS if they left on 7 May 1971, the tickets would no longer be
3. AIRFANCE VS. CA, GANA 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
FACTS: Sometime in February, 1970, the late Jose G. Gana and GANAS to make the arrangements. Ella on his own, attached to
his family, numbering nine (the GANAS), purchased from AIR the tickets validating stickers for the Osaka/Tokyo flight, one a
FRANCE through Imperial Travels, Incorporated, a duly authorized JAL. sticker and the other an SAS (Scandinavian Airways System)
travel agent, nine (9) "open-dated" air passage tickets for the sticker. The SAS sticker indicates thereon that it was
Manila/Osaka/Tokyo/Manila route. The GANAS paid a total of "Reevaluated by: the Philippine Travel Bureau, Branch No. 2" (as
US$2,528.85 for their economy and first class fares. Said tickets shown by a circular rubber stamp) and signed "Ador", and the
were bought at the then prevailing exchange rate of P3.90 per 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 4. IN RE: PETITION FOR ISSUANCE OF SEPARATE
WAS RATIFIED BY ITS PRINCIPAL RENDERING THEM CERTIFICATE OF TITLE.
LIABLE? JOSE A. SANTOS Y Diaz vs. ANATOLIO BUENCONSEJO, ET
AL.
HELD: NO. The circumstances that AIR FRANCE personnel at the
ticket counter in the airport allowed the GANAS to leave is not FACTS: The main facts are not disputed. They are set forth in the
tantamount to an implied ratification of travel agent Ella's order appealed from, from which we quote:
irregular actuations. It should be recalled that the GANAS left in
Manila the day before the expiry date of their tickets and that It appears that the aforementioned Lot No. 1917 covered by
"other arrangements" were to be made with respect to the Original Certificate of Title No. RO-3848 (25322) was originally
remaining segments. Besides, the validating stickers that Ella owned in common by Anatolio Buenconsejo to the extent of
affixed on his own merely reflect the status of reservations on the undivided portion and Lorenzo Bon and Santiago Bon to the
specified flight and could not legally serve to extend the validity extent of the other (Exh. B); that Anatolio Buenconsejo's rights,
of a ticket or revive an expired one. interests and participation over the portion abovementioned were
on January 3, 1961 and by a Certificate of Sale executed by the
The conclusion is inevitable that the GANAS brought upon Provincial Sheriff of Albay, transferred and conveyed to Atty. Tecla
themselves the predicament they were in for having insisted on San Andres Ziga, awardee in the corresponding auction sale
using tickets that were due to expire in an effort, perhaps, to beat conducted by said Sheriff in connection with the execution of the
the deadline and in the thought that by commencing the trip the decision of the Juvenile Delinquency and Domestic Relations
day before the expiry date, they could complete the trip even Court in Civil Case No. 25267, entitled "Yolanda Buenconsejo, et
thereafter. It should be recalled that AIR FRANCE was even al. vs. Anatolio Buenconsejo"; that on December 26, 1961 and by
unaware of the validating SAS and JAL. stickers that Ella had a certificate of redemption issued by the Provincial Sheriff of
affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE Albay, the rights, interest, claim and/or or participation which
merely acted within their contractual rights when they dishonored Atty. Tecla San Andres Ziga may have acquired over the property
the tickets on the remaining segments of the trip and when AIR in question by reason of the aforementioned auction sale award,
FRANCE demanded payment of the adjusted fare rates and travel were transferred and conveyed to the herein petitioner in his
taxes for the Tokyo/Manila flight. capacity as Attorney-in-fact of the children of Anatolio
Buenconsejo, namely, Anastacio Buenconsejo, Elena Buenconsejo
WHEREFORE, the judgment under review is hereby reversed and and Azucena Buenconsejo (Exh. C).
set aside, and the Amended Complaint filed by private
respondents hereby dismissed. 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 FACTS:
have acquired the share of Anatolio Buenconsejo in the
aforementioned Lot No. 1917; that as the alleged present owner It appears that Albaladejo y Cia. is a limited partnership,
of said share, Santos caused a subdivision plan of said Lot No. organized in conformity with the laws of these Islands, and having
1917 to be made, in which the portion he claims as his share its principal place of business at Legaspi, in the Province of Albay;
thereof has been marked as Lot No. 1917-A; and that he wants and during the transactions which gave origin to this litigation
said subdivision at No. 1917-A to be segregated from Lot No. said firm was engaged in the buying and selling of the products of
1917 and a certificate of title issued in his name exclusively for the country, especially copra, and in the conduct of a general
said subdivision Lot No. 1917-A. mercantile business in Legaspi and in other places where it
maintained agencies, or sub-agencies, for the prosecution of its
ISSUE: WON THE SPECIAL POWER OF ATTORNEY GIVEN TO commercial enterprises. The Visayan Refining Co. is a corporation
JOSE SANTOS VESTED HIM SUCH PROPERTY RIGHTS IN HIS organized under the laws of the Philippine Islands; and prior to
OWN NAME? July 9, 1920, it was engaged in operating its extensive plant at
Opon, Cebu, for the manufacture of coconut oil. On August 28,
HELD: NO. As correctly held by the lower court, petitioner's claim 1918, the plaintiff made a contract with the Visayan Refining Co.
is clearly untenable, for: (1) said special power of attorney
authorized him to act on behalf of the children of Anatolio Pursuant to this agreement the plaintiff, during the year therein
Buenconsejo, and, hence, it could not have possibly vested in him contemplated, bought copra extensively for the Visayan Refining
any property right in his own name; (2) the children of Anatolio Co. At the end of said year both parties found themselves
Buenconsejo had no authority to execute said power of attorney, satisfied with the existing arrangement, and they therefore
because their father is still alive and, in fact, he and his wife continued by tacit consent to govern their future relations by the
opposed the petition of Santos; (3) in consequence of said power same agreement. In this situation affairs remained until July 9,
of attorney (if valid) and redemption, Santos could have acquired 1920, when the Visayan Refining Co. closed down its factory at
no more than the share pro indiviso of Anatolio Buenconsejo in Opon and withdrew from the copra market. When the contract
Lot No. 1917, so that petitioner cannot without the conformity above referred to was originally made, Albaladejo y Cia.
of the other co-owners (Lorenzo and Santiago Bon), or a judicial apparently had only one commercial establishment, i.e., that at
decree of partition issued pursuant to the provisions of Rule 69 of Legaspi; but the large requirements of the Visayan Refining Co.
the new Rules of Court (Rule 71 of the old Rules of Court) which for copra appeared so far to justify the extension of the plaintiff's
have not been followed By Santos adjudicate to himself in fee business that during the course of the next two or three years it
simple a determinate portion of said Lot No. 1917, as his share established some twenty agencies, or subagencies, in various
therein, to the exclusion of the other co-owners. ports and places of the Province of Albay and neighboring
provinces.
Inasmuch as the appeal is patently devoid of merit, the order
appealed from is hereby affirmed, with treble cost against After the Visayan Refining Co. had ceased to buy copra, as above
petitioner-appellant Jose A. Santos y Diaz. It is so ordered. 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
5. ALBALADEJO Y CIA., S. en C. vs. The PHILIPPINE parties were liquidated. The last account rendered by the Visayan
REFINING CO., as successor to The Visayan Refining Co., 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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plaintiff undoubtedly remained in it until it was delivered by way
Upon reference to paragraph five of the contract reproduced of subsequent sale to said company.
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 6. THOMAS vs. PINEDA
negligent failure of the Visayan Refining Co. to provide opportune June 28, 1951; Tuason, J.
transportation for the copra collected by the plaintiff and
deposited for shipment at various places. FACTS OF THE CASE
Summary: Defendant managed the business as plaintiffs
ISSUE: WON contract between the plaintiff and the employee or trustee during the Japanese occupation of the City of
Visayan Refining Co. created the relation of principal and Manila and on a share of the profits basis. The business burned
agent between the parties, and the reliance is placed down. After the war, defendant established a business of the
upon article 1729 of the Civil Code which requires the same name, located in the same place; he also refused to make
principal to indemnify the agent for damages incurred in an accounting of the business. The court held that the defendant
carrying out the agency 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.
HELD: NO. Attentive perusal of the contract is, however,
convincing to the effect that the relation between the parties was Plaintiff owns the bar and restaurant known as Silver Dollar Caf
not that of principal and agent in so far as relates to the purchase located in Plaza Santa Cruz, Manila. In the course of time, the
of copra by the plaintiff. It is true that the Visayan Refining Co. defendant became successively cashier and manager of the
made the plaintiff one of its instruments for the collection of business. On the onset of the war, plaintiff made a fictitious sale
copra; but it is clear that in making its purchases from the of the business to defendant to prevent the business and its
producers the plaintiff was buying upon its own account and that property from falling into enemy hands. Simultaneously with, or
when it turned over the copra to the Visayan Refining Co., soon after the execution of the simulated sale, the plaintiff and
pursuant to that agreement, a second sale was effected. In defendant signed a private or secret document stating that the
paragraph three of the contract it is declared that during the deed of sale conveying the restaurant was fictitious and upon the
continuance of this contract the Visayan Refining Co. would not restoration of peace and order, the document automatically
appoint any other agent for the purchase of copra in Legaspi; and becomes null and void and of no effect. On February 3, 1945, the
this gives rise indirectly to the inference that the plaintiff was building was destroyed by fire but the defendant had been able
considered its buying agent. But the use of this term in one to remove some of its furniture. According to the defendant, all of
clause of the contract cannot dominate the real nature of the these goods were accounted for and turned over to the plaintiff.
agreement as revealed in other clauses, no less than in the On May 8, 1945, a bar was opened on Calle Bambang under the
caption of the agreement itself. In some of the trade letters also name Silver Dollar Caf. On September of the same year, it was
the various instrumentalities used by the Visayan Refining Co. for transferred to its original location in Plaza Santa Cruz. It is alleged
the collection of copra are spoken of as agents. But this that after liberation, plaintiff brought a certified public accountant
designation was evidently used for convenience; and it is very to the caf for the purpose of examining the books of the
clear that in its activities as a buyer the plaintiff was acting upon business. The defendant resisted, and even pointed a gun at
its own account and not as agents, in the legal sense, of the them. Because of this incident, plaintiff brought the present
Visayan Refining Co. The title to all of the copra purchased by the 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 complete liquidation of the Silver Dollar Caf. The court said that
third, verbal agreement, the import of which was that he was to this was highly improbable, to put it mildly.
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 The use of the old name for the bar in Bambang suggests that the
therefore that he was relieved of any duty to make an business was in fact an extension and continuation of the Silver
accounting. Dollar Caf. It was also the plaintiff who entered into a written
contract of lease with the owner of the Santa Cruz location.
ISSUE OF THE CASE: Whether or not defendant is obliged to Thomas was even named as its proprietor. That the defendant
render an accounting to the plaintiff. YES. 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
RULING OF THE COURT printed. On the first set, David Thomas was held out as the
The defendants contention is at war with the care and precaution proprietor and Hermogenes Pineda, as manager. On the second
which the plaintiff took to insure his rights in the business and its set, which were ordered later, the defendant was not even
assets. Unless Thomas was willing to give away his property and mentioned as manager, but one Bill Magner, while David Thomas
its profits, no man in his right senses would have given his name was retained as proprietor. At different times from May 8 to
manager an outright license such as the defendant claims to December 15, 1945, the defendant handed the plaintiff averse
have gotten from his employer. The exact legal character of the amounts totaling P24,100 without so much as asking Thomas to
defendants relation to the plaintiff matters not a bit. It was sign a receipt for any of them. The defendant testified that these
enough to show, and it had been shown, that he had been amounts were simple loans secured by plaintiffs mining shares of
entrusted with the possession and management of the plaintiffs stock. The court held that the lack of any receipt is incompatible
business and property for the owners benefit and had not made with the hypothesis of loans. There is no escaping the conclusion
an accounting. that the plaintiff was the sole owner of the post-war Silver Dollar
bar and restaurant, that the defendant was only an industrial
Neither did the defendants sweeping statement at the trial that partner, and that the said amounts were withdrawals on account
all the proceeds from the business had been used to support the of the profits.
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 As to the use of the trade name:
profits. The courts inquiry ought to have been confined to the It appears that the defendant on September 27, 1945, registered
determination of the plaintiffs right to secure an accounting. The the business and its name as his own. He contends that in 1940,
defendant denied that the plaintiff had any proprietary interest in the plaintiffs right to use this trade name expired and by
the saloon in Bambang and at Plaza Sta. Cruz after liberation. abandonment and non-use, the plaintiff ceased to have any title
Thomas however said that he borrowed P2000 from a friend, and thereto. The alleged abandonment or non-use is predicated on
with that amount he constructed a temporary building in the testimony that the plaintiff expressly allowed the defendant
Bambang and with the stocks saved by the defendant, opened to appropriate the trade name in dispute. The court held that the
the business there. He said that, as before, the defendant now defendant registered the business in bad faith. The plaintiffs non-
worked as manager, with the difference that under the new use of his trade name did not work as a forfeiture of his exclusive
arrangement he was to get one-half the net profits. The right to the name.
defendant said that he returned several cases of whiskey, rum,
gin and other kinds of liquor to the plaintiff, and he gave the As legal proposition and in good conscience, the defendants
latter P2000 in cash. He avers that this payment was in full and registration of the trade name Silver Dollar Caf must be deemed
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to have been affected for the benefit of its owner of whom he was therefrom.
a mere trustee or employee.
The CFI dismissed the case, and when the case was brought to
"The relations of an agent to his principal are fiduciary the CA it was similarly dismissed.
and it is an elementary and very old rule that in regard to The court of appeals concluded that the parcel of land in question
property forming the subject matter of the agency, he is is a community property held by Palma in trust for the real
estopped from acquiring or asserting a title adverse to owners (respondent Cristobal being an heir of one of them), the
that of principal. His position is analogous to that of a registration having been made in accordance with an
trustee and he cannot consistently, with the principles of understanding between the coowners, by reason of the
good faith, be allowed to create in himself an interest in confidence they had in Palma and his wife. This confidence, close
opposition to that of his principal or cestui que trust. A relationship, and the fact that co-owners were receiving their
receiver, trustee, attorney, agent or any other person shares in the rentals, were the reasons why no step had been
occupying fiduciary relations respecting property or taken to partition the property. Before the death of Palma's wife,
persons utterly disabled from acquiring for his own she called her husband and enjoined him to give her co-owners
benefit the property committed to his custody for their shares and he told her not to worry about it because he
management. This rule is entirely independent of the fact would. The CA, in dismissing the case, invoked SC rulings w/c
whether any fraud has intervened. No fraud in fact need declared that the registration of the property in the name of the
be shown, and no excuse will be heard from any such trustees in possession thereof, must be deemed to have been
inquiry that the rule takes so general form. The rule effected for the benefit of the principal/cestui que trust. Thus this
stands on the moral obligation to refrain from placing appeal by certiorari.
one's self in position which ordinarily excite conflicts
between self-interest at the expense of one's integrity ISSUE OF THE CASE: Whether or not the CA erred in dismissing
and duty to another, by making it possible to profit by the case
yielding to temptation"
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
7. PALMA vs CRISTOBAL 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
FACTS: In 1909, after registration proceedings under ACT 496, to a property not belonging to him, is not a valid reason for
the original certificate of title was issued in the names of Palma changing the legal relationship between the latter and its true
and his wife (Luisa Cristobal). By the year 1923, said certificate owners to such an extent as to let them lose their ownership to a
was cancelled by virtue of CFI decree, but was later substituted person trying to usurp it.
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 Cristobal is not barred because his appearance as attorney for
issued, but this time only in the name of Palma only. With such, petitioner was not a misrepresentation which would induce Palma
Palma sought to eject Cristobal from a parcel of land in Tondo to believe that he recognized Palma as the sole owner of the
(TCT of w/c registered to Palma). Cristobal raised the question of property in controversy. The misrepresentation could deceive the
ownership and the case was dismissed. Palma filed w/ CFI Manila court and outsiders, because they were not aware of the
praying he be declared owner of the land and for Cristobal to be understanding between the co-owners that the property be
ordered to restore its possession to him and remove his house registered in the name of Palma.
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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himself-but then another person Salvador Vallejo, who had an
Palma then claimed that even granting the property was owned execution upon a judgment against the plaintiff rendered in
by several co-owners he now owns it because of prescription. This another case, levied upon said right of redemption- right of
theory holds no water because, according to the pronouncement redemption sold to Vallejo and was definitely adjudicated to
of the CA, Palma held the property and secured its the him. Later, he transferred the said right of redemption to
registration in his name in a fiduciary capacity, and it is defendant-appellee. The title was consolidated in his name, thus,
elementary that a trustee cannot acquire by prescription the the agent got the title to the right of usufruct to the
ownership of a property entrusted to him. The position of a aforementioned property.
trustee is of representative nature. His position is the position of a
cestui que trust. It is logical that all benefits derived by the ISSUE OF THE CASE: Whether or not the agency was
possession and acts of the agent, as such agent, should accrue to terminated
the benefit of his principal.
RULING OF THE COURT:
The relations of an agent to his principal are fiduciary and in
regard to property forming the subject matter of the agency, he is YES. Art 1732- Agency is terminated by:
estopped from acquiring or asserting a title adverse to that of the a) Revocation
principal. His position is analogous to that of a trustee and he b) Withdrawal of agent
cannot consistently, with the principles of good faith, be allowed c) Death, interdiction, bankruptcy, or insolvency of the principal
to create in himself an interest in opposition to that of his or of the agent.
principal or cestui que trust.
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
8. FEDERICO VALERA VS. MIGUEL VELASCO continuing to act as such without serious detriment to himself.
G.R. No. L-28050 March 13, 1928 The misunderstanding between the plaintiff and the defendant
over the payment of the balance of P1, 000 due the latter more
FACTS OF THE CASE: than prove the breach of the juridical relation between them;
For, although the agent has not expressly told his
By virtue of the powers of attorney executed by the plaintiff- principal that he renounced the agency, yet neither
appellant, the defendant-appellee was appointed attorney-in-fact dignity nor decorum permits the latter to continue
with authority to manage his property in the Philippines, representing a person who has adopted such an
consisting of the usufruct of a real property. The liquidation of antagonistic attitude towards him. When the agent filed a
accounts revealed that the plaintiff-appellant owed the defendant complaint against his principal for recovery of a sum of money
P1,100, and as misunderstanding arose between them, the arising from the liquidation of the accounts between them in
defendant-appellee brought suit against the plaintiff-appellant . connection with the agency, principal could not have understood
The trial court decided in favor of agent; sheriff levied upon otherwise than that agent renounced the agency; because his act
plaintiff-appellants right of usufruct, sold it at public auction and was more expressive than words and could not have caused any
adjudicated it to defendant-appellee in payment of his claim. doubt. In order to terminate their relations by virtue of the
agency the defendant, as agent, rendered his final account on
Plaintiff-appellant sold his right of redemption to Eduardo March 31, 1923 to the plaintiff, as principal.
Hernandez- Hernandez conveyed the same right of redemption
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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Briefly, then, the fact that an agent institutes an action sale executed on March 8, 1946, Rosario Cui appeared as one
against his principal for the recovery of the balance in his of the vendees, but on learning of this fact she subsequently
favor resulting from the liquidation of the accounts renounced her rights under the sale and returned her portion to
between them arising from the agency, and renders and Don Mariano Cui by executing a deed of resale in his favor on
final account of his operations, is equivalent to an express October 11, 1946; that defendants, fraudulently and with the
renunciation of the agency, and terminates the juridical desire of enriching themselves unjustly at the expense of their
relation between them. father, Don Mariano Cui, and of their brothers and co-heirs,
secured a loan of P130,000 from the Rehabilitation properties,
Hence, the said agent's purchase of the aforesaid principal's right and with the loan thus obtained, defendants constructed thereon
of usufruct at public auction held by virtue of an execution issued an apartment building of strong materials consisting of 14 doors,
upon the judgment rendered in favor of the former and against valued at approximately P130,000 and another building on the
the latter, is valid and legal. Moreover, the defendant-appellee, same parcels of land, which buildings were leased to some
having acquired right of redemption from Salvador Vallejo, who Chinese commercial firms a monthly rental of P7,600, which
had acquired it at public auction by virtue of a writ of execution defendants have collected and will continue to collect to the
issued upon the judgment obtained by the said Vallejo against prejudice of the plaintiffs; Jesus alleged that the sale should be
the said plaintiff, the latter lost all right to said usufruct. Neither invalidated so far as the portion of the property sold to Antonio
did the trial court err in not ordering the agent to render a Cui is concerned, for the reason that when that sale was effected,
liquidation of accounts from March 31, 1923, inasmuch as he had Antonio was then acting as the agent or administrator of the
acquired the rights of the plaintiff by purchase at the execution properties of Don Mariano Cui. Jesus lays stress on the power of
sale, and as purchaser, he was entitled to receive the rents from attorney Exhibit L which was executed by Don Mariano in favor of
the date of the sale until the date of the repurchase, considering Antonio Cui on March 2,1946, wherein the former has constituted
them as part of the redemption price; but not having exercised the latter as his "true and lawful attorney" to perform in his name
the right repurchase during the legal period, and the title of the and that of theintestate heirs of Doa Antonia Perales.
re purchaser having become absolute, the latter did not have to
account for said rents. ISSUE OF THE CASE: Whether or not the sale of the property to
Antonio was valid.

RULING OF THE COURT:


9. JESUS MA. CUI, ET AL. v. ANTONIO MA. CUI, ET AL. [G.R.
No. L-7041. February 21, 1957.] YES. While under article 1459 of the old Civil Code an agent or
administrator is disqualified from purchasing property in his
FACTS OF THE CASE: hands for sale or management, and, in this case, the property in
question was sold to Antonio Cui while he was already the agent
Jesus and Antonio are the legitimate children of Don Mariano Cui or administrator of the properties of Don Mariano Cui, we
and Doa Antonia Perales who died intestate in1939. Jesus however believe that this question cannot now be raised
alleged that during the marriage of Don Mariano and Dona or invoked.
Antonia, their parents acquired certain properties in the City of
Cebu, namely, Lots Nos. 2312, 2313 and 2319. Upon the death of The prohibition of the law is contained in article 1459 of
their mother, the properties were placed under the administration the old Civil Code, but this prohibition has already been
of their dad. that while the latter was 84 years of age, Antonio by removed.
means of deceit, secured the transfer to themselves the said lots
without any pecuniary consideration; that in the deed of
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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Under the provisions of article 1491, section 2, of the new Civil On July 1954, AFWU sent a written proposal to MARITIMA for a
Code, an agent may now buy property placed in his hands for CBA, but the latter did not reply. Thereafter, AFWU instituted an
sale or administration, provided that the principal gives his action in the CIR praying that it be certified as the sole and
consent thereto. While the new Code came into effect only on exclusive bargaining unit composed of all the laborers doing
August 30, 1950, however, since this is a right that is declared for arrastre and stevedoring work for MARITIMA, to which action
the first time, the same may be given retroactive effect if no MARITIMA answered, alleging lack of EREE relationship. On
vested or acquired right is impaired (Article 2253, new Civil Aug.1954, MARITIMA informed AFWU of the termination of the
Code). During the lifetime Don Mariano, and particularly on March contract because of the inefficient service rendered by the latter
8, 1946, the herein appellants could not claim any vested or which had adversely affected its business. The termination was to
acquired right in these properties, for, as heirs, the most they had take effect as of Sept.1, 1954. MARITIMA then contracted with the
was a mere expectancy. We may, therefore, invoke now this Iligan Stevedoring Union for the arrastre and stevedoring work.
practical and liberal provision of our new Civil Code even if the The latter agreed to perform the work subject to the same terms
sale had taken place before its effectivity 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


10. ALLIED FREE WORKERS UNION VS C. MARITIMA et practices (ULPs) before the CIR. MARITIMA answered, again
al. [JAN.31, 1967] denying the ER-EE relationship between the parties. On Sept.9,
1954, MARITIMA filed an action to rescind the contract, enjoin
NATURE: Petitions for review by certiorari of CIR decision 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
FACTS: This is a consolidation of 3 cases involving both parties contract and permanently enjoined AFWU members from
performing work in connection with MARITIMAs vessels.
Respondent Compania Maritima (MARITIMA), a local corp.
engaged in shipping entered into a contract for lease of services AFWU was later able to secure a writ of preliminary injunction
with petitioner Allied Free Workers Union (AFWU), a duly ordering the maintenance of the status quo prior to Jan.6, 1961.
registered legitimate labor union. In the contract, it was Thus, after Jan.18, 1961, AFWU laborers were again back doing
stipulated that AFWU will do and perform all the work of the same work as before.
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 On Nov.4, 1963, after almost 10 years, the CFI finally rendered its
of the parties with the reservation that MARITIMA has the right to decision: In pursuance of the provisions of Sec.12 of R.A. 875 and
revoke said contract even before the expiration of the term, if and the Rules of this court on certification election, the Honorable
when AFWU fails to render good service. 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
Towards the end of 1953, MARITIMA complained to AFWU of are performing stevedoring and arrastre service aboard
unsatisfactory and inefficient service. To remedy the situation, Compania Maritima vessels docking at Iligan City port in order to
MARITIMA was forced to hire extra laborers from among stand- determine their representative for collective bargaining with the
by workers not affiliated to any union. employer, whether these desire to be represented by the
petitioner Allied Free Workers Union or neither; and upon
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
12
termination of the said election, the result thereof shall forthwith that an agent can not represent two conflicting interests
be submitted to this court for further consideration. From this that are diametrically opposed. And that the cases sought
ruling, both parties appealed, AFWU claiming that it should be to be relied upon did not involve representatives of
declared outright as the majority union while MARITIMA contends opposing interests.
that said court could not even have correctly ordered a
certification election considering that there was an absence of From these findings, Insofar as the working agreement was
ER-EE relationship between it and said laborers. concerned, there was no real difference between the contract and
the prior oral agreement. Both were based on the cabo system.
ISSUE OF THE CASE: Whether or not the order of a certification Hence, since the parties observed the cabo system after the
election by the CIR was proper. (WON there was an ER-EE rescission of the contract, and since the characteristics of said
relationship between AFWU and MARITIMA) system show that the contracting union was an independent
contractor, it is reasonable to assume that AFWU continued being
RULING OF THE COURT: an independent contractor of MARITIMA. And, being an
independent contractor, it could not qualify as an employee.
NO. Before a certification election can be held, there must exist With more reason would this be true with respect to the laborers.
an ER-EE relationship between the ER and the petitioner union. Moreover, there is no evidence at all regarding the characteristics
Ratio The duty to bargain collectively exists only between the of the working arrangement between AFWU and MARITIMA after
employer and its employees. Where there is no duty the termination of the CONTRACT. All we have to go on is the
to bargain collectively, it is not proper to hold certification court a quos finding that the cabo system was observed-a
elections in connection therewith. Reasoning In its findings, the system that negatives employment relationship.
CIR observed that after the rescission, the AFWU laborers
continued working in accordance with the cabo system, which Since the only function of a certification election is to determine,
was the prevailing custom in the place. Under this system, the with judicial sanction, which union shall be the official
union was an independent contractor. The CIR also made a representative or spokesman of the employees will be, there
finding that prior to the contract between MARITIMA and AFWU, being no ER-EE relationship between the parties disputants, it
the former had an oral arrastre and stevedoring agreement with follows that there is neither a duty to bargain collectively. Thus,
another union, the Iligan Laborers Union (ILU), which agreement the order for certification election in question cannot be
was also based on the cabo system. After unsatisfactory sustained.
service, MARITIMA cancelled this oral contract and entered into a
new contract with AFWU, the terms and conditions of which were Disposition
similar to the oral contract with ILU. The written contract between
AFWU and MARITIMA was signed under the assurance by AFWU Appealed decision of the CIR is AFFIRMED insofar as it dismissed
that the same arrangement previously had with the former union the charge of ULP, but REVERSED and SET ASIDE insofar as it
regarding performance and execution of arrastre and stevedoring ordered the holding of a certification election. The petition for
contract be followed in accordance with the custom of such kind certification election should be DISMISSED.
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
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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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: ISSUE OF THE CASE: Whether or not Far Eastern is liable to the
direct loss and acted as an agent
Sometime in November, 1948, Ignacio Delizalde, an agent of
the Far Eastern Export & Import Company, went to the RULING OF THE COURT:
store of Lim Teck Suan situated at 267 San Vicente Street,
Manila, and offered to sell textile, showing samples thereof, In the present case, the export company acted as agent for
and having arrived at an agreement with Bernardo Lim, the Frenkel International Corporation, presumably the supplier of the
General Manager of Lim Teck Suan, Delizalde returned on textile sold. In the Velasco case, the Universal Trading Co., was
November 17 with the buyer's order. plaintiff established a letter acting as agent for A. J. Wilson Company, also the supplier of the
of credit No. 6390 (Exhibit B) in favor of Frenkel International whisky sold. In the present case, Suan according to the first part
Corporation through the Hongkong and Shanghai Bangking of the agreement is said merely to be commissioning the Export
Corporation, attached to the agreed statement of facts. Company to procure for him the merchandise in question, just as
in the other case, Velasco was supposed to be ordering the
On February 11, 1949, the textile arrived at Manila on board the whisky thru the Universal Trading Co. In the present case, the
vessel M. S. Arnold Maersk. The plaintiff complained to the price of the merchandise bought was paid for by Suan by means
defendant of the inferior quality of the textile received by him of an irrevocable letter of credit opened in favor of the supplier,
and had them examined by Marine Surveyor Del Pan & Company. Frenkel International Corporation. In the Velasco case, Velasco
Upon instructions of the defendants plaintiff deposited the goods was given the choice of either opening a similar irrevocable letter
with the United Warehouse Corporation. As per suggestion of the of credit in favor of the supplier A. J. Wilson Company or making a
Far Eastern Export and Import Company contained in its letter cash deposit.
dated June 16, 1949, plaintiff withdrew from the United Bonded
Warehouse, Port Area, Manila, the fifteen cases of Ashtone It is true that in the Velasco case, upon the arrival of the whisky
Acetate and Rayon Suiting for the purpose of offering them for and because it did not conform to specifications, Velasco refused
sale which netted P11,907.30. Deducting this amount from the to received it; but in the present case although Suan received
sum of P23,686.96 which included the amount paid by plaintiff for the merchandise he immediately protested its poor
said textile and the warehouse expenses, a difference of quality and it was deposited in the warehouse and later
P11,476.66 is left, representing the net direct loss. withdrawn and sold for the best price possible, all at the
suggestion of the Export company. The present case is in our
The defense set up is that the Far Eastern Export and Import opinion a stronger one than that of Velasco for holding the
Company only acted as a broker in this transaction; that after transaction as one of purchase and sale because as may be
placing the order the defendants took no further action and the noticed from the agreement (Exhibit "A"), the same speaks of the
cargo was taken directly by the buyer Lim Teck Suan, the items (merchandise) therein involved as sold, and the sale was
shipment having been made to him and all the documents were even confirmed by the Export company. In both cases, the agents
also handled by him directly without any intervention on the part Universal Trading Co. and the export company dealt directly with
of the defendants; The trial court acquitted defendants. CA the local merchants Velasco and Suan without expressly
reversed judgement on the case of Jose Velasco, vs. Universal indicating or revealing their principals. In both cases there was no
Trading Co., Inc., 45 Off. Gaz. 4504 where the transaction therein privity of contract between the buyers Suan and Velasco and
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
14
the suppliers Frenkel International Corporation and A. J. Wilson In January 1942 operation of the mining properties was disrupted
Company, respectively. In both cases no commission or monetary on account of the war. The mill, power plant, supplies on hand,
consideration was paid or agreed to be paid by the buyers to the equipment, concentrates on hand and mines, were destroyed.
Export company and the Universal Trading Co., proof that there The Japanese forces thereafter occupied the mining properties,
was no agency or brokerage, and that the profit of the latter was operated the mines during the continuance of the war.
undoubtedly the difference between the price listed to the buyers After the mining properties were liberated from the Japanese
and the net or special price quoted to the sellers, by the forces, LEPANTO took possession thereof and embarked in
suppliers. As already stated, it was held in the Velasco case rebuilding and reconstructing the mines and mill. On 26 June
that the transaction therein entered into was one of 1948 the mines resumed operation under the exclusive
purchase and sale, and for the same reasons given there, management of LEPANTO.
we agreed with the Court of Appeals that the transaction
entered into here is one of purchase and sale. Shortly after the mines were liberated from the Japanese invaders
in 1945, a disagreement arose between NIELSON and LEPANTO
As was held by this Tribunal in the case of Gonzalo Puyat & Sons over the status of the operating contract which as renewed
Incorporated vs. Arco Amusement, 72 Phil., 402, where a expired in 1947. Under the terms thereof, the management
foreign company has an agent here selling its goods and contract shall remain in suspense in case fortuitous event or force
merchandise, that same agent could not very well act as majeure, such as war or civil commotion, adversely affects the
agent for local buyers, because the interests of his work of mining and milling.
foreign principal and those of the buyer would be in direct On 6 February 1958, NIELSON brought an action against LEPANTO
conflict. He could not serve two masters at the same time. to recover certain sums of money representing damages
In the present case, the Export company being an agent allegedly suffered by the former in view of the refusal of the latter
of the Frenkel International Corporation could not, as it to comply with the terms of a management contract.
claims, have acted as an agent or broker for Suan.
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
12. NIELSON&CO VS LEPANTO CONSOLIDATED MINING CO. that the intention of the parties regarding the meaning and usage
concerning the force majeure clause meant the extension of the
FACTS: An operating agreement was executed before World War same for a period equivalent to the suspension.
II (on 30 January 1937) between Nielson & Co. Inc. and the In this motion for reconsideration, LEPANTO advances a new
Lepanto Consolidated Mining Co. whereby the former operated theory. It now asserts that the management contract in question
and managed the mining properties owned by the latter for a is a contract of agency such that it has the right to revoke and
management fee of P2,500.00 a month and a 10% participation in terminate the said contract, as it did terminate the same, under
the net profits resulting from the operation of the mining the law of agency, and particularly pursuant to Article 1733 of the
properties, for a period of 5 years. Old Civil Code (Article 1920 of the New Civil Code).

In the latter part of 1941, the parties agreed to renew the ISSUE: W/N the management contract is a contract of agency or
contract for another period of 5 years, but in the mean time, the a contract of lease of services.
Pacific War broke out in December 1941.
HELD: Contract of lease of services
Contract of Agency v Contract of Lease of Services:
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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Article 1709 of the Old Civil Code, defining contract of agency, hydraulic lifter for greasing. As some parts of the car couldnt be
provides that "By the contract of agency, one person binds reached by the greaseman, the lifter was lowered. Unfortunately,
himself to render some service or do something for the account or for unknown reasons (probably due to mechanical failure or
at the request of another." human error), while the lifter was being lowered, the car swung
Article 1544, defining contract of lease of service, provides that and fell from the platform. Said car was insured against loss or
"In a lease of work or services, one of the parties binds himself to damage by Firemen's Insurance Company of Newark, New Jersey,
make or construct something or to render a service to the other and Commercial Casualty Insurance Company jointly for the sum
for a price certain." of P10,000. The insurance companies after paying the sum of
It is true that the management contract provides that Nielson P1,651.38 for the damage and charging the balance of P100.00 to
would also act as purchasing agent of supplies and enter into Salvador Sison, in accordance with the terms of the insurance
contracts regarding the sale of mineral, but the contract also contract, filed this action together with said Salvador Sison for the
provides that Nielson could not make any purchase, or sell the recovery of the total amount of the damage from the defendants
minerals, without the prior approval of Lepanto. It is clear, on the ground of negligence.
therefore, that even in these cases Nielson could not execute
juridical acts which would bind Lepanto without first securing the ISSUE: W/N Dela Fuente is merely an agent of Shell Co.
approval of Lepanto. Nielson, then, was to act only as an
intermediary, not as an agent. HELD: Yes. De la Fuente was the operator of the station "by
From the provision of paragraph XI of the management contract, grace" of the Defendant Company which could and did remove
Lepanto could not terminate the agreement at will. Lepanto could him as it pleased; that all the equipments needed to operate the
terminate or cancel the agreement by giving notice of termination station was owned by the Defendant Company which took charge
ninety days in advance only in the event that Nielson should of their proper care and maintenance, despite the fact that they
prosecute in bad faith and not in accordance with approved were loaned to him; that the Defendant company did not leave
mining practice the operation and development of the mining the fixing of price for gasoline to De la Fuente; That the service
properties of Lepanto. Lepanto could not terminate the station belonged to the company and bore its trade name and the
agreement if Nielson should cease to prosecute the operation and operator sold only the products of the company; that the
development of the mining properties by reason of acts of God, equipment used by the operator belonged to the company and
strike and other causes beyond the control of Nielson. The were just loaned to the operator and the company took charge of
management contract in question is not revocable at the will of their repair and maintenance.
Lepanto. It is not a contract of agency as defined in Article 1709 As the act of the agent or his employees acting within the scope
of the old Civil Code, but a contract of lease of services as defined of his authority is the act of the principal, the breach of the
in Article 1544 of the same Code. This contract can not be undertaking by the agent is one for which the principal is
unilaterally revoked by Lepanto. 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.
13. SHELL CO OF THE PHIL Ltd VS FIREMENS INSURANCE
OF NEWARK 14. SEVILLA VS CA

FACTS: This case is about an action for recovery of sum of FACTS: On Oct. 19, 1960, the Tourist World Service, Inc. leased
money, based on the alleged negligence of the defendants. an office at Mabini St., Manila for the former's use as a branch
A car was brought to a Shell gasoline station owned by Dela office. When the branch office was opened, the same was run by
Fuente for washing and greasing. The car was placed on a the herein appellant Lina O. Sevilla payable to Tourist World
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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Service Inc. by any airline for any fare brought in on the efforts of of November 28, 1961, presumed her principal's authority as
Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be owner of the business undertaking. We are convinced, considering
withheld by the Tourist World Service, Inc. the circumstances and from the respondent Court's recital of
On or about November 24, 1961, the Tourist World Service, Inc. facts, that the parties had contemplated a principal-agent
appears to have been informed that Lina Sevilla was connected relationship, rather than a joint management or a partnership.
with a rival firm, the Philippine Travel Bureau, and, since the But unlike simple grants of a power of attorney, the agency that
branch office was anyhow losing, the Tourist World Service we hereby declare to be compatible with the intent of the parties,
considered closing down its office. cannot be revoked at will. The reason is that it is one coupled with
This was firmed up by two resolutions of the board of directors of an interest, the agency having been created for the mutual
Tourist World Service, Inc. dated Dec. 2, 1961, the first abolishing interest of the agent and the principal. Accordingly, the
the office of the manager and vice-president of the Tourist World revocation complained of should entitle the petitioner, Lina
Service, Inc., Ermita Branch, and the second, authorizing the Sevilla, to damages
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 15. LIM VS PEOPLE
the Branch Office premises was terminated and while the
effectivity thereof was Jan. 31, 1962, the appellees no longer used FACTS: The appellant is a businesswoman. on January 10, 1966,
it. As a matter of fact appellants used it since Nov. 1961. Because the appellant went to the house of Maria Ayroso and proposed to
of this, and to comply with the mandate of the Tourist World sell Ayroso's tobacco. Ayroso agreed to the proposition of the
Service, the corporate secretary Gabino Canilao went over to the appellant to sell her tobacco consisting of 615 kilos at P1.30 a
branch office, and, finding the premises locked, and, being unable kilo. The appellant was to receive the overprice for which she
to contact Lina Sevilla, he padlocked the premises on June 4, could sell the tobacco. This agreement was made in the presence
1962 to protect the interests of the Tourist World Service. of plaintiff's sister, Salud G. Bantug. Salvador Bantug drew the
When neither the appellant Lina Sevilla nor any of her employees document, Exh. A, dated January 10, 1966, which reads:
could enter the locked premises, a complaint was filed by the
herein appellants against the appellees with a prayer for the 'To Whom It May Concern:
issuance of mandatory preliminary injunction. Both appellees This is to certify that I have received from Mrs. Maria de Guzman
answered with counterclaims. For apparent lack of interest of the Vda. de Ayroso, of Gapan, Nueva Ecija, six hundred fifteen kilos of
parties therein, the trial court ordered the dismissal of the case leaf tobacco to be sold at P1.30 per kilo. The proceed in the
without prejudice. amount of Seven Hundred Ninety Nine Pesos and 50/100
(P799.50) will be given to her as soon as it was sold.'
ISSUE: W/N the act of Tourist World Service in abolishing its
Ermita branch proper This was signed by the appellant and witnessed by the
complainant's sister, Salud Bantug, and the latter's maid,
HELD: No. The Supreme Court held that when the petitioner, Genoveva Ruiz. The appellant at that time was bringing a jeep,
Lina Sevilla, agreed to manage Tourist World Service, Inc.'s Ermita and the tobacco was loaded in the jeep and brought by the
office, she must have done so pursuant to a contract of agency. appellant. Of the total value of P799.50, the appellant had paid to
In the case at bar, Sevilla solicited airline fares, but she did so for Ayroso only P240.00, and this was paid on three different times.
and on behalf of her principal, Tourist World Service, Inc. As Demands for the payment of the balance of the value of the
compensation, she received 4% of the proceeds in the concept of tobacco were made upon the appellant by Ayroso, and
commissions. And as we said, Sevilla herself, based on her letter 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 Anent the argument that petitioner was not an agent because
times, but the appellant often eluded her; and that the 'camarin' Exhibit "A" does not say that she would be paid the commission if
of the appellant was empty. Although the appellant denied that the goods were sold, the Court of Appeals correctly resolved the
demands for payment were made upon her, it is a fact that on matter as follows: LLpr
October 19, 1966, she wrote a letter to Salud Bantug which reads
as follows: " . . . Aside from the fact that Maria Ayroso testified that the
appellant asked her to be her agent in selling Ayroso's tobacco,
'Dear Salud, the appellant herself admitted that there was an agreement that
'Hindi ako nakapunta dian noon a 17 nitong nakaraan, dahil upon the sale of the tobacco she would be given something. The
kokonte pa ang nasisingil kong pera, magintay ka hanggang dito appellant is a businesswoman, and it is unbelievable that she
sa linggo ito at tiak na ako ay magdadala sa iyo. Gosto ko Salud would go to the extent of going to Ayroso's house and take the
ay makapagbigay man lang ako ng marami para hindi masiadong tobacco with a jeep which she had brought if she did not intend to
kahiyahiya sa iyo. Ngayon kung gosto mo ay kahit konte muna ay make a profit out of the transaction. Certainly, if she was doing a
bibigyan kita. Pupunta lang kami ni Mina sa Maynila ngayon. favor to Maria Ayroso and it was Ayroso who had requested her to
Salud kuug talagang kailangan mo ay bukas ay dadalhan kita ng sell her tobacco, it would not have been the appellant who would
pera. have gone to the house of Ayroso, but it would have been Ayroso
'Medio mahirap ang maningil sa palengke ng Cabanatuan dahil who would have gone to the house of the appellant and deliver
nagsisilipat ang mga suki ko ng puesto. Huwag kang mabahala at the tobacco to the appellant." (p. 19, Rollo)
tiyak na babayaran kita.
'Patnubayan tayo ng mahal na panginoon Dios. (Exh. B). The fact that appellant received the tobacco to be sold at P1.30
Ludy' 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
"Pursuant to this letter, the appellant sent a money order for the petitioner. The agreement (Exhibit "A") constituted her as an
P100.00 on October 24, 1967, Exh. 4, and another for P50.00 on agent with the obligation to return the tobacco if the same was
March 8, 1967; and she paid P90.00 on April 18, 1967 as not sold.
evidenced by the receipt Exh. 2, dated April 18, 1967, or a total of ACCORDINGLY, the petition for review on certiorari is dismissed
P240.00. As no further amount was paid, the complainant filed a for lack of merit.
complaint against the appellant for estafa.
16. SAN DIEGO v NOMBRE (Yap)
ISSUE: W/N court erred in holding that the transaction is a
contract of agency to sell Facts: Respondent Adelo Nombre was the duly constituted
judicial administrator. As such, he leased one of the properties of
HELD: NO. It is clear in the agreement, Exhibit "A", that the the estatea fishpondto Pedro Escanlar, the other respondent.
proceeds of the sale of the tobacco should be turned over to the The terms of the lease was for 3 years, with a yearly rental of
complainant as soon as the same was sold, or, that the obligation P3,000. The transaction was done without previous authority or
was immediately demandable as soon as the tobacco was approval of the Court. A year after, Nombre was removed as
disposed of. Hence, Article 1197 of the New Civil Code, which administrator, and was replaced by one Sofronio Campillanos.
provides that the courts may fix the duration of the obligation if it Escalanlar was cited for contempt for allegedly refusing to
does not fix a period, does not apply. 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 DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
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, HELD: No.
opposed to the motion, pointing out that the fishpond was leased The provisions on agency should not apply to a judicial
by him to Escalandar for 3 years. He alleged that the validity of administrator. A judicial administrator is appointed by the court.
the lease contract entered into by a judicial administrator must be He is not only the representative of said Court, but also the heirs
recognized unless declared void in a separate action. and creditors of the estate. Before entering into his duties, he is
The lower court declared the contract in favor of Escanlar null and required to file a bond. These circumstances are not required in
void for want of judicial authority and that San Diego offered agency. The agent is only answerable to his principal. The
better lease conditions than Escanlar. In light of this, Escanlar protection which law gives the principal in limiting the powers and
agreed to increase the rental to P5,000 after the termination of rights of an agent stems from the fact that control by the
his original contract. However, the trial judge stated that such principal can only be through agreements. Whereas, the acts of a
contract was fraudulent and executed in bad faith because judicial administrator are subject to specific provisions of law and
Nombre was removed as administrator and the rentals of the orders of the appointing court.
property was inadequate.
However, on appeal, the CA ruled: 17. DELA PENA VS HIDALGO
No such limitation on the power of a judicial administrator to
grant lease of property placed under his custody is provided for in 18. CONDE vs. CA
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 Facts: On 7 April 1938, Margarita Conde, Bernardo Conde and
without special authority. Thus, regardless of the period of lease, Dominga Conde, as heirs of Santiago Conde, sold with right to
there is no need for special authority unless the contract is to be repurchase, within 10 years from said date, a 1 hectare parcel of
recorded in the Registry. agricultural land situated in Burauen, Leyte to Casimira Pasagui
and Pio Altera for P165. Three years later, Original Certificate of
Rule 85, Sec. 3 of the ROC authorizes a judicial administrator to Title No. N-534 covering the land in question was issued in the
administer the estate of the deceased not disposed by will, for name of the Alteras subject to the stipulated right of repurchase
purposes of liquidation and distribution. He may, therefore, by the Condes. On 28 November 1945, Paciente Cordero, son-in-
exercise all acts of administration without special authority of the law of the Alteras and their representative, signed a document in
Court; such as the leasing the property. And where the lease has Bisaya stating that the Memorandum of Repurchase got lost
been formally entered into, the court cannot, in the same during World War II despite all diligent searches being made; that
proceeding, annul the same. The proper remedy would be a the two parcels of land were inherited by the Condes; that
separate action by the administrator or the heirs to annul the Eusebio Amarille was authorized by the Condes to repurchase the
lease. land; that they received P165 in consideration of the sale; and
that the Condes, by virtue of the repurchase, shall repossess the
On appeal to the SC, petitioner contends that Art. 1878(8) limits said parcels of land. Neither the vendees-a-retro, Pio Altera nor
the right of a judicial administrator to lease the real property Casimira Pasagui, were signatories to that document. Many years
without prior court authority and approval, if it exceeds 1 year. later, the pacto de retro document was found. In June 1965, Pio
The lease in favor of Escalanlar, being 3 years and without court Altera sold the disputed lot to Ramon and Catalina Conde, whose
approval, is therefore void. relationship to Dominga does not appear on record.
Consequently, in 1969, Dominga filed with the CFI of Leyte a
ISSUE: W/N the provisions on Agency should apply in this complaint for quieting of title and declaration of ownership
case against all the respondents. The trial court dismissed the
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
19
complaint and ordered Dominga to vacate the premises and to Talisay, Occidental Negros, and A. C. Montelibano was a resident
deliver the disputed land to respondents. The Court of Appeals of Iloilo.
affirmed the decision and ruled that Dominga failed to validly Having this information, Montelibano approached plaintiff at its
exercise her right to repurchase because the Memorandum of Manila office, claiming that he was from Iloilo and lived with
Repurchase was not signed by the Alteras but by Paciente, who Governor Yulo; that he could find purchaser for the "Matthews"
was not authorized to sign for the said vendees-a-retro. 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
ISSUE: Whether or not there was an implied agency when commission of 10 per cent for his services, if the sale was
Cordero signed the Memorandum of Repurchase. consummated. Among other persons. Montelibano interviews the
defendant, and, through his efforts, one of the "Matthews" plants
HELD: Yes. Although the contending parties were legally wanting was sold by the plaintiff to the defendant, and was shipped from
in their respective actuations, for example Dominga did nothing Manila to Iloilo, and later installed on defendant's premises after
to formalize her repurchase while the Alteras did nothing to clear which, without the knowledge of the plaintiff, the defendant paid
their title of the encumbrance therein regarding Domingas right the purchase price to Montelibano. As a result, plaintiff
to repurchase, the repurchase by Dominga is supported by her commenced this action against the defendant, alleging that about
admission that she had been in possession since 1945, the date August 18, 1920, it sold and delivered to the defendant the
of the repurchase, and has been paying land taxes thereon since electric plant at the agreed price of P2,513.55 no part of which
then. No new agreement was entered into by the parties as has been paid, the demands judgment for the amount with
stipulated in the deed of pacto de retro, if the vendors-a-retro interest from October 20, 1920.
failed to exercise their right of redemption within 10 years. If, as
alleged, Dominga did not exert an effort to procure Pio Alteras For answer, the defendant admits the corporation of the plaintiff,
signature after he had recovered from illness, neither did the and denies all other material allegations of the complaint, and, as
Alteras repudiate the deed signed by their son-in-law for 24 years, an affirmative defense, alleges "that on or about the 18th of
from which the Alteras are deemed to have incurred in laches. August, 1920, the plaintiff sold and delivered to the defendant a
Thus, an implied agency must have been held to have been certain electric plant and that the defendant paid the plaintiff the
created by their silence or lack of action, or their failure to value of said electric plant, to wit: P2,513.55."
repudiate the agency created. (Art. 1869, New Civil Code).
Wherefore, Dominga is declared the owner of the land in Upon such issues the testimony was taken, and the lower court
question. 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
19. HARRY E. KEELER ELECTRIC CO., INC., plaintiff- defendant as an agent authorized to collect, and in rendering
appellant, vs. DOMINGO RODRIGUEZ, defendant-appellee. judgment for the defendant, and in not rendering judgment for
the plaintiff.
Facts: The plaintiff is a domestic corporation with its principal
office in the city of Manila and engaged in the electrical business, Issue: WON MONTELIBANO is authorized to receive payment?
and among other things in the sale of what is known as the
"Matthews" electric plant, and the defendant is a resident of Held: No. There is no evidence that the plaintiff ever delivered
any statements to Montelibano, or that he was authorized to
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
20
receive or receipt for the money, and defendant's own telegram . . . It is, moreover, in any case entirely within the power of the
shows that the plaintiff "did not present bill" to defendant. He now person dealing with the agent to satisfy himself that the agent
claims that at the very time this telegram was sent, he had the has the authority he assumes to exercise, or to decline to enter
receipt of Montelibano for the money upon the identical into relations with him. (Melchem on Agency, vol. I, sec. 746.)
statement of account which it is admitted the plaintiff did render
to the defendant. The person dealing with the agent must also act with ordinary
prudence and reasonable diligence. Obviously, if he knows or has
Article 1162 of the Civil Code provides: good reason to believe that the agent is exceeding his authority,
Payment must be made to the persons in whose favor the he cannot claim protection. So if the suggestions of probable
obligation is constituted, or to another authorized to limitations be of such a clear and reasonable quality, or if the
receive it in his name. character assumed by the agent is of such a suspicious or
unreasonable nature, or if the authority which he seeks to
And article 1727 provides: exercise is of such an unusual or improbable character, as would
The principal shall be liable as to matters with respect to suffice to put an ordinarily prudent man upon his guard, the party
which the agent has exceeded his authority only when he dealing with him may not shut his eyes to the real state of the
ratifies the same expressly or by implication. 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, volume I, section 743, says: (Mechem on Agency, vol. I, sec 752.)
In approaching the consideration of the inquiry whether an
assumed authority exist in a given case, there are certain And not only must the person dealing with the agent ascertain
fundamental principles which must not be overlooked. Among the existence of the conditions, but he must also, as in other
these are, as has been seen, (1) that the law indulges in no cases, be able to trace the source of his reliance to some word or
bare presumptions that an agency exists: it must be act of the principal himself if the latter is to be held responsible.
proved or presumed from facts; (2) that the agent cannot As has often been pointed out, the agent alone cannot enlarge or
establish his own authority, either by his representations extend his authority by his own acts or statements, nor can he
or by assuming to exercise it; (3) that an authority cannot alone remove limitations or waive conditions imposed by his
be established by mere rumor or general reputation; principal. To charge the principal in such a case, the principal's
(4)that even a general authority is not an unlimited one; consent or concurrence must be shown. (Mechem on Agency, vol.
and (5) that every authority must find its ultimate source I, section 757.)
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.
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
21
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
20. RALLOS VS. YANGCO termination of such relationship.

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 21. B. H. MACKE ET AL V JOSE CAMPS
had been other produce previously. The said Collantes received
said tobacco and sold it for the sum of P1,744. The charges for FACTS: B. H. Macke and W.H. Chandler, partners doing business
such sale were P206.96. leaving in the hands of said Collantes the under thee firm name of Macke, Chandler And Company, allege
sum of P1,537.08 belonging to the plaintiffs. This sum was, that during the months of February and March 1905, they sold to
apparently, converted to his own use by said agent. Jose Camps and delivered at his place of business, known as
It appears, however, that prior to the sending of said tobacco the the :Washington Caf, various bills of goods amounting to
defendant had severed his relations with Collantes and that the P351.50; that Camps has only paid on account of said goods the
latter was no longer acting as his factor. This fact was not known sum of P174; that there is still due them on account of said goods
to the plaintiffs; and it is conceded in the case that no notice of the sum of P177.50
any kind was given by the defendant to the plaintiffs of the Plaintiffs made demand for the payment from defendant and that
termination of the relations between the defendant and his agent. the latter failed and refused to pay the said balance or any part of
The defendant refused to pay the said sum upon demand of the it
plaintiffs, placing such refusal upon the ground that at the time
the said tobacco was received and sold by Collantes he was Macke, one of the plaintiffs, testified that on the order of one
acting personally and not as agent of the defendant. This action Ricardo Flores, who represented himself to be the agent of Jose
was brought to recover said sum. Camps, he shipped the said goods to the defendant at the
Washington Caf; that Flores (agent) later acknowledged the
Issue: WON whether or not the plaintiffs, acting in good receipt of the said goods and made various payments thereon
faith and without knowledge, having sent produce to sell amounting in all to P174; that believes that Flores is still the
on commission to the former agent of the defendant, can agent of Camps; and that when he went to the Washington Caf
recover of the defendant under the circumstances above for the purpose of collecting his bill he found Flores, in the
set forth absence of Camps, apparently in charge of the business and
claiming to be the business manager of Camps, said business
HELD: being that of a hotel with a bar and restaurant annexed.
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
22
A written contract was introduced as evidence, from which it the agent must be presumed to include all the necessary
appears that one Galmes, the former of Washington Caf and usual means of carrying his agency into effect.
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 22. LINAN VS PUNO
the business without the consent of the said Galmes. *This
contract was signed by Camps and the name of Ricardo Flores as FACTS: Plaintiff, was the owner of a certain parcel of land
a witness and attached thereon is an inventory of the furniture Plaintiff executed the following document, which conferred upon
and fittings which also is signed by Camps with the word the defendant Marcos Puno the power, duties, and obligations
sublessee below the name, and at the foot of this inventory the Contract provides that: Linan, plaintiff, confers sufficient power
word received followed by the name Ricardo Flores with the upon Marcos Puno, respondent, to represent him in administering
words managing agent immediately following his name. his interest that the former possess within the municipality of
Tarlac, purchase, sell, as well as sue and be sued before any
ISSUE: WON Ricardol Flores was the agent of Camps authority, appear before the courts of justice and administrative
officers in any proceeding or business concerning the good
HELD: Yes administration and advancement of my interests and may, in
Evidence is sufficient to sustain a finding that Flores is the agent necessary cases, appoint attorneys at law or attorneys in fact to
of Camps in the management of the bar of the Washington Caf represent him
with authority to bind Camps, his principal, for the payment of the Puno, for the sum of P800 sold and delivered parcel of land to the
goods other defendants
The contract sufficiently establishes the fact that Camps was the Plaintiff alleges that the said document did not confer upon Puno
owner of the business and of the bar, and the title of managing the power to sell the land and prayed that the sale be set aside
agent attached to the signature of Flores which appears on that and that the land be returned to him and with damages
contract, together with the fact that at the time the purchases
were made, Flores was apparently in charge of the business ISSUE: WON Puno is an agent of the plaintiff and the sale
performing the duties usually intrusted to a managing agent made by the former in favor of other defendants binds the
leave little room for doubt that he was there as the authorized principal/plaintiff
agent of Camps.
Agency by Estoppel --- One who clothes another with apparent Held:
authority as his agent, and holds him out to the public as such, Puno is an agent but and has authority to sell the land,
can not be permitted to deny the authority of such person to act binds principal
as his agent, to the prejudice of innocent third persons dealing The Document presented did not give Puno authority to sell the
with such person in good faith and in the honest belief that he is land; that the sale was illegal and void; that defendants should
what he appears to be. return the land to the plaintiff; and that defendants should pay
plaintiff the sum of P1,000 as damages, P400 of which Puno
Estopple---- Whenever a party has, by his own should be responsible for, and to pay the costs.
declaration, act or omission, intentionally and deliberately Puno had no authority to sell the land but only to administer the
led another to believe a particular thing true, and to act land
upon such belief, he can not, in any litigation arising out Contracts of agency as well as general powers of attorney must
of such declaration, act, or omission be permitted to be interpreted in accordance with the language used by the
falsify; and unless the contrary appears, the authority of 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 The plaintiff alleges that in the month of August, 1918, the
gathered from the whole instrument. In case of doubt, resort must defendant company, through its manager, Antonio A. Brimo,
be had to the situation, surroundings and relations of the parties. employed him to look for a purchaser of its factory known as
Whenever it is possible, effect is to be given to every word and
"Holland American Oil Co.," for the sum of P1,200,000, payable in
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 cash; that the defendant promised to pay the plaintiff, as
clause with some purpose and that purpose, if possible to be compensation for his services, a commission of five per cent on
ascertained and enforced. The intention of the parties must be the said sum of P1,200,000, if the sale was consummated, or if
sustained rather than defeated. the plaintiff should find a purchaser ready, able and willing to buy
If the contract be open to two constructions, one of which would said factory for the said sum of P1,200,000; that subsequently the
uphold while the other would overthrow it, the former is to be plaintiff found such a purchaser, but that the defendant refused to
chosen. So, if by one construction the contract would be illegal,
sell the said factory without any justifiable motive or reason
and by another equally permissible construction it would be
lawful, the latter must be adopted. The acts of the parties in therefor and without having previously notified the plaintiff of its
carrying out the contract will presumed to be done in good faith. desistance or variation in the price and terms of the sale.
The acts of the parties will be presumed to have been done in
conformity with and not contrary to the intent of the contract To that complaint the defendant interposed a general denial.
Supreme Court: The words administer, sell, purchase etc Upon the issue thus presented, the Honorable Simplicio del
used in the contract seem to be used coordinately. Each has equal Rosario, judge, after hearing and considering the evidence
force with the other. There seems to be no good reason for saying adduced during the trial of the cause, rendered a judgment in
that Puno had authority to administer and not to sell when to favor of the plaintiff and against the defendant for the sum of
sell was as advantageous to the plaintiff in the administration of
P60,000, with costs. From that judgment the defendant appealed
his affairs as to administer. To hold that the power was to
administer only when the power to sell was equally conferred to this court.
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 The proof with regard to the authority of the plaintiff to sell the
meaning to the exclusion of other general words of equal import factory in question for the defendant, on commission, is
Supreme Court: No proof that Puno acted in bad faith or extremely unsatisfactory. It consists solely of the testimony of the
fraudulently in selling the land. It will be presumed that he acted plaintiff, on the one hand, and of the manager of the defendant
in good faith and in accordance with his power as he understood company, Antonio A. Brimo, on the other. From a reading of their
it. That his interpretation of his power is tenable cannot be testimony we believe that neither of them has been entirely free
successfully denied.
from prevarications. However, after giving due weight to the
Supreme Court: defendants should be relieved from liability
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
23. JULIO DANON, plaintiff-appellee, vs. ANTONIO A. approximating the truth in finding: (1) That Antonio A. Brimo, in a
BRIMO & CO., defendant-appellant. conversation with the plaintiff, Julio Danon, about the middle of
August, 1918, informed the latter that he (Brimo) desired to sell
Facts: 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 DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
24
plaintiff a commission of 5 per cent provided the latter could sell the broker was not entitled to compensation. (Walker vs. Tirrel, 3
said factory for that amount; and (3) that no definite period of Am. Rep., 352.)
time was fixed within which the plaintiff should effect the sale. It
seems that another broker, Sellner, was also negotiating the sale, It is clear from the foregoing authorities that, although the
or trying to find a purchaser for the same property and that the present plaintiff could probably have effected the sale of the
plaintiff was informed of the fact either by Brimo himself or by defendant's factory had not the defendant sold it to someone
someone else; at least, it is probable that the plaintiff was aware else, he is not entitled to the commissions agreed upon because
that he was not alone in the field, and his whole effort was to he had no intervention whatever in, and much sale in question. It
forestall his competitor by being the first to find a purchaser and must be borne in mind that no definite period was fixed by the
effect the sale. Such, we believe. was the contract between the defendant within which the plaintiff might effect the sale of its
plaintiff and the defendant, upon which the present action is factory. Nor was the plaintiff given by the defendant the exclusive
based. agency of such sale. Therefore, the plaintiff cannot complaint of
the defendant's conduct in selling the property through another
Issue: WON the plaintiff is entitled to the commission? agent before the plaintiff's efforts were crowned with success.
"One who has employed a broker can himself sell the property to
Held: No. The rule laid down in the foregoing case was adopted a purchaser whom he has procured, without any aid from the
and followed in the cases of Zeimer vs. Antisell (75 Cal. 509), and broker." (Hungerford vs. Hicks, 39 Conn., 259; Wylie vs. Marine
Ayres vs. Thomas (116 Cal., 140). National Bank, 61 N.Y., 415, 416.)

The undertaking to procure a purchaser requires of the party so Take note: A leading case on the subject is that of Sibbald vs.
undertaking, not simply to name or introduce a person who may Bethlehem Iron Co. (83 N. Y., 378; 38 Am. Rep., 441). In the case,
be willing to make any sort of contract in reference to the after an exhaustive review of various cases, the Court of Appeals
property, but to produce a party capable, and who ultimately of New York stated the rule as follows:
becomes the purchaser. (Kimberly vs. Henderson and Lupton, 29
Md., 512, 515, citing: Keener vs. Harrod and Brooke, 2 Md. 63; In all the cases, under all and varying forms of expression, the
McGavock vs. Woodlief, 20 How., 221. See also Richards, fundamental and correct doctrine, is, that the duty assumed by
Executor, vs. Jackson, 31 Md., 250.) 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.
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, 24. CONSEJO INFANTE, petitioner, vs. JOSE CUNANAN, JUAN
any party with whom I may see fit and proper to effect a sale or MIJARES and THE COURT OF APPEALS, Second
exchange of my real estate, above described I will pay you the Division, respondents.|||
sum of $200. The broker found a person who proposed to
DOCTRINE: Oral evidence is presented to the effect that while
purchase the property, but the sale was not affected. Held: That
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 DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
25
assurance that, should the property subject of their contract of Defendant admitted having contracted the services of the
agency be sold to their own buyer, they would be given the plaintiffs to sell her property as set forth in the complaint, but
commission agreed upon. Held: The cancellation of the written stated that she agreed to pay them a commission of P1,200 only
authority being in writing, parole evidence is not admissible on condition that they buy her a property somewhere in Taft
under section 22 of Rule 123. Avenue to where she might transfer after selling her property.
Consejo avers that while plaintiffs took steps to sell her property
If there is other evidence which would justify the agents' claim
as agreed upon, they sold the property at Taft Avenue to another
for commission, even if such parol evidence is disregarded, they
party and because of this failure it was agreed that the authority
are entitled to such commission.
she had given them be cancelled.
The principal took advantage of the agents' services consisting
in locating a buyer for the principal's land. The principal, TC & CA: The lower court found that the preponderance of
perhaps by stratagem, advised the agents that she was no evidence was in favor of the plaintiffs and rendered judgment
longer interested in the deal and was able to prevail upon them sentencing the defendant to pay the plaintiffs the sum of P2,500
to sign a document agreeing to the cancellation of the written with legal interest plus the costs of action.
authority she had originally given the agents, believing that she CONTENTION: Petitioner, however, contends that that authority
could evade payment of their commission. Then she sold the has already been withdrawn on November 30, 1948 when, by the
property to the buyer found by the agents. Held: The principals voluntary act of respondents, they executed a document stating
act is unfair as would amount to bad faith, and cannot be that said authority shall be considered cancelled and without any
sanctioned without according to the agents the reward which is effect, so that when petitioner sold the property to Pio S. Noche
due them. on December 20, 1948, she was already free from her
FACTS: Consejo Infante (defendant), was the owner of two commitment with respondents and, therefore, was not in duty
parcels of land, together with a house built thereon. On or before bound to pay them any commission for the transaction.
November 30, 1948, she contracted the services of Jose Cunanan
and Juan Mijares(Plaintiffs), to sell the above-mentioned property ISSUE: (1) WON the cancellation of the written authority being in
for a price of P30,000 subject to the condition that the purchaser writing, parole evidence is not admissible under section 22 of Rule
would assume the mortgage existing thereon in favor of the 123.
Rehabilitation Finance Corporation. She agreed to pay them a
commission of 5% on the purchase price plus whatever overprice (2) WON the principals act is in bad faith
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 HELD:
latter informed them that she was no longer interested in selling
the property and succeeded in making them sign a document (1) YES, parole evidence is not admissible. If the facts were as
stating therein that the written authority she had given them was claimed by petitioner, there is indeed no doubt that she would
already cancelled.However, on December 20, 1948, defendant have no obligation to pay respondents the commission which was
dealt directly with Pio S. Noche selling to him the property for promised them under the original authority because, under the
P31,000. old Civil Code, her right to withdraw such authority is recognized.
A principal may withdraw the authority given to an agent at will.
Upon learning this transaction, plaintiffs demanded from
(Article 1733.) But this fact is disputed. Thus, respondents claim
defendant the payment of their commission, but she refused and that while they agreed to cancel the written authority given to
so they brought the present action
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 (2) yes. The principal took advantage of the agents' services
S. Noche, they would be given the commission agreed upon. True, consisting in locating a buyer for the principal's land. The
this verbal assurance does not appear in the written cancellation, principal, perhaps by stratagem, advised the agents that she was
Exhibit 1, and, on the other hand, it is disputed by petitioner, but no longer interested in the deal and was able to prevail upon
respondents were allowed to present oral evidence to prove it, them to sign a document agreeing to the cancellation of the
and this is now assigned as error in this petition for review. written authority she had originally given the agents, believing
that she could evade payment of their commission. Then she sold
The plea that oral evidence should not have been allowed to the property to the buyer found by the agents. Thus, the
prove the alleged verbal assurance is well taken it appearing that principals act is unfair as would amount to bad faith, and cannot
the written authority given to respondents has been cancelled in be sanctioned without according to the agents the reward which
a written statement. The rule on this matter is that "When the is due them.
terms of an agreement have been reduced to writing, it is to be
considered as containing all those terms, and, therefore, there 25. MANOTOK BROTHERS, INC., petitioner, vs. THE
can be, between the parties and their successors in interest, no HONORABLE COURT OF APPEALS, THE HONORABLE JUDGE
evidence of the terms of the agreement other than the contents OF THE REGIONAL TRIAL COURT OF MANILA (Branch VI),
of the writing." (Section 22, Rule 123, Rules of Court.) The only and SALVADOR SALIGUMBA, respondents.
exceptions to this rule are: "(a) Where a mistake or imperfection
of the writing, or its failure to express the true intent and FACTS: Petitioner herein (then defendant-appellant) is the owner
agreement of the parties, or the validity of the agreement is put of a certain parcel of land and building which were formerly
in issue by the pleadings"; and "(b) Where there is an intrinsic leased by the City of Manila and used by the Claro M. Recto High
ambiguity in the writing." (Ibid.) There is no doubt that the point School. By means of a letter, petitioner authorized herein private
raised does not come under any of the cases excepted, for there respondent Salvador Saligumba to negotiate with the City of
is nothing therein that has been put in issue by respondents in Manila the sale of aforementioned property for not less than
their complaint. The terms of the document, Exhibit 1, seem to be P425,000.00. In the same writing, petitioner agreed to pay private
clear and they do not contain any reservation which may in any respondent a five percent (5%) commission in the event the sale
way run counter to the clear intention of the parties is finally consummated and paid. Petitioner ,executed another
letter extending the authority of private respondent for 120 days.
But even disregarding the oral evidence adduced by respondents Thereafter, another extension was granted to him for 120 more
in contravention of the parole evidence rule, we are, however, of days, as evidenced by another letter. Finally, through another
the opinion that there is enough justification for the conclusion letter dated November 16, 1967, the corporation with Rufino
reached by the lower court as well as by the Court of Appeals to Manotok, its President, as signatory, authorized private
the effect that respondents are entitled to the commission respondent to finalize and consummate the sale of the property
originally agreed upon. It is a fact found by the Court of Appeals to the City of Manila for not less than P410,000.00. With this letter
that after petitioner had given the written authority to came another extension of 180 days. The Municipal Board of the
respondents to sell her land for the sum of P30,000, respondents City of Manila eventually, on April 26, 1968, passed Ordinance No.
found a buyer in the person of one Pio S. Noche who was willing 6603, appropriating the sum of P410,816.00 for the purchase of
to buy the property under the terms agreed upon, and this matter the property which private respondent was authorized to sell.
was immediately brought to the knowledge of petitioner. But the Said ordinance however, was signed by the City Mayor only on
latter, perhaps by way of stratagem, advised respondents that May 17, 1968, one hundred eighty three (183) days after the last
she was no longer interested in the deal and was able to prevail letter of authorization. On January 14, 1969, the parties signed
upon them to sign a document agreeing to the cancellation of the the deed of sale of the subject property. The initial payment of
written authority. 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 ISSUE: WON private respondent is entitled to the five percent
the amount of P210,816.00. Notwithstanding the realization of the (5%) agent's commission.
sale, private respondent never received any commission, which
should have amounted to P20,554.50. This was due to the refusal HELD: YES. In an earlier case, this Court ruled that when there is
of petitioner to pay private respondent said amount as the former a close, proximate and causal connection between the agent's
does not recognize the latter's role as agent in the transaction. efforts and labor and the principal's sale of his property, the agent
is entitled to a commission. We agree with respondent Court that
COMPLAINT: Private respondent filed a complaint against the City of Manila ultimately became the purchaser of petitioner's
petitioner, alleging that he had successfully negotiated the sale of property mainly through the efforts of private respondent.
the property. He claimed that it was because of his efforts that Without discounting the fact that when Municipal Ordinance No.
the Municipal Board of Manila passed Ordinance No. 6603 which 6603 was signed by the City Mayor on May 17, 1968, private
appropriated the sum for the payment of the property subject of respondent's authority had already expired, it is to be noted that
the sale. the ordinance was approved on April 26, 1968 when private
respondent's authorization was still in force. Moreover, the
ANSWER: Petitioner denied the claim of private respondent on approval by the City Mayor came only three days after the
the following grounds: (1) private respondent would be entitled to expiration of private respondent's authority. It is also worth
a commission only if the sale was consummated and the price emphasizing that from the records, the only party given a written
paid within the period given in the respective letters of authority; authority by petitioner to negotiate the sale from July 5, 1966 to
and (2) private respondent was not the person responsible for the May 14, 1968 was private respondent.|||
negotiation and consummation of the sale, instead it was
Filomeno E. Huelgas, the PTA president for 1967-1968 of the Claro While it may be true that Filomeno Huelgas followed up the
M. Recto High School. matter with Councilor Magsalin, the author of Municipal Ordinance
No. 6603 and Mayor Villegas, his intervention regarding the
Huelgas testified to the effect that after being inducted as PTA purchase came only after the ordinance had already been passed
president in August, 1967 he followed up the sale from the start when the buyer has already agreed to the purchase and to the
with Councilor Magsalin until after it was approved by the Mayor price for which said property is to be paid. Without the efforts of
on May 17, 1968. He. also said that he came to know Rufino private respondent then, Mayor Villegas would have nothing to
Manotok only in August, 1968, at which meeting the latter told approve in the first place. It was actually private respondent's
him that he would be given a "gratification" in the amount of labor that had set in motion the intervention of the third party
P20,000.00 if the sale was expedited. that produced the sale, hence he should be amply
compensated. cdll
TC & CA: rendered judgment sentencing petitioner and/or Rufino
Manotok to pay unto private respondent the sum of P20,540.00 26. VICENTE M. DOMINGO, represented by his heirs,
by way of his commission fees with legal interest thereon from ANTONIA RAYMUNDO VDA. DE DOMINGO, RICARDO,
the date of the filing of the complaint until payment. CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and
JOSELITO, all surnamed DOMINGO, petitioners-appellants, vs.
It is petitioner's contention that as a broker, private respondent's
GREGORIO M. DOMINGO, intervenor-respondent.
job is to bring together the parties to a transaction. Accordingly, if
the broker does not succeed in bringing the minds of the FACTS: In a document executed on June 2, 1956, Vicente M.
purchaser and the vendor to an agreement with respect to the Domingo granted Gregorio Domingo, a real estate broker, the
sale, he is not entitled to a commission. 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 DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
28
square meter (or for P176,954.00) with a commission of 5% on was not disclosed by Gregorio to Vicente. Neither did Oscar pay
the total price, if the property is sold by Vicente or by anyone else Vicente the additional amount of One Thousand Pesos (P1,000.00)
during the 30-day duration of the agency or if the property is sold by way of earnest money. When the deed of sale was not
by Vicente within three months from the termination of the executed on August 1, 1956 as stipulated in Exhibit "C" nor on
agency to a purchaser to whom it was submitted by Gregorio August 16, 1956 as extended by Vicente, Oscar told Gregorio that
during the continuance of the agency with notice to Vicente. The he did not receive his money from his brother in the United
said agency contract was in triplicate, one copy was given to States, for which reason he was giving up the negotiation
Vicente, while the original and another copy were retained by including the amount of One Thousand Pesos (P1,000.00) given
Gregorio. as earnest money to Vicente and the One Thousand Pesos
(P1,000.00) given to Gregorio aspropina or gift. When Oscar did
On June 3, 1956, Gregorio authorized the intervenor Teofilo P. not see him after several weeks, Gregorio sensed something fishy.
Purisima to look for a buyer, promising him one-half of the 5% So, he went to Vicente and read a portion of Exhibit "A" marked
commission. Exhibit "A-1" to the effect that Vicente was still committed to pay
him 5% commission, if the sale is consummated within three
Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio months after the expiration of the 30-day period of the exclusive
as a prospective buyer. agency in his favor from the execution of the agency contract on
June 2, 1956 to a purchaser brought by Gregorio to Vicente during
Oscar de Leon submitted a written offer which was very much the said 30-day period. Vicente grabbed the original of Exhibit "A"
lower than the price of P2.00 per square meter. Vicente directed and tore it to pieces. Gregorio held his peace, not wanting to
Gregorio to tell Oscar de Leon to raise his offer. After several antagonize Vicente further, because he had still the duplicate of
conferences between Gregorio and Oscar de Leon, the latter Exhibit "A". From his meeting with Vicente, Gregorio proceeded to
raised his offer to P109,000.00 on June 20, 1956, to which Vicente the office of the Register of Deeds of Quezon City, where he
agreed by signing. Upon demand of Vicente, Oscar de Leon issued discovered Exhibit "G", a deed of sale executed on September 17,
to him a check in the amount of P1,000.00 as earnest money, 1956 by Amparo Diaz, wife of Oscar de Leon, over their house and
after which Vicente advanced to Gregorio the sum of P300.00. lot at No. 40 Denver Street, Cubao, Quezon City, in favor of
Oscar de Leon confirmed his former offer to pay for the property Vicente as down payment by Oscar de Leon on the purchase price
at P1.20 per square meter in another letter. Subsequently, of Vicente's lot No. 883 of Piedad Estate. Upon thus learning that
Vicente asked for an additional amount of P1,000.00 as earnest Vicente sold his property to the same buyer, Oscar de Leon and
money, which Oscar de Leon promised to deliver to him. his wife, he demanded in writing payment of his commission on
Thereafter, was amended to the effect that Oscar de Leon will the sale price of One Hundred Nine Thousand Pesos
vacate on or about September 15, 1956 his house and lot at (P109,000.00), Exhibit "H". He also conferred with Oscar de Leon,
Denver Street, Quezon City which is part of the purchase price. It who told him that Vicente went to him and asked him to eliminate
was again amended to the effect that Oscar will vacate his house Gregorio in the transaction and that he would sell his property to
and lot on December 1, 1956, because his wife was on the family him for One Hundred Four Thousand Pesos (P104,000.00). In
way and Vicente could stay in lot No. 883 of Piedad Estate until Vicente's reply to Gregorio's letter, Exhibit "H", Vicente stated
June 1, 1957, in a document dated June 30, 1956 (the year 1957 that Gregorio is not entitled to the 5 % commission because he
therein is a mere typographical error) and marked Exhibit "D". sold the property not to Gregorio's buyer, Oscar de Leon, but to
Pursuant to his promise to Gregorio, Oscar gave him as a gift another buyer, Amparo Diaz, wife of Oscar de Leon.
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 The Court of Appeals found from the evidence that Exhibit "A",
square meter or a total in round figure Hundred Nine Thousand the exclusive agency contract, is genuine; that Amparo Diaz, the
Pesos (P109,000.00). This gift of One Thousand Pesos (P1,000.00)
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
29
vendee, being the wife of Oscar de Leon, the sale by Vicente of virtue of the agency, even though it may not be
his property is practically a sale to Oscar de Leon since husband owing to the principal.
and wife have common or identical interests; that Gregorio and
intervenor Teofilo Purisima were the efficient cause in the "Every stipulation exempting the agent from the
consummation of the sale in favor of the spouses Oscar de Leon obligation to render an account shall be void."
and Amparo Diaz; that Oscar de Leon paid Gregorio the sum of xxx xxx xxx
One Thousand Pesos (P1,000.00) as "propina" or gift and not as
additional earnest money to be given to the plaintiff, because "Art. 1909. The agent is responsible not only for
Exhibit "66", Vicente's letter addressed to Oscar de Leon with fraud, but also for negligence, which shall be
respect to the additional earnest money, does not appear to have judged with more or less rigor by the courts,
been answered by Oscar de Leon and therefore there is no writing according to whether the agency was or was not
or document supporting Oscar de Leon's testimony that he paid for a compensation."
an additional earnest money of One Thousand Pesos (P1,000.00)
Article 1891 of the New Civil Code amends Article 1720 of the old
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 Spanish Civil Code which provides that:
earnest money, evidenced by the letter Exhibit "4"; and that "Art. 1720. Every agent is bound to give an
Vicente did not even mention such additional earnest money in account of his transaction and to pay to the
his two replies Exhibits "I" and "J" to Gregorio's letter of demand principal whatever he may have received by
of the 5% commission. virtue of the agency, even though what he has
received is not due to the principal."
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 Consequently, the decisive legal provisions are found in Articles
One Thousand Pesos (P1,000.00) as gift or "propina" for having 1891 and 1909 of the New Civil Code. The aforecited provisions
persuaded Vicente to reduce the purchase price from P2.00 to demand the utmost good faith, fidelity, honesty, candor and
P1.20 per square meter, so constitutes fraud as to cause a fairness on the part of the agent, the real estate broker in this
forfeiture of his 5% commission on the sale price; case, to his principal, the vendor. The law imposes upon the agent
the absolute obligation to make a full disclosure or complete
(2) whether Vicente or Gregorio should be liable directly to the account to his principal of all his transactions and other material
intervenor Teofilo Purisima for the latter's share in the expected facts relevant to the agency, so much so that the law as amended
commission of Gregorio by reason of the sale; and does not countenance any stipulation exempting the agent from
such an obligation and considers such an exemption as void. The
HELD: 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
The duties and liabilities of a broker to his employer are truest principle of morality as well as of the strictest justice.
essentially those which an agent owes to his principal. 1
(1) An agent who takes a secret profit in the nature of a bonus,
Consequently, the decisive legal provisions are found in Articles gratuity or personal benefit from the vendee, without revealing
1891 and 1909 of the New Civil Code. the same to his principal, the vendor, is guilty of a breach of his
"Art. 1891. Every agent is bound to render an loyalty to the principal and forfeits his right to collect the
account of his transactions and to deliver to the commission from his principal, even if the principal does not
principal whatever he may have received by 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 being reimbursed for his expenditures for the same, unless the
possibility of any wrong, not to remedy or repair an actual principal has consented to or ratified the transaction knowing that
damage. benefit or profit would accrue, or had accrued, to the agent, or
unless with such knowledge he has allowed the agent so as to
By taking such profit or bonus or gift orpropina from the vendee, change his condition that he cannot be put in status quo. The
the agent thereby assumes a position wholly inconsistent with application of this rule is not affected by the fact that the
that of being an agent for his principal, who has a right to treat principal did not suffer any injury by reason of the agent's
him, insofar as his commission is concerned, as if no agency had dealings, or that he in fact obtained better results; nor is it
existed. The fact that the principal may have been benefited by affected by the fact that there is a usage or custom to the
the valuable services of the said agent does not exculpate the contrary, or that the agency is a gratuitous one.
agent who has only himself to blame for such a result by reason
of his treachery or perfidy. 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
Because of his responsibility under the aforecited Article 1720, an task of merely bringing together the vendor and vendee, who
agent is likewise liable for estafa for failure to deliver to his themselves thereafter will negotiate on the terms and conditions
principal the total amount collected by him in behalf of his of the transaction. Neither would the rule apply if the agent or
principal and cannot retain the commission pertaining to him by broker had informed the principal of the gift or bonus or profit he
subtracting the same from his collections. received from the purchaser and his principal did not object
Where a principal has paid an agent or broker a commission while thereto. Herein defendant-appellee Gregorio Domingo was not
ignorant of the fact that the latter has been unfaithful, the merely a middleman of the petitioner-appellant Vicente Domingo
principal may recover back the commission paid, since an agent and the buyer Oscar de Leon. He was the broker and agent of said
or broker who has been unfaithful is not entitled to any petitioner-appellant only. And herein petitioner-appellant was not
compensation. If the agent does not conduct himself with entire aware of the gift of One Thousand Pesos (P1,000.00) received by
fidelity towards his principal, but is guilty of taking a secret profit Gregorio Domingo form the prospective buyer; much less did he
or commission in regard the matter in which he is employed, he consent to his agent's accepting such a gift.
loses his right to compensation on the ground that he has taken a (2) Teofilo Purisima, the sub-agent of Gregorio Domingo, can only
position wholly inconsistent with that of agent for his employer, recover from Gregorio Domingo his one-half share of whatever
and which gives his employer, upon discovering it, the right to amounts Gregorio Domingo received by virtue of the transaction
treat him so far as compensation, at least, is concerned as if no as his sub-agency contract was with Gregorio Domingo alone and
agency had existed. This may operate to give to the principal the not with Vicente Domingo, who was not even aware of such sub-
benefit of valuable services rendered by the agent, but the agent agency. Since Gregorio Domingo received from Vicente Domingo
has only himself to blame for that result. and Oscar de Leon respectively the amounts of Three Hundred
As a general rule, it is a breach of good faith and loyalty to his Pesos (P300.00) and One Thousand Pesos (P1,000.00) or a total of
principal for an agent, while the agency exists, so to deal with the One Thousand Three Hundred Pesos (P1,300.00), one-half of the
subject matter thereof, or with information acquired during the same, which is Six Hundred Fifty Pesos (P650.00), should be paid
course of the agency, as to make a profit out of it for himself in by Gregorio Domingo to Teofilo Purisima.
excess of his lawful compensation; and if he does so he may be WHEREFORE, the judgment is hereby rendered, reversing the
held as a trustee and may be compelled to account to his decision of the Court of Appeals and directing the defendant-
principal for all profits, advantages, rights, or privileges acquired appellee Gregorio Domingo: (1) to pay to the heirs of Vicente
by him in such dealings, whether in performance or in violation of Domingo the sum of One Thousand Pesos (P1,000.00) as moral
his duties, and be required to transfer them to his principal upon
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
31
damages and One Thousand Pesos (P1,000.00) as attorney's fees; On October 16, 1974, the first delivery of 7,933 flags was made
(2) to pay Teofilo Purisima the sum of Six Hundred Fifty Pesos by the United Flag Industry. The next day, on October 17, 1974,
(P650.00); and (3) to pay the costs. 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
27. PRIMITIVO SIASAT and MARCELINO receiving the payment of P469,980.00 on October 23, 1974 for
SIASAT, petitioners, vs. INTERMEDIATE APPELLATE COURT the first delivery, tendered the amount of P23,900.00 or five
and TERESITA NACIANCENO, respondents. percent (5%) of the amount received, to the respondent as
payment of her commission. The latter allegedly protested. She
FACTS: Sometime in 1974, respondent Teresita Nacianceno refused to accept the said amount insisting on the 30%
succeeded in convincing officials of the then Department of commission agreed upon. The respondent was prevailed upon to
Education and Culture (Department), to purchase without public accept the same, however, because of the assurance of the
bidding, one million pesos worth of national flags for the use of petitioners that they would pay the commission in full after they
public schools throughout the country. The respondent was able delivered the other half of the order. The respondent states that
to expedite the approval of the purchase by handcarrying the she later on learned that petitioner Siasat had already received
different indorsements from one office to another, so that by the payment for the second delivery of 7,833 flags. When she
first week of September, 1974, all the legal requirements had confronted the petitioners, they vehemently denied receipt of the
been complied with, except the release of the purchase orders. payment, at the same time claiming that the respondent had no
When Nacianceno was informed by the Chief of the Budget participation whatsoever with regard to the second delivery of
Division of the Department that the purchase orders could not be flags and that the agency had already been revoked.
released unless a formal offer to deliver the flags in accordance
with the required specifications was first submitted for approval, She filed an action in CFI to recover the following commissions:
she contacted the owners of the United Flag Industry on 25% as balance on the first delivery and 30% on the second
September 17, 1974. The next day, after the transaction was delivery. LLpr
discussed, the following document (Exhibit A) was drawn up:
TC & IAC: decided in favor of the respondent.
"Mrs. Tessie Nacianceno,
In assailing the appellate court's decision, the petition tenders the
"This is to formalize our agreement for you to following arguments: first, the authorization making the
represent United Flag Industry to deal with any respondent the petitioner's representative merely states that she
entity or organization, private or government in could deal with any entity in connection with the marketing of
connection with the marketing of our products - their products for a commission of 30%. There was no specific
flags and all its accessories. authorization for the sale of 15,666 Philippine flags to the
Department
"For your service, you will be entitled to a
commission of thirty (30%) percent. ISSUE: WON respondent has no capacity to represent petitioners
Signed in the transaction with the Department
Mr. Primitivo Siasat
HELD: We find petitioners' argument regarding respondent's
Owner and Gen. Manager"
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 DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
32
"An agent may be (1) universal; (2) general, or The validity of a power of attorney executed in Germany
(3) special. A universal agent is one authorized to between German subjects should considered according to the
do all acts for his principal which can lawfully be laws of that country.
delegated to an agent. So far as such a condition The right to commence action for collection of debts owing to
is possible, such an agent may be said to have principal is not an incident of strict ownership, which must be
universal authority. conferred in express terms.
"A general agent is one authorized to do all acts The power to "legally compel" the payment of debts owing to
pertaining to a business of a certain kind or at a the principal is an express grant of the right to bring suit for the
particular place, or all acts pertaining to a collection of such debts.
business of a particular class or series. He has
usually authority either expressly conferred in FACTS: This is an incident of want of personality of the plaintiffs
general terms or in effect made general by the attorney. The action is to recover money said to be due for freight
usages, customs or nature of the business which under charter party. It was brought by virtue of general power of
he is authorized to transact. suits, executed in Manila by Fernando Kammerzell, and purports
to be a substitution in favor of several attorneys of power given to
"An agent, therefore, who is empowered to Kammerzell in an instrument executed in Berlin by Max Leonard
transact all the business of his principal of a Tornow, the sole owner of the business carried on in Berlin and
particular kind or in a particular place, would, for Manila under the name Germann & Co. The first-named
this reason, be ordinarily deemed a general instrument was authenticated by a notary with the formalities
agent. required by the domestic laws. The other was not so
authenticated. Both Tornow and Kammerzell are citizens of
"A special agent is one authorized to do some Germany. Tornow is a resident of Berlin and Kammerzell of Manila.
particular act or to act upon some particular
occasion. He acts usually in accordance with The defendants claim that the original power is invalid under
specific instructions or under limitations article 1280, No. 5, of the Civil Code, which provides that powers
necessarily implied from the nature of the act to for suits must be contained in a public instrument. No claim is
be done." made that the document was not executed with the formalities
required by the German law in the case of such an instrument. We
One does not have to undertake a close scrutiny of the document
see no reason why the general principle that the formal validity of
embodying the agreement between the petitioners and the
contracts is to be tested by the laws of the country where they
respondent to deduce that the latter was instituted as a general
are executed should not apply.
agent. Indeed, it can easily be seen by the way general words
were employed in the agreement that no restrictions were The defendants also claim that the original power cannot be
intended as to the manner the agency was to be carried out or in construed as conferring upon Kammerzell authority to institute or
the place where it was to be executed. The power granted to the defend suits, from which contention, if correct, it would of course
respondent was so broad that it practically covers the follow that the delegated power is invalid. In support of this
negotiations leading to, and the execution of, a contract of sale of contention reliance is placed upon article 1713 of the Civil Code,
petitioners' merchandise with any entity or organization. by which it is provided that "an agency stated in general terms
28. GERMANN & CO., plaintiffs-appellees, vs. DONALDSON, only includes acts of administration," and that "in order to
SIM & CO., defendants-appellants. 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 main object of the instrument is clearly to make Kammerzell the
conferring upon Kammerzell authority to institute or defend suits manager of the Manila branch of the plaintiff's business, with the
same general authority with reference to its conduct which his
HELD: YES, original power cannot be construed as conferring principal would himself possess if he were personally directing it.
upon Kammerzell authority to institute or defend suits. It cannot be reasonably supposed, in the absence of very clear
language to that effect, that it was the intention of the principal
By this instrument Tornow constitutes Kammerzell his "true and to withhold from his agent a power so essential to the efficient
lawful attorney with full power to enter the firm name of Germann management of the business entrusted to his control as that to
& Co. in the Commercial Registry of the city of Manila as a branch sue for the collection of debts.
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
29. THE MUNICIPAL COUNCIL OF ILOILO, plaintiff-
and in our name a branch of our general commercial business of
appellee, vs. JOSE EVANGELISTA ET AL., defendants-
importation and exportation, for which purpose he may make
appellees. TAN ONG SZE VDA. DE TAN TOCO, appellant.
contracts of lease and employ suitable assistants, as well as sign
every kind of documents, accounts, and obligations connected FACTS: March 20, 1924: Court of First Instance of Iloilo rendered
with the business which may be necessary, take charge in general judgment in civil case No. 3514 thereof, wherein the
of the receipt and delivery of merchandise connected with the appellant herein, Tan Ong Sze Vda. de Tan Toco was the plaintiff,
business, sign all receipts for sums of money and collect them and the municipality of Iloilo the defendant, and the former
and exact their payment by legal means, and in general execute sought to recover of the latter the value of a strip of
all the acts and things necessary for the perfect carrying on of the land belonging to said plaintiff taken by the defendant to widen a
business committed to his charge in the same manner as we public street. The judgment entitled the plaintiff to recover Php
could do ourselves if we were present in the same place." 42,966.40 representing the value of said strip of land from the
We should not be inclined to regard the institution of a suit like municipality of Iloilo. On appeal to the SC, judgment was affirmed.
the present, which appears to be brought to collect a claim After the case was remanded to the court of origin and the
accruing in the ordinary course of the plaintiff's business, as judgment rendered therein had become final and
properly belonging to the class of acts described in article 1713 of executory. Attorney Jose Evangelista in his own behalf and as
the Civil Code as acts "of strict ownership." It seems rather to be counsel for the administratix of Jose Ma. Arroyos intestate estate
something which is necessarily a part of the mere administration filed a claim in the said case for professional services rendered by
of such a business as that described in the instrument in question him, which the court acting with the consent of the appellant
and only incidentally, if at all, involving a power to dispose of the widow, fixed at 15% of the amount of the judgment. At the
title to property. hearing on said claim, the claimants appeared, as did also the
Philippine National Bank, which prayed that the amount of the
But whether regarded as an act of strict ownership or not, it
judgment be turned over to it because the land taken over
appears to be expressly and specially authorized by the clause
had been mortgaged to it. Antero Soriano also appeared claiming
conferring the power to "exact the payment" of sums of money
the amount of the judgment as it had been assigned to him, and
"by legal means." This must mean the power to exact the
by him, in turn, assigned to Mauricio Cruz & Co., Inc. After
payment of debts due the concern by means of the institution of
hearing, all the adverse claims on the amount of the judgment,
suits for their recovery. If there could be any doubt as to the
the court ordered that the attorneys lien in the amount of 15% of
meaning of this language taken by itself, it would be removed by
the judgment be recorded in favor of Attorney Evangelistain his
a consideration of the general scope and purpose of the
own behalf and counsel for the administratix of the deceased Jose
instrument in which it occurs. (See Civil Code, art. 1286.) The
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
34
Ma. Arroyo and directed the Municipality of Iloilo to file an action may deem convenient, to take charge of any actions necessary or
of interpleading against the adverse claimants: the PNB,Antero expedient for the interests of his principal, and to defend suits
Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo. brought against her. This power necessarily implies the authority
March 29, 1928: with the approval of the auditor of the provincial to pay for the professional services thus engaged. In the present
treasurer of Iloilo and with the Executive Bureau paid the late case, the assignment made by Tan Boon Tiong, as Attorney-in-fact
Antero Soriano the amount of Php 6,000.00 in part payment of for the appellant, in favor of Attorney Antero Soriano
the judgment mentioned above assigned to him by Tan Boon for professional services rendered in other cases in the interests
Tiong acting as attorney-in-fact of the appellant herein, Tan Ong of the appellant and her coheirs, was that credit which she had
Sze Vda. de Tan Toco. December 18, 1928: the municipal against the municipality of Iloilo, and such assignment was
treasurer of Iloilo deposited with the clerk of the CFI of Iloilo the equivalent to the payment of the amount of said credit to Antero
amount of Php 6,000.00 on account of the judgment rendered in Soriano for professional services
said civil case.
(2) No. With regard to the failure of the other attorney-in-fact of
In pursuance of the resolution of the court below ordering that the the appellant, Tan Montano, authorized by Tan Toco, to consent
attorneys lien in the amount of15% of the judgment be recorded to the deed of assignment, the latter being also authorized to
in favor of Attorney Jose Evangelista. In his own behalf and as a pay, in the name and behalf of the principal, all her debts and the
counsel for the late Jose Ma. Arroyo, the said clerk of court liens and encumbrances her property, the very fact that different
delivered on the same date to said Attorney Evangelista the said letters of attorney were given to each of these two
amount of Php 6,000.00 representatives shows that itwas not the principal's intention that
they should act jointly in order to make their acts valid. From the
With these 2 payments of Php 6,000.00 each making a total syllabus: When two letters of attorney are issued simultaneously
of Php 12,000.00 , the judgment forPhp 42,966.44 against the to two different attorneys-in-fact, but covering the same powers
Municipality of Iloilo was reduced to Php 30,966.40 which was shows that it was not the principals intention that they should act
adjudicated by said court to Maurice Cruz & Co. This appeal, then jointly in order to make their acts valid; the separate act of one of
is confined to the claim of Mauricio Cruz & Co. as alleged assignee the attorney-in-fact, even when not consented to by the other
of the rights of the late Soriano by virtue of the said judgment in attorney-in-fact, is a valid and binding on the principal, especially
payment of professional services rendered by him to the said the principal did not only repudiate the act done, but continued to
widow and her co-heirs retain the said attorney-in-fact.

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
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
35
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
38. THE PHILIPPINE NATIONAL BANK vs. PAZ
constituted a mortgage on lots Nos. 61 and 207 of the
AGUDELO Y GONZAGA, ET AL., defendants. PAZ
cadastral survey of Bacolod, together with the
AGUDELO Y GONZAGA, appellant.
improvements thereon, described in transfer certificates of
FACTS: On November 9, 1920, the defendant- title Nos. 2216 and 1148, respectively, issued in the name
appellant Paz Agudelo y Gonzaga executed in favor of her of Paz Agudelo y Gonzaga, and on lot No. 878 of the
nephew, Mauro A. Garrucho, the document Exhibit K cadastral survey of Murcia, described in transfer certificate
conferring upon him a special power of attorney sufficiently of title No. 2415, issued in the name of Amparo A. Garrucho.
broad in scope to enable him to sell, alienate and mortgage
In connection of the credits, loans, and commercial
in the manner and form he might deem convenient, all her
overdrafts amounting to P21,000 which had been granted
real estate situated in the municipalities of Murcia and
him, Mauro A. Garrucho, on the said date July 15, 1922,
Bacolod, Occidental Negros, consisting in lots Nos. 61 and
executed the promissory note, Exhibit B, for P21,000 as a
207 of the cadastral survey of Bacolod, Occidental Negros,
novation of the former promissory notes for P6,000 and
together with the improvement thereon.
P16,000, respectively.
Amparo A. Garrucho executed the document Exhibit H
On November 25, 1925, Amparo A. Garrucho sold lot No.
whereby she conferred upon her brother Mauro A Garrucho
878 described in certificate of title No. 2415, to Paz Agudelo
a special power of attorney sufficiently broad in scope to
y Gonzaga (Exhibit M).
enable him to sell, alienate, mortgage or otherwise
encumber, in the manner and form he might deem ISSUE: Whether or not Paz Agudelo y Gonzaga is
convenient, all her real estate situated in the municipalities liable for the payment of the loans obtained by
of Murcia and Bago, Occidental Negros. Mauro A. Garrucho from the Philippine National Bank
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
36
for the security of which he constituted a mortgage and P16,000 have been novated by the promissory notes
on the aforesaid real estate belonging to the for P21,000 (Exhibit B) executed by Mauro A. Garrucho, not
defendant-appellant Paz Agudelo y Gonzaga. only without express authority from his principal Paz
Agudelo y Gonzaga but also under his own signature.
HELD: No.
Furthermore, the records do not show that the loan
ART. 1709. By the contract of agency, one person binds obtained by Mauro A. Garrucho, evidenced by the
himself to render some service, or to do something for the promissory note, Exhibit B, was for his principal Paz Agudelo
account or at the request of another. y Gonzaga. The special power of attorney, Exhibit K, does
not authorize Mauro A. Garrucho to constitute a mortgage
ART. 1717. When an agent acts in his own name, the
on the real estate of his principal to secure his personal
principal shall have no right of action against the persons
obligations. Therefore, in doing so by virtue of the
with whom the agent has contracted, or such persons
document, Exhibit C, he exceeded the scope if his authority
against the principal. In such case, the agent is directly
and his principal is not liable for his acts. (2 Corpus Juris, p.
liable to the person with whom he has contracted, as if the
651; article 1714, Civil Code.)
transaction were his own. Cases involving things belonging
to the principal are excepted. It is further claimed that inasmuch as the properties
mortgaged by Mauro A. Garrucho belong to Paz Agudelo y
The provisions of this article shall be understood to be
Gonzaga, the latter is responsible for the acts of the former
without prejudice to actions between principal and agent.
although he acted in his own name, in accordance with the
Aside from the phrases "attorney in fact of his sister, exception contained in article 1717 of the Civil Code. It
Amparo A. Garrucho, as evidenced by the power of attorney would be an exception with the properties of his own name
attached hereto" and "attorney in fact of Paz Agudelo y in connection with the properties of his principal, does so
Gonzaga" written after the name of Mauro A. Garrucho in within the scope of his authority. It is noted that Mauro A.
the mortgage deeds, Exhibits G. and J, respectively, there is Garrucho was not authorized to execute promissory notes
nothing in the said mortgage deeds to show that Mauro A. even in the name of his principal Paz Agudelo y Gonzaga,
Garrucho is attorney in fact of Amparo A. Garrucho and of nor to constitute a mortgage on her real properties to
Paz Agudelo y Gonzaga, and that he obtained the loans secure such promissory notes. Wherefore, it is hereby held
mentioned in the aforesaid mortgage deeds and constituted that the liability constructed by the aforesaid defendant-
said mortgages as security for the payment of said loans, appellant Paz Agudelo y Gonzaga is merely subsidiary to
for the account and at the request of said Amparo A. that of Mauro A. Garrucho, limited lot No. 878 of the
Garrucho and Paz Agudelo y Gonzaga. The above-quoted cadastral survey of Murcia, Occidental Negros, described in
phrases which simply described his legal personality, did Torrens title No. 2415. However, inasmuch as the principal
not mean that Mauro A. Garrucho obtained the said loans obligator, Mauro A. Garrucho, has been absolved from the
and constituted the mortgages in question for the account, complaint and the plaintiff- appellee has not appealed from
and at the request, of his principals. Furthermore, the the judgment absolving him, the law does not afford any
promissory notes executed by Mauro A. Garrucho in favor of remedy whereby Paz Agudelo y Gonzaga may be required
the Philippine National Bank, evidencing loans of P6,000 to comply with the said subsidiary obligation in view of the
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
37
legal maxim that the accessory follows the principal. ISSUE: WON the properties bought by Santiago in his own
Wherefore, the defendant herein should also be absolved name, as an administrator, belong to him. (NO, except the
from the complaint which is hereby dismissed, with the second casco.)
costs against the appellee. So ordered.
HELD: Judgment appealed from affirmed except in so far as
39. SY-JUCO and VIARDO v. SY-JUCO casco no. 2545 is concerned.

DOCTRINE: When an agency acts in his own name, the As to the launch Malabon:
principal shall have no right of action against the person
with whom the agent has contracted, cases involving things Santiago bought it in his own name from the Pacific
belonging to the principal are excepted. According to this Commercial Co., and afterwards registered it at the Custom
exception (when things belonging to the principal are dealt House. But this does not necessarily show that he bought it
with) the agent is bound to the principal although he does for himself and with his own money. This transaction was
not assume the character of such agent and appears acting within the agency which he had received from the plaintiffs.
in his own name. This means that in the case of this The fact that he has acted in his own name may be only, as
exception the agent's apparent representation yields to the we believe it was, a violation of the agency on his part. The
principal's true representation and that, in reality and in question is not in whose favor the document of sale of the
effect, the contract must be considered as entered into launch is executed nor in whose name same was registered,
between the principal and the third person; and, but with whose money was said launch bought. The
consequently, if the obligations belong to the former, to him plaintiffs' testimony that it was bought with their money
alone must also belong the rights arising from the contract. and for them is supported by the fact that, immediately
after its purchase, the launch had to be repaired at their
FACTS: expense, although said expense was collected from the
defendant. Santiago invoked the case of Martinez v.
In 1902, Defendant Santiago Sy-juco was appointed Martinez:
by plaintiffs Vicente and Cipriana as administrator of their
property, and acted as such until June 30, 1916, when his Martinez, Jr., bought a vessel in his own name and in
authority was cancelled. Santiago is the son of Vicente and his name registered it at the Custom House. This court then
Cipriana. Vicente and Cipriana allege that during Santiagos said that although the funds with which the vessel was
administration, Santiago acquired the property claimed in bought belonged to Martinez Sr., Martinez Jr. is its sole and
the complaint in his capacity as the plaintiffs administrator exclusive owner.
with their money and for their benefit. Trial Court Ordered
Santiago to return to the plaintiffs: the launch Malabon, But the Court ruled that this is not applicable to the case at
two cascos , an automobile, a typewriting machine, the bar. In said case the relation of principal and agent, which
house occupied by Santiago, and the price of the piano. exists between the plaintiffs and the defendant in the
Both parties appealed from this judgment. 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
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
38
this representation and bought the launch in his own name evidence. In fact the only proof presented to support this
thereby violating the agency. If the result of this transaction allegation is his own testimony contradicted, on the on
should be that the defendant has acquired for himself the hand, by the plaintiffs' testimony and, on the other hand,
ownership of the launch, it would be equivalent to rebutted by the fact that, on the date this casco was
sanctioning this violation and accepting its consequences. constructed, he did not have sufficient money with which to
But not only must the consequences of the violation of this pay the expense of this construction.
agency not be accepted, but the effects of the agency itself
must be sought. If the defendant contracted the obligation As to the automobile:
to but the launch for the plaintiffs and in their
There is sufficient evidence to show that its prices
representation, but virtue of the agency, notwithstanding
was paid with plaintiffs' money. Defendant's adverse
the fact that he bought it in his own name, he is obliged to
allegation that it was paid with his own money is not
transfer to the plaintiffs the rights he received from the
supported by the evidence.
vendor, and the plaintiffs are entitled to be subrogated in
these rights. As to Casco no. 2545:
From the rule established in Article 1717 of the Civil Upon examination of the evidence relative to this
Code that, when an agency acts in his own name, the casco, it was found that it belonged to the plaintiffs but sold
principal shall have no right of action against the person it afterwards to the defendant by means of a public
with whom the agent has contracted, cases involving things instrument. The plaintiffs have not adduced sufficient proof
belonging to the principal are excepted. According to this of such deceit (on the part of Santiago, when they signed)
exception (when things belonging to the principal are dealt which would destroy the presumption of truth which a
with), the agent is bound to the principal although he does public document carries with it. Attorney Sevilla, who acted
not assume the character of such agent and appears acting as the notary in the execution of this instrument, testifying
in his own name. This means that in the case of this as a witness in the case, said that he never verified any
exception the agent's apparent representation yields to the document without first inquiring whether the parties knew
principal's true representation and that, in reality and in its content. Our conclusion is that this casco was lawfully
effect, the contract must be considered as entered into sold to the defendant by the plaintiffs. (Fun fact: This casco
between the principal and the third person; and, had been leased and was sunk while in the lessees hands
consequently, if the obligations belong to the former, to him before the complaint in this case was filed. As such, the
alone must also belong the rights arising from the contract. issue of ownership is determinative of who may enforce the
The money with which the launch was bough having come responsibility of damages for losses on the lessee.)
from the plaintiff, the exception established in article 1717
is applicable to the instant case.

As to Casco no. 2584: 40. NATIONAL FOOD AUTHORITY VS. IAC


Santiagos allegation that it was constructed at his Facts:
instance and with his money is not supported by the
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
39
Medalla, as a commission agent of plaintiff Superior bound in favor of the person with whom he has contracted,
Shipping Corporation, entered into a contract for hireof ship as if the transaction were his own, except when the
(MV Sea Runner) with defendant NFA. The contract contract involves things belonging to the principal.
obligated Medalla to transport on the MV Sea Runner 8,550
sacks of rice belonging to NFA from Occidental Mindoro to The provision of this article shall be understood to be
Malabon, Metro Manila. Upon completion of the delivery, without prejudice to the actions between the principal and
plaintiff wrote a letter around October 1979,requesting NFA agent. Consequently, when things belonging to the
that it be allowed to collect the amount for freightage and principal (in this case, Superior Shipping Corporation) are
other charges. Plaintiff wrote again around November 1979, dealt with, the agent is bound to the principal although he
this time specifically requesting that payment be made to it does not assume the character of such agent and appears
and not to Medalla because plaintiff was the owner of the acting in his own name. In other words, the agent's
vessel. On November 16, 1979, NFA informed plaintiff that it apparent representation yields to the principal's true
could not grant its request because the contract to representation and that, in reality and in effect, the contract
transport the rice was entered into by NFA and defendant must be considered as entered into between the principal
Medalla who did not disclose that he was acting as a mere and the third person. Corollarily, if the principal can be
agent of plaintiff. Thereupon on November 19, 1979, obliged to perform his duties under the contract, then it can
defendant NGA paid defendant Medalla the sum of also demand the enforcement of its rights arising from the
P25,974.90, for freight services. On December 4, 1979, contract.
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 41. E. AWAD, vs. FILMA MERCANTILE CO., INC.,
demand."
FACTS: the plaintiff, doing business in the Philippine
Issue: Whether NFA is jointly and severally Islands under the name of E. Awad & Co., delivered certain
liable with defendant Medalla. merchandise of the invoice value of P11,140 to Chua Lioc, a
merchant operating under the name of Hang Chua Co. in
Held: Yes, NFA is solidarily liable with defendant Medalla. It
Manila, said merchandise to be sold on commission by Chua
is an undisputed fact that Gil Medalla was a commission
Lioc. Representing himself as being the owner of the
agent of respondent Superior Shipping Corporation which
merchandise, Chua Lioc, on September 8, 1924, sold it to
owned the vessel "MV Sea Runner" that transported the
the defendant for the sum of P12,155.60. He owed the
sacks of rice belonging to petitioner NFA. The context of the
Philippine Manufacturing Co., the sum of P3,480, which the
law is clear. Art. 1883, which is the applicable law in the
defendant agreed to pay, and was also indebted to the
case at bar provides:
defendant itself in the sum of P2,017.98. The total amount
Art. 1883. If an agent acts in his own name, the principal of the two debts, P5,497.98, was deducted from the
has no right of action against the persons with whom the purchase price, leaving a balance of P6,657.52 which the
agent has contracted; neither have such persons against defendant promised to pay to Chua Lioc on or before
the principal. In such case the agent is the one directly October 9, 1924. The merchandise so purchased on
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
40
September 9, was delivered to the defendant, who orders of the court in the cases above-mentioned, but
immediately offered it for sale. Three days later D. J. Awad, which sum the defendant is able and willing to pay at any
the representative of the plaintiff in the Philippine Islands; time when the court decides to whom the money lawfully
having ascertained that the goods entrusted to Chua Lioc pertains.
was being offered for sale by the defendant, obtained
authorization from Chua Lioc to collect the sum of P11,707 HELD: The law applicable to the case is well settled. Article
from said defendant and informed the latter's treasurer of 246 of the Code of Commerce reads as follows: When the
the facts above set forth. On September 15, D. J. Awad, in agent transacts business in his own name, it shall not be
behalf of E. Awad & Co., wrote a letter to the defendant necessary for him to state who is the principal and he shall
corporation advising it that, inasmuch as the merchandise be directly liable, as if the business were for his own
belonged to E. Awad & Co., the purchase price should be account, to the persons with whom he transacts the same,
paid to them. said persons not having any right of action against the
principal, nor the latter against the former, the liabilities of
September 18, 1924, the Philippine Trust Company, brought the principal and of the agent to each other always being
an action, civil case No. 26934, against Chua Lioc for the reserved.
recovery of the sum of P1,036.36 and under a writ of
attachment garnished the balance due Chua Lioc from the The rule laid down in the article quoted is contrary to the
defendant. On October 7, E. Awad also brought an action, general rule in the United States as to purchases of
civil case No. 27016, against Chua Lioc for the recovery of merchandise from agents with undisclosed principal, but it
the sum of P11,140, the invoice value of the merchandise has been followed in a number of cases and is the law in its
above-mentioned and also obtained a writ of attachment jurisdiction. But the appellant points out several
under which notice of garnishment of the said aforesaid circumstances which, in his opinion, indicate that the
balance we served upon the herein defendant. defendant-appellee was aware of the condition under which
the merchandise was entrusted to the agent Chua Lioc and
The complaint in the present action was filed on November therefore did not purchase the goods in good faith. This, if
26, 1924, the plaintiff demanding payment of the same true, would, of course, lead to a decision of the case in
sum of P11,140 for which action had already been brought favor of the plaintiff, but there is, in our opinion, nothing
against Chua Lioc. The defendant, its answer, set up as conclusive about the circumstances referred to and they are
special defense that it brought the merchandise in good not sufficient to overcome the presumption of good faith.
faith and without any knowledge whether of the person The appealed judgment is in accordance with the law and
from whom or the condition under which the said the facts and is affirmed with the costs against the
merchandise had been acquired by Chua Lioc or Hang appellant. So ordered.
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
AGENCY CASE DIGEST DAVID-IWAKI-SARANZA-MENDOZA-CAMBALIZA-CARBONELL-ALCAZAREN
41