G.R. No.

144805 June 8, 2006

LINTONJUA, JR. vs. ETERNIT CORPORATION

Facts: The Eternit Corporation (EC) manufactures roofing materials and pipe products. Ninety (90%) percent of the shares of stocks of EC were owned by Eteroutremer
S.A. Corporation (ESAC), a corporation registered under the laws of Belgium. Glanville was the General Manager and President of EC, while Delsaux was the Regional
Director for Asia of ESAC. In 1986, because of the political situation in the Philippines the management of ESAC wanted to stop its operations and to dispose the land
in Mandaluyong City. They engaged the services of realtor/broker Lauro G. Marquez.

Marquez thereafter offered the land to Eduardo B. Litonjua, Jr. for P27,000,000.00. Litonjua counter offered P20,000,000.00 cash. Marquez apprised Glanville &
Delsaux of the offer. Delsaux sent a telex stating that, based on the "Belgian/Swiss decision," the final offer was "US$1,000,000.00 and P2,500,000.00. The Litonjua
brothers deposited US$1,000,000.00 with the Security Bank & Trust Company, and drafted an Escrow Agreement to expedite the sale.

Meanwhile, with the assumption of Corazon C. Aquino as President, the political situation improved. Marquez received a letter from Delsaux that the ESAC Regional
Office decided not to proceed with the sale. When informed of this, the Litonjuas, filed a complaint for specific performance and payment for damages on account of
the aborted sale. Both the trial court and appellate court rendered judgment in favor of defendants and dismissed the complaint.

The lower court declared that since the authority of the agents/realtors was not in writing, the sale is void and not merely unenforceable.

Issue: WON the appellate court committed grave error of law in holding that Marquez needed a written authority from respondent ETERNIT before the sale can be
perfected.

Held: Respondents maintain that Glanville, Delsaux and Marquez had no authority from the stockholders of EC and its Board of Directors to offer the properties for
sale to the petitioners.

Petitioners assert that there was no need for a written authority from the Board of Directors of EC for Marquez to validly act as broker. As broker, Marquez was not an
ordinary agent because his only job as a broker was to look for a buyer and to bring together the parties to the transaction. He was not authorized to sell the
properties; hence, petitioners argue, Article 1874 of the New Civil Code does not apply.

A corporation is a juridical person separate and distinct from its stockholders and is not affected by the personal rights, obligations and transactions of the latter. It
may act only through its board of directors or, when authorized by its board resolution, through its officers or agents. The general principles of agency govern the
relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law.

Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary.
Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void.

In this case, the petitioners failed to adduce in evidence any resolution of the Board of Directors of EC empowering Marquez, Glanville or Delsaux as its agents, to sell,
let alone offer for sale, for and in its behalf, the eight parcels of land owned by it.

Moreover, the evidence of petitioners shows that Adams and Glanville acted on the authority of Delsaux, who, in turn, acted on the authority of ESAC, through its
Committee for Asia, and the Belgian/Swiss component of the management of ESAC. The offer of Delsaux emanated only from the "Belgian/Swiss decision," and not
the entire management or Board of Directors of ESAC. While it is true that petitioners accepted the counter-offer of ESAC, EC was not a party to the transaction
between them; hence, EC was not bound by such acceptance. Decision of the lower court is affirmed.

Jocelyn B. Doles vs. Ma. Aura Tina Angeles

G.R. No. 149353. June 26, 2006.

Facts:
Petitioner executed a Deed of Absolute Sale ceding a parcel of land in favor of respondent to satisfy the alleged indebtedness of the former in the amount of
P405,430.00. Since the said land was mortgaged to the National Home Mortgage Finance Corporation, they further agreed that respondent assume the remaining
balance of the loan. Learning that the petitioner still has arrearages, respondent demanded that the arrearages be paid first. Petitioner did not heed, thus a case was
filed by the respondent.

In answer, the petitioner alleged that sale was void for lack of consideration and that she was not indebted to the respondent as she only referred her friends to
respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. Further petitioner
contended that since the respondent is also an agent, she does not have the capacity to sue her.

It is an admitted fact by both petitioner and defendant, based on their testimonies, that respondent knew that the money will be used by the friends of the petitioner;
that the respondent was merely representing Arsenio Pua; and that before the supposed friends of the petitioner defaulted in payment, each issued their personal
checks in the name of Arsenio Pua for the payment of their debt.

Issue/s:
Whether or not petitioner and respondent were acting on their personal capacity or as mere agents.

Ruling:
The question whether an agency has been created is ordinarily a question which may be established in the same was as any other fact, either by direct or
circumstantial evidence. Agency may be implied from the words and conduct of the parties and the circumstances of the particular case. Though the fact or extent of
authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one frofessed to act as agent for another, she may be
stopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged.

In this case, petitioner knew that the financier of the respondent is Pua, and respondent knew that the borrowers are friends of petitioner. It is sufficient that
petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends. For an agency to arise, it is not necessary that the principal
personally encounter the third person with whom the agent interacts.

Here, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else and so both of them are estopped to deny the
same.

That both parties acted as mere agents is shown by the undisputed fact that the friends of the petitioner issued checks in payment of the loan in the name of Arsenio
Pua.

Westmont Investment Corporation vs Amos Francia, Jr. et al

 In 1999, Amos Francia was convinced by the bank manager of Westmont Bank to make an investment in Westmont Investment. Since the interest rate offered was
impressive, Amos was convinced, he invited his siblings to join in the investment and so they invested an aggregate amount of P3.9 million. When the investment
matured, the Francia siblings demanded the retirement of their investment but Westmont Investment advised them they have no funds. Westmont Investment then
requested for an extension. At the same time, Westmont Investment advised the Francias that their money was borrowed by Pearlbank. When the extension asked by
Westmont expired, they again were not able to pay up and so the Francias sued Westmont Investment. Pearlbank was impleaded in the complaint.
In its defense, Westmont Investment alleged that it was merely acting as an agent of Pearlbank; that Pearlbank authorized Westmont Investment to borrow money on
its behalf; that Westmont Investment merely brokered a “loan transaction” between Pearlbank and the Francias. To support its claim, Westmont provided documents
showing that Pearlbank borrowed an amount equivalent to the investment of the Francias.
ISSUE: Whether or not Westmont Investment is an agent of Pearlbank.
HELD: No. The evidence presented is not sufficient to prove that an agency existed between Pearlbank and Westmont Investment hence, only Westmont Investment is
liable to pay the Francias. Pearlbank did not authorize Westmont Investment to borrow money for it. Neither was there a ratification, expressly or impliedly, that it
had authorized or consented to said transaction. In fact, Pearlbank questioned Westmont Investment’s practice of naming Pearlbank as a “borrower” of certain
investments made by other investors with Westmont Investment. Also, the Francias had no personal knowledge if Pearlbank was indeed the recipient/beneficiary of
their investments. The Francias have always maintained that they only transacted with Westmont Investment and never with Pearlbank. The fact that the Francias
impleaded Pearlbank in their suite is understandable (it does not defeat their suit) because they only impleaded Pearlbank to protect their interest when they found
out that Westmont was already bankrupt.
PHILEX MINING CORP. v. CIR
GR No. 125704, August 28, 1998
294 SCRA 687

FACTS: Petitioner Philex Mining Corp. assails the decision of the Court of Appeals affirming the Court of Tax
Appeals decision ordering it to pay the amount of P110.7 M as excise tax liability for the period from the 2nd
quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until fully paid pursuant to
Sections 248 and 249 of the Tax Code of 1977. Philex protested the demand for payment of the tax liabilities
stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in
the amount of P120 M plus interest. Therefore these claims for tax credit/refund should be applied against the
tax liabilities.

ISSUE: Can there be an off-setting between the tax liabilities vis-a-vis claims of tax refund of the petitioner?

HELD: No. Philex's claim is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the
government and so should be collected without unnecessary hindrance. Evidently, to countenance Philex's
whimsical reason would render ineffective our tax collection system. Too simplistic, it finds no support in law or in
jurisprudence.
To be sure, Philex cannot be allowed to refuse the payment of its tax liabilities on the ground that it has a
pending tax claim for refund or credit against the government which has not yet been granted.Taxes cannot be
subject to compensation for the simple reason that the government and the taxpayer are not creditors and
debtors of each other. There is a material distinction between a tax and debt. Debts are due to the Government
in its corporate capacity, while taxes are due to the Government in its sovereign capacity. xxx There can be no
off-setting of taxes against the claims that the taxpayer may have against the government. A person cannot
refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax
being collected. The collection of a tax cannot await the results of a lawsuit against the government.

Spouses Fernando Viloria and Lourdes Viloria vs Continental Airlines, Inc.

In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from
Newark to San Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train because it was already fully booked; that they must
purchase plane tickets for Continental Airlines; that if they won’t purchase plane tickets; they’ll never reach their destination in time. The couple believed Mager’s
representations and so they purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train trip wasn’t really fully booked and so they purchased train tickets and went to their destination by train instead.
Then they called up Mager to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines. As the couple were now in the Philippines,
they filed their request with Continental Airline’s office in Ayala. The spouses Viloria alleged that Mager misled them into believing that the only way to travel was by
plane and so they were fooled into buying expensive plane tickets.
Continental Airlines refused to refund the amount of the tickets and so the spouses sued the airline company. In its defense, Continental Airlines claimed that the
tickets sold to them by Mager were non-refundable; that, if any, they were not bound by the misrepresentations of Mager because there’s no contract of agency
existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the RTC.
ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:
1. there is consent, express or implied of the parties to establish the relationship;
2. the object is the execution of a juridical act in relation to a third person;
3. the agent acts as a representative and not for himself, and
4. the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it concluded an agreement with Holiday Travel to which Mager is part of,
whereby Holiday Travel would enter into contracts of carriage with third persons on the airlines’ behalf. The third element is also present as it is undisputed that
Holiday Travel merely acted in a representative capacity and it is Continental Airlines and not Holiday Travel who is bound by the contracts of carriage entered into by
Holiday Travel on its behalf. The fourth element is also present considering that Continental Airlines has not made any allegation that Holiday Travel exceeded the
authority that was granted to it.
Continental Airlines also never questioned the validity of the transaction between Mager and the spouses. Continental Airlines is therefore in estoppel. Continental
Airlines cannot be allowed to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever
damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on Continental Airlines’ acts in recognition of Holiday
Travel’s authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance,
the failure to apply it in this case would result in gross travesty of justice.
BORDADOR V LUZ

FACTS:
Petitioners were engaged in the business of purchase and sale of jewelry and respondent Brigida Luz, also known as Aida Luz, was their regular customer.
On several occasions, respondent Deganos, brother of Luz, received several pieces of gold and jewelry from petitioners amounting to P382, 816. These items and their
prices were indicated in seventeen receipts covering the same. 11 of the receipts stated that they were received for a certain Aquino, a niece of Deganos, and the
remaining 6 receipts indicated that they were received for Luz.

Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold items to Bordador. Deganos remitted only the sum of P53,
207. He neither paid the balance of the sales proceeds, nor did he return any unsold item to petitioners.

The total of his unpaid account to Bordador, including interest, reached the sum of P725, 463.98. Petitioners eventually filed a complaint in the barangay court against
Deganos to recover said amount.

In the barangay proceedings, Luz, who was not impleaded in the caes, appeared as a witness for Deganos and ultimately, she and her husband, together with Deganos
signed a compromise agreement with petitioners.

In that compromise agreement, Deganos obligated himself to pay petitioners, on installment basis , the balance of his account plus interest thereon. However, he
failed to comply with his aforestated undertakings.

Petitioners instituted a complaint for recovery of sum of money and damages, with an application for preliminary attachment against Deganos and Luz.

Deganos and Luz was also charged with estafa

During the trial of the civil cae, petitioners claimed that Deganos acted as agent of Luz when received the subject items of jewelry, and because he failed to pay for the
same, Luz, as principal, and her spouse are solidarily liable with him

Trial court ruled that only Deganos was liable to Bordador for the amount and damages claimed. It held that while Luz did have transactions with petitioners in the
past, the items involved were already paid for and all that Luz owed Bordador was the sum or P21, 483 representing interest on the principal account which she had
previously paid for.

CA affirmed TC’s decision

ISSUE:
W/N Luz are liable to petitioners for the latter’s claim for money and damages in the sum of P725,463.98, plus interests and attorney’s fees, despite the fact that the
evidence does not show that they signed any of the subject receipts or authorized Deganos to receive the items of jewelry on their behalf

RULING: No
Evidence does not support the theory of Bordador that Deganos was an agent of Luz and that the latter should consequently be held solidarily liable with Deganos in
his obligation to petitioners.

The basis for agency is representation. Here, there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf, much less with
respect to the particular transactions involved.

It was grossly and inexcusably negligent of petitioner to entrust to Deganos, not once or twice but on at least six occasions as evidenced by 6 receipts, several pieces
of jewelry of substantial value without requiring a written authorization from his alleged principal.

A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

Records show that neither an express nor an implied agency was proven to have existed between Deganos and Luz. Evidently, Bordador who were negligent in their
transactions with Deganos cannot seek relief from the effects of their negligence by conjuring a supposed agency relation between the two respondents where no
evidence supports such claim

Regina Dizon et al v. CA and Overland Express Lines, Inc.

G.R. No. 122544 January 28, 1999
Martinez, J.

FACTS:
 Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner
MacArthur Highway and South “H” Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16, 1974 up to May 15, 1975. During
this period, Overland Express Lines was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month
basis with a monthly rental of P3,000.00.
 For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment against it. The
lower court rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears
and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to
November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint,
until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully vacates the premises, and to pay P20,000.00 as and by
way of attorney’s fees.

ISSUE: WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in consideration of the option

HELD: No.
 CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the leased property, which petitioners accepted (through Alice A.
Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny
receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in
their behalf. CA went further by stating that in fact, what was entered into was a “conditional contract of sale” wherein ownership over the leased property shall
not pass to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express Lines did not consign to the court the balance of the
purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the
purchase price.
 In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the
said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the
petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners’ alleged agent, and Overland Express Lines. The
basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. As provided in
Article 1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with
regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of
Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency.
 Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is
chargeable with knowledge of the agent’s authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agency, whether
the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the
nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.
VICTORIAS MILLING CO. vs. COURT OF APPEALS

FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co (VMC). In the course of their dealings, VMC issued several Shipping
List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M.SLDR No. 1214M, dated October 16, 1989, covers 25,000 bags of
sugar. Each bag contained 50 kg and priced at P638.00 per bag. The transaction covered was a “direct sale”.

On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in the same SLDR for P14,750,000.00. CSC issued checks in
payment. That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by the said SLDR. Enclosed in the letter were a copy
of SLDR No. 1214M and a letter of authority from STM authorizing CSC to “withdraw for and in our behalf the refined sugar covered by the SLDR” On Oct. 27, 1989,
STM issued checks to VMC as payment for 50,000 bags, covering SLDR No. 1214M.CSC surrendered the SLDR No. 1214M and to VMC’s NAWACO Warehouse and was
allowed to withdraw sugar. But only 2,000 bags had been released because VMC refused to release the other 23,000 bags.

Therefore, CSC informed VMC that SLDR No. 1214M had been “sold and endorsed” to it. But VMC replied that it could not allow any further withdrawals of
sugar against SLDR No. 1214M because STM had already withdrawn all the sugar covered by the cleared checks. VMC also claimed that CSC was only representing
itself as STM’s agent as it had withdrawn the 2,000 bags against SLDR No. 1214M “for and in behalf” of STM. Hence, CSC filed a complaint for specific performance
against Teresita Ng Sy (doing business under STM's name) and VMC. However, the suit against Sy was discontinued because later became a witness. RTC ruled in favor
of CSC and ordered VMC to deliver the 23,000 bags left. CA concurred. Hence this appeal.

ISSUES:
W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as assignee.

HELD:
NO. CSC was not an agent of STM. VMC heavily relies on STM’s letter of authority that said CSC is authorized to withdraw sugar “for and in our behalf”. It is clear from
Art. 1868 that the: basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable
from his words or actions, and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent,
there is generally NO agency. One factor, which most clearly distinguishes agency from other legal concepts, is control; one person – the agent – agrees to act under
the control or direction of another – the principal. Indeed, the very word “agency” has come to connote control by the principal. The control factor, more than any
other, has caused the courts to put contracts between principal and agent in a separate category. Where the relation of agency is dependent upon the acts of the
parties, the law makes no presumption of agency and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show
not only the fact of its existence but also its nature and extent. It appears that CSC was a buyer and not an agent of STM. CSC was not subject to STM’s control. The
terms “for and in our behalf” should not be eyed as pointing to the existence of an agency relation. Whether or not a contract is one of sale or agency depends on
the intention of the parties as gathered from the whole scope and effect of the language employed. Ultimately, what is decisive is the intention of the parties. (In
fact, CSC even informed VMC that the SLDR was sold and endorsed to it.)
Agency distinguished from sale.

In an agency to sell, the agent, in dealing with the thing received, is bound to act according to the instructions of his principal, while in a sale, the buyer can deal with
the thing as he pleases, being the owner. The elementary notion of sale is the transfer of title to a thing from one to another, while the essence of agency involves the
idea of an appointment of one to act for another. Agency is a relationship which often results in a sale, but the sale is a subsequent step in the transaction. (Teller, op.
cit., p. 26; see Commissioner of Internal Revenue vs. Manila Machinery & Supply Co., 135 SCRA 8 [1985].) An authorization given to another containing the phrase “for
and in our behalf’’ does not necessarily establish an agency, as ultimately what is decisive is the intention of the parties. Thus, the use of the words “sold and
endorsed’’ may mean that the parties intended a contract of sale, and not a contract of agency.

DOMINION INSURANCE CORPORATION vs. COURT OF APPEALS, RODOLFO S. GUEVARRA, and FERNANDO AUSTRIA

FACTS:
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance Corp. (Dominion) for the amount advanced by Guevarra in his capacity as
manager of defendant to satisfy certain claims filed by defendant’s client.

The pre-trial was always postponed, and during one of the pre-trial conference dominion failed to arrive therefore the court declared them to be in default. Dominion
filed several Motions to Lift Order of Default but was always denied by the court. The RTC rendered its decision making Dominion liable to repay Guevarra for the sum
advanced and other damages and fees. Dominion appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.

HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word “special” the contents of the document was actually a general agency. A
general power permits the agent to do all acts for which the law does not require a special power and the contents in the document did not require a special power of
attorney.

Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion

The payment of claims is not an act of administration which requires a special power of attorney before Guevarra could settle the insurance claims of the insured.

Also Guevarra was instructed that the payment for the insured must come from the revolving fund or collection in his possession, Gueverra should not have paid the
insured through his own capacity. Under 1918 of civil code an agent who acted in contravention of the principal’s instruction the principal will not be liable for the
expenses incurred by the agent.

(b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his right to recover may be justified under the article 1236 of the civil code.
[1]
Thus Guevarra must be reimbursed but only to the extent that Dominion has benefited without interest or demand for damages.

#8
CONSTANTE AMOR DE CASTRO VS CA
GR NO. 115838
JULY 18, 2002

FACTS:
Private respondent Artigo sued petitioners Constante and Amor De Castro to collect the unpaid balance of his broker’s commission from the De Castros.
The appellants, De Castros, were co-owners of 4 lots in Cubao, Quezon City. The appellee, Artigo, was authorized by appellants to act as real estate broker
in the sale of these properties for the amount of P23,000,000.00, 5% of which will be given to the agent as commission. Appellee first found the Times Transit
Corporation and 2 lots were sold. In return, he received P48,893.76 as commission.
 Appellee apparently felt short changed because according to him, his total commission should be P352,500.00 which is 5% of the agreed price of
P7,050,000.00 paid by Times Transit Corporation to appellants for the 2 lots and that it was he who introduced the buyer to appellants and unceasingly facilitated the
negotiation which ultimately led to the consummation of the sale. Hence, he sued to collect the balance of P303,606.24 after having received P48,893.76 in advance.
Appellants argued that appellee is selfishly asking for more than what he truly deserved as commission to the prejudice of other agents who were more
instrumental to the consummation of the sale and that there were more or less 18 others who took active efforts.
The De Castros argued that Artigo’s complaint should have been dismissed for failure to implead all the co owners of the 2 lots. . The De Castros contend
that failure to implead such indispensable parties is fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid with funds co-owned by the
four co-owners.
It was shown also that Constante Amor De Castro signed the authorization of Artigo as owner and representative of the co-owners.

ISSUE:
Whether or not the complaint merits dismissal for failure to implead other co-owners as indispensable parties

HELD:
No. The De Castros’ contentions are devoid of legal basis. The CA explained that it is not necessary to implead the co-owners since the action is exclusively
based on a contract of agency between Artigo and Constante. The rule on mandatory joinder of indispensable parties is not applicable to the instant case.
Constante signed the note as owner and as representative of the other co-owners. Under this note, a contract of agency was clearly constituted between
Constante and Artigo. Whether Constante appointed Artigo as agent, in Constante’s individual or representative capacity, or both, the De Castros cannot seek the
dismissal of the case for failure to implead the other co-owners as indispensable parties. The De Castros admit that the other co-owners are solidarily liable under the
contract of agency, citing Article 1915 of the Civil Code, which reads:

Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the
consequences of the agency.

The solidary liability of the four co-owners, however, militates against the De Castros’ theory that the other co-owners should be impleaded as
indispensable parties.
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency, each obligor may be compelled to
pay the entire obligation. The agent may recover the whole compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of
them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.

1. DE LA CRUZ V NORTHERN THEATRIAL ENTERPRISES

FACTS:
*The Northern Theatrical Enterprises, a domestic corporation opearated a movie house in Laoag, Ilocos Norte and among the persons employed by it was
plaintiff De La Cruz, hired as special guard whose duties were to guard the main entrance of the cine, to maintain peace and order and to report the commission of
disorder within the premises
*As such guard, he carried a revolver
* One Benjamin Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of plaintiff to let him in without first providing
himself with a ticket, Martin attacked him with a bolo
*Plaintiff defended himself until he was cornered, at which moment to save himself, he shot gate crasher resulting in latter’s death
*Plaintiff was charged with homicide but was acquitted of charge after trial. In both criminal cases against him, he employed a lawyer to defend him
*He then demanded from NLE reimbursement of expenses but was refused thus filed present action against the company and t3 members of its Board of
Directors to recover not only the amounts he had paid his lawyers but also moral damages said to have been suffered due to his worry, neglect of his interests and his
family as well in the supervision of the cultivation of his land, a total of P 15,000.
*CFI rejected plaintiff’s theory that he was an agent of the company and that he had no cause of action and dismissed the complaint

ISSUE: W/N Plaintiff De la Cruz is considered as an agent of the corporation and as such entitled to reimbursement for expenses incurred in conncection with agency

RULING: No, Plaintiff is mere employee

The relationship between the movie corporation and plaintiff was not that of principal and agent because the principle of representation as a characteristic
of agency was in no way involved.
Plaintiff was not employed to represent corporation in its dealings with 3rd parties
Plaintiff is a mere employee hired to perform a certain specific duty or task, that of acting as a special guard and staying at the main entrance of the movie
house to stop gate crashers and to maintain peace and order within the premises.

Sub issue: W/N an employee or servant who in line of duty and while in the performance of the task assigned to him, performs an act which eventually results in his
incurring in expenses caused not directly by his master or employer or by reason of his performance of his duty, but rather by a 3 rd party or stranger not in the employ
of his employer may recover said damages against his employer
Ruling: No

Although the employer has a moral obligation to give employee legal assistance to aid the latter in his case, he has no legal obligation to do so.
If the employer is not legally obliged to give legal assistance to employee and provide him with a lawyer, naturally said employee may not recover the amount he may
have paid a lawyer hired by him.
Damages suffered by plaintiff by reason of expenses incurred by him in remunerating his lawyer is not caused by his act of shooting to death the gate
crasher but rather by filing the charge of homicide which made it necessary for him to defend himself with the aid of counsel.
Had no criminal charge against him, there would have been no expenses incurred or damages suffered.
Spouses Mamaril vs. The BSP
G.R. No. 179382, January 14, 2013

SPOUSES BEN.JAMIN . MAMARIL AND SONIA P. MAMARIL, Petitioners, v. THE BOY SCOUT OF THE PHILIPPINES, AIB SECURITY AGENCY, INC., CESARIO PENA,'' AND
VICENTE GADDI, Respondents.

PERLAS-BERNABE. J.:
FACTS:

Spouses Benjamin C. Mamaril and Sonia P. Mamaril (Spouses Mamaril) are jeepney operators. They park their passenger jeepneys every night at the Boy Scout of the
Philippines (BSP) for a fee per month for each unit.

As usual, all these vehicles were parked inside the BSP compound one evening. However, the following morning, one of the vehicles was missing and was never
recovered. According to the security guards CesarioPe (Pe) and Vicente Gaddi (Gaddi) of AIB Security Agency, Inc. (AIB) with whom BSP had contracted (Guard Service
Contract) for its security and protection, a male person who looked familiar to them took the subject vehicle out of the compound.

ISSUE: Whether or not BSP is liable based on the Guard Service Contract and the parking ticket it issued.

HELD: The petition lacks merit.

CIVIL LAW: Principle of Relativity of Contracts; Lease

With respect to Guard Service Contract, it is undisputed that Spouses Mamaril are not parties therein. Neither did the subject agreement contain any stipulation pour
autrui. And even if there was, Spouses Mamaril did not convey any acceptance thereof. Thus, under the principle of relativity of contracts, they cannot validly claim
any rights or favor under the said agreement.

With respect to the parking ticket, it has been held that the act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease. A lessor-lessee
relationship existed between Spouses Mamaril and BSP. Article 1664 of the same Code states that [t]he lessor is not obliged to answer for a mere act of trespass which
a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder. Here, BSP was not remiss in its obligation to
provide Spouses Mamaril a suitable parking space for their jeepneys as it even hired security guards to secure the premises; hence, it should not be held liable for the
loss suffered by Spouses Mamaril.

DENIED.

.R. No. L-10918 March 4, 1916 Trent

WILLIAM FRESSEL, ET AL. vs. MARIANO UY CHACO SONS & COMPANY

FACTS:

 Defendant entered into a contract with E. Merritt, whereby the said Merritt undertook and agreed with the defendant to build for the defendant a costly
edifice in the city of Manila. It was agreed that the defendant at any time, upon certain contingencies, before the completion of said edifice could take
possession of said edifice in the course of construction and of all the materials in and about said premises acquired by Merritt for the construction.
 August, the plaintiffs delivered to Merritt at the said edifice materials of the value of P1,381.21, which price Merritt had agreed to pay on the 1st day of
September, 1914

 28th of August, 1914, the defendant under and by virtue of its contract with Merritt took possession of the incomplete edifice in course of construction
together with all the materials on said premises including the materials delivered by plaintiffs

 Neither Merritt nor the defendant has paid for the materials

 Plaintiffs demanded of the defendant the return or permission to enter upon said premises and retake said materials at the time still unused which was
refused by defendant.

 Fressel et al insist that Merritt acted as the agent of the defendant in purchasing the materials in question and that the defendant, by taking over and using
such materials, accepted and ratified the purchase, thereby obligating itself to pay for the same.

ISSUE: Whether or not Merritt acted as agent of Mariano Uy Chaco Sons & Co.

RATIO:

 The facts alleged do not even intimate that the relation existing between Merritt and the defendant was that of principal and agent, but, on the contrary,
they demonstrate that Merritt was an independent contractor and that the materials were purchased by him as such contractor without the intervention
of the defendant.
 The fact that "the defendant entered into a contract with one E. Merritt, where by the said Merritt undertook and agreed with the defendant to build for
the defendant a costly edifice" shows that Merritt was authorized to do the work according to his own method and without being subject to the
defendant's control, except as to the result of the work.

 The mere fact that Merritt and the defendant had stipulated in their building contract that the latter could, "upon certain contingencies," take possession
of the incomplete building and all materials on the ground, did not change Merritt from an independent contractor to an agent. an independent contractor
either as such owner or as the assignee of the contractor

Nielson & Co. Inc. vs. Lepanto Consolidated Mining Co.

GR L-21601 December 28, 1968
By: Karen P. Lustica

FACTS: Before World War II, an operating agreement was executed between Nielson & Co. Inc. and the Lepanto Consolidated Mining Co. whereby the former operated
and managed the mining properties owned by the latter for a management fee of P2,500.00 a month and a 10% participation in the net profits resulting from the
operation of the mining properties, for a period of 5 years.

Lepanto modified a pertinent provision of the contract. This time, Nielson will receive (1) 10% of the dividends declared and paid, when and as paid, during the period
of the contract and at the end of each year, (2) 10% of any depletion reserve that may be set up, and (3) 10% of any amount expended during the year out of surplus
earnings for capital account.

Both parties agreed to renew the contract for a period of 5 years. But the operation of the mining properties was disrupted on account of the war.

After the mining properties were liberated from the Japanese forces, the mine operation was under Lepanto’s exclusive management. Lepanto declared stock
dividends worth one million in 1949 and two million in 1950. This was during the period covered by an extension in the management contract. However, a
disagreement arose between the parties.

Nielson claims his share in the stock dividends. 0n its motion for reconsideration, Lepanto contends that the payment to Nielson of stock dividends as compensation
for its services under the management contract is a violation of the Corporation Law, and that it was not, and it could not be, the intention of the parties that the
services of Nielson should be paid in shares of stock taken out of stock dividends declared by Lepanto.

ISSUE: WON Nielson is entitled to his share in the stock dividends.

HELD: NO.

RATIO: Stock dividends cannot be issued to a person who is not a stockholder in payment of services rendered.
Section 16 of the Corporation Law, in part, provides as follows:

No corporation organized under this Act shall create or issue bills, notes or other evidence of debt, for circulation as money, and no corporation shall issue
stock or bonds except in exchange for actual cash paid to the corporation or for: (1) property actually received by it at a fair valuation equal to the par or
issued value of the stock or bonds so issued; and in case of disagreement as to their value, the same shall be presumed to be the assessed value or the
value appearing in invoices or other commercial documents, as the case may be; and the burden or proof that the real present value of the property is
greater than the assessed value or value appearing in invoices or other commercial documents, as the case may be, shall be upon the corporation, or for
(2) profits earned by it but not distributed among its stockholders or members; Provided, however, That no stock or bond dividend shall be issued without
the approval of stockholders representing not less than two-thirds of all stock then outstanding and entitled to vote at a general meeting of the corporation
or at a special meeting duly called for the purpose.

In the case at bar, Nielson cannot be paid in shares of stock which form part of the stock dividends of Lepanto for services it rendered under the management
contract. We sustain the contention of Lepanto that the understanding between Lepanto and Nielson was simply to make the cash value of the stock dividends
declared as the basis for determining the amount of compensation that should be paid to Nielson, in the proportion of 10 % of the cash value of the stock dividends
declared. In other words, Nielson must still be paid his 10% fee using as the basis for computation the cash value of the stock dividends declared.

Moreover, from the above-quoted provision of Section 16 of the Corporation Law, the consideration for which shares of stock may be issued are cash, property; and
undistributed profits. Shares of stock are given the “special name,” “stock dividends,” only if they are issued in lieu of undistributed profits. If shares of stocks are
issued in exchange of cash or property then those shares do not fall under the category of “stock dividends”. A corporation may legally issue shares of stock in
consideration of services rendered to it by a person not a stockholder, or in payment of its indebtedness. But a share of stock issued to pay for services rendered is
equivalent to a stock issued in exchange of property, because services is equivalent to property. Likewise a share of stock issued in payment of indebtedness is
equivalent to issuing a stock in exchange for cash. But a share of stock thus issued should be part of the original capital stock of the corporation upon its organization,
or part of the stocks issued when the increase of the capitalization of a corporation is properly authorized. In other words, it is the shares of stock that are originally
issued by the corporation and forming part of the capital that can be exchanged for cash or services rendered, or property; that is, if the corporation has original
shares of stock unsold or unsubscribed, either coming from the original capitalization or from the increased capitalization. Those shares of stock may be issued to a
person who is not a stockholder, or to a person already a stockholder in exchange for services rendered or for cash or property. But a share of stock coming from stock
dividends declared cannot be issued to one who is not a stockholder of a corporation.

A “stock dividend” is any dividend payable in shares of stock of the corporation declaring or authorizing such dividend.

So, a stock dividend is actually two things. - a dividend and the enforced use of the dividend money to purchase additional shares of stock at par. When a corporation
issues stock dividends, it shows that the corporation accumulated profits have been capitalized instead of distributed to the stockholders or retained as surplus
available for distribution, in money or kind, should opportunity offer. Far from being a realization of profits for the stockholder, it tends rather to postpone said
realization, in that the fund represented by the new stock has been transferred from surplus to assets and no longer available for actual distribution. Thus, it is
apparent that stock dividends are issued only to stockholders. This is so because only stockholders are entitled to dividends. They are the only ones who have a right
to a proportional share in that part of the surplus which is declared as dividends. % stock dividend really adds nothing to the interest of the stockholder; the
proportional interest of each stockholder remains the same. If a stockholder is deprived of his stock dividends - and this happens if the shares of stock forming part of
the stock dividends are issued to a non-stockholder - then the proportion of the stockholder’s interest changes radically. Stock dividends are civil fruits of the original
investment, and to the owners of the shares belong the civil fruits.

G.R. No. L-8169 January 29, 1957

THE SHELL COMPANY OF THE PHILIPPINES, LTD., vs. FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY
COMMERCIAL CASUALTY INSURANCE CO., SALVADOR SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS (First
Division)

FACTS:

This case is about an action for recovery of sum of money, based on the alleged negligence of the defendants.

A car was brought to a Shell gasoline station owned by Dela Fuente for washing and greasing. The car was
placed on a hydraulic lifter for greasing. As some parts of the car couldn’t be reached by the greaseman, the
lifter was lowered. Unfortunately, for unknown reasons (probably due to mechanical failure or human error),
while the lifter was being lowered, the car swung and fell from the platform. Said car was insured against loss
or damage by Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance
Company jointly for the sum of P10,000. The insurance companies after paying the sum of P1,651.38 for the
damage and charging the balance of P100.00 to Salvador Sison, in accordance with the terms of the insurance
contract, filed this action together with said Salvador Sison for the recovery of the total amount of the damage
from the defendants on the ground of negligence.

ISSUE:

WON Dela Fuente is merely an agent of Shell Co.

HELD:

Yes. De la Fuente was the operator of the station "by grace" of the Defendant Company which could and did
remove him as it pleased; that all the equipments needed to operate the station was owned by the Defendant
Company which took charge of their proper care and maintenance, despite the fact that they were loaned to him;
that the Defendant company did not leave the fixing of price for gasoline to De la Fuente; That the service
station belonged to the company and bore its trade name and the operator sold only the products of the
company; that the equipment used by the operator belonged to the company and were just loaned to the operator
and the company took charge of their repair and maintenance.

As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the
breach of the undertaking by the agent is one for which the principal is answerable. The latter was negligent
and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car
from the hydraulic lifter.