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ORIENT AIR SERVICES AND HOTEL REPRESENTATIVES vs.
COURT OF APPEALS
CASE NUMBER: GR. NO. 76931
DATE: MAY 29, 1991
FACTS:
January 15 1977- American Airlines, Inc. an air carrier
offering passenger and air cargo transportation in the
Philippines, and Orient Air Services and Hotel
Representatives entered into a General Sales Agency
Agreement, whereby the former authorized the latter to act
as its exclusive general sales agent within the Philippines for
the sale of air passenger transportation.
May 11 1981- American Air took charge of the collection
of the proceeds of tickets sold originally by Orient Air and
terminated the Agreement in accordance with Paragraph 13
thereof (Termination).
13. Termination
American may terminate the Agreement on two days'
notice in the event Orient Air Services is unable to
transfer to the United States the funds payable by Orient
Air Services to American under this Agreement. Either
party may terminate the Agreement without cause by
giving the other 30 days' notice by letter, telegram or
cable.
May 15 1981- American Air instituted suit against Orient
Air with the Court of First Instance of Manila, for Accounting
with Preliminary Attachment or Garnishment, Mandatory
Injunction and Restraining Order
In its Answer with counterclaim dated 9 July 1981, Orient
Air denied the material allegations of the complaint with
respect to plaintiff's entitlement to alleged unremitted
amounts, contending that after application thereof to the
commissions due it under the Agreement, plaintiff in fact still
owed Orient Air a balance in unpaid overriding commissions.
Further, the defendant contended that the actions taken by
American Air in the course of terminating the Agreement as
well as the termination itself were untenable, Orient Air
claiming that American Air's precipitous conduct had
occasioned prejudice to its business interests.
Trial Court ruled in favor of Orient Air
ON APPEAL: Intermediate Appellate Court affirmed the
ruling of TC
ISSUE: W/N the respondent appellate court correctly ruled
that Orient Air be reinstated again as sales agent of American
Air
RULING:
By affirming this ruling of the trial court, respondent
appellate court, in effect, compels American Air to extend its
personality to Orient Air. Such would be violative of the
principles and essence of agency, defined by law as a
contract whereby "a person binds himself to render some
service or to do something in representation or on behalf of
another, WITH THE CONSENT OR AUTHORITY OF THE
LATTER .
Cases on Agency
In an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so
doing, the agent, by legal fiction, becomes the principal,
authorized to perform all acts which the latter would have
him do. Such a relationship can only be affected with the
consent of the principal, which must not, in any way, be
compelled by law or by any court. The Agreement itself
between the parties states that "either party may terminate
the Agreement without cause by giving the other 30 days'
notice by letter, telegram or cable." (Emphasis supplied) We,
therefore, set aside the portion of the ruling of the
respondent appellate court reinstating Orient Air as general
sales agent of American Air.
WHEREFORE, with the foregoing modification, the Court
AFFIRMS the decision and resolution of the respondent Court
of Appeals, dated 27 January 1986 and 17 December 1986,
respectively. Costs against petitioner American Air.
RALLOS vs. FELIX GO CHAN & SONS REALTY
CORPORATION
CASE NUMBER: L-24332
DATE: January 31, 1978
PONENTE: Munoz-Palma, J.
FACTS:
Concepcion and Gerundia Rallos were sisters and
registered co-owners of a parcel of land known as Lot No.
5983 of the Cadastral Survey of Cebu covered by Transfer
Certificate of Title No. 11116 of the Registry of Cebu.
They executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell such land for
and in their behalf.
After Concepcion died, Simeon Rallos sold the undivided
shares of his sisters Concepcion and Gerundia to Felix Go
Chan & Sons Realty Corporation for the sum of P10,686.90.
New TCTs were issued to the latter.
Petitioner Ramon Rallos, administrator of the Intestate
Estate of Concepcion filed a complaint praying (1) that the
sale of the undivided share of the deceased Concepcion
Rallos in lot 5983 be unenforceable, and said share be
reconveyed to her estate; (2) that the Certificate of 'title
issued in the name of Felix Go Chan & Sons Realty
Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and (3) that plaintiff
be indemnified by way of attorney's fees and payment of
costs of suit.
CFI: [Plaintiffs Complaint]
Sale of land was null and void insofar as the one-half pro-
indiviso share of Concepcion Rallos
Ordered the issuance of new TCTs to respondent
corporation and the estate of Concepcion in the proportion
of share each pro-indiviso and the payment of attorneys
fees and cost of litigation
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[Respondent filed cross claim against Simon Rallos(*Simon
and Gerundia died during pendency of case)]
Juan T. Borromeo, administrator of the Estate of Simeon
Rallos was ordered to pay defendant the price of the share
of the land (P5,343.45) plus attorneys fees
[Borromeo filed a third party complaint against Josefina
Rallos, special administratrix of the Estate of Gerundia]
Dismissed without prejudice to filing either a complaint
against the regular administrator of the
Estate of Gerundia Rallos or a claim in the Intestate-Estate of
Cerundia Rallos, covering the same subject-matter
CA: CFI Decision reversed, upheld the sale of Concepcions
share.
MR: denied.
ISSUES & RULING:
1) WON sale was valid although it was executed after the
death of the principal, Concepcion.?
Sale was void.
o No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to
represent him (Art. 1317 of the Civil Code).
o Simons authority as agent was extinguished upon
Concolacions death
2) WON sale fell within the exception to the general rule that
death extinguishes the authority of the agent
The sale did not fall under the exceptions to the
general rule that death ipso jure extinguishes the
authority of the agent
o Art. 1930 inapplicable: SPA in favor of Simon Rallos was not
coupled with interest
o Art. 1931 inapplicable:
Simon Rallos knew (as can be inferred from his pleadings)
of principal Concepcions death
For Art 1931 to apply, both requirements must be present
3) WON agents knowledge of the principals death is a
material factor.
Yes, agents knowledge of principals death is material. Teresita replied that it will be up to the GANAS to make
o Respondent asserts that: there is no provision in the Code
which provides that whatever is done by an agent having
knowledge of the death of his principal is void even with
respect to third persons who may have contracted with him
in good faith and without knowledge of the death of the
principal
o Court says: this contention ignored the ignores the
existence of the general rule enunciated in Article 1919 that
the death of the principal extinguishes the agency. Article
1931, being an exception to the general rule, is to be strictly
construed.
AIR FRANCE vs. COURT OF APPEALS
CASE NUMBER: G.R. No. L-57339
DATE: December 29, 1983
Cases on Agency
CAUSE OF ACTION: Petition for review on certiorari assailing
the Decision of then respondent Court of Appeals
promulgated "Jose G. Gana, et al. vs. Sociedad Nacionale Air
France", which reversed the Trial Court's judgment dismissing
the Complaint of private respondents for damages arising
from breach of contract of carriage, and awarding instead
P90,000.00 as moral damages.
FACTS:
1. Late Jose G. Gana and his family (the GANAS), purchased
from AIR FRANCE (9) "open-dated" air passage tickets
for the Manila/Osaka/Tokyo/Manila route. On 24 April
1970, AIR FRANCE exchanged or substituted the
aforementioned tickets with other tickets for the same
route. At this time, the GANAS were booked for the
Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May
1970, and for the Tokyo/Manila return trip on AIR FRANCE
Flight 187 on 22 May 1970.
2. The aforesaid tickets were valid until 8 May 1971. The
GANAS did not depart on 8 May 1970. Instead, Jose Gana
sought the assistance of Teresita Manucdoc, a Secretary of
the Sta. Clara Lumber Company where Jose Gana was the
Director and Treasurer, for the extension of the validity of
their tickets, which were due to expire on 8 May 1971.
3. Teresita enlisted the help of Lee Ella Manager of the
Philippine Travel Bureau. Ella sent the tickets to Cesar Rillo,
Office Manager of AIR FRANCE. The tickets were returned
to Ella who was informed that extension was not possible
unless the fare differentials resulting from the increase in
fares triggered by an increase of the exchange rate of the US
dollar to the Philippine peso and the increased travel tax
were first paid. Ella then returned the tickets to Teresita
and informed her of the impossibility of extension.
4. In the meantime, the GANAS had scheduled their
departure on 7 May 1971 or one day before the expiry
date. Teresita requested travel agent Ella to arrange the
revalidation of the tickets. Ella gave the same negative
answer and warned her that although the tickets could be
used by the GANAS if they left on 7 May 1971, the tickets
would no longer be valid for the rest of their trip because
the tickets would then have expired on 8 May 1971.
the arrangements.
5. With that assurance, Ella on his own, attached to the
tickets validating stickers for the Osaka/Tokyo flight, one a
JAL. sticker and the other an SAS (Scandinavian Airways
System) sticker. The SAS sticker indicates thereon that it
was "Reevaluated by: the Philippine Travel Bureau,
Branch No. 2" (as shown by a circular rubber stamp) and
signed "Ador", and the date is handwritten in the center of
the circle. Then appear under printed headings the notations:
JL. 108 (Flight), 16 May (Date), 1040 (Time), OK (status).
Apparently, Ella made no more attempt to contact AIR
FRANCE as there was no more time.
6. Notwithstanding 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.
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7. 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. They encountered the same difficulty with respect to
their return trip to Manila as AIR FRANCE also refused to
honor their tickets. They were able to return only after pre-
payment in Manila, through their relatives, of the readjusted
rates. They finally flew back to Manila on separate Air
France Frights on 19 May 1971 for Jose Gana and 26 May
1971 for the rest of the family.
8. On 25 August 1971, the GANAS commenced before the
then Court of First Instance of Manila, Branch III, Civil Case
No. 84111 for damages arising from breach of contract of
carriage.
9. AIR FRANCE traversed the material allegations of the
Complaint and alleged that the GANAS brought upon
themselves the predicament they found themselves in
and assumed the consequential risks; that travel agent
Ella's affixing of validating stickers on the tickets without
the knowledge and consent of AIR FRANCE, violated
airline tariff rules and regulations and was beyond the
scope of his authority as a travel agent; and that AIR
FRANCE was not guilty of any fraudulent conduct or bad
faith.
10. TC dismissed the Complaint of the GANAS based on
Partial and Additional Stipulations of Fact .
11. The GANAS appealed to the CA. During the pendency of
the appeal, Jose Gana, the principal plaintiff, died.
12. CA set aside and reversed the TCs decision ordering Air
France to pay appellants moral damages in the total sum
P90,000.00 plus costs.
13. Reconsideration sought by AIR FRANCE was denied,
hence, petitioner's recourse before this instance, to which we
gave due course.
ISSUE:
1. Whether or not, under the environmental milieu the
GANAS have made out a case for breach of contract of
carriage entitling them to an award of damages? No!
2. Whether or not Teresita was the agent of the GANAS
and notice to her of the rejection of the request for
extension of the validity of the tickets was notice to the
GANAS, her principals? YES!
RULING: No! SC reversed the affirmative ruling of the CA. (As
for the mainFIRST issue)
AIR FRANCE cannot be faulted for breach of contract
when it dishonored the tickets of the GANAS after 8 May
1971 since those tickets expired on said date; nor when it
required the GANAS to buy new tickets or have their
tickets re-issued for the Tokyo/Manila segment of their
trip. Neither can it be said that, when upon sale of the new
tickets, it imposed additional charges representing fare
differentials, it was motivated by self-interest or unjust
enrichment considering that an increase of fares took effect,
as authorized by the Civil Aeronautics Board (CAB) in April,
1971. This procedure is well in accord with the IATA tariff
rules which provide:
Cases on Agency
6. TARIFF RULES
7. APPLICABLE FARE ON THE DATE OF DEPARTURE
3.1 General Rule.
All journeys must be charged for at the fare (or charge) in
effect on the date on which transportation commences from
the point of origin. Any ticket sold prior to a change of fare
or charge (increase or decrease) occurring between the date
of commencement of the journey, is subject to the above
general rule and must be adjusted accordingly. A new ticket
must be issued and the difference is to be collected or
refunded as the case may be. No adjustment is necessary if
the increase or decrease in fare (or charge) occurs when the
journey is already commenced.
The GANAS cannot defend by contending lack of
knowledge of those rules since the evidence bears out
that Teresita, who handled travel arrangements for the
GANAS, was duly informed by travel agent Ella of the
advice of Reno, the Office Manager of Air France, that
the tickets in question could not be extended beyond the
period of their validity without paying the fare
differentials and additional travel taxes brought about by
the increased fare rate and travel taxes.
Teresita was the agent of the GANAS and notice to her of
the rejection of the request for extension of the validity
of the tickets was notice to the GANAS, her principals.
(AGENCY: NOTICE TO THE AGENT IS NOTICE TO THE
PRINCIPAL)
The circumstances that AIR FRANCE personnel at the ticket
counter in the airport allowed the GANAS to leave is not
tantamount to an implied ratification of travel agent Ella's
irregular actuations. It should be recalled that the GANAS left
in Manila the day before the expiry date of their tickets and
that "other arrangements" were to be made with respect to
the remaining segments. Besides, the validating stickers that
Ella affixed on his own merely reflect the status of
reservations on the specified flight and could not legally
serve to extend the validity of a ticket or revive an expired
one.
The conclusion is inevitable that the GANAS brought upon
themselves the predicament they were in for having
insisted on using tickets that were due to expire in an
effort, perhaps, to beat the deadline and in the thought
that by commencing the trip the day before the expiry
date, they could complete the trip even thereafter.
It should be recalled that AIR FRANCE was even unaware
of the validating SAS and JAL. stickers that Ella had
affixed spuriously. Consequently, Japan Air Lines and AIR
FRANCE merely acted within their contractual rights
when they dishonored the tickets on the remaining
segments of the trip and when AIR FRANCE demanded
payment of the adjusted fare rates and travel taxes for
the Tokyo/Manila flight.
WHEREFORE, the judgment under review is hereby reversed
and set aside, and the Amended Complaint filed by private
respondents hereby dismissed.
SANTOS vs. BUENCONSEJO
CASE NUMBER: G.R. No. L-20136
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DATE: June 23, 1965
FACTS:
1. Petitioner Jose A. Santos y Diaz seeks the reversal of an
order of the Court of First Instance of Albay, denying his
petition:
a. Cancellation of original certificate of title No. RO-3848
(25322), issued in the name of Anatolio Buenconsejo,
Lorenzo Bon and Santiago Bon, and covering Lot No. 1917 of
the Cadastral Survey of Tabaco, Albay, and
b. Issuance in lieu thereof, of a separate transfer certificate of
title in his name.
2. Lot No. 1917 covered by Original Certificate of Title No.
RO-3848 (25322) was originally owned in common by
Anatolio Buenconsejo to the extent of undivided portion
and Lorenzo Bon and Santiago Bon to the extent of the other
(Exh. B)
3. Anatolio Buenconsejo's rights, interests and participation
over the portion abovementioned were by a Certificate of
Sale executed by the Provincial Sheriff of Albay, transferred
and conveyed to Atty. Tecla San Andres Ziga, awardee in
the corresponding auction sale conducted by said Sheriff
4. By a certificate of redemption issued by the Provincial
Sheriff of Albay, the rights, interest, claim and/or or
participation which Atty. Tecla San Andres Ziga may have
acquired over the property in question by reason of the
aforementioned auction sale award, were transferred and
conveyed to the herein petitioner in his capacity as
Attorney-in-fact of the children of Anatolio Buenconsejo,
namely, Anastacio Buenconsejo, Elena Buenconsejo and
Azucena Buenconsejo (Exh. C).
5. 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.
6. Relying upon this power of attorney and redemption made
by him, Santos now claims to have acquired the share of
Anatolio Buenconsejo in the aforementioned Lot No.
1917;
7. As the alleged present owner of said share, Santos caused
a subdivision plan of said Lot No. 1917 to be made, in which
the portion he claims as his share thereof has been marked
as Lot No. 1917-A; and that he wants said subdivision at No.
1917-A to be segregated from Lot No. 1917 and a certificate
of title issued in his name exclusively for said subdivision Lot
No. 1917-A.
8. Lower court: ruled in favor of the respondents.
ISSUE: Whether or not petitioner Santos claim that he has
acquired the share of Anatolio Buenconsejo in Lot No. 1917
relying upon a power of attorney and redemption made by
him is tenable?
RULING: No! SC affirmed the lower courts decision that
petitioner's claim is clearly untenable, for three reasons:
a. Said special power of attorney authorized him to act on
behalf of the children of Anatolio Buenconsejo, and, hence, it
Cases on Agency
could not have possibly vested in him any property right in
his own name; (
b. The children of Anatolio Buenconsejo had no authority to
execute said power of attorney, because their father is still
alive and, in fact, he and his wife opposed the petition of
Santos;
c. In consequence of said power of attorney (if valid) and
redemption, Santos could have acquired no more than the
share pro indiviso of Anatolio Buenconsejo in Lot No. 1917,
so that petitioner cannot without the conformity of the
other co-owners (Lorenzo and Santiago Bon), or a judicial
decree of partition issued pursuant to the provisions of Rule
69 of the new Rules of Court (Rule 71 of the old Rules of
Court) which have not been followed By Santos adjudicate
to himself in fee simple a determinate portion of said Lot No.
1917, as his share therein, to the exclusion of the other co-
owners.
Inasmuch as the appeal is patently devoid of merit, the order
appealed from is hereby affirmed, with treble cost against
petitioner-appellant Jose A. Santos y Diaz. It is so ordered.
ALBADEJO y CIA vs. PHILIPPINE REFINING CO.
DATE: December 20, 1923
FACTS:
It appears that Albaladejo y Cia. is a limited partnership,
organized in conformity with the laws of these Islands, and
having its principal place of business at Legaspi, Albay. The
firm was engaged in the buying and selling of the products
of the country, especially copra.
The Visayan Refining Co. is a corporation organized engaged
in operating its extensive plant at Opon, Cebu, for the
manufacture of coconut oil.
On August 28, 1918, the plaintiff made a contract with the
Visayan Refining Co., the material parts of which are as
follows: (important provisions)
- The party of the first part (Albadejo) agrees and binds itself
to sell to the party of the second part (Visayan Refining Co.) ,
and the party of the second part agrees and binds itself to
buy from the party of the first part, for a period of one (1)
year
- During the continuance of this contract the party of the
second part will not appoint any other agent for the
purchase of copra in Legaspi, nor buy copra from any vendor
in Legaspi.
- The party of the second part will provide transportation by
sea to Opon, Cebu, for the copra delivered to it by the party
of the first part, but the party of the first part must deliver
such copra to the party of the second part free on board the
boats of the latter's ships or on the pier alongside the latter's
ships.
Pursuant to this agreement the plaintiff bought copra
extensively for the Visayan Refining Co. for a year. At the end
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of said year both parties found themselves satisfied with the
existing arrangement, and they therefore continued by tacit
consent to govern their future relations by the same
agreement.
When the contract above referred to was originally made,
Albaladejo y Cia. apparently had only one commercial
establishment. After the Visayan Refining Co. had ceased to
buy copra, the supplies of copra already purchased by the
plaintiff were gradually shipped out and accepted by \the
Visayan Refining Co. In next eight or ten months the
accounts between the two parties were liquidated. The last
account rendered by the Visayan Refining Co. to the plaintiff
was for the month of April, 1921, and it showed a balance of
P288 in favor of the defendant.
Under date of June 25, 1921, the plaintiff company addressed
a letter from Legaspi to the Philippine Refining Co. (which
had now succeeded to the rights and liabilities of the Visayan
Refining Co.), expressing its approval of said account. In this
letter no dissatisfaction was expressed by the plaintiff as to
the state of affairs between the parties; but about six weeks
thereafter the present action was begun.
This action was instituted in the CFI Albay by Albaladejo to
recover a sum of money from the Philippine Refining Co., as
successor to the Visayan Refining Co., two causes of action
being stated in the complaint.
Upon hearing the cause, the trial judge absolved the
defendant from the first cause of action but gave judgment
for the plaintiff to recover the sum of P49,626.68, with costs,
upon the second cause of action.
The plaintiff appealed the first cause of action, and the
defendant appealed with respect to the action taken upon
the second cause of action. It results that, by the appeal of
the two parties, the decision of the lower court is here under
review.
ISSUE: Whether he defendant liable for the expenses
incurred by the plaintiff in keeping its organization intact
during the period now under consideration.
RULING: NO
First cause of action: The alleged negligent failure of the
Visayan Refining Co. to provide opportune transportation for
the copra collected by the plaintiff and deposited for
shipment.
Upon consideration of all the facts revealed in evidence
(records of shipping), court found that the Visayan Refining
Co. had used reasonable promptitude in its efforts to get out
the copra from the places where it had been deposited for
shipment, notwithstanding occasional irregularities due at
times to the condition of the weather as related to
transportation by sea and at other times to the inability of
the Visayan Refining Co. to dispatch boats to the more
remote ports. This finding of the trial judge, that no
negligence of the kind alleged can properly be imputed to
the Visayan Refining Co., is in our opinion supported by the
proof.
The trial judge calls attention to the fact that it is expressly
provided in paragraph two of the contract that the shrinkage
Cases on Agency
of copra from the time of its delivery to the party of the
second part till its arrival at Opon should fall upon the
plaintiff, from whence it is to be interfered that the parties
intended that the copra should be paid for according to its
weight upon arrival at Opon regardless of its weight when
first purchased.
From what has been said it follows that the first cause of
action set forth in the complaint is not well founded, and
the trial judge committed no error in absolving the
plaintiff therefrom.
Second cause of action: Plaintiff seeks to recover the sum of
P110,000, the alleged amount expended by the plaintiff in
maintaining and extending its organization for Visayan
Refining Co.
As a basis for the defendant's liability in this respect it is
alleged that said organization was maintained and extended
at the express request, or requirement, of the defendant, in
conjunction with repeated assurances that the defendant
would soon resume activity as a purchaser of copra.
SC: We note that in his letter of July 10, 1920, Mr. Day
suggested that if the various purchasing agents of the
Visayan Refining Co. would keep their organization intact, the
company would endeavour to see that they should not lose
by the transaction in the long run. These words afford no
sufficient basis for the conclusion, which the trial judge
deduced there from, that the defendant is bound to
compensate the plaintiff for the expenses incurred in
maintaining its organization. The correspondence sufficiently
shows on its face that there was no intention on the part of
the company to lay a basis for contractual liability of any sort;
and the plaintiff must have understood the letters in that
light. The parties could undoubtedly have contracted about
it, but there was clearly no intention to enter into contractual
relation; and the law will not raise a contract by implication
against the intention of the parties.
The inducement held forth was that, when purchasing should
be resumed, the plaintiff would be compensated by the
profits then to be earned for any expense that would be
incurred in keeping its organization intact. It is needless to
say that there is no proof showing that the officials of the
defendant acted in bad faith in holding out this hope.
In the appellant's brief the contention is advanced that the
contract between the plaintiff and the VisayanRefining Co.
created the relation of principal and agent between the
parties, and the reliance is placed upon article1729 of the
Civil Code which requires the principal to indemnify the
agent for damages incurred in carrying out the agency.
Attentive perusal of the contract is, however, convincing to
the effect that the relation between the parties was not that
of principal and agent in so far as relates to the purchase of
copra by the plaintiff. It is true that the Visayan Refining Co.
made the plaintiff one of its instruments for the collection of
copra; but it is clear that in making its purchases from the
producers the plaintiff was buying upon its own account
In paragraph three of the contract it is declared that during
the continuance of this contract the Visayan Refining Co.
would not appoint any other agent forthe purchase of copra
in Legaspi; and this gives rise indirectly to the inference that
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the plaintiff was considered its buying agent. But the use of
this term in one clause of the contract cannot dominate the
real nature of the agreement as revealed in other clauses, no
less than in the caption of the agreement itself.
In some of the trade letters also the various instrumentalities
used by the Visayan Refining Co. for the collection of copra
are spoken of as agents. But this designation was evidently
used for convenience; and it is very clear that in its activities
as a buyer the plaintiff was acting upon its own account and
not as agents of the Visayan Refining Co. The title to all of
the copra purchased by the plaintiff undoubtedly remained
in it until it was delivered by way of subsequent sale to said
company.
For the reasons stated we are of the opinion that no liability
on the part of the defendant is shown upon the plaintiff's
second cause of action, and the judgment of the trial court
on this part of the case is erroneous.
THOMAS vs. PINEDA
CASE NUMBER: G.R. No. L-2411
DATE: June 28, 1951
FACTS:
Thomas bought the bar and restaurant known as Silver Dollar
Caf at Plaza Sta. Cruz.
He employed Pineda as a bartender-promoted to cashier
and manager
During Japanese occupation, to prevent the business and
its property from falling into enemy hands, Thomas made a
fictitious sale to Pineda fictitious sale was admitted by both
parties;
2nd agreement which was a secret stating that the sale was
fictitious
Original building was destroyed by fire, Pineda was able to
remove some furniture and a considerable qty of stocks to a
place of safety- a bar was opened on Calle Bambang-after 4
months it was transferred to the original location
Thomas brought a CPA for the purpose of examining the
books- Pineda threatened Thomas with a gun if they
persisted in their purpose. So Thomas filed a case and set up
another bar
1st CoA- Thomas sought to compel an ACCOUNTING of
Pinedas operations during the time he was in control of the
bar
- Pineda claims that there was a 3rd verbal agreement, the
import of which was that he was to operate the business with
no liability other than to turn over to the plaintiff as the
plaintiff would find it after the war
2nd CoA: ownership of Silver Dollar Caf trade name it
appears that Pineda registered the business as his own
RULING:
1st CoA valid
- Little or no weight can be attached to Pinedas assertion .As
sole manager with full power to do as his fancies dictated;
Cases on Agency
the defendant could strip the business naked of all its stocks,
leaving the plaintiff holding the bag, as it were, when the
defendant's management was terminated. Unless Thomas
was willing to give away his property and its profits, no man
in his right senses would have given his manager an outright
license such as the defendant claims to have gotten from his
employer.
- The conclusion thus seems clear that the defendant owes
the plaintiff an accounting of his management of the
plaintiff's business during the occupation. The exact legal
character of the defendant's relation to the plaintiff matters
not a bit. It was enough to show, and it had been shown, that
he had been entrusted with the possession and management
of the plaintiff's business and property for the owner's
benefit and had not made an accounting.
- It was error for the court below to declare at this stage of
the proceeding, on the basis of defendant's incomplete and
indefinite evidence, that there were no surplus profits
- Monies and food stuffs which the defendant said he had
supplied the plaintiff and his daughters during the war are
appropriate items to be considered on taking account
Upon plaintiffs release from the internment camp, he lost no
time in looking for a site where he could open a saloon
The use of the old name suggested that the business was in
fact an extension and continuation of the Silver Dollar Caf
- Upon the reopening of the bar in the original place- lease
was in the name of Thomas; calling cards saying Thomas is
the proprietor == defendant was only a manager. 2nd CoA-
Thomas is the owner of the trade name
- In the fictitious bill of sale Pineda acknowledged Thomas
ownership of the business
- Business cards: Thomas is the proprietor
- No abandonment because when Thomas set up a new
saloon it used the same name
The most that can be said is that the plaintiff instructed
Pineda to renew the registration of the trade-name and the
defendant understood the instruction as permission to make
the registration in his favor
As legal proposition and in good conscience, the defendants
registration of the trade name Silver Dollar Cafe must be
deemed to have been affected for the benefit of its owner of
whom he was a mere trustee or employee.
"The relations of an agent to his principal are fiduciary and it
is an elementary and very old rule that in regard to property
forming the subject matter of the agency, he is estopped
from acquiring or asserting a title adverse to that of principal.
His position is analogous to that of a trustee and he cannot
consistently, with the principles of good faith, be allowed to
create in himself an interest in opposition to that of his
principal or cestuique trust. A receiver, trustee, attorney,
agent or any other person occupying fiduciary relations
respecting property or persons utterly disabled from
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acquiring for his own benefit the property committed to his
custody for management.
The rule stands on the moral obligation to refrain from
placing one's self in position which ordinarily excite conflicts
between self-interest at the expense of one's integrity and
duty to another, by making it possible to profit by yielding to
temptation,
PALMA VS. CRISTOBAL
CASE NUMBER: G.R. No. L-49219
DATE: December 11, 1946
FACTS:
A parcel of a land located in Quesada Street, Tondo,
Manila, covered by transfer certificate of title No. 31073 of
the Register of Deeds of Manila, issued in favor of petitioner
Pablo D. Palma, is the subject of contention between the
parties.
o Petitioner sought, at first, to eject respondent Eduardo
Cristobal Reyes from the land in question in a complaint filed
with the Municipal Court of Manila. As respondent raised the
question of ownership, the complaint was dismissed, and
petitioner filed with the Court of First Instance of Manila the
complaint which initiated this case, petitioner praying that he
be declared the owner of the land and that respondent be
ordered to restore its possession and to remove his house
therefrom.
o The complaint was dismissed and petitioner brought the
case to the Court of Appeals, where he again failed.
o The case is appealed by certiorari.
In 1909, after registration proceedings under the provisions
of Act No. 496, original certificate of title No. 1627 was issued
in the names of petitioner and his wife Luisa Cristobal.
In 1923, said certificate was cancelled and substituted by
certificate of title No. 20968 by virtue of a decree issued by
the Court of First Instance of Manila in connection with
Manila cadastre.
It was later substituted by certificate of title No. 26704, also
in the name of petitioner and his wife.
After the wifes death in 1922,a new certificate of title was
issued in 1923 only in the name of the name of the
petitioner, substituted in 1928 by certificate of title No.
31073.
The Court of Appeals, upon the evidence, concluded with
the Court of First Instance of Manila that the parcel of land
in question is a community property held by petitioner in
trust for the real owners (the respondent being an heir of
one of them), the registration having been made in
accordance with an understanding between the co-
owners, by reason of the confidence they had in
petitioner and his wife. This confidence, close relationship,
and the fact that the co-owners were receiving their shares in
the rentals, were the reasons why no step had been taken to
partition the property.
It was only after the death of Luisa Cristobal and petitioner
had taken a second wife that trouble on religious matters
arose between petitioner and respondent, and it gives
credence to the testimony of Apolonia Reyes and respondent
Cases on Agency
to the effect that Luisa, before her death, called her
husband, the petitioner, and enjoined him to give her co-
owners their shares in the parcel of land; but respondent
told her then not to worry about it, for it was more
important to them to have her cured of the malady that
affected her. Petitioner answered his wife that she should
not worry because he would take care of the matter by
giving the co-owners their respective shares.
After Luisa Cristobal, petitioners wife, died in 1922, instead
of moving for the partition of the property, considering
specially that petitioner had promised such a partition at the
deathbed of the deceased, respondent appeared as
attorney for petitioner and prayed that a new certificate
of title be issued in the name of said petitioner as the
sole owner of the property.
Petitioner assigns as first error of the Court of Appeals the
fact that it considered the oral testimony adduced in behalf
of respondent sufficient to rebut the legal presumption that
petitioner is the owner of the land in controversy. .
In Severino vs. Severino (43 Phil. 343), this court declared that
Affirming the said doctrine in Barretto vs. Tuason (50 Phil.
888), the Supreme Court declared that In Palet vs. Tejedor (55
Phil. 790), it was declared that This right to recover is
sanctioned by section 55 of Act No. 496, as amended by Act
No. 3322.
There is no showing why the conclusions of facts of the Court
of Appeals should be disturbed, and upon said facts
petitioners first assignment of errors appears to be
untenable in the light of law and of the decision of this court.
Petitioner alleged that the Court of Appeals erred in not
holding
ISSUE: Whether the respondent is estopped from claiming
that petitioner is not the absolute owner of the property in
question.
RULING: No
The fact that respondent has been a party to the deception
which resulted in petitioners securing in his name the title to
a property not belonging to him, is not valid reason for
changing the legal relationship between the latter and its
true owners to such an extent as to let them lose their
ownership to a person trying to usurp it.
Respondent is not barred because his appearance as
attorney for petitioner was not a misrepresentation which
would induce petitioner to believe that respondent
recognized the former as the sole owner of the property in
controversy.
Respondents appearance, as attorney for petitioner in
1923, was a consequence of the understanding, and
petitioner could not legitimately assume that it had the effect
of breaking or reversing said understanding.
Lastly, it is contended by petitioner that, even conceding that
the controverted property was owned in common by several
co-owners, yet the Court of Appeals erred in not holding
that, as against respondent,
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ISSUE: Whether petitioner had acquired absolute ownership
of the property through prescription.
Upon the premise that the registration in 1909 in the name
of petitioner and his wife, Luisa Cristobal, was in accordance
with an agreement among the co-owners, petitioner
advances the theory that when he, upon the death of his
wife in 1922, caused the trust property to be registered
in his sole name in 1923, and subsequently partitioned
between himself and his daughter, Ildefonsa Cristobal
Ditangco, as heirs of the decedent, he openly breached
the agreement of 1909 as well as the promise made to his
dying wife of giving the co-owners their respective shares,
concluding that that breach was an assumption of
ownership, and could be the basis of title by
prescription.
RULING No, Petitioners pretension of building his right to
claim ownership by prescription upon his own breach of a
trust cannot be countenanced by any court, being subversive
of generally accepted ethical principles.
Petitioner held the property and secured its registration in
his name in a fiduciary capacity, and it is elementary that a
trustee cannot acquire by prescription the ownership of the
property entrusted to him.
The position of a trustee is of representative nature. His
position is the position of a cestui que trust.
It is logical that all benefits derived by the possession and
acts of the agent, as such agent, should accrue to the benefit
of his principal.
The registration of the property in the name of the trustees
in possession thereof, must be deemed to have been
effected for the benefit of the cestui que trust.
whether or not there is bad faith or fraud in obtaining a
decree with respect to a registered property, the same does
not belong to the person in whose favor it was issued, and
the real owners be entitled to recover the ownership of the
property so long as the same has not been transferred to a
third person who has acquired it in good faith and for a
valuable consideration.
VALERA VS. VELASCO
CASE NUMBER: G.R. No. L-28050
DATE: March 13, 1928
Doctrine: The filing of a complaint by an agent against his
principal for the collection of a balance in his favor resulting
from the liquidation of the agency accounts between them,
and his rendering of a final account of his operations, are
equivalent to an express renunciation of the agency and
terminates the juridical relation between them.
FACTS:
This is an appeal taken by Federico Valera from the
judgment of the Court of First Instance of Manila dismissing
his complaint against Miguel Velasco, on the ground that he
has not satisfactorily proven his right of action.
By virtue of the powers of attorney, Exhibits X and Z,
executed by the plaintiff on April 11, 1919, and on August 8,
1922, the defendant was appointed attorney-in-fact of
the said plaintiff with authority to manage his property
Cases on Agency
in the Philippines, consisting of the usufruct of a real
property located of Echague Street, City of Manila.
The defendant accepted both powers of attorney,
managed plaintiff's property, reported his operations, and
rendered accounts of his administration; and on March 31,
1923 presented exhibit F to plaintiff, which is the final
account of his administration for said month, wherein it
appears that there is a balance of P3,058.33 in favor of the
plaintiff.
The liquidation of accounts revealed that the plaintiff
owed the defendant P1,100, and as misunderstanding
arose between them, the defendant brought suit against
the plaintiff, civil case No. 23447 of this court. Judgment
was rendered in his favor on March 28, 1923, and after the
writ of execution was issued, the sheriff levied upon the
plaintiff's right of usufruct, sold it at public auction and
adjudicated it to the defendant in payment of all of his claim.
o Subsequently, on May 11, 1923, the plaintiff sold his right
of redemption to one Eduardo Hernandez, for the sum of
P200 (Exhibit A). On September 4, 1923, this purchaser
conveyed the same right of redemption, for the sum of P200,
to the plaintiff himself, Federico Valera (Exhibit C).
o After the plaintiff had recovered his right of redemption,
one Salvador Vallejo, who had an execution upon a judgment
against the plaintiff rendered in a civil case against the latter,
levied upon said right of redemption, which was sold by the
sheriff at public auction to Salvador Vallejo for P250 and was
definitely adjudicated to him. Later, he transferred said right
of redemption to the defendant Velasco. This is how the title
to the right of usufruct to the aforementioned property later
came to vest the said defendant.
ISSUE: Whether the lower court erred in holding that one of
the ways of terminating an agency is by the express or tacit
renunciation of the agent; and that the institution of a civil
action and the execution of the judgment obtained by the
agent against his principal is but renunciation of the powers
conferred on the agent;
RULING:
The lower court did not err. The fact that an agent institutes
an action against his principal for the recovery of the balance
in his favor resulting from the liquidation of the accounts
between them arising from the agency, and renders a final
account of his operations, is equivalent to an express
renunciation of the agency, and terminates the juridical
relation between them.
Article 1732 of the Civil Code reads as follows:
Art. 1732. Agency is terminated:
1. By revocation;
2. By the withdrawal of the agent;
3. By the death, interdiction, bankruptcy, or insolvency of the
principal or of the agent.
And article 1736 of the same Code provides that:
Art. 1736. An agent may withdraw from the agency by giving
notice to the principal. Should the latter suffer any damage
through the withdrawal, the agent must indemnify him
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therefore, unless the agent's reason for his withdrawal should
be the impossibility of continuing to act as such without
serious detriment to himself.
The misunderstanding between the plaintiff and the
defendant over the payment of the balance of P1,000 due
the latter, as a result of the liquidation of the accounts
between them arising from the collections by virtue of the
former's usufructuary right, who was the principal, made by
the latter as his agent, and the fact that the said defendant
brought suit against the said principal on March 28, 1928 for
the payment of said balance, more than prove the breach of
the juridical relation between them; for, although the agent
has not expressly told his principal that he renounced the
agency, yet neither dignity nor decorum permits the latter to
continue representing a person who has adopted such an
antagonistic attitude towards him.
When the agent filed a complaint against his principal for
recovery of a sum of money arising from the liquidation of
the accounts between them in connection with the agency,
Federico Valera could not have understood otherwise than
that Miguel Velasco renounced the agency; because his act
was more expressive than words and could not have caused
any doubt.
In order to terminate their relations by virtue of the agency
the defendant, as agent, rendered his final account on March
31, 1923 to the plaintiff, as principal.
The defendant-appellee Miguel Velasco, in adopting a
hostile attitude towards his principal, suing him for the
collection of the balance in his favor, resulting from the
liquidation of the agency accounts, ceased ipso facto to be
the agent of the plaintiff-appellant, said agent's purchase
of the aforesaid principal's right of usufruct at public auction
held by virtue of an execution issued upon the judgment
rendered in favor of the former and against the latter, is valid
and legal.
The defendant-appellee, Miguel Velasco, having acquired
Federico Valera's right of redemption from Salvador Vallejo,
who had acquired it at public auction by virtue of a writ of
execution issued upon the judgment obtained by the said
Vallejo against the said Valera, the latter lost all right to said
usufruct.
The disagreements between an agent and his principal
with respect to the agency, and the filing of a civil action by
the former against the latter for the collection of the balance
in favor of the agent, resulting from a liquidation of the
agency accounts, are facts showing a rupture of relations,
and the complaint is equivalent to an express renunciation of
the agency, and is more expressive than if the agent had
merely said, "I renounce the agency."
CUI vs. CUI
CASE NUMBER: L-7041
DATE: August 31, 1964
FACTS:
Cases on Agency
1. The Hospicio is a charitable institution established by the
spouses Don Pedro Cui and Doa Benigna Cui, now
deceased, "for the care and support, free of charge, of
indigent invalids, and incapacitated and helpless persons." It
was incorporated under Act No. 3239 of the Philippine
Legislature in 1925 and endowed with extensive properties
by the said spouses through a series of donations, principally
the deed of donation executed in 1926.
2. Section 2 of Act No. 3239 gave the initial management to
the founders jointly and, in case of their incapacity or death,
to "such persons as they may nominate or designate, in the
order prescribed to them."
3. Don Pedro Cui died in 1926, while his widow died in
1929. The administration passed to Mauricio Cui and
Dionisio Jakosalem. The former died on 8 May 1931 and
the latter on 1 July 1931.
4. On 2 July 1931 Dr. Teodoro Cui, only son of Mauricio Cui,
became the administrator. Beginning 1932, a series of
controversies and court litigations ensued concerning the
position of administrator.
5. Plaintiff Jesus Ma. Cui and defendant Antonio Ma. Cui are
brothers, being the sons of Mariano Cui, one of the nephews
of the spouses Don Pedro Cui and Doa Benigna Cui. In
1960, the then incumbent administrator, Dr. Teodoro Cui,
resigned in favor of Antonio Ma. Cui pursuant to a
"convenio" entered into between them. On February 28,
Antonio Ma. Cui took his oath of office. Jesus Ma. Cui, had no
prior notice of either the "convenio" or of his brother's
assumption of the position.
6. Dr. Teodoro Cui died on 27 August and the plaintiff wrote
a letter to the defendant demanding that the office be
turned over to him. The demand remained unheeded, the
plaintiff filed the complaint. Romulo Cui later on intervened,
claiming a right to the same office, being a grandson of
Vicente Cui, one of the nephews mentioned by the founders
of the Hospicio in their deed of donation.
7. As between Jesus and Antonio the main issue turns upon
their respective qualifications to the position of
administrator. Jesus is the older and under equal
circumstances would be preferred pursuant to section 2 of
the deed of donation. However, before the test of age may
be, applied the deed gives preference to the one, among the
legitimate descendants of the nephews named, "que posea
titulo de abogado, o medico, o ingeniero civil, o
farmaceutico, o a falta de estos titulos el que pague al estado
mayor impuesto o contribucion."
8. What is being disputed is the meaning of the term "titulo
de abogado." Jesus Ma. Cui holds the degree of Bachelor of
Laws from the University of Santo Tomas (Class 1926) but is
not a member of the Bar, not having passed the
examinations. Antonio Ma. Cui is a member of the Bar and
although disbarred by the Court but was reinstated by
resolution about two weeks before he assumed the position
of administrator of the Hospicio.
9. The Court a quo, decied in favor of the plaintiff and
held that the phrase "titulo de abogado," taken alone,
means that of a full-fledged lawyer, but that has used in
the deed of donation and considering the function or
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purpose of the administrator, it should not be given a
strict interpretation but a liberal one," and therefore
means a law
degree or diploma of Bachelor of Laws.
10. Jesus Ma. Cui believed he was entitled to the office in as
long ago as 1932. On January 26 of that year he filed a
complaint in quo warranto against Dr. Teodoro Cui, who
assumed the administration of the Hospicio. Mariano Cui, the
plaintiff's father and Antonio Ma. Cui came in as intervenors.
The case was dismissed by the Court of First Instance upon a
demurrer by the. Upon appeal to the Supreme Court from
the order of dismissal, the case was remanded. The plaintiff,
did not prosecute the case as decided by the Court, but
entered into an arrangement whereby Teodoro Cui
continued as administrator, Mariano Cui was named "legal
adviser" and plaintiff Jesus Ma. Cui accepted a position as
assistant administrator.
11. The plaintiff tried to get the position by a series of extra-
judicial maneuvers. However, the Commissioner to the
Secretary of Justice ruled that the plaintiff, not being a
lawyer, was not entitled to the administration of the
Hospicio.
12. Defendant Antonio Ma. Cui was reinstated by this Court
as member of the Bar, and succeeded Dr. Teodoro Cui when
he resigned as administrator pursuant to the "convenio"
between them.
ISSUE & RULING:
WON the administrator should only have possession of
the academic degree of Bachelor of Laws. NO.
The Court is of the opinion, that whether taken alone or
in context the term "titulo de abogado" means not mere
possession of the academic degree of Bachelor of Laws but
membership in the Bar after due admission, qualifying one
for the practice of law. In Spanish the word "titulo" is
defined as "testimonies o instrumento dado para ejercer
un empleo, dignidad o profesion" and the word
"abogado," as follows: "Perito en el derecho positivo que
se dedica a defender en juicio, por escrito o de palabra,
los derechos o intereses de los litigantes, y tambien a dar
dictmen sobre las cuestiones o puntos legales que se le
consultan (Id., p.5) A Bachelor's degree alone, conferred by
a law school upon completion of certain academic
requirements, does not entitle its holder to exercise the legal
profession. The English equivalent of "abogado" is lawyer
or attorney-at-law. This term has a fixed and general
signification, and has reference to that class of persons
who are by license officers of the courts, empowered to
appear, prosecute and defend, and upon whom peculiar
duties, responsibilities and liabilities are devolved by law
as a consequence.
2) WON Jesus Cui is disqualified as being an
administrator. YES.
He only has the academic degree of Bachelor of Laws.
The founders of the Hospicio de San Jose de Barili provided
in the deed of donation that if not a lawyer, the administrator
should be a doctor or a civil engineer or a pharmacist, in that
order; or failing all these, should be the one who pays the
highest taxes among those otherwise qualified. A lawyer,
Cases on Agency
first of all, because under Act No. 3239 the managers or
trustees of the Hospicio shall "make regulations for the
government of said institution (Sec. 3, b); shall "prescribe
the conditions subject to which invalids and
incapacitated and destitute persons may be admitted to
the institute" (Sec. 3, d); shall see to it that the rules and
conditions promulgated for admission are not in conflict
with the provisions of the Act; and shall administer
properties of considerable value for all of which work, it
is to be presumed, a working knowledge of the law and a
license to practice the profession would be a distinct
asset.
3) WON Antonio Cui is entitled as administrator despite
his past disbarment. YES.
It is argued that although the latter (Antonio) is a
member of the Bar he is nevertheless disqualified by
virtue of paragraph 3 of the deed of donation, which
provides that the administrator may be removed on the
ground, among others, of ineptitude in the discharge of
his office or lack of evident sound moral character.
Reference is made to the fact that the defendant was
disbarred by this Court in1957 for immorality and
unprofessional conduct. It is also a fact, however, that he
was reinstated in 1960, before he assumed the office of
administrator. His reinstatement is a recognition of his moral
rehabilitation, upon proof no less than that required for his
admission to the Bar in the first place.
As far as moral character is concerned, the standard
required of one seeking reinstatement to the office of
attorney cannot be less exacting than that implied in
paragraph 3 of the deed of donation as a requisite for
the office which is disputed in this case. When the
defendant was restored to the roll of lawyers the
restrictions and disabilities resulting from his previous
disbarment were wiped out.
This action must fail on one other ground: it is already
barred by lapse of time amounting the prescription or
laches. Under Section 16 of Rule 66, this kind of action
must be filed within one (1) year after the right of
plaintiff to hold the office arose.
4) WON the action of the plaintiff for administrator has
prescribed. YES.
The failure of the plaintiff to prosecute his claim
judicially after this Court decided the first case of Cui v.
Cui in 1934 remanding it to the trial court for further
proceedings; his acceptance instead of the position of
assistant administrator, allowing Dr. Teodoro Cui to
continue as administrator and his failure to file an action
in quo warranto against said Dr. Cui after 31 July 1956,
when the appeal in Civil Case No. R-1216 of the Cebu
Court was dismissed upon motion of the parties precisely
so that the conflicting claims of the parties could be
ventilated in such an action all these circumstances
militate against the plaintiff's present claim in view of
the rule that an action in quo warranto must be filed
within one year after the right of the plaintiff to hold the
office arose. The excuse that the plaintiff did not file an
action against Dr. Teodoro Cui after 31 July 1956 because
of the latter's illness did not interrupt the running of the
statutory period. And the fact that this action was filed
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within one year of the defendant's assumption of office
in September 1960 does not make the plaintiff's position
any better, for the basis of the action is his own right to
the office and it is from the time such right arose that the
one-year limitation must be counted, not from the date
the incumbent began to discharge the duties of said
office.
5) WON Romulo Cui is entitled as administrator. NO.
Now for the claim of intervenor and appellant Romulo
Cui. This party is also a lawyer, grandson of Vicente Cui,
one of the nephews of the founders of the Hospicio
mentioned by them in the deed of donation. He is
further, in the line of succession, than defendant Antonio
Ma. Cui, who is a son of Mariano Cui, another one of the
said nephews. The deed of donation provides: "a la
muerte o incapacidad de estos administradores (those
appointed in the deed itself) pasara a una sola persona
que sera el varon, mayor de edad, que descienda
legitimamente de cualquiera de nuestros sobrinos
legitimos Mariano Cui, Mauricio Cui, Vicente Cui, Victor
Cui, y que posea titulo de abogado ... En igualdad de
circumstancias, sera preferido el varon de mas edad
descendiente de quien tenia ultimamente la
administration." Besides being a nearer descendant than
Romulo Cui, Antonio Ma. Cui is older than he and
therefore is preferred when the circumstances are
otherwise equal. The intervenor contends that the intention
of the founders was to confer the administration by line and
successively to the descendants of the nephews named in
the deed, in the order they are named. Thus, he argues, since
the last administrator was Dr. Teodoro Cui, who belonged to
the Mauricio Cui line, the next administrator must come from
the line of Vicente Cui, to whom the intervenor belongs. This
interpretation, however, is not justified by the terms of the
deed of donation.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the
judgment appealed from is reversed and set aside, and
the complaint as well as the complaint in intervention are
dismissed, with costs equally against plaintiff-appellee
and intervenor-appellant.
ALLIED FREE WORKERS UNION [PLUM] vs. COMPANIA
MARITIMA
CASE NUMBER: L-22971
DATE: January 31, 1967
FACTS:
1. MARITIMA is a local corporation engaged in the shipping
business. Teves is its branch manager in the port of Iligan
City and AFWU is a duly registered legitimate labor
organization with 225 members.
2. On August 11, 1952, MARITIMA, through Teves, entered
into a CONTRACT with AFWU to do and perform all the work
of stevedoring and arrastre services of all its vessels or boats
calling in the port of Iligan City, beginning August 12, 1952.
3. During the first month of the existence of the CONTRACT,
AFWU rendered satisfactory service. So, MARITIMA, through
Teves, verbally renewed the same.
4. The harmonious relations between MARITIMA and AFWU
lasted up to the latter part of 1953 when the former
complained to the latter of unsatisfactory and inefficient
Cases on Agency
service by the laborers doing the arrastre and stevedoring
work. This deteriorating situation was admitted as a fact by
AFWU's president.
5. To remedy the situation since MARITIMA's business was
being adversely affected -Teves was forced to hire extra
laborers from among "stand-by" workers not affiliated to any
union to help in the stevedoring and arrastre work. The
wages of these extra laborers were paid by MARITIMA
through separate vouchers and not by AFWU. Moreover, said
wages were not charged to the consignees or owners of the
cargoes.
6. On July 23, 1954, AFWU presented to MARITIMA a written
proposal for a collective bargaining agreement. This demand
embodied certain terms and conditions of employment
different from the provisions of the CONTRACT. No reply was
made by MARITIMA.
7. AFWU sued MARITIMA for unfair labor practice saying that
MARITIMA refused to bargain collectively. CIR dismissed the
case on the ground that it has no jurisdiction over the case.
ISSUES:
1. Whether or not Maritima is can be considered an employer
of the members of AFWU? NO.
2. Whether or not AFWU is an agent of Maritima? NO.
RULING:
1. There is no any direct employment relationship between
MARITIMA and the laborers. The latter have no separate
individual contracts with MARITIMA. In fact, the court a quo
found that it was AFWU that hired them. Their only possible
connection with MARITIMA is through AFWU which
contracted with the latter. Hence, they could not
possibly be in a better class than AFWU which dealt with
MARITIMA.
a. Under the CONTRACT, AFWU was an independent
contractor of MARITIMA.
i. The petitioner union operated as a labor contractor under
the so-called "cabo" system has a complete set of officers
and office personnel and its organizational structure.
ii. The payrolls where laborers are listed and paid were
prepared by the union itself without the intervention or
control of the respondent company and/or its agent at. The
respondent never had any knowledge of the individual
names of laborers and/or workers listed in the union payroll
or in their roster of membership.
iii. The union engaged the services of their members in
undertaking the work of arrastre and stevedoring geither to
haul shippers' goods from their warehouses to the
MARITIMA boat or from the boat to the different consignees.
The charges for such service were known by the union and
collected by them through their bill collector, who are
employees of the union and not of the respondent. The
respondent had no intervention whatsoever in the collection
of those charges.
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iv. The union members who were hired by the union to
perform arrastre and stevedoring work on respondents'
vessels at Iligan port were being supervised and controlled
by the general foreman of the petitioner union or by any
union assistant when performing arrastre and/or stevedoring
work aboard vessels of the Compaia MARITIMA. There were
no instances where offices and employees of the respondent
Compaia MARITIMA and/or its agent had interferred in the
giving of instructions to the laborers performing the arrastre
and/or stevedoring work.
b. It is true that MARITIMA admits that it did not answer
AFWU's proposal for a collective bargaining agreement. From
this it does not necessarily follow that it is guilty of unfair
labor practice. Under the law the duty to bargain collectively
arises only between the "employer" and its "employees".
Where neither party is an ''employer" nor an "employee" of
the other, no such duty would exist. Needless to add, where
there is no duty to bargain collectively the refusal to bargain
violates no right.
c. The facts as found by the court a quo strongly indicate that
it is AFWU itself who is the "employer" of those laborers. The
facts very succinctly show that it was AFWU, through its
officers, which (1) selected and hired the laborers, (2) paid
their wages, (3) exercised control and supervision over
them, and (4) had the power to discipline and dismiss
them. These are the very elements constituting an employer-
employee relationship.
2. An agent can not represent two conflicting interests that
are diametrically opposed. And that the cases sought to be
relied upon did not involve representatives of opposing
interests.
FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK SUAN
CASE NUMBER: L-7144
DATE: May 31, 1955
FACTS:
Ignacio Delizalde, an agent of the Far Eastern Export &
Import Company, went to the store of Lim Teck Suan in
Manila and offered to sell textile.
Having arrived at an agreement with Bernardo Lim, General
Manager of Lim Teck Suan, Delizalde returned with a buyers
order.
Suan established a letter of credit in favour of Frenkel
International Corporation through HSBC.
The textile arrived and was received by Suan, but
complained to Far Eastern of the inferior quality of the textile.
Upon the instruction of Far Eastern, Suan deposited the
goods in a warehouse and withdrew the same and was
offered for sale. The net direct loss is now being claimed
against Far Eastern.
The defense set up is that Far Eastern only acted as a
broker in this transaction.
The lower court acquitted Far Eastern.
Cases on Agency
CA reversed the judgment, basing its decision of reversal
on the case of Jose Velasco v. Universal Trading where the
transaction therein involved was found by the court to be
one of purchase and sale and not of brokerage or agency.
ISSUE: Was the transaction one of agency that will exonerate
Far Eastern from liability, or one of purchase and sale?
RULING: One of purchase and sale
SC agreed with the CA that the facts in this case are very
similar to those in the Velasco case.
o In the Velasco case, Universal Trading contends that it
merely acted as agent for Velasco and could not be held
responsible for the substitution of Blended Whisky for
Bourbon Whisky.
o The Court held that the transaction was purchase and sale
and ordered the defendant to refund his deposit with legal
interest.
Where a foreign company has an agent here selling its
goods and merchandise, that same agent could not very well
act as agent for local buyers, because the interests of his
foreign principal and those of the buyer would be in direct
conflict.
o He could not serve two masters at the same
time.
o Far Eastern, being an agent of Frenkel, could not have
acted as an agent or broker for Suan.
The transaction entered into by Far Eastern with Suan is
one of purchase and sale.
o Far Eastern acted as agent for Frenkel International
Corporation, presumably the supplier of the textile sold.
o Suan according to the first part of the agreement is said
merely to be commissioning Far Eastern to procure for him
the merchandise in question.
o The price of the merchandise bought was paid for by Suan
by means of an irrevocable letter of credit opened in favour
of the supplier, Frenkel International Corporation.
o The agreement speaks of the items involved as sold, and
the sale was even confirmed by Far Eastern.
o Far Eastern dealt directly with Suan without expressly
indicating or revealing the principal.
o There was no privity of contract between the buyer and
supplier.
o No commission or monetary consideration was paid or
agreed to be paid by the buyer to export company proof
that there was no agency or brokerage, and that the profit of
the latter was undoubtedly the difference between the price
listed to the buyer and the net or special price quoted to the
seller by the supplier.
NIELSON & CO., INC. vs LEPANTO CONSOLIDATED
MINING CO.
CASE NUMBER: L-21601
DATE: December 28, 1968
FACTS:
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Nielson & Company, Inc. and Lepanto Consolidated Mining
Company entered into a management contract.
o Nielson had agreed, for a period of five years, with the
right to renew for a like period, to explore, develop and
operate the mining claims of Lepanto, and to mine, or mine
and mill, such pay ore as may be found and to market the
metallic products recovered therefrom which may prove to
be marketable, as well as to render for Lepanto other services
specified in the contract.
o Nielson was to take complete charge, subject at all times to
the general control of the Board of Directors of Lepanto, of
the exploration and development of the mining claims, of the
hiring of a sufficient and competent staff and of sufficient
and capable laborers, of the prospecting and development of
the mine, of the erection and operation of the mill, and of
the benefication and marketing of the minerals found on the
mining properties.
o Nielson was also to act as purchasing agent of supplies,
equipment and other necessary purchases by Lepanto, but
no purchase shall be made without the prior approval of
Lepanto and no commission shall be claimed or retained by
Nielson on such purchase.
o The principal and paramount undertaking of Nielson under
the management contract was the operation and
development of the mine and the operation of the mill. All
the other undertakings mentioned in the contract are
necessary or incidental to the principal.
o In the performance of this principal undertaking, Nielson
was not in any way executing juridical acts for Lepanto.
Lepanto terminated the contract in 1945, 2 years before its
expiration, when it took over and assumed exclusive
management of the work previously entrusted to Nielson
under the contract.
Lepanto finally maintains that Nielson as an agent is not
entitled to damages since the law gives to the principal the
right to terminate the agency at will.
ISSUE: Was the management contract entered into by and
between Nielson and Lepanto a contract of agency such that
it has the right to revoke and terminate the contract at will,
or a contract of lease of services?
RULING: Contract of Lease of Services
The management contract was one of contract of lease of
services and not a contract of agency.
In both agency and lease of services, one of the parties
binds himself to render some service to the other party.
Agency, however is distinguished from lease of work or
services in that:
o The basis of agency is representation, while in the lease of
work or services, the basis is employment
SHELL COMPANY OF THE PHILS., LTD. vs. FIREMENS INS.
OF NEWARK, N.J.
CASE NUMBER: L-8169
DATE: January 29, 1957
Cases on Agency
FACTS:
1. A Plymounth car, owned by Salvador Sison, was brought
by his son, Perlito Sison to the Shell Gasoline and Service
Station in Manila for washing, greasing and spraying.
2. The operator of the station agreed to do service upon
payment of P 8.00
3. The car was placed on a hydraulic lifter under the direction
of the personnel of the station.
4. According to the testimony of son Perlito, the car was
raised up to 6 feet high. After it was washed and greased, the
grease men cannot reach the ungreased portion underneath
the vehicle so they loosen the lifter a few feet lower. Because
of this, the car swayed and for a few second, it fell.
5. This was immediately reported to the Manila Adjustor
Company, the adjustor of respondent insurance companies.
6. As inspected by Mr. Baylon, the damaged car was taken to
the repair shop and it was restored to running condition after
repairs amounting to P 1,651.38.
7. Because the insurance companies paid for the damages,
respondent Salvador Sison made assignments of his rights to
recover damages in favor of the respondent-insurance
companies.
8. However, according to the counter-statement of facts by
defendant Porfirio de la Fuente, the operator of Shell
gasoline Manila, the ff tasks were done by the ff people:
Job of washing and greasing defendant Porfirio de la
Fuente through his two employees:
o Alfonso Adriano grease man
o De los Ryees helper and washer
Respondent de la Fuente denied negligence in the
operation of the lifter
9. The insures and the owner of the car brought an action
against petitioner Shell Company and de la Fuente to recover
the sum of P 1, 651. 38 from them jointly and severally.
10. Decision of CFI: Dismissed complaint
11. Decision of CA: reversed decision of CFI; Shell must pay
insurance companies the amount P 1,651. 38 with legal
interest.
The car fell as a result of the jerking and swaying of the lift
when the valve was released and that the jerking was due to
some accident and unforeseen shortcoming of the
mechanism itself.
Reasoning of CA: De la Fuente is NOT an independent
contractor BUT an AGENT of petitioner Shell
o Respondent de la Fuente, the operator of the gasoline and
service station was the AGENT of the petitioner Shell
Company of the Philippines, Ltd.
o Facts which show that de la Fuente is a mere agent:
The operator, de la Fuente, owned his position to the
company and the company could remove him or terminate
his services at will
The service station belonged to the company and bore its
trade name and the operator sold only the products of the
company
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The equipment used by the operator belonged to the
company and were just loaned to the operator and the
company took charge of their remain and maintenance
An employee of the company supervised the operator and
conducted periodic inspection of the companys gasoline and
service station, etc.
ISSUE: WON petitioner Shell should be liable for the acts of
an agent or his employee acting within the scope of his
authority?
RULING: YES. The breach of the undertaking by the agent
(defendant de la Fuente) is one for which the principal
(Shell) is answerable. Decision: Judgment under review is
AFFIRMED. Costs against petitioner
1. Rule: As the act of the agent or his employees acting
within the scope of his authority is the act of the
principal, the breach of the undertaking by the agent is
one for which the principal is answerable.
2. The petitioner-company undertook to "answer and see to
it that the equipments are in good running order and
usable condition;"
3. Also, the CA found that the Company's mechanic failed
to make a thorough check up of the hydraulic lifter and
the check up made by its mechanic was "merely routine"
by raising "the lifter once or twice and after observing
that the operator was satisfactory, he (the mechanic) left
the place."
4. 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.
SEVILLA VS. COURT OF APPEALS
CASE NUMBER: L-41182-3
DATE: APRIL 15, 1988
FACTS:
1. Mrs. Segundina Noguera leased her premises located at
Ermita, Manila to Tourist World Service, Inc. (TWSI),
represented by Eliseo Canilao, for the latters use as branch
office.
2. In the said contract Mrs. Lina Sevilla held herself solidarily
liable with TWSI for the prompt payment of the monthly
rental agreed on.
3. When the branch office was opened, the same was run by
petitioner Mrs. Sevilla, who was designated as branch
manager by TWSI. For any fare bought in on the efforts of
Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by
TWSI
4. In November 1961, TWSI was allegedly informed that Mrs.
Sevilla was connected with a rival travel firm. Since the
branch office was losing, TWSI considered closing it down.
The firms board of directors issued two resolutions; the first
abolishing the office of manager of the Ermita Branch Office
and the second, authorizing the corporate secretary to
receive the property of TWSI in said branch
5. In January 1962, the lease contract to use the premises as
branch office was terminated. In June 1962, the Corporate
Cases on Agency
Secretary went over to the office to comply with the mandate
of the resolutions. Finding the premises locked and unable to
contact Mrs. Sevilla, he padlocked the premises to protect
the interests of TWSI
6. As such, petitioners Spouses Sevilla filed a complaint
against respondents TWSI, Canilao and Noguera, praying for
mandatory preliminary injunction. Petitioners claim that Mrs.
Sevillas relationship with TWSI was one of joint business
venture and notone of employment.
7. In its answer, TWSI contend that Mrs. Sevilla was its
employee and as such was designated manager.
8. The trial court held for the private respondents. It ruled
that TWSI, being the true lessee, has the privilege to
terminate the lease and padlock the premises. It also held
that Mrs. Sevilla was a mere employee of TWSI and that she
was bound by the act of her employer.
9. The Court of Appeals affirmed said decision, Hence, the
instant petition.
ISSUE: WON there is a contract of agency between
respondent-principal TWSI and petitioner Sevilla? If yes,
should principal TWSI be liable for damages for its
unwarranted revocation of the contract of agency?
YES for both.
Decision: Decision of CA is REVERSED and SET ASIDE. Costs
against respondent TWSI
RULING:
1. This case involves a contract of Agency. There is
neither joint venture between nor partnership TWSI and
Mrs. Sevilla
The relationship of said parties is one that of a principal
and an agent.
Case at bar:
o Petitioner Sevilla agreed to man the Ermita office of
respondent TWSI based on a contract of agency.
o It is the essence of this contract that the agent renders
services in representation or on behalf of another
o Sevilla solicited airline fares but she did so for and on
behalf of her principal TWSI. As compensation, she received
4% of the proceeds in the concept of commissions. Sevilla
pre-assumed her principals authority as owner of the
business undertaking. Considering the facts, this case
involves a principal-agent relationship rather than a joint
management or partnership.
o But unlike simple grants of a power of attorney, the agency
that the Court here by declares to be compatible with the
intent of the parties cannot be revoked at will.
o The reason is that it is an agency coupled with an interest,
the agency having been created for mutual interest of the
agent and the principal.
o In this case, the agency cannot be revoked at the pleasure
of the principal. This unwarranted revocation of the contract
of agency entitles petitioner Sevilla to damages
Respondent TWIS is liable for P 25,000 moral damages, P
10,000 exemplary damages, P 5,000 nominal damages and/or
temperate damages.
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LIM vs. PEOPLE
CASE NUMBER: G.R. No. L-34338
DATE: November 21, 1984
FACTS:
1. Lourdes Lim went to the house of Maria de Guzman and
proposed to sell the latters tobacco.
2. Maria agreed with the proposalhence the execution of a
receipt manifesting that Lourdes received 615 kilos of
tobacco to be sold at P1.30 per kilo, the overprice for which
would be received by Lourdes.
3. The receipt also states that the proceeds will be given to
Mariaas soon as it was sold.
4. However, Lourdes paid only P240, despite repeated
demands.
5. Thus, Maria filed a complaint, and Lourdes was found
guilty of estafa. (Estafa is present where contract to sell
constituted another as mere agent)
6. Lourdes argued that the receipt was a contract of sale
and not a contract of agency to sell.
ISSUE: Is Lourdes argument tenable?
RULING: NO.
The contract was not a contract of sale because there was no
transfer of ownership of the goods to Lourdes. Instead, the
agreement was a contract of agency to sell for it constituted
Lourdes as agent with the obligation to give the proceeds of
the sale to Maria as soon as the same was sold.
The obligation was immediately demandable as soon as the
tobacco was disposed of. Consequently, there is no need for
the court to fix the duration of the obligation, as contended
by Lourdes.
SAN DIEGO, SR. vs. NOMBRE
CASE NUMBER: G.R. No. L-19265
DATE: May 29, 1964
FACTS:
1. While being the judicial administrator of the intestate
estate subject of Special Proceeding 7279, AdeloNombre
leased one of the properties (fishpond) of the said estate to
Pedro Escanlar for 3 years without approval of the court.
2. When Nombre was removed as judicial administrator, he
was substituted by SofronioCampillanos. Campillanos filed a
motion asking for authority to execute a lease contract of the
same fishpond in favour of Moises San Diego.This motion
was granted on the ground that the contract of lease entered
into between Nombre and Escanlar was void for want of
judicial authority.
3. Nombre and Escanlar appealed this order to the Court of
Appeals, which reversed the same order.
4. Aggrieved, San Diego appealed to the Supreme Court.
ISSUE: San Diego raised the following legal questions:
1. Whether a judicial administrator can validly lease property
of the estate without prior judicial authority and approval,
and
Cases on Agency
2. Whether the provisions of the New Civil Code on Agency
(referring specifically to par. 8 of Article 1878) should apply
to judicial administrators.
RULING:
Administrator has the power of administering the estate of
the deceased person. He may, therefore, exercise all acts of
administration without special authority of the court. For
instance, he may lease the property without prior approval
from the court, since leasing has been considered an act of
administration.
Par. 8 of Article 1878 states that Special powers of attorney
are necessary to lease any real property to another person
for more than one (1) year. This provision, according to San
Diego, is a limitation to the right of a judicial administrator to
lease real property without prior judicial authority if it
exceeds one (1) year. However, the same argument falls
because provisions on Agency do not apply to judicial
administrators.
A judicial administrator is appointed by the court. He is not
only the representative of the court, but also the heirs and
creditors of the estate. Before conducting his duties, he is
required to file a bond. His actions are subject to specific
provisions of law and orders of the appointing court. These
circumstances are not true in case of agency.
DELA PENA VS. HIDALGO
CASE NUMBER: G.R. No. L-5486
DATE: August 17, 1910
FACTS:
1. Before Jose de la Pea y Gomiz embarked for Spain, on
November 12, 1887, he executed a power of attorney in favor
of Federico Hidalgo, Antonio L. Rocha, Francisco Roxas and
Isidro Llado, so that, as his agents, they might represent him
and administer various properties he owned and possessed
in Manila.
2. After Federico Hidalgo had occupied the position of agent
and administrator of De la Pea's property, he wrote to the
latter requesting him to designate a person who might
substitute him in his said position in the event of his being
obliged to absent himself from the country.
one of those appointed in the said power of attorney had
died and the others did not wish to take charge of the
administration of their principal's property.
3. Hidalgo stated that Pea y Gomiz, did not even answer his
letters, to approve or object to the former's accounts, and
did not appoint or designate another person who might
substitute him.
4. For reasons of health and by order of his physician,
Federico Hidalgo was obliged to embark for Spain, and, on
preparing for his departure, he rendered the accounts of his
administration by letter of the date of March 22, 1894,
addressed to his principal, Pea y Gomiz.
5. In this letter the defendant informed the dela Pena of the
his intended departure from this country and of his having
provisionally turned over the administration of the said
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property to his cousin, Antonio Hidalgo, upon whom he
had conferred a general power of attorney.He added
thatin case that this was not sufficient, that Pea send to
Antonio Hidalgo a new power of attorney.
6. TC concluded that despite the denial, the was sent to, and
was received by Jose de la Pea y Gomiz, during his lifetime
and that the constituent he was informed of the departure of
his agent of the latter's having turned over the
administration of the property to Antonio Hidalgo, and of his
agent's the defendant's petition that he send a new power of
attorney to the substitute.
ISSUE:
(1) WON Federico had renounced his agency
(2) WON Federico can be held liable with the wrongful
administration of the subsequent agents
RULING:
1. YES
Federico had definitely renounced his agency was duly
terminated, according to the provisions of article 1732 of the
Civil Code, because, althoughthe word "renounce" was not
employed in connection with the agency or power of
attorney executed in his favor, yet when the agent informs
his principal that for reasons of health and by medical
advice he is about to depart from the place where he is
exercising his trust and where the property subject to his
administration is situated, abandons the property, turns
it over a third party, without stating when he may return
to take charge of the administration, renders accounts of
its revenues up to a certain date, December 31, 1893, and
transmits to his principal a general statement which
summarizes and embraces all the balances of his
accounts since he began to exercise his agency to the
date when he ceased to hold his trust, and asks that a
power of attorney in due form in due form be executed
and transmitted to another person who substituted him
and took charge of the administration of the principal's
property, it is then reasonable and just to conclude that the
said agent expressly and definitely renounced his agency,
and it may not be alleged that the designation of Antonio
Hidalgo to take charge of the said administration was that of
a mere proceed lasted for more than fifteen years, for such
an allegation would be in conflict with the nature of the
agency.
In permitting Antonio Hidalgo to administer his property in
this city during such a number of years, it is inferredthatthe
deceased consented to have Antonio Hidalgo administer his
property, and in fact created in his favor an implied agency,
as the true and legitimate administrator.
Antonio Hidalgo administered the aforementioned property
of De la Pea y Gomiz, not in the character of business
manager, but as agent by virtue of an implied agency vested
in him by its owner who was not unaware of the fact, who
knew perfectly well that the said Antonio Hidalgo took
charge of the administration of that property on account of
the obligatory absence of his previous agent for whom it was
an impossibility to continue in the discharge of his duties.
**Difference between agency and business management:
Cases on Agency
The implied agency is founded on the lack of
contradiction or opposition, which constitutes
simultaneous agreement on the part of the presumed
principal to the execution of the contract, while in the
management of another's business there is no
simultaneous consent, either express or implied, but a
fiction or presumption of consent because of the benefit
received.
In the power of attorney executed by Pea y Gomizin favor of
Federico Hidalgo, no authority was conferred upon the latter
by his principal to substitute the power or agency in favor of
another person; wherefore the agent could not, by virtue of
the said power of attorney, appoint any person to substitute
or relieve him in the administration of the principal's
property, for the lack of a clause of substitution in the said
instrument authorizing him so to do.
HOWEVER, from the time of that notification the agent who,
for legitimate cause, ceased to exercise his trust, was free and
clear from the results and consequences of the management
of the person who substituted him with the consent, even
only a tacit one, of the principal, inasmuch as the said
owner of the property could have objected to could have
prohibited the continuance in the administration thereof,
of the party designated by his agent, and could have
opportunely appointed another agent or mandatory of his
own confidence to look after his property and if he did not
do so, he is obliged to abide by the consequences of his
negligence and abandonment and has no right to claim
damages against his previous agent, who complied with his
duty and did all that he could and ought to have done, in
accordance with the law.
2. NO
If the defendant Federico is not responsible for the results of
the administration of said property administered by Antonio
Hidalgo during the second period before referred to, neither
is he responsible for that performed during the third period
by Francisco Hidalgo, inasmuch as the latter was not even
chosen when Francisco Hidalgo took charge of Peas'
property that had been turned over to him by Antonio
Hidalgo. Hence, the defendant can in no manner be obliged
to pay to the plaintiff any sum that may be found owing by
Francisco Hidalgo.
HARRY E. KELLER ELEC. CO. vs. RODRIGUEZ
CASE NUMBER: 19001
DATE: November 11, 1922
FACTS:
this is a case filed by harry keeler, an electric co. which sold
a mathews electric plant to rodriguez.
harry keeler co. authorized ac montelibano to find buyers
for the mathews electric plant.
montelibano informed harry that he found a buyer in iloilo.
harry then shipped the electric plant to iloilo, which was
then installed by cenar
cenar, the mechanic of harry keeler, testified that he in fact
presented a bill to rodriguez.
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when he presented this bill, rodriguez informed him that
payment would just be made in manila.
allegedly, rodriguez already made payment to
montelibano.
when harry wanted to collect the 2500 pesos from
rodriguez, rodriguez said that he already paid montelibano.
a case for collection was the filed by harry against
rodriguez
the lower court ruled in favor of rodriguez.
the lower court said that:
1.) that the bill was given to montelibano for collection
2.) that harry represented montelibano as an agent
authorized to collect.
ISSUE: Was the lower court correct in ruling that
montelibano was an agent of harry keeler authorized to
make collection?
RULING: NO, the lower court ruling is hereby reversed!!!
in the receipt presented by rodriguez(which was the receipt
given by montelibano) there was no showing that
montelibano was an agent
it also did not contain that montelibano had authority to
receive money
payment made by rodriguez to montelibano was at his
own risk.
rodriguez failed to exercise ordinary prudence and
reasonable diligence in making sure that montelibano was in
fact authorized to receive payment.
important things to remember in assuming that there is
authority
1.)the law does not presume that an agency exists. it has to
be proven through facts
2.)the agent cannot establish his authority
3.)authority cannot be established through mere rumor or
general reputation
4.)general authority is not equal to unlimited authority
5.)that every authority must find its ultimate source in
some act or omission by the principal
in assuming that there is authority, a person has to be very
cautious
note: that the agent cannot enlarge or extend his authority
without the concurrence of the principal
important provisions:
art 1162: payment must be made to the person in whose
favor the obligation is constituted, or to another authorized
to receive it in his name
art 1727: the principal shall be liable as to matters with
respect to which the agent has exceeded his authority only
when he ratifies the same expressly or by implication.
RALLOS vs. YANGCO
CASE NUMBER: 6906
DATE: September 27, 1911
Cases on Agency
FACTS:
Yangco sent a letter of invitation to rallos.
This was an invitation regarding the buying and selling of
tobacco
In the letter, it was stated that collantes would be his agent
and that as agent collantes would be acting in his behalf.
This arrangement was accepted by rallos
At one point, rallos gave collantes 218 bundles of tobacco,
which was sold at a price of 1744 pesos
206 pesos was deducted for charges involving the sale,
leaving the sum of 1537 pesos.
This amount was not remitted by collantes to rallos.
Apparently, collantes used the money for his personal gain
Rallos was now claiming from yangco the unpaid amount
for the sale of tobacco.
Yangco refused, saying that collantes was no longer
connected with him.
Yangco also claims that at the time when the 218 bundles
of tobacco was given to collantes, the latter was no longer
acting as his factor.
This then forced rallos to file a collection case.
The lower court ruled in favor of rallos.
ISSUE: Should yangco still be liable for the acts of collantes,
considering that collantes was no longer his agent at the
time of the transaction?
RULING: YES!! Yangco is still liable
Yangco did not even inform rallos that collantes was no
longer his agent.
Furthermore, yangco advertised collantes to be his agent,
he should have given rallos timely notice that he had already
severed ties with collantes.
The negligence of yangco to give timely notice to rallos,
makes him liable for the acts of collantes.
It was the duty of yangco to notify rallos regarding the
severed relation with collantes.
MACKE vs. CAMPS
CASE NUMBER: G.R. No. 2962
DATE: 27 February 1907
FACTS:
The plaintiffs are partners doing business under the firm
name of Macke, Chandler & Company, allege that during the
months of February and March, 1905, they sold to the
defendant and delivered at his place of business, known as
the "Washington Cafe," various bills of goods amounting to
P351.50.
The plaintiffs further alleged that the defendant has only
paid on account of said accounts the sum of P174; that there
is still due sum of P177.50; that before instituting this action
they made demand for the payment but the defendant had
failed and refused to pay.
The plaintiffs, testified that on the order of one Ricardo
Flores, who represented himself to be agent of the
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defendant, he shipped the said goods to the defendants at
the Washington Cafe; that Flores later acknowledged the
receipt of said goods and made various payments amounting
in all to P174.
On demand for payment of balance of the account Flores
informed him that he did not have the necessary funds on
hand, and that he would have to wait the return of his
principal, the defendant, who was at that time visiting in the
provinces.
The plaintiffs were satisfied as to the credit of the
defendant and as to the authority of Flores to act as his
agent who was apparently in charge of the business and
claiming to be the business manager of the defendant.
A written contract (for the hotel with a bar and restaurant
business of the defendant) dated May 25, 1904, was
introduced in evidence to establish the relationship between
the defendant and Flores.
The defendant relies wholly on his contention that the
foregoing facts are not sufficient to establish the fact that he
received the goods for which payment is demanded.
ISSUE: WON Flores was managing the business as agent?
RULING:
YES, the evidence is sufficient to sustain a finding that
Flores was the agent of the defendant in the management of
the bar of the Washington Cafe with authority to bind the
defendant, his principal, for the payment of the goods
mentioned in the complaint. Lastly, from an examination of
the items of the account attached to the complaint, we are of
opinion that Flores was acting within the scope of his
authority.
It is a well settled rule that: One who clothes another
apparent authority as his agent, and holds him out to the
public as such, cannot be permitted to deny the authority of
such person to act as his agent, to the prejudice of innocent
third parties dealing with such person in good faith and in
the honest belief that he is what he appears to be.
JIMENEZ vs. RABOT
CASE NUMBER: G.R. No. L-12579
DATE: July 27, 1918
FACTS:
It is admitted that the parcel of land in question, together
with two other parcels in the same locality originally
belonged to the plaintiff (Gregorio Jimenez), having been
assigned to him as one of the heirs in the division of the
estate of his father.
Gregorio was staying at Vigan, his property in Alaminos
was confided by him to the care of his elder sister Nicolasa
Jimenez. On 7 February 1911 of that year he wrote this sister
a letter from Vigan in which he informed her that he was
pressed for money and requested her to sell one of his
Cases on Agency
parcels of land and send him the money in order that he
might pay his debts.
This letter contains no description of the land to be sold
other than is indicated in the words "one of my parcels of
land" ("uno de mis terrenos"). Acting upon this letter
Nicolasa approached the defendant Pedro Rabot, and the
latter agreed to buy the parcel in question for the sum of
P500.
Nicolasa admits having received this payment of P250 at
the time stated; but there is no evidence that she sent any of
it to her brother. About one year later Gregorio came down
to Alaminos and demanded that his sister should surrender
this piece of land to him, it being then in her possession. She
refused upon some pretext.
Gregorio, in conjunction with others of his brothers and
sisters, whose properties were also in the hands of Nicolasa,
instituted an action in the Court of First Instance for the
purpose of recovering their land from her control. This action
was decided favorably to the plaintiffs upon August 12, 1913.
May 31, 1912, Nicolasa Jimenez executed and delivered to
Pedro Rabot a deed purporting to convey to him the parcel
of land which is the subject of this controversy.
Pedro Rabot went into possession, and the property was
found in his hands at the time when final judgment was
entered in favor of the plaintiffs in the action above
mentioned. It will thus be seen that Pedro Rabot acquired
possession under the deed from Nicolasa during the
pendency of the litigation in which she was defendant.
ISSUE: WON the authority conferred on Nicolasa by the
letter of February 7, 1911, was sufficient to enable her to bind
her brother?
RULING: YES, under Article 1713 of the Civil Code it requires
that the authority to alienate land shall be contained in an
express mandate; while subsection 5 of section 335 of the
Code of Civil Procedure says that the authority of the agent
must be in writing and subscribed by the party to be
charged; as such we are of the opinion that the authority
expressed in the letter is a sufficient compliance with both
requirements and Nicolasa Jimenez acted within the scope of
her authority.
It is a rule that: where the owner of real property desires
to confer upon an attorney in fact authority to sell the same,
it is necessary that the authority should be expressed in
writing; but it is not necessary that the property to be sold
should be precisely described. It is sufficient if the authority is
so expressed as to determine without doubt the limits of the
agents authority.
The purpose in giving a power of attorney is to substitute
the mind and hand of the agent for the mind and hand of
the principal; and if the character and extent of the power is
so far defined as to leave no doubt as to the limits within
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which the agent is authorized to act, and he acts within those
limits, the principal cannot question the validity of his act.
LINAN VS. PUNO
CASE NUMBER: G.R. No. L-9608
DATE: August 7, 1915
PONENTE: Johnson, J.
FACTS:
1) Linan was the owner of a certain parcel of subject land. He
executed a document, which conferred upon the Puno the
power, duties and obligations to administer the interest Linan
including to purchase, sell, collect and pay, as well as sue
and be sued before any authority, appear before the courts
of justice and administrative officers in any proceeding or
business concerning the good administration and
advancement of Linans said interests, and may, in necessary
cases, appoint attorneys at law or attorneys in fact to
represent him.
2) The meaning, purport, and power conferred by this
document constitute the very gist of the present action.
3) Defendant Puno, for the sum of P800, sold and delivered
said parcel of land to the other defendants. The plaintiff
alleges that the said document (Exhibit A) did not confer
upon the defendant Puno the power to sell the land and
prayed that the sale be set aside; that the land be returned to
him, together with damages.
ISSUE: Did the document (Exhibit A)give Puno authority to
sell the land?
RULING:
1) Contracts of agency as well as general powers of attorney
must be interpreted in accordance with the language used by
the parties. The real intention of the parties is primarily to be
determined from the language used. The intention is to be
gathered from the whole instrument. In case of doubt resort
must be had to the situation, surroundings and relations of
the parties. The intention of the parties must be sustained
rather than defeated. If the contract be open to two
constructions, one of which would uphold while the other
would overthrow it, the former is to be chosen. The acts of
the parties will be presumed to have been done in
conformity with and not contrary to the intent of the
contract.
2) The lower court held that the "only power conferred was
the power to administer." Reading the contract we find it
says that the plaintiff "I confer ... power ... that ... he may
administer ... purchase, sell, collect and pay ... in any
proceeding or business concerning the good administration
and advancement of my said interests." The words
"administer, purchase, sell," etc., seem to be used
coordinately. Each has equal force with the other. There
seems to be no good reason for saying that Puno had
authority to administer and not to sell when "to sell" was as
advantageous to the plaintiff in the administration of his
affairs as "to administer."
3) To hold that the power was "to administer" only when the
power "to sell" was equally conferred would be to give to
Cases on Agency
special words of the contract a special and limited meaning
to the exclusion of other general words of equal import.
4) The record contains no allegation on proof that Puno
acted in bad faith or fraudulently in selling the land. It will be
presumed that he acted in good faith and in accordance with
his power as he understood it. That his interpretation of his
power, as gathered from the contract (Exhibit A), is tenable
cannot, we believe, be successfully denied. Neither have we
overlooked the fact in the brief of the appellants that the
plaintiff has not returned, nor offered to return, nor indicated
a willingness to return, the purchase price. (Art. 1308 of the
Civil Code; Manikis vs. Blas, No. 7585.).
Disposition: In view of all the foregoing, we are of the
opinion that the lower court committed the error complained
of in the second assignment, and, without discussing the
other assignments of error, we are of the opinion, and so
hold, that the judgment of the lower court should be and is
hereby revoked and that the appellants should be relieved
from all liability under the complaint. Without any finding as
to costs, it is so ordered.
KATIGBAK vs. TAI HING CO.
CASE NUMBER: G.R. No. L-29917
DATE: December 29, 1928
PONENTE: Villareal, J.
FACTS:
1) Gabino Barreto Po Ejap, as attorney-in-fact of Po Tecsi,
sold in favor of Jose M. Katigbak the subject land; after said
sale, Po Tecsi leased the property sold, from Gabino Barreto
Po Ejap, who administered it in the name of Jose M. Katigbak,
at a rental of P1,500 per month, payable in advance, leaving
unpaid the rents accrued from that date until his death which
occurred on November 26, 1926, having paid the accrued
rents up to October 22, 1925;
2) from November 26, 1926, the defendants Po Sun Suy and
Po Ching leased said land for the sum of P1,500 per month;
on February 11, 1927, Po Sun Suy was appointed
administrator of the estate of his father Po Tecsi, and filed
with the court an inventory of said estate including the land
in question; and on May 23, 1927, Jose M. Katigbak sold
the same property to Po Sun Boo.
3) Take note that all these transfers happened even though
the power of attorney was not registered in the Registry of
deeds.
ISSUE: Can the Principal be bound by the acts of the agent
even though the power of attorney is not registered the
Registry of deeds?
RULING: YES
1) Inasmuch as in accordance with section 39 of said Act No.
496, Every applicant receiving a certificate of title in
pursuance of a decree of registration, and every subsequent
purchaser of registered land who takes a certificate of title
for value in good faith, shall hold the same free of all
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incumbrance except noted on said certificate, every
document which in any manner affects the registered land is
ineffective unless it is recorded in the registry of deeds. But
such inefficacy only refers to third persons who, in good
faith, may have acquired some right to the registered land.
2) While it is true that a power of attorney not recorded in
the registry of deeds is ineffective in order than an agent or
attorney-in-fact may validly perform acts in the name of his
principal, and that any act performed by the agent by virtue
of said with respect to the land is ineffective against a third
person who, in good faith, may have acquired a right thereto,
it does, however, bind the principal to acknowledge the acts
performed by his attorney-in-fact regarding said property
(sec. 50, Act No. 496).
3) In the present case, while it is true that the non-
registration of the power of attorney executed by Po Tecsi in
favor of his brother Gabino Barreto Po Ejap prevents the sale
made by the latter of the litigated land in favor of Jose M.
Katigbak from being recorded in the registry of deeds, it is
not ineffective to compel Tecsi to acknowledge said sale.
4) From the fact that said power and sale were not recorded
in the registry of deeds, and from the omission of any
mention in the deed of sale of the mortgage lien in favor of
Antonio M. H. Limjenco, and the lease of a part of said land
in favor of Uy Chia, the appellants deduce that said sale is
fraudulent.
5) The record contains many indication that Po Tecsi was not
unaware of said sale. His several letters complaining of the
pressing demands of his brother Gabino Barreto Po Ejap to
send him the rents of the land, his promises to send them to
him, and the remittance of the same were a tacit
acknowledgment that he occupied the land in question no
longer as an owner but only as lessee.
DANONA vs. BRIMO & CO.
CASE NUMBER: G.R. No. 15823
DATE: September 12, 1921
FACTS:
Danon was employed byHolland American Oil Co thru its
manager, Antonio A. Brimo,to look for a purchaser of its
factoryfor the sum of P1,200,000, payable in cash;
Brimopromised to pay the Danon, as compensation for his
services, a commission of five per cent on the said sum of
P1,200,000, if the sale was consummated, or if he should find
a purchaser ready, able and willing to buy said factory for the
said sum of P1,200,000;
No definite period of time was fixed where Danon should
effect the sale. It seems that another broker, Sellner, was also
negotiating the sale, or trying to find a purchaser for the
same property and that the plaintiff was informed of the fact
either by Brimo himself or by someone else; at least, it is
probable that Dano was aware that he was not alone in the
Cases on Agency
field, and his whole effort was to forestall his competitor by
being the first to find a purchaser and effect the sale.
Danon found such a purchaser, but Brimo refused to sell
the said factory without any justifiable motive or reason
therefor and without having previously notified Danon of its
desistance or variation in the price and terms of the sale.
RTC ruled in favor of Danon
CA affirmed RTCs ruling
ISSUE: Was Danon as broker entitled to payment of his
commission?
RULING: NO
The broker must be the efficient agent or the procuring
cause of sale. The means employed by him and his efforts
must result in the sale. He must find the purchaser, and the
sale must proceed from his efforts acting as broker.
Under the proofs in this case, the most that can be said as to
what the plaintiff had accomplished is, that he had found a
person who might have bought the defendant's factory if the
defendant had not sold it to someone else. The evidence
does not show that the Santa Ana Oil Mill had definitely
decided to buy the property in question at the fixed price of
P1,200,000. The board of directors of said corporation had
not resolved to purchase said property; and even if its
president could legally make the purchase without previous
formal authorization of the board of directors, yet said
president does not pretend that he had definitely and
formally agreed to buy the factory in question on behalf of
his corporation at the price stated.
In all the cases, under all and varying forms of expression, the
fundamental and correct doctrine, is, that the duty assumed
by the broker is to bring the minds of the buyer and seller to
an agreement for a sale, and the price and terms on which it
is to be made, and until that is done his right to commissions
does not accrue. It follows, as a necessary deduction from the
established rule, that a broker is never entitled to
commissions for unsuccessful efforts. The risk of a failure is
wholly his.
The undertaking to procure a purchaser requires of the party
so undertaking, not simply to name or introduce a person
who may be willing to make any sort of contract in reference
to the property, but to produce a party capable, and who
ultimately becomes the purchaser.
Where no time for the continuance of the contract is fixed by
its terms either party is at liberty to terminate it at will ,
subject only to the ordinary requirements of good faith.
Usually the broker is entitled to a fair and reasonable
opportunity to perform his obligation, subject of course to
the right of the seller to sell independently. But having been
granted him, the right of the principal to terminate his
authority is absolute and unrestricted, except only that he
may not do it in bad faith, and as a mere device to escape
the payment of the broker's commissions.
INFANTE vs. CUNANAN
CASE NUMBER: G.R. No. L-5180
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DATE: August 31, 1953
FACTS:
1. Consejo Infante owns of two parcels of land with a house
built thereon in Manila
2. Infante contracted the services of Jose Cunanan and Juan
Mijares, to sell the property for a price of P30,000 subject to
the condition that the purchaser would assume the mortgage
existing thereon in the favor of the Rehabilitation Finance
Corporation.
3. Infante agreed to pay them a commission of 5% on the
purchase price plus whatever overprice they may obtain for
the property.
4. Cunanan & Mijares found one Pio S. Noche who was
willing to buy the property under the terms agreed upon
with Infante but when they introduced him to Infante the
latter informed them that she was no longer interested in
selling the property and succeeded in making them sign a
document stating therein that the written authority she had
given them was already can-celled.
5. However, Infantedealt directly with Pio S. Noche selling to
him the property for P31,000.
6. Upon learning this transaction, Cunanan & Mijares
demanded from Infante the payment of their commission,
but she refused and so they brought the present action.
ISSUE: Were Cunanan and Mijares as brokers entitled to
payment of their commission?
RULING: YES
1. After infante had given the written authority to
respondents to sell her land for the sum of P30,000,
respondents found a buyer in the person of one Pio S. Noche
who was willing to buy the property under the terms agreed
upon, and this matter was immediately brought to the
knowledge of Infante.
2. Infante, perhaps by way of strategem, advised respondents
that she was no longer interested in the deal and was able to
prevail upon them to sign a document agreeing to the
cancellation of the written authority.
3. Infante had changed her mind even if respondents had
found a buyer who was willing to close the deal, is a matter
that would not give rise to a legal consequence if
respondents agree to call off the transaction in deference to
the request of the petitioner. But the situation varies if one of
the parties takes advantage of the benevolence of the other
and acts in a manner that would promote his own selfish
interest. This act is unfair as would amount to bad faith. This
act cannot be sanctioned without according to the party
prejudiced the reward which is due him. This is the situation
in which respondents were placed by petitioner.
4. Infante took advantage of the services rendered by
respondents, but believing that she could evade payment of
their commission, she made use of a ruse by inducing them
to sign the deed of cancellation Exhibit 1. This act of
Cases on Agency
subversion cannot be sanctioned and cannot serve as basis
for petitioner to escape payment of the commission agreed
upon.
MANOTOK BROTHERS, INC. VS. COURT OF APPEALS
CASE NUMBER: G.R. No. 94753
DATE: April 7, 1993.
FACTS:
The petitioner in this case is the owner of a parcel of land
and building which was leased to the City of Manila and was
used by Claro M. Recto High school.
Respondent here, Salvador Saligumba was the agent of the
petitioner who negotiated with the city for the sale of the
said property.
Accordingly as such, he was given letters of authority that
allowed him to negotiate the property at a price not less than
425k
He was to get a 5% commission from the said sale
His authority was extended several times, the last one
lasting for 180 days from November 16, 1987, also it was at
this time that petitioner allowed the sale to be consummated
for the amount of 410k.
However, it was only on April 26, 1968, passed Ordinance
No. 6603, appropriating the sum of P410,816.00 for the
purchase of the property which private respondent was
authorized to sell.
Said ordinance however, was signed by the City Mayor only
on May 17, 1968, one hundred eighty three (183) days after
the last letter of authorization.
On January 14, 1969, the parties signed the deed of sale of
the subject property. The initial payment of P200,000.00
having been made, the purchase price was fully satisfied with
a second payment on April 8, 1969 by a check in the amount
of P210,816.00.
Respondent now asks that the 5% commission be paid to
him in the amount of P20,554.50.
But petitioners refused to pay up, arguing that:
(1) Private respondent would be entitled to a commission
only if the sale was consummated and the price paid within
the period given in the respective letters of authority;
(2) Private respondent was not the person responsible for
the negotiation and consummation of the sale; instead it was
Filomeno E. Huelgas, the PTA president for 1967-1968 of the
Claro M. Recto High School.
Petitioner presented as its witnesses Filomeno Huelgas and
the petitioner's President, Rufino Manotok.
Huelgas testified to the effect that after being inducted as
PTA president in August, 1967 he followed up the sale from
the start with Councilor Magsalin until after it was approved
by the Mayor on May 17, 1968
He also said that he came to know Rufino Manotok only in
August, 1968, at which meeting the latter told him that he
would be given a "gratification" in the amount of P20,000.00
if the sale was expedited.
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Petitioners contention that as a broker, private
respondent's job is to bring together the parties to a
transaction.
Accordingly, if the broker does not succeed in bringing the
minds of the purchaser and the vendor to an agreement with
respect to the sale, he is not entitled to a commission.
The Court ruled in favor of the respondent, with the CA
affirming the RTC decision. Hence the appeal
ISSUE: is the private respondent entitled to the 5%
commission? -> Yes
RULING:
Court says: it is to be noted that the ordinance was
approved on April 26, 1968 when private respondent's
authorization was still in force.
Moreover, the approval by the City Mayor came only three
days after the expiration of private respondent's authority.
It is also worth emphasizing that from the records, the
only party given a written authority by petitioner to
negotiate the sale from July 5, 1966 to May 14, 1968 was
private respondent.
When there is a close, proximate and causal connection
between the agent's efforts and labor and the principal's
sale of his property, the agent is entitled to a
commission.
Private respondent is the efficient procuring cause for
without his efforts, the municipality would not have anything
to pass and the Mayor would not have anything to approve.
The SC agrees with respondent Court that the City of
Manila ultimately became the purchaser of petitioner's
property mainly through the efforts of private respondent.
Disposition: Decision of the RTC is affirmed.
DOMINGO VS. DOMINGO
CASE NUMBER: GR No. L-30573
DATE: Oct. 29, 1971
FACTS:
Vicente Domingo granted to Gregorio Domingo, a real
estate broker, the exclusive agency to sell his Lot No. 883,
Piedad Estate in a document.
thelot has an area of 88,477 sq. m.
According to the document, said lot must be sold for P2
per sq. m.
Accordingly, Gregorio is entitled to 5% commission on the
total price if the property is sold by Vicente or by anyone else
during the 30-day duration of the agency or by Vicente
within 3 months from the termination of the agency to a
purchaser to whom it was submitted by Gregorio during the
effectivity of the agency with notice to Vicente.
This contract is in triplicate with the original and another
copy being retained by Gregorio.
The last copy was given to Vicente. Subsequently,
Gregorio authorized Teofilo Purisima to look for a buyer
without notifying Vicente.
Cases on Agency
Gregorio promised Teofilo of the 5% commission.
Teofilo then introduced Oscar de Leon to Gregorio as a
prospective buyer.
Oscar submitted a written offer which was very much
lower than the P2 per sq. m. price.
Vicente directed Gregorio to tell Oscar to raise his offer.
After several conferences between the parties, Oscar
raised his offer to P1.20 per sq. m. or P109k in total to which
Vicente agreed to said offer.
Upon Vicentes demand, Oscar issued a P1,000 check to
him as earnest money.
Vicente, then, advanced P300 to Gregorio.
Subsequently, Vicente asked for an additional P1,000 as
earnest money, which Oscar promised to deliver to Vicente.
The written agreement, Exhibit C, between the parties was
amended.
Oscar will vacate on or about September 15, 1956 his
house and lot at Denver St., QC, which is part of the purchase
price later on, it was again amended to state that Oscar will
vacate his house and lot on Dec.1, 1956 because his wife was
pregnant at that time.
Oscar gave Gregorio P1,000 as a gift or propina for
succeeding in persuading Vicente to sell his lot at P1.20 per
sq. m.
Gregorio did not disclose said gift or propina to Vicente.
Oscar did not pay Vicente the additional P1,000 Vicente
asked from him as earnest money.
The deed of sale was not executed since Oscar gave up on
the negotiation when he did not receive his money from his
brother in the US, which he communicated to Gregorio.
Gregorio did not see Oscar for several weeks thus sensing
that something fishy might be going on.
He went to Vicentes house where he read a portion of the
agreement to the effect that Vicente was still willing to pay
him 5% commission, P5,450.
Gregorio went to the Register of Deeds of QC, where he
discovered that a Deed of sale was executed by Amparo de
Leon, Oscars wife, over their house and lot in favor of
Vicente. After discovering that Vicente sold his lot to Oscars
wife, Gregorio demanded in writing the payment of his
commission.
Gregorio also conferred with Oscar who told him that:
Vicente went to him and asked him to eliminate Gregorio
in the transaction and that he would sell his property to him
for P104k.
In his reply, Vicente stated that Gregorio is not entitled to
the 5% commission:
Since he sold the property not to Gregorios buyer (Oscar
de Leon) but to another buyer (Amparo Diaz) who is the wife
of Oscar de Leon.
CA said: the exclusive agency contract is genuine. The
sale of the lot to Amparo de Leon is practically a sale to
Oscar.
ISSUE: Does Gregorios act of accepting the gift or propina
from Oscar constitute fraud which would cause the forfeiture
of his 5%commission? -> Yes
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RULING:
Gregorio Domingo as the broker received a gift or propina
from the prospective buyer Oscar de Leon, without the
knowledge and consent of the principal, Vicente.
His acceptance of said substantial monetary gift corrupted
his duty to serve the interests only of his principal and
undermined his loyalty to his principal, who gave him partial
advance of P3000 on his commission.
As a consequence, instead of exerting his best to
persuade his prospective buyer to purchase the property on
the most advantageous terms desired by his principal,
Gregorio Domingo, succeeded in persuading his principal to
accept the counter-offer of the prospective buyer to
purchase the property at P1.20 per sq. m.
The duties and liabilities of a broker to his employer are
essentially those which an agent owes to his principal.
An agent who takes a secret profit in the nature of a
bonus, gratuity or personal benefit from the vendee,
without revealing the same to his principal, the vendor, is
guilty of a breach of his loyalty to the principal and
forfeits his right to collect the commission from his
principal, even if the principal does not suffer any injury by
reason of such breach of fidelity, or that he obtained better
results or that the agency is a gratuitous one, or that usage
or custom allows it.
This is to prevent the possibility of any wrong not to
remedy or repair an actual damage agent thereby assumes a
position wholly inconsistent with that of being an agent for
his principal, who has a right to treat him, insofar as his
commission is concerned, as if no agency had existed
The fact that the principal may have been benefited by the
valuable services of the said agent does not exculpate the
agent who has only himself to blame for such a result by
reason of his treachery or perfidy.
As a necessary consequence of such breach of trust,
Gregorio Domingo must forfeit his right to the commission
and must return the part of the commission he received from
his principal.
Decisive Provisions Article 1891 and 1909 CC
Article 1891 consists in changing the phrase "to pay" to
"to deliver", which latter term is more comprehensive than
the former.
Paragraph 2 of Article 1891 is a new addition designed to
stress the highest loyalty that is required to an agent
condemning as void any stipulation exempting the agent
from the duty and liability imposed on him in paragraph one
thereof.
Article 1909 demands the utmost good faith, fidelity,
honesty, candor and fairness on the part of the agent, the
real estate broker in this case, to his principal, the vendor.
The law imposes upon the agent the absolute
obligation to make a full disclosure or complete account
to his principal of all his transactions and other material
facts relevant to the agency, so much so that the law as
amended does not countenance any stipulation
exempting the agent from such an obligation and
considers such an exemption as void.
Cases on Agency
Situations where the duty mandated by Art 1891 does not
apply:
Agent or broker acted only as a middleman with the task
of merely bringing together the vendor and vendee, who
themselves thereafter will negotiate on the terms and
conditions of the transaction.
Agent or broker had informed the principal of the gift or
bonus or profit he received from the purchaser and his
principal did not object
Teofilo Purisimas entitlement to his share in the 5%
commission
Teofilo can only recover from Gregorio his share of
whatever amounts Gregorio Domingo received by virtue of
the transaction as his sub-agency contract was with Gregorio
Domingo alone and not with Vicente Domingo, who was not
even aware of such sub-agency.
Since Gregorio already received a total of P1,300 from
Oscar and Vicente, P650 of which should be paid by Gregorio
to Teofilo.
Disposition: CA decision reversed.
SIASAT vs. INTERMEDIATE APPELLATE COURT
CASE NUMBER: G.R. No. L-67889
DATE: October 10, 1985
FACTS:
Teresita Nacianceno succeeded in convincing officials of
the Department of Education and Culture to purchase
without public bidding, one million pesos worth of national
flags for the use of public schools throughout the country.
Nancianceno was able to expedite the approval of the
purchase.
All the legal requirements had been complied with, except
the release of the purchase orders.
She was informed by the Chief of the Budget Division of
the Department that the purchase orders could not be
released unless a formal offer to deliver the flags was first
submitted for approval
She contacted the owners of the United Flag Industry.
Mr. Primitivo Siasat, owner and general manager of United
Flag Industry came up with a document which read:
Mrs. Tessie Nacianceno,
This is to formalize our agreement for you to represent
United Flag Industry to deal with any entity or organization,
private or government in connection with the marketing of
our products-flags and all its accessories.
For your service, you will be entitled to a commission of
thirty (30%) percent.
Signed Mr. Primitive Siasat Owner and Gen. Manager
The first delivery of 7,933 flags was made by the United
Flag Industry.
Then, Nanciancenos authority to represent the United
Flag Industry was revoked by Primitivo Siasat on the
ground that she was not authorized to sell 16, 666
Philippine flags to the Department.
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Nancianceno said that for the first delivery, United Flag
Industry tendered the amount of P23,900.00 or five
percent (5%) of the amount received as payment of her
commission. She refused to accept the said amount
insisting on the 30% commission agreed upon.
She later learned that petitioner Siasat had already
received payment for the second delivery of 7,833 flags.
When she confronted the petitioners, they vehemently
denied receipt of the payment, at the same time claimed
that the respondent had no participation whatsoever
with regard to the second delivery of flags and that the
agency had already been revoked.
Nancianceno filed an action in the Court of First Instance of
Manila to recover the following commissions: 25%, as
balance on the first delivery and 30%, on the second delivery.
The trial court decided in favor of the respondent.
The decision was affirmed in toto by the Intermediate
Appellate Court.
ISSUE:
1. Did Nancianceno have the capacity to represent United
Flag in the transaction with the Department?
2. Did the revocation of agency foreclose the respondent's
claim of 30% commission on the second transaction?
3. Was the award for attorneys fees and moral damages
proper?
RULING:
1. YES, she had the capacity to represent United Flag In fact,
she was a general agent.
- There are several kinds of agents. An agent may be (1)
universal: (2) general, or (3) special. A universal; agent is one
authorized to do all acts for his principal which can lawfully
be delegated to an agent. So far as such a condition is
possible, such an agent may be said to have universal
authority.
- HUNDRED AND NINETY FOUR PESOS (P140,994.00) as
- A general agent is one authorized to do all acts
pertaining to a business of a certain kind or at a
particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either
expressly conferred in general terms or in effect made
general by the usages, customs or nature of the business
which he is authorized to transact.
- An agent, therefore, who is empowered to transact all
the business of his principal of a particular kind or in a
particular place, would, for this reason, be ordinarily
deemed a general agent.
- A special agent is one authorized to do some particular act
or to act upon some particular occasion. lie actsusually in
accordance with specific instructions or under limitations
necessarily implied from the nature of the act to be done.
- By the way general words were employed in the
agreement, no restrictions were intended as to the
manner the agency was to be carried out or in the place
where it was to be executed. The power granted to the
respondent was so broad that it practically covers the
Cases on Agency
negotiations leading to, and the execution of, a contract
of sale of petitioners' merchandise with any entity or
organization.
- There was nothing to prevent the petitioners from stating in
the contract of agency that the respondent could represent
them only in the Visayas or to state that the Department of
Education and Culture and the Department of National
Defense, which alone would need a million pesos worth of
flags, are outside the scope of the agency.
2. NO, the revocation did not foreclose the respondents
claime of 30% commission on the second transaction.
- The revocation of agency could not prevent the
Nancianceno from earning her commission because the
contract of sale had been already perfected and partly
executed.
- The principal cannot deprive his agent of the
commission agreed upon by cancelling the agency and,
thereafter, dealing directly with the buyer.
3. NO, the award was not proper.
- Moral damages: To support a judgment for damages, facts
which justify the inference of a lack or absence of good faith
must be alleged and proven. There is no evidence on record
from which to conclude that the revocation of the agency
was deliberately effected by the petitioners to avoid payment
of the respondent's commission.
- Attorneys fees: For one thing, the respondent did not come
to court with completely clean hands. For another, the
petitioners apparently believed they could legally revoke the
agency in the manner they did and deal directly with
education officials handling the purchase of Philippine flags.
They had reason to sincerely believe they did not have to pay
a commission for the second delivery of flags.
The decision of the respondent court was MODIFIED. The
petitioners were ordered to pay the respondent the
amount of ONE HUNDRED FOURTY THOUSAND NINE
her commission on the second delivery of flags with legal
interest from the date of the trial court's decision.
*The decision was modified to exclude the respondents right
to collect 25% from the first delivery. The demand letter of
the respondent's lawyer dated November 13, 1984 asked
petitioner Siasat only for the 30% commission due from the
second delivery. The fact that the respondent demanded only
the commission on the second delivery without reference to
the alleged unpaid balance which was only slightly less than
the amount claimed can only mean that the commission on
the first delivery was already fully paid.
GERMAN & CO. vs. DONALDSON, SIM, & CO.
CASE NUMBER: G.R. No. L-439
DATE: November 11, 1901
FACTS:
A general power for suits was executed in Manila in favor
of Fernando Kammerzell, a German national. It was
purported to be a substitution in favor of several attorneys of
24 | P a g e
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powers conferred upon Kammerzell in an instrument
executed in Berlin, Germany by Max Leonard Tornow, the
sole owner of the business carried on in Berlin and Manila
under the name of Germann & Co.
Kammerzell, by virtue of the general power for suits, filed
an action against Donaldson, Sim & Co. to recover a sum
claimed to be due for freight under a charter party.
The Court of First Instance of Manila ruled in favor of
Germann & Co.
ISSUE:
1. Is the original power invalid under article 1280, No. 5, of
the Civil Code, which provides that powers for suits must be
contained in a public instrument?
2. Can the original power be construed as conferring upon
Kammerzell authority to institute or defend suits?
RULING:
1. No, because no claim is made that the document was not
executed with the formalities required by the German law in
the case of such an instrument. The Court saw no reason why
the general principle that the formal validity of contracts is to
be tested by the laws of the country where they are executed
should not apply.
2. Yes, because the instrument contains an explicit grant of a
power broad enough to authorize the bringing of the present
action, even assuming the applicability of the domestic law
as claimed by the defendants.
- By this instrument Tornow constitutes Kammerzell his "true
and lawful attorney with full power to enter the firm name of
Germann & Co. in the Commercial Registry of the city of
Manila as a branch of the house of Germann & Co. in Berlin,
it being the purpose of this power to invest said attorney will
full legal powers and authorization to direct and administer
in the city of Manila for us and in our name a branch of our
general commercial business of important and exportation,
for which purpose he may make contracts of lease and
employ suitable assistants, as well as sign every kind of
documents, accounts, and obligations connected with the
business which may be necessary, take charge in general of
the receipt and delivery of merchandise connected with the
business, sign all receipts for sums of money and collect
them and exact their payment by legal means, and in general
execute all the acts and things necessary for the perfect
carrying on of the business committed to his charge in the
same manner as we could do ourselves if we were present in
the same place.
- The Court did not consider the institution of the suit to
collect a claim accruing in the ordinary course of the
plaintiff's business, as properly belonging to the class of acts
described in article 1713 of the Civil Code as acts "of strict
ownership.
- It is necessarily a part of the mere administration of
such a business as that described in the instrument in
question and only incidentally, if at all, involving a power
to dispose of the title to property.
Cases on Agency
The judgment was affirmed.
CABALLERO VS. DEIPARINE
CASE NUMBER: L-39059
DATE: September 30, 1974
FACTS:
1. This involves a dispute over a parcel of land and the acts
committed by the plaintiff lawyer which were not intended
by his client, the plaintiff.
2. That during the lifetime of Bucao she with her second
husband acquired by joint purchase a parcel of land from the
Talisay-Minglanilla Estate
3. That in 1932 Bucao and Tomas executed jointly a notarial
instrument identified as Annex "B" wherein they
acknowledged that Antonio Caballero had contributed the
amount therein stated for the purchase of the property and
they sold 1/4 of the lot to him; when the title to said lot was
issued, VicentaBucao and Tomas Raga held it in trust for their
co-owner.
4. That the portion mentioned as sold to plaintiff Antonio
Caballero remained unsegregated from Lot 2072 and the
deed of sale, Annex "B" of the Complaint; nor had it been
registered in the Register of Deeds; but he, had been in
occupation of a portion of this lot peacefully until the
present.
5. Bucaosold her undivided 1/2 of the above parcel to her co-
owner, Tomas Raga.
6. Defendants Olimpio Raga, Adriano Raga, Magdalena Raga
and Tomas Raga executed an instrument known as
"Declaration and confirmation of sale" without the
participation of plaintiffs Antonio Caballero and Concordia
Caballero, wherein they stated that they are the heirs of
VicentaBucao of the 1/2 of the property to Tomas Raga, a
certified true copy of which document is identified as Annex
"E" in the Complaint.
7. Alma Deiparine acquired in good faith, with a just title and
for a valuable consideration, the whole of Lot 2072 from
Tomas Raga as per deed of absolute sale identified as Annex
"C" in the complaint which cancelled Transfer Certificate of
Title No. RT-2482 (T-17232) and the issuance in her name of
Transfer Certificate of Title No. 9934 on April 1, 1963, a
certified true copy of which is identified as Annex "D" in the
complaint;
8. That defendant Alma Deiparine came to know only of
Annex "B" when it was presented by plaintiff Antonio
Caballero at the trial of an ejectment case filed by the former
in the Municipal Court of Talisay.
9. This case was decided in favor of Antonio Caballero but
the decision was appealed by Alma Deiparine to the Court of
First Instance of Cebu which affirmed the decision for
Caballero. The case is now in the Court of Appeals on appeal
by Alma Deiparine.
10. Caballero and the defendant parties entered into a
compromise agreement. And the lawyer of Caballero
admitted to certain facts without the authority of his client,
Caballero.
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ISSUE: Is the compromise valid, considering that the lawyer
admitted to facts which were not authorized by his client to
make? No
RULING:
1. A reading of the stipulation of facts convinced the court
that it is a compromise agreement of the parties. The
stipulation concludes with this prayer: "WHEREFORE, it is
most respectfully prayed that the foregoing Stipulation of
Facts be approved and that a decision be handed down on
the legal issues submitted on the basis of said Stipulation of
Facts." Apparently it is intended to terminate the case.
2. Attorneys have authority to bind their clients in any case
by any agreement in relation thereto made in writing, and in
taking appeals, and in all matters of ordinary judicial
procedure. But they cannot, without special authority,
compromise their client's litigation, or receive anything in
discharge of a client's claim but the full amount in cash
3. It may be true that during the pre-trial hearing held on
February 3, 1968, the parties concerned agreed to execute a
stipulation of facts but it does not mean that the respective
counsels of the contending parties can prepare a stipulation
of facts the contents of which is prejudicial to the interest of
their clients and sign it themselves without the intervention
of their clients.
4. Counsel for plaintiffs-appellants, Atty. Melecio C. Guba,
agreed that defendant-appellee Alma Deiparine bought the
land in question in good faith and for a valuable
consideration; that during the lifetime of their mother
VicentaBucao, she, with the conformity of her husband, sold
her undivided of the land in question to her co-owner and
son, Tomas Raga.
5. All these adverse facts were made the basis of the
appealed decision against the plaintiffs. No further evidence
was presented as there was no hearing.
6. The attorney for the plaintiffs in making such admission
went beyond the scope of his authority as counsel and
practically gave away the plaintiffs' case. The admission does
not refer to a matter of judicial procedure related to the
enforcement of the remedy. It related to the very subject
matter of the cause of action, or to a matter on which
the client alone can make the admission binding on him.
7. The broad implied or apparent powers of an attorney with
respect to the conduct or control of litigation are, however,
limited to matters which relate only to the procedure or
remedy.
8. The employment of itself confers upon the attorney no
implied or power or authority over the subject matter of the
cause of action or defense; and, unless the attorney has
expressly been granted authority with respect thereto, the
power to deal with or surrender these matters is regarded as
remaining exclusively in the client.
PHILIPPINE NATIONAL BANK vs. STA. MARIA
CASE NUMBER: G.R. No. L-24765
DATE: August 29, 1969
Cases on Agency
FACTS:
In this appeal certified to this Court by the Court of
Appeals as involving purely legal issues, we hold that a
special power of attorney to mortgage real estate is limited
to such authority to mortgage and does not bind the grantor
personally to other obligations contracted by the grantee, in
the absence of any ratification or other similar act that would
estop the grantor from questioning or disowning such other
obligations contracted by the grantee.
Plaintiff bank filed this action on February 10, 1961 against
defendant Maximo Sta. Maria and his six brothers and sisters,
defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin,
Rosario and Leonila, all surnamed Sta. Maria, and the
Associated Insurance & Surety Co., Inc. as surety, for the
collection of certain amounts representing unpaid balances
on two agricultural sugar crop loans due allegedly from
defendants. 1
The said sugar crop loans were obtained by defendant
Maximo Sta. Maria from plaintiff bank under a special power
of attorney, executed in his favor by his six brothers and
sisters, defendants-appellants herein, to mortgage a 16-odd
hectare parcel of land, jointly owned by all of them.
In addition, Valeriana Sta. Maria alone also executed in
favor of her brother, Maximo, a special power of attorney to
borrow money and mortgage any real estate owned by her.
By virtue of the two above powers, Maximo Sta. Maria
applied for two separate crop loans, for the 1952-1953 and
1953-1954 crop years, with plaintiff bank, one in the amount
of P15,000.00, of which only the sum of P13,216.11 was
actually extended by plaintiff, and the other in the amount of
P23,000.00, of which only the sum of P12,427.57 was actually
extended by plaintiff. As security for the two loans, Maximo
Sta. Maria executed in his own name in favor of plaintiff bank
two chattel mortgages on the standing crops, guaranteed by
surety bonds for the full authorized amounts of the loans
executed by the Associated Insurance & Surety Co., Inc. as
surety with Maximo Sta. Maria as principal. The records of the
crop loan application further disclose that among the
securities given by Maximo for the loans were a "2nd
mortgage on 25.3023 Has. of sugarland, including sugar
quota rights therein" including, the parcel of land jointly
owned by Maximo and his six brothers and sisters herein for
the 1952-1953 crop loan, with the notation that the bank
already held a first mortgage on the same properties for the
1951-1952 crop loan of Maximo, and a 3rd mortgage on the
same properties for the 1953-1954 crop loan.
The trial court rendered judgment in favor of plaintiff and
against defendants: condemning the defendant Maximo R.
Sta. Maria and his co-defendants Valeriana, Quintin, Rosario,
Emeteria, Teofilo, and Leonila all surnamed Sta. Maria and
the Associated Insurance and Surety Company, Inc., jointly
and severally, to pay the plaintiff, the Philippine National
Bank, Del Carmen Branch the sum of P8,500.72 and
P14,299.79 .
Defendant Maximo Sta. Maria and his surety, defendant
Associated Insurance & Surety Co., Inc. who did not resist the
action, did not appeal the judgment. This appeals been taken
26 | P a g e
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by his six brothers and sisters, defendants-appellants who
reiterate in their brief their main contention in their answer to
the complaint that under this special power of attorney, they
had not given their brother, Maximo, the authority to borrow
money but only to mortgage the real estate jointly owned by
them; and that if they are liable at all, their liability should not
go beyond the value of the property which they had
authorized to be given as security for the loans obtained by
Maximo. In their answer, defendants-appellants had further
contended that they did not benefit whatsoever from the
loans, and that the plaintiff bank's only recourse against
them is to foreclose on the property which they had
authorized Maximo to mortgage.
ISSUE: Whether the 6 brothers and sisters are liable for the
loan obtained by Maximo.
RULING:
The authority granted by defendants-appellants (except
Valeriana) unto their brother, Maximo, was merely to
mortgage the property jointly owned by them. They did not
grant Maximo any authority to contract for any loans in their
names and behalf. Maximo alone, with Valeriana who
authorized him to borrow money, must answer for said loans
and the other defendants-appellants' only liability is that the
real estate authorized by them to be mortgaged would be
subject to foreclosure and sale to respond for the obligations
contracted by Maximo. But they cannot be held personally
liable for the payment of such obligations, as erroneously
held by the trial court.
It is not unusual in family and business circles that one
would allow his property or an undivided share in real estate
to be mortgaged by another as security, either as an
accommodation or for valuable consideration, but the grant
of such authority does not extend to assuming personal
liability, much less solidary liability, for any loan secured by
the grantee in the absence of express authority so given by
the grantor.
The outcome might be different if there had been an
express ratification of the loans by defendants-appellants or
if it had been shown that they had been benefited by the
crop loans so as to put them in estoppel. Quintin Sta. Maria
testified that he and his co-defendants executed the
authority to mortgage "to accommodate (my) brother Dr.
Maximo Sta. Maria ... and because he is my brother, I signed
it to accommodate him as security for whatever he may
apply as loan. Only for that land, we gave him as, security"
and that "we brothers did not receive any centavo as
benefit." The record further shows plaintiff bank itself
admitted during the trial that defendants-appellants "did not
profit from the loan" and that they "did not receive any
money (the loan proceeds) from (Maximo)." No estoppel,
therefore, can be claimed by plaintiff as against defendants-
appellants.
Cases on Agency
Valeriana Sta. Maria's liability to plaintiff. Valeriana stands
liable not merely on the mortgage of her share in the
property, but also for the loans which Maximo had obtained
from plaintiff bank, since she had expressly granted Maximo
the authority to incur such loans. The Court hold that
Valeriana's liability for the loans secured by Maximo is not
joint and several or solidary as adjudged by the trial court,
but only joint, pursuant to the provisions of Article 1207 of
the Civil Code that "the concurrence ... of two or more
debtors in one and the same obligation does not imply
that ... each one of the (debtors) is bound to render entire
compliance with the prestation. There is a solidary liability
only when the obligation expressly so states, or when the law
or the nature of the obligation requires solidarity." It should
be noted that in the additional special power of attorney,
executed by Valeriana, she did not grant Maximo the
authority to bind her solidarity with him on any loans he
might secure thereunder.
WHEREFORE, the judgment of the trial court against
defendants-appellants Emeteria, Teofilo, Quintin, Rosario and
Leonila, all surnamed Sta. Maria is hereby reversed and set
aside, with costs in both instances against plaintiff. The
judgment against defendant-appellant Valeriana Sta. Maria is
modified in that her liability is held to be joint and not
solidary.
BA FINANCE CORPORATION vs. COURT OF APPEALS
DATE: July 3, 1992
FACTS:
On December 17, 1980, Renato Gaytano, doing business
under the name Gebbs International, applied for and was
granted a loan with respondent Traders Royal Bank in the
amount of P60,000.00. As security for the payment of said
loan, the Gaytano spouses executed a deed of suretyship
whereby they agreed to pay jointly and severally to
respondent bank the amount of the loan including interests,
penalty and other bank charges.
In a letter dated December 5, 1980 addressed to
respondent bank, Philip Wong as credit administrator of BA
Finance Corporation for and in behalf of the latter, undertook
to guarantee the loan of the Gaytano spouses.
Partial payments were made on the loan leaving an unpaid
balance in the amount of P85,807.25. Since the Gaytano
spouses refused to pay their obligation, respondent bank
filed with the trial court complaint for sum of money against
the Gaytano spouses and petitioner corporation as
alternative defendant.
The Gaytano spouses did not present evidence for their
defense. Petitioner corporation, on the other hand, raised the
defense of lack of authority of its credit administrator to bind
the corporation.
On December 12, 1988, the trial court: judgment in favor of
plaintiff and against defendants/Gaytano spouses, ordering
the latter to jointly and severally pay the plaintiff the
following among others P85,807.25
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Not satisfied with the decision, respondent bank appealed
with the Court of Appeals. On March 13, 1990, respondent
appellate court rendered judgment modifying the decision of
the trial court ordering the defendants Gaytano spouses and
alternative defendant BA Finance Corporation, jointly and
severally, to pay the plaintiff the amount of P85,807.25
Hence this petition was filed with the petitioner assigning
the following errors committed by respondent appellate
court:
ISSUE: Whether the plaintiff was guilty of estoppels despite
the fact that it never knew of such alledged letter-guaranty.
RULING:
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 liable, to ascertain
not only the fact of agency but also the nature and extent of
authority, and in case either is controverted, the burden of
proof is upon them to establish it (Harry Keeler v. Rodriguez,
4 Phil. 19).
that a power of attorney or authority of an agent should
not be inferred from the use of vague or general words.
Guaranty is not presumed, it must be expressed and cannot
be extended beyond its specified limits (Director v. Sing Juco,
53 Phil. 205).
We find that the said conclusion has no basis in fact.
Respondent bank had not shown any evidence aside from
the testimony of the credit administrator that the disputed
transaction of guaranty was in fact entered into the official
records or files of petitioner corporation, which will show
notice or knowledge on the latter's part and its consequent
ratification of the said transaction. In the absence of clear
proof, it would be unfair to hold petitioner corporation guilty
of estoppel in allowing its credit administrator to act as
though the latter had power to guarantee.
ACCORDINGLY, the petition is GRANTED and the assailed
decision of the respondent appellate court dated March 13,
1990 is hereby REVERSED and SET ASIDE and another one is
rendered dismissing the complaint for sum of money against
BA Finance Corporation.
DIRECTOR OF PUBLIC WORKS VS. SING JUCO, et al.
CASE NUMBER: 30181
DATE: July 12, 1929
PONENTE: Street, J.
FACTS:
1. Involves a land located on Point Llorente at the mouth of
Iloilo River, near Iloilo City. Mariano de la Rama, Gonzalo
Mariano Tanboontien, Sing Juco, and Sing Bengco owned
this land, in undivided shares.
2. In 1920, the owners of the property conveyed it by way of
mortgage to the PNB for the purpose of securing a credit in
current account of not exceeding P170,000.00.
3. The subject land was subject to frequent flooding due to
its low level. In 1921, the Government of the Philippine
Islands was planning extensive harbor improvements in this
Cases on Agency
vicinity, requiring extensive dredging by the Bureau of Public
Works in the mouth of said river.
4. This dredging operation requires the Director of Public
Works to find a place of deposit for the dirt and mud taken
from the places dredged.
5. A contract was made between the DPW, representing the
Government of the Philippine Islands, and the four owners.
DPW also required a bond to be supplied by the owners in
the amount of P150,000.00. This bond was made together
with the main contract; one of the signatures of the owner
was under the name of Casa Viuda de Tan Toco,
purporting to be signed by M. de la Rama.
6. The dredging operation was conducted in substantial
compliance with the agreement; and the amount due from
the owners was determined and demanded. No payment was
made thus an action was instituted by the DPW to recover
the amount due to the Government under the said contract.
a. Defense: government has not complied with the contract;
the material deposited on the land was not enough to raise
the level of the land above water. Defendants asserted that
they are not obliged to pay and subsequently sought to
recover further damages.
i. On part of Viuda de Tan Toco: the name Casa Viuda de
Tan Toco signed under the contract of suretyship by M. de
la Rama was signed without authority.
b. Decision: Owners are obliged to pay and that Tan OngSze
(widow of Tan Toco) and Viuda de Tan Toco is personally
liable upon the contract of suretyship in case the principal
debtors should not satisfy their indebtedness.
ISSUE: Whether or not TanOngSze, Viuda de Tan Toco is
liable upon the contract of suretyship?
RULING: No. Judgment in relation to Tan OngSze, Viuda de
Tan Toco was reversed.
The said contract purports to have been signed by Mariano
de la Rama, acting for this defendant under the power of
attorney. But the Government did not exhibitevidence that
would prove that the defendant was authorized in creating
an obligation in the nature of suretyship binding upon the
principal. The clauses noted in the documents exhibiting
powers of attorney, relate more specifically to the execution
of contracts relating to property. Neither of these powers
officially confers upon Mariano de la Rama the power to bind
a principal by a contract of suretyship. Following the principle
of ejusdem generis.
Power to execute a contract such as a contract of
suretyship or guaranty cannot be inferred from the general
words contained in these powers. Article 1827 of the Civil
Code declared that guaranty should not be presumed; it
must be expressed and cannot be extended beyond its limit.
By effect, a power of attorney to execute a contract of
guaranty should not be inferred from vague or general
words, especially when such words have their origin and
explanation in particular powers of a wholly different nature.
PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., vs.
POIZAT
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CASE NUMBER: G.R. No. L-23352
DATE: December 31, 1925
FACTS:
1. Appellant, Doa Gabriela Andrea de Coster, executed to
and in favor of her husband, Juan M.Poizat, a general power
of attorney. It authorized him to do "in her name, place and
stead, and making use of her rights and actions"; to loan or
borrow any amount of cash under the conditions he may
deemed convenient, executing and signing private and
public document and making these transactions with or
without mortgage.
2. Poizat obtained from the plaintiff a credit for the sum of
10,000 Pounds Sterling to be drawn on the "Banco Espaol
del Rio de la Plata.
3. To secure payment he executed a mortgage upon the real
property of his wife.
4. Plaintiff then brought an action against the defendant for
failure to pay, to for lose the mortgage. The trial court's
decision issued an order directing the sale of the mortgaged
property to satisfy the judgment. Consequently, the property
was sold to the plaintiff for P100,000.00
5. Appellant personally appeared and objected to the
confirmation of the sale. She alleged that the mortgage in
question was illegally executed thus null and void, because
the agent of the defendant was not authorized to execute it.
That the plaintiff was aware of such fact and that the
mortgage was executed to secure a loan, which was not
made to this defendant or for her benefit but was made to
him personally. Such objections were overruled, which
prompted the appellant to appeal.
ISSUE: Whether the act of defendant Poizant, in his capacity
as attorney in fact, binds her wife?
HELD: No. The mortgage is declared null and void ab initio.
The sale is set aside
RULING:
Juan Poizat may have had the authority to borrow money
and mortgage the real property of his wife, but the law
specifically provided how and in what manner it must be
done. The law requires that a power of attorney to mortgage
or sell real property should be executed with all the
formalities required in a deed. In this case it was not
exercised. His personal signature, standing alone, does not
bind his principal. The deed in its face does not purport to be
the deed of the principal, made and signed by him in his
name and as his deed. The mortgage in question was held to
be executed by him and him only thus it is not binding to his
wife.
RURAL BANK OF BOMBON INC. vs. COURT OF APPEALS
CASE NUMBER: G.R. No. 95703
DATE: August 3, 1992
Cases on Agency
FACTS:
1. On January 12, 1981, Ederlinda M. Gallardo, married to
Daniel Manzo, executed a special power of attorney in favor
of Rufina S. Aquino authorizing him:
- To secure a loan from any institution for any amount or
mortgage the property at Las Pinas, Rizal
2. On August 26, 1981, a Deed of Real Estate Mortgage was
executed by Rufino S. Aquino in favor of the Rural Bank of
Bombon(Camarines Sur), Inc. The property was secured for a
loan in the total sum of Three Hundred Fifty Thousand Pesos
only (P350,000.00), plus interest at the rate of fourteen (14%)
per annum.
3. Spouses Gallardo filed an action against Rufino Aquino
and Rural Bank. They alleged that Aquino mortgaged the
property to pay for his personal loans, from the same Bank.
- The trial court temporarily restrained the Rural Bank "from
enforcing the real estate mortgage and from foreclosing it
either judicially or extrajudicially until further orders from the
court.
4. Aquino, in his answer, alleged that the spouses allowed
him to mortgage the property and use the use the proceeds
thereof to compensate for the pre-existing obligation of
P350,000 that the spouse owed him.
5. The trial court lifted the TRO against the bank and ordered
the foreclosure proceeding against the mortgaged property.
The Spouses Gallardo appealed to the Court of Appeals (CA).
The CA reversed the trial court and held that Rufino Aquino
had no authority to mortgage the land. Thus, this appeal
against the decision.
ISSUE: Whether or not the Deed of Real Estate
Mortgageexecuted by Rufino S. Aquinoin favor of the Rural
Bank of Bombon (Cam. Sur), Inc. is with authority, thus valid?
NO, it was without authority.
RULING:
Agent who signs a Deed of Mortgage in his name alone
does not validly bind the owner of the real estate
mortgaged.Aquino's act of signing the Deed of Real Estate
Mortgage in his name alone as mortgagor, without any
indication that he was signing for and in behalf of the
property owner, Ederlinda Gallardo, bound himself alone in
his personal capacity as a debtor of the petitioner Bank and
not as the agent or attorney-in-fact of Gallardo.
The petitioner misapplied Art. 1883. The above provision of
the Civil Code relied upon by the petitioner Bank, is not
applicable to the case at bar. Herein respondent Aquino
acted purportedly as an agent of Gallardo, but actually acted
in his personal capacity. Involved herein are properties titled
in the name of respondent Gallardo against which the Bank
proposes to foreclose the mortgage constituted by an agent
(Aquino) acting in his personal capacity. Under these
circumstances, we hold, that Gallardo's property is not liable
on the real estate mortgage.
COMMERCIAL BANK & TRUST CO. OF THE PHILS Vs. REP.
ARMORED CAR SERVICE CORP.
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CASE NUMBER: G.R. Nos. L-18223-24
DATE: September 30, 1963
FACTS:
1. Defendant-appellant Damaso Perez has presented a
motion for new trial on the ground of newly discovered
evidence.
2. Damaso Perez claims that he was not aware of the nature
of the power of attorney that Ramon Racelis used,
purportedly signed by him, to secure the loans for the
Republic Armored Car Service Corporation and the Republic
Credit Corporation.
3. He claims that Ramon Racelis only used a photastic copy
as proof of the Power of Attorney. He further presents the
original purporting the alleged true authority granted by the
movant.
- It is not expressly mentioned that this is the precise power
of attorney that Ramon Racelis Utilized to secure the loans
the collection of which is sought in these cases.
ISSUE: Whether or not the claim of the movant is tenable as
to invalidate the security loans secured under the name of
movant? NO, it is not.
RULING:
Assuming, for the sake of argument, that the said power of
attorney incorporated in the motion for reconsideration was
the one used to obtain the loans. We find that the movant's
contention has no merit. In accordance with the document,
Racelis was authorized to negotiate for a loan or various
loans .. with other being institution, financing corporation,
insurance companies or investment corporations, in such
sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis,
may deem proper and convenient to my interests, ... and to
execute any and all documents he deems requisite and
necessary in order to obtain such loans, always having in
mind best interest; ... We hold that this general power
attorney to secure loans from any banking institute was
sufficient authority for Ramon Racelis to obtain the credits
subject of the present suits.
LIM TIU vs. RUIZ y REMENTERIA
CASE NUMBER: GR No. 5676
DATE: March 2, 1910
PONENTE: Johnson, J.
FACTS:
On May 26, June 5 and June 12, 1908, Lim Tiu sold to Ruiz
y Rementeria certain merchandise totaling P1,043.57
Said amount was due and unpaid therefore, an action was
filed by Lim Tiu against Ruiz y Rementeria
Lower Court ruling
- Ruiz y Rementeria purchased and paid the merchandise to
Domingo Tim Bun Lui
- Since they have already paid the merchandise, Ruiz y
Rementeria is no longer liable
Cases on Agency
Lim Tiu filed an appeal, arguing that the following errors,
among others, were committed by the lower court
- Ruiz y Rementeria never had a notice that their business
transactions with Domingo were by him as agent or
employee of Lim Tiu
- They never notified Ruiz y Rementeria that Domingo could
sell their merchandise
- No payments were accepted by them thru Domingo
ISSUE/RULING:
a. W/N Ruiz y Rementeria purchased directly from Lim
Tiu?
NO. They have no knowledge or information that the
merchandise they were receiving from Domingo was the
merchandise of Lim Tiu
Ruiz y Rementeria had been buying merchandise from
Domingo for several months and paying for said
merchandise by selling to Domingo certain goods in
exchange. Payments were likewise made to him
Further, Ruiz y Rementerias books of account were kept by
Domingo during the entire period they were doing business
Domingo even presented a bill in Ruiz y Rementerias favor
for every merchandise sold
Since Ruiz y Rementeria already paid to Domingo the
merchandise purchased, they are no longer liable to Lim Tiu
b. W/N Domingo Tim Bun Liu acted in his own name in
dealing with Ruiz y Rementeria?
YES. No notice was given by Domingo to Ruiz y Rementeria
that he was acting as Lim Tius agent in selling the
merchandise
What Domingo did was to purchase the all or nearly all the
merchandise from Lim Tiu then sell it to Ruiz y Rementeria
Ruiz y Rementeria also believed that they were dealing
with Domingo without any knowledge that he is indeed an
agent of Lim Tiu
Art. 1717 of the Civil Code: When an agent acts in his own
name, the principal shall have no action against the persons
with whom the agent has contracted, nor the said persons
against the principal
Art. 246 of the Code of Commerce: When an agent
transacts business in his own name, it shall not be necessary
for him to state who is the principal, and he shall be directly
liable, as if the business were for his own account, to the
persons with whom he transacts the same, said persons not
having any right of action against the principal, nor the latter
against the former, the liabilities of the principal and the
agent to each other always reserved
The judgment of the lower court is hereby affirmed.
PHIL. NATIONAL BANK vs. AGUDELO y GONZAGA
CASE NUMBER: GR No. L-39037
DATE: Oct. 30, 1933
PONENTE: Villareal, J.
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FACTS:
On Nov. 9, 1920, Paz Agudelo executed a special power of
attorney (Exhibit K) in favor of her nephew, Mauro Garrucho
In the said SPA, Garrucho is able to sell alienate and
mortgage in whatever manner or form he might deem
convenient, all Agudelos properties in Murcia and Bacolod,
Negros Occidental
On Dec. 22, 1920, Amparo Garrucho executed a special
power of attorney (Exhibit H) wherein she enabled her
brother, Mauro, to sell, alienate, mortgage or otherwise
encumber all her properties in Murcia and Bago, Negros
Occidental
However, nothing in the said SPAs expressly authorized
Mauro A. Garrucho to contract any loan nor to constitute a
mortgage on the properties belonging to the respective
principals, to secure his obligations
On Dec. 23, 1920, a document (Exhibit G) was executed by
Mauro in favor of Philippine National Bank (PNB) whereby he
constituted a mortgage on Lot No. 878 under Amparo A.
Garrucho, to secure the payment of credits, loans,
commercial overdrafts, etc., not exceeding P6,000, together
with interest thereon, which he might obtain from PNB,
issuing the corresponding promissory note to that effect
For the years 1921 and 1922, Mauro maintained a personal
credit account with PNB
On Aug. 24, 1921, Mauro executed another document
(Exhibit J) in PNBs favor whereby he constituted a
mortgage on Agudelos 2 lots, including the buildings and
improvements to secure the payment of credits, loans and
commercial overdrafts which the said bank might furnish him
to the amount of P16,000, payable on August 24, 1922,
executing the corresponding promissory note to that effect.
Said mortgage contracts and promissory notes were
executed by Mauro in his own name and signed by him in his
personal capacity, authorizing PNB 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
Thereafter, PNB notified Mauro of his promissory note
within which to make a payment
Eventually, Mauros commercial credit was closed starting
May 22, 1922
PNB manager requested Mauro to liquidate his account
amounting to P15,148.15, at the same time notifying him that
his promissory note for P16,000 giving as security for the
commercial overdraft in question, had fallen due
As a result, another mortgage contract (Exhibit C) was
executed by Mauro in PNBs favor over Agudelos lot in
Bacolod and Murcia
Mauro incurred credits and loans for a total of P21,000. A
new promissory note was executed for P21,000, thereby
novating the first 2 notes
Sometime 1925, Amparo sold Lot 878 (which was under
exhibit G) to Paz Agudelo (Exhibit M).
An affidavit (Exhibit N) was likewise signed by Paz
Agudelo which states: xxx do hereby agree and consent to
the transfer in my favor of lot No. 878 of the Cadastre of
Cases on Agency
Murcia, Occidental Negros, P. I., by Miss Amparo A.
Garrucho, as evidenced by the public instrument dated
November 25, 1925, executed before the notary public Mr.
Genaro B. Benedicto, and do hereby further agree to the
amount of the lien thereon stated in the mortgage deed
executed by Miss Amparo A. Garrucho in favor of the
Philippine National Bank.
Pursuant to the said sale, the property and title was
transferred in Pazs name
CFI Ruling:
- Absolved Mauro from the complaint
- Paz Agudelo is ordered to pay PNB
ISSUE: W/N the powers of attorney issued in Mauro
Garruchos favor to mortgage their respective real estate,
authorized him to obtain loans secured by mortgage in the
properties in question?
RULING: NO
Art. 1709 of the Civil Code states that by the contract of
agency, one person binds himself to render some service, or
to do something for the account or at the request of another
On the other hand, Art. 1717 states that when an agent
acts in his own name, the principal shall have no right of
action against the persons with whom the agent has
contracted, or such persons against the principal. In such
case, the agent is directly liable to the person with whom he
has contracted, as if the transaction were his own. Cases
involving things belonging to the principal are excepted xxx
There is nothing in the mortgage deeds to show that
Mauro A. Garrucho is attorney in fact of Amparo and Paz,
and that he obtained the loans mentioned in the aforesaid
mortgage deeds and constituted said mortgages as security
for the payment of said loans, for the account and at the
request of said Amparo A. Garrucho and Paz Agudelo
Mauros transactions with PNB appears to have been acted
in his personal capacity
In the mortgage deeds, Mauro appears to have acted in his
personal capacity. In his capacity as mortgage debtor, he
appointed the mortgage creditor PNB as his attorney in fact
so that it might take actual and full possession of the
mortgaged properties by means of force in case of violation
of any of the conditions stipulated in the respective
mortgage contracts
As held in National Bank vs. Palma Gil, a mortgage on real
property of the principal not made and signed in the name of
the principal is not valid as to the principal.
If Mauro A. Garrucho acted in his capacity as mere attorney
in fact of Amparo A. Garrucho and of Paz Agudelo, he could
not delegate his power, in view of the legal principle of
"delegata potestas delegare non potest" (a delegated power
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cannot be delegated), inasmuch as there is nothing in the
records to show that he has been expressly authorized to do
so
Also, he executed the promissory notes evidencing the
aforesaid loans, under his own signature, without authority
from his principal and, therefore, were not binding upon the
latter. There was no showing that the loan obtained was for
his principal
What really happened was Mauro obtained such credit for
himself in his personal capacity and secured the payment
thereof by mortgage constituted by him in his personal
capacity, although on properties belonging to his principal
Thus, Mauro exceeded his scope of his authority and the
principal is not liable for his acts
In conclusion, when an agent negotiates a loan in his
personal capacity and executes a promissory note under his
own signature, without express authority from his principal,
giving as security therefor real estate belonging to the letter,
also in his own name and not in the name and representation
of the said principal, the obligation do constructed by him is
personal and does not bind his aforesaid principal.
SYJUCO & VIARDO vs. SY-JUCO
CASE NUMBER: 13471
DATE: 12 Jan 1920
FACTS:
1. Santiago was appointed by the plaintiffs (Syjucos for
brevity; Santiagos parents) as administrator of their property
and acted as such from 1902-1916.
2. The Syjucos allege that during his administration, Santiago
acquired the launch Malabon in his capacity as administrator
with their (Syjucos) money and for their benefit.
3. The RTC ruled in favor of the Syjucos and ordered Santiago
to return basically everything that the Syjucos asked for in
the complaint.
4. The SC affirmed the RTC with the exception of casco No.
2545 which was lawfully sold to Santiago.
ISSUE: Do the properties bought by Santiago in his own
name, as an administrator, belong to him? (No; except the
casco 2545)
RULING:
1. Regarding the launch Malabon: though Santiago bought
it in his own name, such fact does not show that bought it for
himself and with his own money, as he claims.
- This transaction was within the agency which he had
received from the Syjucos (the principal).
- The fact that he has acted in his own name may be only a
violation of the agency on his part.
- The question is not in whose favor the document of sale of
the launch is executed nor in whose name same was
registered, but with whose money was said launch bought.
Cases on Agency
2. Moreover, from the rule established in Article 1717 of the
Civil Code (when an agent acts in his own name, the
principal shall have no right of action against the person with
whom the agent has contracted, cases involving things
belonging to the principal are excepted):
- According to this exception: the agent is bound to the
principal although he does not assume the character of such
agent and appears acting on his own name
- Thus, in effect, the contract must be considered as entered
into between the principal and the third person; and,
consequently, if the obligations belong to the former, to him
alone must also belong the rights arising from the contract.
- The money with which the launch was bought having come
from the Syjucos, the exception established in Article 1717 is
applicable to this case.
3. Concerning the casco No. 2584, Santiago himself admits it
was constructed by the Syjucos in the latter's ship-yard.
4. As to the automobile, there is sufficient evidence to show
that its price was paid with the Syjucos money.
5. Concerning the casco No. 2545: (the RTC refrained from
making any declaration about its ownership in view of the
fact that this casco had been leased and was sunk while in
the lessee's hands before the complaint in this case was filed )
- The RTC should have made a pronouncement upon this
casco.
- As it belonged to the Syjucos, and that the latter sold it
afterwards to Santiago- Santiagos ownership over it
absolves him from liability on it.
6. Concerning the rendition of accounts which the Syjucos
require of Santiago, Santiago is also absolved from this for it
appears that Santiago used to render accounts of his agency
after each transaction, to the Syjucos satisfaction.
NATIONAL FOOD AUTHORITY vs. INTERMEDIATE
APPELLATE COURT
CASE NUMBER: GR NO. 75640
DATE: April 5, 1990
FACTS:
Medalla, as commission agent of Superior Shipping
Corporation (SSC), entered into a contract for hire of ship
with the National Grains Authority (NGA), where sacks of rice
belonging to the latter would be transported from Occidental
Mindoro to Manila. SSC then asked payments from NGA and
it requested that the payment be made to it and not to
Medalla. NGA replied that it could not grant its request
because the contract was entered into by NGA and Medalla
who did not disclose that he was acting as a mere agent of
SSC. NGA paid Medalla. The SSC asked Medalla for the
payment but the latter ignored the request.
ISSUE: : Is NGA liable to SSC?
RULING:
NGA is liable under Art 1883 of the Civil Code. Relevant
portion of the provision states, In such case the agent is the
one directly bound in favor of the person with whom he has
contracted, as if the transaction were his own, except when
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the contract involves things belonging to the principal . to retain subject to the orders of the court in the two other
Consequently, when things belonging to the principal (in this cases. Hence, this appeal.
case, SSC) are dealt with, the agent is bound to the principal
although he does not assume the character of such agent ISSUE: Whether the defendant brought the merchandise in
and appears acting in his own name. Thus, in effect, the good faith.
contract must be considered as entered into between the
principal and the third person. RULING: Yes. Article 246 of the Code of Commerce states
that:
AWAD vs. FILMA MAECANTILE CO. When the agent transacts business in his own name, it shall
CASE NUMBER: No. L-25950 not be necessary for him to state who is the principal and he
DATE: December 24, 1926 shall be directly liable, as if the business were for his own
account, to the persons with whom he transacts the same,
FACTS: said persons not having any right of action against the
Plaintiff, doing business in the Philippine Islands under the principal, nor the latter against the former, the liabilities of
name of E. Awad & Co., delivered certain merchandise with the principal and of the agent to each other always being
an invoice value of 11,140 to Chua Lioc, a merchant reserved.
operating under the name of Hang Chua Co. in Manila, and
sell it on commission basis. Chua Lioc, representing himself The plaintiff-appellant pointed out several circumstances
as the owner of the merchandise, sold it to Filma Mercantile which he believes indicate that the defendant-appellee was
(defendant) for 12,155.60. He owed the Philippine aware of the condition under which the merchandise was
Manufacturing Co. 3,480, which the defendant agreed to entrusted to the agent Chua Lioc and therefore did not
pay, and was also indebted to the defendant itself of the purchase the goods in good faith. But the court did not see
amount of 2,017.98. The total amount of the two debts, anything conclusive about the circumstances referred to and
5,497.98, was deducted from the purchase price, leaving a they are not sufficient to overcome the presumption of good
balance of 6,657.52 which the defendant promised to pay to faith.
Chua Lioc on or before October 9, 1924.
The merchandise purchased was delivered to the defendant,
who immediately offered it for sale. Three days later D. J.
Awad, plaintiffs representative in the Philippine Islands,
having ascertained that the goods entrusted to Chua Lioc
was being offered for sale by the defendant, obtained
authorization from Chua Lioc to collect 11,707 from the
defendant and informed the latter's treasurer of the said
transaction. On September 15, D. J. Awad, in behalf of E.
Awad & Co., wrote a letter to the defendant corporation
telling them that inasmuch the merchandise belonged to E.
Awad & Co., the purchase price should be paid to them, but
the defendant refused to comply in its reply letter.
On September 18, 1924, the Philippine Trust Company
brought an action against Chua Lioc for the recovery of the
sum of 1,036.36 and under a writ of attachment garnished
the balance due Chua Lioc from the defendant. On October
7, E. Awad also brought an action, against Chua Lioc for the
recovery of the sum of 11,140 (invoice value of the
merchandise) and also obtained a writ of attachment under
which notice of garnishment of the said aforesaid balance we
served upon the herein defendant.
The present action was filed on November 26, 1924 with the
plaintiff demanding payment of the same sum of 11,140 for
which action had already been brought against Chua Lioc.
The defendant averred, among others, that it brought the
merchandise in good faith and without any knowledge
whether of the person from whom or the condition under
which the said merchandise had been acquired by Chua Lioc
or Hang Chua Co. The trial court dismissed the case on the
ground that the plaintiff was only entitled to payment of the
sum of 6,657.52, but which sum the defendant had the right

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