G.R. No. 76931 May 29, 1991 ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner, vs.

COURT OF APPEALS and AMERICAN AIR-LINES INCORPORATED, respondents. G.R. No. 76933 May 29, 1991 AMERICAN AIRLINES, INCORPORATED, petitioner, vs. COURT OF APPEALS and ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, INCORPORATED, respondents. Francisco A. Lava, Jr. and Andresito X. Fornier for Orient Air Service and Hotel Representatives, Inc. Sycip, Salazar, Hernandez & Gatmaitan for American Airlines, Inc. PADILLA, J.:p This case is a consolidation of two (2) petitions for review on certiorari of a decision of the Court of Appeals in CA-G.R. No. CV-04294, entitled "American Airlines, Inc. vs. Orient Air Services and Hotel Representatives, Inc." which affirmed, with modification, the decision 2 of the Regional Trial Court of Manila, Branch IV, which dismissed the complaint and granted therein defendant's counterclaim for agent's overriding commission and damages. The antecedent facts are as follows: On 15 January 1977, American Airlines, Inc. (hereinafter referred to as American Air), an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air Services and Hotel Representatives (hereinafter referred to as Orient Air), entered into a General Sales Agency Agreement (hereinafter referred to as the Agreement), whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. Pertinent provisions of the agreement are reproduced, to wit: WITNESSETH In consideration of the mutual convenants herein contained, the parties hereto agree as follows: 1. Representation of American by Orient Air Services Orient Air Services will act on American's behalf as its exclusive General Sales Agent within the Philippines, including any United States military installation therein which are not serviced by an Air Carrier Representation Office (ACRO), for the sale of air passenger transportation. The services to be performed by Orient Air Services shall include:
1

(a) soliciting and promoting passenger traffic for the services of American and, if necessary, employing staff competent and sufficient to do so; (b) providing and maintaining a suitable area in its place of business to be used exclusively for the transaction of the business of American; (c) arranging for distribution of American's timetables, tariffs and promotional material to sales agents and the general public in the assigned territory; (d) servicing and supervising of sales agents (including such sub-agents as may be appointed by Orient Air Services with the prior written consent of American) in the assigned territory including if required by American the control of remittances and commissions retained; and (e) holding out a passenger reservation facility to sales agents and the general public in the assigned territory. In connection with scheduled or non-scheduled air passenger transportation within the United States, neither Orient Air Services nor its sub-agents will perform services for any other air carrier similar to those to be performed hereunder for American without the prior written consent of American. Subject to periodic instructions and continued consent from American, Orient Air Services may sell air passenger transportation to be performed within the United States by other scheduled air carriers provided American does not provide substantially equivalent schedules between the points involved. xxx xxx xxx 4. Remittances Orient Air Services shall remit in United States dollars to American the ticket stock or exchange orders, less commissions to which Orient Air Services is entitled hereunder, not less frequently than semi-monthly, on the 15th and last days of each month for sales made during the preceding half month. All monies collected by Orient Air Services for transportation sold hereunder on American's ticket stock or on exchange orders, less applicable commissions to which Orient Air Services is entitled hereunder, are the property of American and shall be held in trust by Orient Air Services until satisfactorily accounted for to American. 5. Commissions American will pay Orient Air Services commission on transportation sold hereunder by Orient Air Services or its sub-agents as follows: (a) Sales agency commission American will pay Orient Air Services a sales agency commission for all sales of transportation by Orient Air Services or its sub-agents over American's services and any

connecting through air transportation, when made on American's ticket stock, equal to the following percentages of the tariff fares and charges: (i) For transportation solely between points within the United States and between such points and Canada: 7% or such other rate(s) as may be prescribed by the Air Traffic Conference of America. (ii) For transportation included in a through ticket covering transportation between points other than those described above: 8% or such other rate(s) as may be prescribed by the International Air Transport Association. (b) Overriding commission In addition to the above commission American will pay Orient Air Services an overriding commission of 3% of the tariff fares and charges for all sales of transportation over American's service by Orient Air Service or its sub-agents. xxx xxx xxx 10. Default If Orient Air Services shall at any time default in observing or performing any of the provisions of this Agreement or shall become bankrupt or make any assignment for the benefit of or enter into any agreement or promise with its creditors or go into liquidation, or suffer any of its goods to be taken in execution, or if it ceases to be in business, this Agreement may, at the option of American, be terminated forthwith and American may, without prejudice to any of its rights under this Agreement, take possession of any ticket forms, exchange orders, traffic material or other property or funds belonging to American. 11. IATA and ATC Rules The provisions of this Agreement are subject to any applicable rules or resolutions of the International Air Transport Association and the Air Traffic Conference of America, and such rules or resolutions shall control in the event of any conflict with the provisions hereof. xxx xxx xxx 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. xxx xxx xxx 3

On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net proceeds of sales for the months of January to March 1981 in the amount of US $254,400.40, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement in accordance with Paragraph 13 thereof (Termination). Four (4) days later, or on 15 May 1981, American Air instituted suit against Orient Air with the Court of First Instance of Manila, Branch 24, for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order 4 averring the aforesaid basis for the termination of the Agreement as well as therein defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff." 5 In its Answer 6 with counterclaim dated 9 July 1981, defendant Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions. Further, the defendant contended that the actions taken by 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. Finding that the record and the evidence substantiated the allegations of the defendant, the trial court ruled in its favor, rendering a decision dated 16 July 1984, the dispositive portion of which reads: WHEREFORE, all the foregoing premises considered, judgment is hereby rendered in favor of defendant and against plaintiff dismissing the complaint and holding the termination made by the latter as affecting the GSA agreement illegal and improper and order the plaintiff to reinstate defendant as its general sales agent for passenger tranportation in the Philippines in accordance with said GSA agreement; plaintiff is ordered to pay defendant the balance of the overriding commission on total flown revenue covering the period from March 16, 1977 to December 31, 1980 in the amount of US$84,821.31 plus the additional amount of US$8,000.00 by way of proper 3% overriding commission per month commencing from January 1, 1981 until such reinstatement or said amounts in its Philippine peso equivalent legally prevailing at the time of payment plus legal interest to commence from the filing of the counterclaim up to the time of payment. Further, plaintiff is directed to pay defendant the amount of One Million Five Hundred Thousand (Pl,500,000.00) pesos as and for exemplary damages; and the amount of Three Hundred Thousand (P300,000.00) pesos as and by way of attorney's fees. Costs against plaintiff. 7 On appeal, the Intermediate Appellate Court (now Court of Appeals) in a decision promulgated on 27 January 1986, affirmed the findings of the court a quo on their material points but with some modifications with respect to the monetary awards granted. The dispositive portion of the appellate court's decision is as follows: WHEREFORE, with the following modifications —

1) American is ordered to pay Orient the sum of US$53,491.11 representing the balance of the latter's overriding commission covering the period March 16, 1977 to December 31, 1980, or its Philippine peso equivalent in accordance with the official rate of exchange legally prevailing on July 10, 1981, the date the counterclaim was filed; 2) American is ordered to pay Orient the sum of US$7,440.00 as the latter's overriding commission per month starting January 1, 1981 until date of termination, May 9, 1981 or its Philippine peso equivalent in accordance with the official rate of exchange legally prevailing on July 10, 1981, the date the counterclaim was filed 3) American is ordered to pay interest of 12% on said amounts from July 10, 1981 the date the answer with counterclaim was filed, until full payment; 4) American is ordered to pay Orient exemplary damages of P200,000.00; 5) American is ordered to pay Orient the sum of P25,000.00 as attorney's fees. the rest of the appealed decision is affirmed. Costs against American. 8 American Air moved for reconsideration of the aforementioned decision, assailing the substance thereof and arguing for its reversal. The appellate court's decision was also the subject of a Motion for Partial Reconsideration by Orient Air which prayed for the restoration of the trial court's ruling with respect to the monetary awards. The Court of Appeals, by resolution promulgated on 17 December 1986, denied American Air's motion and with respect to that of Orient Air, ruled thus: Orient's motion for partial reconsideration is denied insofar as it prays for affirmance of the trial court's award of exemplary damages and attorney's fees, but granted insofar as the rate of exchange is concerned. The decision of January 27, 1986 is modified in paragraphs (1) and (2) of the dispositive part so that the payment of the sums mentioned therein shall be at their Philippine peso equivalent in accordance with the official rate of exchange legally prevailing on the date of actual payment. 9 Both parties appealed the aforesaid resolution and decision of the respondent court, Orient Air as petitioner in G.R. No. 76931 and American Air as petitioner in G.R. No. 76933. By resolution 10 of this Court dated 25 March 1987 both petitions were consolidated, hence, the case at bar. The principal issue for resolution by the Court is the extent of Orient Air's right to the 3% overriding commission. It is the stand of American Air that such commission is based only on sales of its services actually negotiated or transacted by Orient Air, otherwise referred to as "ticketed sales." As basis thereof, primary reliance is placed upon paragraph 5(b) of the Agreement which, in reiteration, is quoted as follows: 5. Commissions

a) . . . b) Overriding Commission In addition to the above commission, American will pay Orient Air Services an overriding commission of 3% of the tariff fees and charges for all sales of transportation over American's services by Orient Air Services or its sub-agents. (Emphasis supplied) Since Orient Air was allowed to carry only the ticket stocks of American Air, and the former not having opted to appoint any sub-agents, it is American Air's contention that Orient Air can claim entitlement to the disputed overriding commission based only on ticketed sales. This is supposed to be the clear meaning of the underscored portion of the above provision. Thus, to be entitled to the 3% overriding commission, the sale must be made by Orient Air and the sale must be done with the use of American Air's ticket stocks. On the other hand, Orient Air contends that the contractual stipulation of a 3% overriding commission covers the total revenue of American Air and not merely that derived from ticketed sales undertaken by Orient Air. The latter, in justification of its submission, invokes its designation as the exclusive General Sales Agent of American Air, with the corresponding obligations arising from such agency, such as, the promotion and solicitation for the services of its principal. In effect, by virtue of such exclusivity, "all sales of transportation over American Air's services are necessarily by Orient Air." 11 It is a well settled legal principle that in the interpretation of a contract, the entirety thereof must be taken into consideration to ascertain the meaning of its provisions. 12 The various stipulations in the contract must be read together to give effect to all. 13 After a careful examination of the records, the Court finds merit in the contention of Orient Air that the Agreement, when interpreted in accordance with the foregoing principles, entitles it to the 3% overriding commission based on total revenue, or as referred to by the parties, "total flown revenue." As the designated exclusive General Sales Agent of American Air, Orient Air was responsible for the promotion and marketing of American Air's services for air passenger transportation, and the solicitation of sales therefor. In return for such efforts and services, Orient Air was to be paid commissions of two (2) kinds: first, a sales agency commission, ranging from 7-8% of tariff fares and charges from sales by Orient Air when made on American Air ticket stock; and second, an overriding commission of 3% of tariff fares and charges for all sales of passenger transportation over American Air services. It is immediately observed that the precondition attached to the first type of commission does not obtain for the second type of commissions. The latter type of commissions would accrue for sales of American Air services made not on its ticket stock but on the ticket stock of other air carriers sold by such carriers or other authorized ticketing facilities or travel agents. To rule otherwise, i.e., to limit the basis of such overriding commissions to sales from American Air ticket stock would erase any distinction between the two (2) types of commissions and would lead to the absurd conclusion that the parties had entered into a contract with meaningless provisions. Such an interpretation must at all times be avoided with every effort exerted to harmonize the entire Agreement. An additional point before finally disposing of this issue. It is clear from the records that

American Air was the party responsible for the preparation of the Agreement. Consequently, any ambiguity in this "contract of adhesion" is to be taken "contra proferentem", i.e., construed against the party who caused the ambiguity and could have avoided it by the exercise of a little more care. Thus, Article 1377 of the Civil Code provides that the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. 14 To put it differently, when several interpretations of a provision are otherwise equally proper, that interpretation or construction is to be adopted which is most favorable to the party in whose favor the provision was made and who did not cause the ambiguity. 15 We therefore agree with the respondent appellate court's declaration that: Any ambiguity in a contract, whose terms are susceptible of different interpretations, must be read against the party who drafted it. 16 We now turn to the propriety of American Air's termination of the Agreement. The respondent appellate court, on this issue, ruled thus: It is not denied that Orient withheld remittances but such action finds justification from paragraph 4 of the Agreement, Exh. F, which provides for remittances to American less commissions to which Orient is entitled, and from paragraph 5(d) which specifically allows Orient to retain the full amount of its commissions. Since, as stated ante, Orient is entitled to the 3% override. American's premise, therefore, for the cancellation of the Agreement did not exist. . . ." We agree with the findings of the respondent appellate court. As earlier established, Orient Air was entitled to an overriding commission based on total flown revenue. American Air's perception that Orient Air was remiss or in default of its obligations under the Agreement was, in fact, a situation where the latter acted in accordance with the Agreement—that of retaining from the sales proceeds its accrued commissions before remitting the balance to American Air. Since the latter was still obligated to Orient Air by way of such commissions. Orient Air was clearly justified in retaining and refusing to remit the sums claimed by American Air. The latter's termination of the Agreement was, therefore, without cause and basis, for which it should be held liable to Orient Air. On the matter of damages, the respondent appellate court modified by reduction the trial court's award of exemplary damages and attorney's fees. This Court sees no error in such modification and, thus, affirms the same. It is believed, however, that respondent appellate court erred in affirming the rest of the decision of the trial court. We refer particularly to the lower court's decision ordering American Air to "reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement." 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 . 17 (emphasis supplied) In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the

principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. The Agreement itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the portion of the ruling of the respondent appellate court reinstating Orient Air as general sales agent of American Air. 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. SO ORDERED.

[G.R. No. 130148. December 15, 1997]

charged with estafa[5] in the Regional Trial Court of Malolos, Bulacan, which was docketed as Criminal Case No. 785-M-94. That criminal case appears to be still pending in said trial court. During the trial of the civil case, petitioners claimed that Deganos acted as the agent of Brigida D. Luz when he received the subject items of jewelry and, because he failed to pay for the same, Brigida, as principal, and her spouse are solidarily liable with him therefor. On the other hand, while Deganos admitted that he had an unpaid obligation to petitioners, he claimed that the same was only in the sum of P382,816.00 and not P725,463.98. He further asserted that it was he alone who was involved in the transaction with the petitioners; that he neither acted as agent for nor was he authorized to act as an agent by Brigida D. Luz, notwithstanding the fact that six of the receipts indicated that the items were received by him for the latter. He further claimed that he never delivered any of the items he received from petitioners to Brigida. Brigida, on her part, denied that she had anything to do with the transactions between petitioners and Deganos. She claimed that she never authorized Deganos to receive any item of jewelry in her behalf and, for that matter, neither did she actually receive any of the articles in question. After trial, the court below found that only Deganos was liable to petitioners for the amount and damages claimed. It held that while Brigida D. Luz did have transactions with petitioners in the past, the items involved were already paid for and all that Brigida owed petitioners was the sum of P21,483.00 representing interest on the principal account which she had previously paid for.[6] The trial court also found that it was petitioner Lydia Bordador who indicated in the receipts that the items were received by Deganos for Evelyn Aquino and Brigida D. Luz. [7] Said court was “persuaded that Brigida D. Luz was behind Deganos,” but because there was no memorandum to this effect, the agreement between the parties was unenforceable under the Statute of Frauds. [8] Absent the required memorandum or any written document connecting the respondent Luz spouses with the subject receipts, or authorizing Deganos to act on their behalf, the alleged agreement between petitioners and Brigida D. Luz was unenforceable. Deganos was ordered to pay petitioners the amount of P725,463.98, plus legal interest thereon from June 25, 1990, and attorney’s fees. Brigida D. Luz was ordered to pay P21,483.00 representing the interest on her own personal loan. She and her codefendant spouse were absolved from any other or further liability. [9] As stated at the outset, petitioners appealed the judgment of the court a quo to the Court of Appeals which affirmed said judgment. [10] The motion for reconsideration filed by petitioners was subsequently dismissed, [11] hence the present recourse to this Court. The primary issue in the instant petition is whether or not herein respondent spouses 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. Petitioners argue that the Court of Appeals erred in adopting the findings of the

JOSE BORDADOR and LYDIA BORDADOR, petitioners, vs. BRIGIDA D. LUZ, ERNESTO M. LUZ and NARCISO DEGANOS, respondents.

DECISION REGALADO, J.: In this appeal by certiorari, petitioners assail the judgment of the Court of Appeals in CA-G.R. CV No. 49175 affirming the adjudication of the Regional Trial Court of Malolos, Bulacan which found private respondent Narciso Deganos liable to petitioners for actual damages, but absolved respondent spouses Brigida D. Luz and Ernesto M. Luz of liability. Petitioners likewise belabor the subsequent resolution of the Court of Appeals which denied their motion for reconsideration of its challenged decision. Petitioners were engaged in the business of purchase and sale of jewelry and respondent Brigida D. Luz, also known as Aida D. Luz, was their regular customer. On several occasions during the period from April 27, 1987 to September 4, 1987, respondent Narciso Deganos, the brother of Brigida D. Luz, received several pieces of gold and jewelry from petitioners amounting to P382,816.00. [1] These items and their prices were indicated in seventeen receipts covering the same. Eleven of the receipts stated that they were received for a certain Evelyn Aquino, a niece of Deganos, and the remaining six indicated that they were received for Brigida D. Luz. [2] Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold items to petitioners. Deganos remitted only the sum of P53,207.00. He neither paid the balance of the sales proceeds, nor did he return any unsold item to petitioners. By January 1990, the total of his unpaid account to petitioners, including interest, reached the sum of P725,463.98. [3] Petitioners eventually filed a complaint in the barangay court against Deganos to recover said amount. In the barangay proceedings, Brigida D. Luz, who was not impleaded in the case, 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. On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in the Regional Trial Court of Malolos, Bulacan against Deganos and Brigida D. Luz for recovery of a sum of money and damages, with an application for preliminary attachment.[4] Ernesto Luz was impleaded therein as the spouse of Brigida. Four years later, or on March 29, 1994, Deganos and Brigida D. Luz were

Luz and Deganos for estafa in the pending criminal case. with regard to the testimony of Brigida admitting delivery of the gold to her.[17] Petitioners now claim that the aforesaid dismissal by the Court of Appeals of the petition in CA-G. Luz. [18] Petitioners have apparently lost sight of Article 33 of the Civil Code which provides that in cases involving alleged fraudulent acts. a civil action for damages. Evidently. Luz as the latter clothed him with apparent authority as her agent and held him out to the public as such. the quantum of proof required for holding the parties liable therein differ.[14] The evidence does not support the theory of petitioners that Deganos was an agent of Brigida D. be validly said that she admitted her liability regarding the same. . [13] Petitioners further represent that the Court of Appeals recognized in its decision that Deganos was an agent of Brigida. entirely separate and distinct from the criminal action. Petitioners insist that Deganos was the agent of Brigida D. hence Brigida can not be permitted to deny said authority to innocent third parties who dealt with Deganos under such belief. Consequently. petitioners theorize that the decision and resolution of the Court of Appeals now being impugned in the case at bar would result in a possible conflict with the prospective decision in the criminal case. create two conflicting rulings. Their fancied fear of possible conflict between the disposition of this civil case and the outcome of the pending criminal case is illusory. much less with respect to the particular transactions involved. They likewise aver that Brigida testified in the trial court that Deganos took some gold articles from petitioners and delivered the same to her. the same was denied by the trial court.R. While the quoted statement in the findings of fact of the assailed appellate decision mentioned that Deganos ostensibly acted as an agent of Brigida. Besides. They then filed a petition for certiorari in the Court of Appeals to set aside the denial of their demurrer and motion for reconsideration but. petitioners cannot plausibly claim in this appellate review that the letters were in the nature of acknowledgments by Brigida that she was the principal of Deganos in the subject transactions. petitioners. Both the Court of Appeals and the trial court. it was the duty of the two branches of the Regional Trial Court concerned to independently proceed with the civil and criminal cases. and had nothing to do with the money sought to be recovered in the instant case. it was grossly and inexcusably negligent of petitioners to entrust to Deganos. therefore. who were negligent in their transactions with Deganos. 1868. as said conclusion of the trial court is contradicted by the finding of fact of the appellate court that “(Deganos) acted as agent of his sister (Brigida Luz). their petition therefor was dismissed. not once or twice but on at least six occasions as evidenced by six receipts. petitioners quoted several letters sent to them by Brigida D. It cannot. It will also be observed that a final judgment rendered in a civil action absolving the defendant from civil liability is no bar to a criminal action. Instead of promulgating the present decision and resolution under review. The basis for agency is representation. worse. it is improvident of petitioners to claim that the decision and resolution of the Court of Appeals in the present case would be preemptive of the outcome of the criminal case. found as a fact that the aforementioned letters concerned the previous obligations of Brigida to petitioners. both of which were denied by the trial court. there is no showing that Brigida consented to the acts of Deganos or authorized him to act on her behalf. therefore. so they suggest. Here. the actual conclusion and ruling of the Court of Appeals categorically stated that. as already stated. [16] The records show that neither an express nor an implied agency was proven to have existed between Deganos and Brigida D. The Civil Code provides: Art. Luz and Deganos had filed a demurrer to evidence and a motion for reconsideration in the aforestated criminal case. may be brought by the injured party. “(Brigida Luz) never authorized her brother (Deganos) to act for and in her behalf in any transaction with Petitioners x x x. however. as just stated. SP No. Hence. Petitioners’ attempt to foist liability on respondent spouses through the supposed agency relation with Deganos is groundless and ill-advised. It is worth noting that this civil case was instituted four years before the criminal case for estafa was filed. therefore. and that although there was a move to consolidate both cases. Luz wherein the latter acknowledged her obligation to petitioners and requested for more time to fulfill the same. so as not to render academic or preempt the same or. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. [19] It is clear.R. Such concurrent factual findings are entitled to great weight. 39445 holding that there is “sufficient evidence/proof” against Brigida D.court a quo that respondent spouses are not liable to them. SP No. On the other hand. Such civil action shall proceed independently of the criminal prosecution and shall require only a preponderance of evidence. hence. with the consent or authority of the latter. that even assuming arguendo that Deganos acted as an agent of Brigida. 39445 with respect to the criminal case is equivalent to a finding that there is sufficient evidence in the estafa case against Brigida D. is “null and void” as it contradicted its ruling in CA-G.” [12] In support of this contention. Luz and Deganos. Thus. They further aver that said appellate court erred in ruling against them in this civil action since the same would result in an inevitable conflict of decisions should the trial court convict the accused in the criminal case. By way of backdrop for this argument of petitioners. which it affirmed. there is no showing whatsoever that her statement referred to the items which are the subject matter of this case.” [15] It is clear. the Court of Appeals should have awaited the decision in the criminal case. several pieces of jewelry of substantial value without requiring a written authorization from his alleged principal. Luz and that the latter should consequently be held solidarily liable with Deganos in his obligation to petitioners. herein respondents Brigida D. Petitioners next allege that the Court of Appeals erred in ignoring the fact that the decision of the court below. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another. that this civil case may proceed independently of the criminal case [20] especially because while both cases are based on the same facts. 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. the latter never authorized him to act on her behalf with regard to the transactions subject of this case.

1997.Petitioners surprisingly postulate that the Court of Appeals had lost its jurisdiction to issue the denial resolution dated August 18. [29] They proceed on the premise that the Statute of Frauds applies only to executory contracts and not to executed or to partially executed ones. 1997. It is thus reprehensible for them to cast aspersions on a court of law on the bases of conjectures or surmises. was then recuperating from surgery and. especially since one of the petitioners appears to be a member of the Philippine Bar. [27] that the proceedings of a judicial tribunal are regular and valid. It was allegedly impossible for the Court of Appeals to resolve the issue in just one and a half days. the late Justice Maximiano C. Luz and Narciso Deganos. There is no showing whatsoever that the resolution was issued without considering the reply filed by petitioners. that. It is definitely not for the parties to determine and dictate when and how a tribunal should act upon those cases since they are not even aware of the status of the dockets and the internal rules and policies for acting thereon. by itself. It is the thesis of petitioners that there was undue haste in issuing the resolution as the same was made without waiting for the lapse of the ten-day period for respondents to file their comment and for petitioners to file their reply. its challenged decision and resolution are hereby AFFIRMED and the instant petition is DENIED.” [22] These lamentable allegation of irregularities in the Court of Appeals and in the conduct of its officers strikes us as a desperate attempt of petitioners to induce this Court to give credence to their arguments which. They claim that said resolution was drafted by the ponente. What was finally proven as a matter of fact is that there was no such contract between Brigida D. That was merely a preparatory statement of a principle of law. be deemed irregular. as the same was tainted with irregularities and badges of fraud perpetrated by its court officers. Luz and Narciso Deganos is unenforceable under the Statute of Frauds as that aspect of this case allegedly is not covered thereby. no error having been committed by the Court of Appeals in affirming the judgment of the court a quo. the same is unenforceable as the contract would fall under the Statute of Frauds which requires the presentation of a note or memorandum thereof in order to be enforceable in court. concur. as already found by both the trial and intermediate appellate courts. [28] The burden of proving irregularity in official conduct is on the part of petitioners and they have utterly failed to do so. executed or partially executed. petitioners fault the trial court’s holding that whatever contract of agency was established between Brigida D. born of wisdom and experience. Asuncion. and no delivery of any of the items subject of this case was ever made to the former. are devoid of factual and legal substance. It is a legal presumption. especially because its ponente. On July 9. that official duty has been regularly performed. hence. Respondents filed the same on August 5. Lastly. It should be emphasized that neither the trial court nor the appellate court categorically stated that there was such a contractual relation between these two respondents. 1997. 1997. The fact that a resolution was issued by said court within a relatively short period of time after the records of the case were elevated to the office of the ponente cannot.. gravely abused its discretion in issuing that resolution denying their motion for reconsideration. and that judicial acts and duties have been and will be duly and properly performed. . Puno. but we are inclined to let that pass with a strict admonition that petitioners refrain from indulging in such conduct in litigations. 1997 [24] and petitioners filed their reply to said comment on August 15. From there. then signed and issued by the members of the Eleventh Division of said court within one and a half days from the elevation thereof by the division clerk of court to the office of the ponente. [21] They charge that said appellate court. [23] Petitioners moved for reconsideration and the Court of Appeals ordered respondents to file a comment. Mendoza. [25] The Eleventh Division of said court issued the questioned resolution denying petitioner’s motion for reconsideration on August 18. they move on to claim that the contract involved in this case was an executed contract as the items had already been delivered by petitioners to Brigida D. The regrettably irresponsible attempt to tarnish the image of the intermediate appellate tribunal and its judicial officers through ad hominem imputations could well be contumacious. and Martinez. that brief pleading filed by petitioners does not exhibit any esoteric or ponderous argument which could not be analyzed within an hour. They would even deny the exercise of discretion by the appellate court to prioritize its action on cases in line with the procedure it has adopted in disposing thereof and in declogging its dockets.[26] It is ironic that while some litigants malign the judiciary for being supposedly slothful in disposing of cases. petitioners are making a show of calling out for justice because the Court of Appeals issued a resolution disposing of a case sooner than expected of it. additionally. the Court of Appeals rendered judgment in this case affirming the trial court’s decision. WHEREFORE. such delivery resulted in the execution of the contract and removed the same from the coverage of the Statute of Frauds. Petitioners’ claim is speciously unmeritorious. JJ. Luz. The trial court merely said that if there was such an agency existing between them. through conspiracy and fraud on the part of its officers. In fact. with double costs against petitioners SO ORDERED. “hundreds of more important cases were pending.

this case arose from the failure of petitioners to pay respondents’ predecessor-in-interest. [Respondents] advanced that before issuing said checks[. Another simulated sale of a Toyota Willys was executed on January 25. 156262 xxx MARIA TUAZON. ALEJANDRO P.889 cavans valued at P1. 1988.x DECISION PANGANIBAN.-. leaving unpaid 3.-. challenging the July 31. “[Respondents] averred that because spouses Tuazon anticipated that they would be sued. TUAZON. No.] x x x only 4.-. defendants denied having purchased x x x rice from [Bartolome] Ramos.R. 46535.: Stripped of nonessentials. the check drawer need not be impleaded in the Complaint. 1988 of a Stake Toyota registered with the Land Transportation Office of Cabanatuan City on September 7. 1988 in favor of their other son.] as well as their residential lot and the house thereon[.-.-.-.-.-.-.326 cavans of rice from [the deceased Bartolome] Ramos [predecessor-in-interest of respondents]. the present case involves the collection of a sum of money.G. the suit is directed. judgment is hereby rendered in favor of the plaintiffs and against the defendants. 2005 The Facts x -. J. As a result of the said sales.-.000. to the damage and prejudice of [respondents]. That of this [quantity. TUAZON.-. all of the checks bounced due to insufficiency of funds.-.00.919.-.-.000. Petitioners.750. versus HEIRS OF BARTOLOME RAMOS. The decretal portion of the assailed Decision reads: “WHEREFORE. disposed as follows: “WHEREFORE. July 14. the appeal is DISMISSED and the appealed decision is AFFIRMED. “2. 1988.-. ordering the defendants spouses Leonilo Tuazon and Maria Tuazon to pay the plaintiffs. BUENAVENTURA. they conspired with the other [defendants] to defraud them as creditors by executing x x x fictitious sales of their properties. Specifically.437 cavans [have been paid for so far]. 1988 x x x over a residential lot located at Nueva Ecija.-. Resultantly. by the said ante-dated and simulated sales and the corresponding transfers there was no more property left registered in the names of spouses Tuazon answerable to creditors. And to pay the costs of suit.-.-. the affirmed Decision[3] of Branch 34 of the Regional Trial Court (RTC) of Gapan. the titles of these properties issued in the names of spouses Tuazon were cancelled and new ones were issued in favor of the [co]defendants spouses Buenaventura.-. 2002 Decision[2] of the Court of Appeals (CA) in CA-GR CV No.-.00. and another simulated deed of sale dated July 12. not against the drawer. Respondents.00.” On the other hand. “3.-. The Case Before us is a Petition for Review[1] under Rule 45 of the Rules of Court. The sum of P50. but against the debtor who indorsed the checks in payment of the obligation. Spouses ANASTACIO and MARY T.00. MELECIO P. a son of spouses Tuazon.-.-. The sum of P1.211. but indorsed by herein Petitioner Maria Tuazon in favor of the said predecessor. spouses Leonilo and Maria Tuazon purchased a total of 8.] spouses Tuazon already knew that they had no available fund to support the checks. the spouses Tuazon issued x x x [several] Traders Royal Bank checks. [Co-petitioner] Melecio Tuazon. to enable respondents to collect on the indebtedness.] all located at Nueva Ecija. [co-petitioner] Alejandro Tuazon x x x. This fact was shown by the non-encashment of checks issued by a third person. Alejandro Tuazon and Melecio Tuazon. The facts are narrated by the CA as follows: “[Respondents] alleged that between the period of May 2.-. as attorney’s fees. Under these circumstances. and they failed to provide for the payment of these despite repeated demands made on them. Nueva Ecija.--. as follows: “1. They executed x x x simulated sale[s] [of three lots] in favor of the x x x spouses Buenaventura x x x[.050. “For their part. as moral damages “4. They alleged . In payment therefor. The sum of P20. 1988 and June 5. registered a fictitious Deed of Sale on July 19. Thus. xxx xxx xxx xxx x x x”[4] [B]ut when these [checks] were encashed.-. with interests from the filing of the second amended complaint.

with Alejandro Tuazon and Melecio as additional defendants. official receipts or like evidence to prove this. The question of whether a contract is one of sale or of agency depends on the intention of the parties. In good faith[. not for oneself. there must be an intention on the part of the agent to accept the appointment and act upon it. are conclusive on the parties and this Court. they argued that there was no sales invoice. (4) the limitation that the agent acts within the scope of his or her authority. wife of said deceased. the CA held that petitioners had failed to prove the existence of an agency between respondents and Spouses Tuazon. they were mere agents of respondents. they were not mere agents of respondents in their rice dealership. an indispensable party to the suit.[9] The following are the elements of agency: (1) the parties’ consent.[11] This Court finds no reversible error in the findings of the courts a quo that petitioners were the rice buyers themselves. with the latter’s consent or authority.[14] In the present case. The appellate court disbelieved petitioners’ contention that Evangeline Santos should have been impleaded as an indispensable party.[12] The declarations of agents alone are generally insufficient to establish the fact or extent of their authority. To dispute the contention of plaintiffs that they were the buyers of the rice. In the same manner. yet fail to prove its existence. who thereby became liable to subsequent holders for the amounts stated in those checks. this Petition. in a separate civil case that they sought to be consolidated with the current one. spouses Tuazon contended that these were sold because they were then meeting financial difficulties but the disposals were made for value and in good faith and done before the filing of the instant suit. Inasmuch as all the checks had been indorsed by Maria Tuazon. on their own behalf. First Issue: Agency Well-entrenched is the rule that the Supreme Court’s role in a petition under Rule 45 is limited to reviewing errors of law allegedly committed by the Court of Appeals. If. there was no need to implead Santos. to establish the relationship. however. Having passed away before the pretrial. herein respondents. an actual intention to appoint.[10] As the basis of agency is representation. The RTC. Allegedly. as evidenced by the fact that the checks had been drawn in her name.”[7] The Court’s Ruling The Petition is unmeritorious. especially when affirmed by the CA. Ruling of the Court of Appeals Sustaining the RTC.] the checks were received [by petitioner] from Evangeline Santos and turned over to Ramos without knowing that these were not funded. on the part of the principal. sued Evangeline Santos for collection of the amounts represented by the bounced checks. who owned and traded the merchandise and Maria Tuazon was merely her agent.”[5] in ruling that petitioners are not agents of the respondents. express or implied. And it is for this reason that [petitioners] have been insisting on the inclusion of Evangeline Santos as an indispensable party. Contending that Evangeline Santos was an indispensable party in the case.[6] Issues Petitioners raise the following issues for our consideration: “1. They assert that they were merely agents and should not be held answerable. one binds oneself to render some service or to do something in representation or on behalf of another. The Court notes that petitioners. (3) the representation. proving its existence.[8] Petitioners have not given us sufficient reasons to deviate from this rule.[15] Their filing a suit against her in their own names negates their claim that they acted as mere agents in selling the rice obtained from The corresponding civil and criminal cases were filed by respondents Spouses Tuazon. “2. and her non-inclusion was a fatal error. there must be. in accordance with Section 2 of Rule 3 of the Rules on Civil Procedure.[13] The law makes no presumption of agency. petitioners moved to file a third-party complaint against her. denied petitioners’ Motion. by which the one who acts as an agent does so. petitioners should have brought the suit against Santos for and on behalf of their alleged principal. Those cases were later consolidated and amended to Spouses Anastacio and Mary Buenaventura. but as a representative. Refuting that the sale of several properties were fictitious or simulated. petitioners raise the fact of agency as an affirmative defense. which is the execution of a juridical act in relation to a third person. Since the trial court acquitted petitioners in all three of the consolidated criminal cases. Factual findings of the trial court. They argued that it was Evangeline Santos who was the buyer of the rice and issued the checks to Maria Tuazon as payments therefor. nature and extent is incumbent upon the person alleging it. there is generally no agency. because she was the one who had purchased the merchandise from their predecessor. Whether or not the Honorable Court of Appeals erred in rendering judgment against the petitioners despite x x x the failure of the respondents to include in their action Evangeline Santos. as they claim. Hence. she was primarily liable to respondents. they appealed only its decision finding them civilly liable to respondents.that it was Magdalena Ramos. an intention naturally inferable from the principal’s words or actions. against include Tuazon Ramos In a contract of agency. Whether or not the Honorable Court of Appeals erred . Bartolome was substituted by his heirs. Absent such mutual intent. (2) the object.

They insist that respondents’ Complaint against them is based on the bouncing checks she issued.”[19] The instant case was originally one for the collection of the purchase price of the rice bought by Maria Tuazon from respondents’ predecessor. Petitioner Maria Tuazon warranted that upon due presentment.[17] After an instrument is dishonored by nonpayment.is not an indispensable party in an action against Maria Tuazon. they point to her as the person primarily liable for the obligation. or both.[16] That Santos was the drawer of the checks is thus immaterial to the respondents’ cause of action. . the Petition is DENIED and the assailed Decision AFFIRMED.as the drawer of the checks -. the checks were to be accepted or paid. The trial court held that Petitioner Maria Tuazon had indorsed the questioned checks in favor of respondents. it is clear that there is no privity of contract between respondents and Santos. Evangeline Santos -.Bartolome Ramos. they become principal debtors whose liability becomes identical to that of the original obligor. Indispensable parties are defined as “parties in interest without whom no final determination can be had. a final determination of the rights and interest of the parties may be made without any need to implead her. Costs against petitioners.[18] Clearly. hence. she would pay the corresponding amount. In this case. in accordance with Sections 31 and 63 of the Negotiable Instruments Law. As indorser. the indorser of the checks. WHEREFORE. and that in case they were dishonored. The holder of a negotiable instrument need not even proceed against the maker before suing the indorser. We hold that respondents’ cause of action is clearly founded on petitioners’ failure to pay the purchase price of the rice. SO ORDERED. according to their tenor. Second Issue: Indispensable Party Petitioners argue that the lower courts erred in not allowing Evangeline Santos to be impleaded as an indispensable party. Hence. indorsers cease to be merely secondarily liable.

. They added that there were purchases or orders made by Lines & Spaces/TriRealty which they were about to deliver... or a total of 5.387..00 as refund of the fee for the undelivered 5. though...200 bags. counsel for Lines & Spaces moved to withdraw from the case for the reason that its client was beyond contact. Branch 104. In the presently assailed Decision.200 undelivered bags of cement at P98.. On 29 January 1998..Amon Trading Corp..[2] Soon after...000 bags from Juliana Marketing. The Court of Appeals disposedWHEREFORE.900. was not delivered... However. informed private respondent that it could obtain cement to its satisfaction from petitioners..00 for the refund of the price of 2. Six Thousand (6.. Sanchez issued receipts for the two manager’s checks. Lines & Spaces denied in its Answer that it is represented by Eleanor B. in consideration of the facilitation of the orders and certainty of delivery of the same to the private respondent.. and another one is entered ordering the following: Defendant-appellee Amon Trading Corporation is held liable jointly and severally with defendant-appellee Lines and Spaces Interiors Center in the amount of P215.. 0011565 and 0011566 were paid by Sanchez to petitioners.200 bags from Amon Trading Corporation and 3.00 for compensatory damages.050) bags of cement from petitioner Amon Trading Corporation. Left high and dry. it raised the defense that it was only an intermediary between the private respondent and petitioners. represented by Eleanor Bahia Sanchez..00 payable to Juliana Marketing...00/bag.00 through Solidbank Manager’s Check No.00/bag. premises considered.. Amon Trading Corporation and its sister company.850 bags and 3. x.000) bags at P98.. Sanchez of Lines & Spaces. paid in advance the amount of P592. reversing the Decision of the Regional Trial Court of Quezon City. Private respondent. and from Juliana Marketing.[3] CHICO-NAZARIO.. sent petitioners written demands but in reply. during the period from April to June 1992. private respondent proceeded to order from Sanchez Six Thousand Fifty (6. CV No.. on the crossclaim the sum of P200.600..00 per bag. Sanchez. Lines & Spaces. through Solidbank Manager’s Check No. respectively. The dispositive portion of the trial court’s Decision reads: Wherefore. with news reaching it that Eleanor Sanchez had already fled abroad. The refund was in the form of a check payable to Lines & Spaces.. private respondent filed this case for sum of money against petitioners and Lines Private Respondent Tri-Realty partially appealed from the trial court’s decision absolving Amon Trading Corporation and Juliana Marketing of any liability to Tri-Realty. Solidbank Manager’s Check Nos. J. judgment is hereby rendered ordering defendant Lines and Spaces Interiors Center as follows: to pay plaintiff on the complaint the amount of P47. alleging that private respondent had no privity of contract with them as it was Lines & Spaces/TriRealty.200 bags of cement at the rate of P7..00 as attorney’s fees.: This is an appeal by certiorari from the Decision[1] dated 28 November 2002 of the Court of Appeals in CA-G.-x DECISION & Spaces. Court of Appeals. 0011565 payable to Amon Trading Corporation. the Court of Appeals reversed the decision of the trial court and held petitioners Amon Trading Corporation and Juliana Marketing to be jointly and severally liable with Lines & Spaces for the undelivered bags of cement.600...00.050 cement bags at the rate of P7.350. 0011566. There were deliveries to private respondent from Amon Trading Corporation and Juliana Marketing of 3. Petitioners plead in defense lack of right or cause of action. Juliana Marketing.50 as attorney’s fees..R. Sanchez and the consideration of the cancelled purchases or orders was later reimbursed to Lines & Spaces. as well as the amount of P639. thus. 60031... Branch 104.. the amount of P2.000..000.200 undelivered bags of cement. and the amount of P588.000.000... Private respondent likewise paid to Lines & Spaces an advance fee for the 12. found Lines & Spaces solely liable to private respondent and absolved petitioners of any liability. and holding petitioners Amon Trading Corporation and Juliana Marketing to be solidarily liable with Lines & Spaces Interiors Center (Lines & Spaces) in refunding private respondent Tri-Realty Development and Construction Corporation (Tri-Realty) the amount corresponding to the value of undelivered bags of cement. On the strength of such representation..00 for the refund of the price of the 5. and to pay Amon Trading and Juliana Marketing. The undisputed facts: Private respondent Tri-Realty is a developer and contractor with projects in Bulacan and Quezon City. the Regional Trial Court of Quezon City. .. through Mrs. the balance of 2.. Inc. Sanchez and pleads in defense lack of cause of action and in the alternative. the decision of the court a quo is hereby REVERSED AND SET ASIDE. private respondent had difficulty in purchasing cement needed for its projects. v. through Mrs.... but were cancelled by Mrs. the amount of P509... Private respondent. that ordered or purchased several bags of cement and paid the price thereof without informing them of any special arrangement nor disclosing to them that Lines & Spaces and respondent corporation are distinct and separate entities. Sometime in February 1992... or a total of P84.000 bags. petitioners stated that they have already refunded the amount of undelivered bags of cement to Lines and Spaces per written instructions of Eleanor Sanchez.00 per bag.950. A certain “Weng Chua” signed the check vouchers for Lines & Spaces while Mrs....

zealously make a case that there was no contract of agency between Lines & Spaces and private respondent. 074 issued by Lines & Spaces Interiors Center. per her representation. As gleaned from the records. No pronouncement as to costs. petitioners elevated the case to this Court via the present petition for review to challenge the Decision and Resolution of the Court of Appeals on the following issues: I. … Q: I am showing to you check no.900.050 bags of cement received by a certain “Weng Chua” for Mrs.050 bags of cement. The records bear out. it was Lines & Spaces. was between private respondent and Eleanor Sanchez of Lines & Spaces. in their brief. At the focus of scrutiny is the issue of whether or not the Court of Appeals committed reversible error in ruling that petitioners are solidarily liable with Lines & Spaces.[8] Then. private respondent stirs up support for its contention that contrary to petitioners' claim. was a separate and distinct entity from Tri-Realty.00 we paid to Amon Trading Corporation for 6. The key to unlocking this issue is to determine whether or not Lines & Spaces is the private respondent’s agent and whether or not there is privity of contract between petitioners and private respondent. no privity of contract can be said to exist between petitioners and private respondent.200 undelivered bags of cement to the plaintiffappellant Tri-Realty Development and Construction Corporation.[9] Primarily. on the other hand. was a single account or entity. Eleanor Sanchez of Lines & Spaces. private respondent agreed with Eleanor Sanchez of Lines & Spaces for the latter to source the cement needs of the former in consideration of P7.[4] contrary to their claim of innocence. covering the said manager’s checks. petitioners had knowledge that Lines & Spaces. which.950. signed by Eleanor Bahia Sanchez. WHETHER OR NOT PETITIONERS AND RESPONDENT HAS PRIVITY OF CONTRACT.[7] Private respondent. It is worthy to note that the payment in manager’s checks was made to Eleanor Sanchez of Lines & Spaces and was not directly paid to petitioners.[5] II. The cross claim of defendants-appellees Amon Trading Corporation and Juliana Marketing is DISMISSED for lack of merit. therefore. goes over the top in arguing that . The meeting of minds.000. WHETHER OR NOT THERE WAS A CONTRACT OF AGENCY BETWEEN LINES AND SPACES INTERIOR CENTER AND RESPONDENT. as represented by Eleanor Sanchez. While the manager’s check issued by respondent company was eventually paid to petitioners for the delivery of the bags of cement. there is obviously nothing from the face of said manager’s check to hint that private respondent was the one making the payments. what relation has this check to that check you mentioned earlier? A: Official Receipt No. Annex “A” showing a check voucher payable to Amon Trading Corporation for the 6. Also on record are the receipts issued by Lines & Spaces.00 for the refund of the price of 3. not petitioners. Q: Now there appears a signature in that Pained by the ruling. There was likewise no intimation from Sanchez that the purchase order placed by her was for private respondent’s benefit. and Annex “B” which is a check voucher bearing the name of Juliana Marketing as payee. 074 issued by Lines & Spaces Interiors Center was for the P592. too. which issued to them a receipt for the two (2) manager’s checks. We shall consider these issues concurrently as they are interrelated.[6] Petitioners strongly assert that they did not have a hint that Lines & Spaces and Tri-Realty are two different and distinct entities inasmuch as Eleanor Sanchez whom they have dealt with just represented herself to be from Lines & Spaces/Tri-Realty when she placed her order for the delivery of the bags of cement. there was no written contract entered into between petitioners and private respondent for the delivery of the bags of cement.00 as refund of the fee for the 5.00 per bag of cement. and as private respondent itself admitted in its Complaint. Hence. there was privity of contract between private respondent and petitioners. The awards of compensatory damages and attorney’s fees are DELETED. Guido Ganhinhin of respondent Tri-Realty testified.000 undelivered bags of cement.Defendant-appellee Juliana Marketing is held liable jointly and severally with defendant-appellee Lines and Spaces Interiors Center in the amount of P294.” Nowhere from the face of the check vouchers is it shown that petitioners or any of their authorized representatives received the payments from respondent company. This contract is distinct and separate from the contract of sale between petitioners and Eleanor Sanchez who represented herself to be from Lines & Spaces/TriRealty. Petitioners. ThusQ: And what is your proof that Amon and Juliana were paid of the purchases through manager’s checks? A: Lines & Spaces who represented Amon Trading and Juliana Marketing issued us receipts for the two (2) manager’s checks we paid to Amon Trading and Juliana Marketing Corporation. The defendant-appellee Lines and Spaces Interiors Center is held solely in the amount of P47. too. As Engr. but was received again by said “Weng Chua.

There is likewise a dearth of evidence to show that the case at bar is an open-and-shut case of agency between private respondent and Lines & Spaces.) Why do you know that that is her . On the part of the principal. whose signature is that? A: The signature of Mrs. Parenthetically. The control factor. Moreover. All the quibbling about whether Lines & Spaces acted as agent of private respondent is inane because as illustrated earlier. and in the absence of such intent. so there was indeed no cause to suspect the scheme. one person . Here. or that one word or the other may be taken accordingly as one or the other will best effectuate the intended purpose. Hence. Sanchez represented herself to be from Lines & Spaces/Tri-Realty. The Civil Code defines a contract of agency as follows: Art. By analogy. Members of the Board of Trustees. petitioners were not remiss when they believed Eleanor Sanchez’s representation that “Lines & Spaces/Tri-Realty” refers to just one entity. Mabanta. A: Lines & Spaces represented by Eleanor Bahia Sanchez offered to supply us cement when there was scarcity of cement experienced in our projects. petitioners had no reason to doubt the request of Eleanor Sanchez later on to refund the value of the undelivered bags of cement to Lines & Spaces. Inasmuch as they have never directly dealt with private respondent and there is no paper trail on record to guide them that the private respondent. Eleanor Bahia Sanchez. Home Development Mutual Fund. but rather a supplier for the latter’s cement needs. 1868. There was no sufficient showing that petitioners knew that the delivery sites were that of private respondent and for another thing. v.receipt above the printed words authorized signature. not to Sanchez. the very word "agency" has come to connote control by the principal. there must be an intention to accept the appointment and act on it. .[13] the Court decreed from Article 1868 that the basis of agency is representation.[10] (Emphasis supplied. sir. through Eleanor Sanchez. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another. It was accordingly ordinarily held that in using the term "and/or" the word "and" and the word "or" are to be used interchangeably. purportedly a single entity. There was. the intention of private respondent. was merely for Lines & Spaces. more than any other. Court of Appeals. Inc. has caused the courts to put contracts between principal and agent in a separate category. as the Executive Officer of respondent corporation testified on. the deliveries were made by petitioners’ men who have no business nosing around their client’s affairs.the principal.the agent . Eleanor Sanchez has absconded to the United States of In a bevy of cases such as the avuncular case of Victorias Milling Co. . after all. there is generally no agency. Indeed. Sanchez the cost of the undelivered bags of cement. Q: Do you know the defendant Lines & Spaces in this case? A: Q: Yes. petitioners took orders from Eleanor Sanchez who. . How come you know this defendant? Without doubt. in fact. v. no error attributable to petitioners when they refunded the value of the undelivered bags of cement to Lines & Spaces only. There is likewise nothing meaty about the assertion of private respondent that inasmuch as the delivery receipts as well as the purchase order were for the account of Lines & Spaces/Tri-Realty.[12] the term “and/or” was held to mean that effect shall be given to both the conjunctive “and” and the disjunctive “or”. then petitioners should have been placed on guard that it was private respondent which is the principal of Sanchez. 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. the words “Lines & Spaces/Tri-Realty” mean that effect shall be given to both Lines & Spaces and Tri-Realty or that Lines & Spaces and Tri-Realty may be used interchangeably. Sayoc and De los Angeles v. Buenaventura. therefore.[14] (Emphasis supplied) We cannot go along the Court of Appeals’ disquisition that Amon Trading Corporation and Juliana Marketing should have required a special power of attorney form when they refunded Eleanor B. One factor which most clearly distinguishes agency from other legal concepts is control. the representative of Lines and Spaces.. no vinculum could be said to exist between petitioners and private respondent. is the beneficiary. was the one who paid them the manager’s checks for the purchase of cement. Home Development Mutual Fund[11] and the later case of Romulo. The fact that the deliveries were made at the construction sites of private respondent does not by itself raise suspicion that petitioners were delivering for private respondent. Neither Eleanor Sanchez nor Lines & Spaces was an agent for private respondent. to supply them with the needed bags of cement. Q: signature? A: She is quite familiar with me and I saw her affix her signature upon issuance of the receipt. In China Banking Corp. the check refund was payable to Lines & Spaces.agrees to act under the control or direction of another . with the consent or authority of the latter.

its counsel had to withdraw his appearance because of his client’s vanishing act. But this Court finds plausible the stance of petitioners that they had no inkling of the deception that was forthcoming. private respondent brought the wrong upon itself. Private respondent likewise paid in advance the commission of Eleanor Sanchez for the materials that have yet to be delivered so it really had no means of control over her. washed its hands of the apparent ruse perpetuated by Sanchez. SO ORDERED. Branch 104. the Decision and the Resolution dated 28 November 2002 and 10 June 2003. With no other way out. . private respondent now puts the blame on petitioners. WHEREFORE. in Civil Case Q-92-14235 is hereby REINSTATED.R CV No. but argues that if at all. For such huge sums of money involved in this case. Considering the vagaries of the case. the present petition is hereby GRANTED. Lines & Spaces. It is in this sense that we must apply the equitable maxim that “as between two innocent parties. Lines & Spaces was a no-show at the trial proceedings so that eventually. Second. For its failure to establish any of these deterrent measures. 60031. at the very least. Private respondent should have. In this case. it is the latter who had made possible the wrong that was perpetuated by Eleanor Sanchez against it so it must bear its own loss. it is surprising that a corporation such as private respondent would pay its construction materials in advance instead of in credit thus opening a window of opportunity for Eleanor Sanchez or Lines & Spaces to pocket the remaining balance of the amount paid corresponding to the undelivered materials. are hereby REVERSED and SET ASIDE. Accordingly. Left with an empty bag. private respondent was the one who had reposed too much trust on Eleanor Sanchez for the latter to source its cement needs. it was the representative of Lines & Spaces who signed the check vouchers. there is no paper trail linking private respondent to petitioners thereby leaving the latter clueless that private respondent was their true client. between petitioners and private respondent. private respondent incurred the risk of not being able to recoup the value of the materials it had paid good money for.America and the story of what happened to the check refund may be forever locked with her. in its Answer to the Complaint. Indeed. without any contract or any hard evidence to show any privity of contract between it and petitioners. No costs. of the Court of Appeals in CA-G.”[15] First. required petitioners to sign the check vouchers or to issue receipts for the advance payments so that it could have a hold on petitioners. private respondent’s claim against petitioners lacks legal foothold. it failed to employ safety nets to steer clear of the rip-off. As adeptly surmised by the trial court. The Decision dated 29 January 1998 of the Regional Trial Court of Quezon City. it was merely an intermediary between petitioners and private respondent. Finally. the one who made it possible for the wrong to be done should be the one to bear the resulting loss. so to speak.

451117. In a telex dated April 22. Both had their offices in Belgium.3 Jack Glanville. vs. with the assumption of Corazon C. Jr.R. The Eternit Corporation (EC) is a corporation duly organized and registered under Philippine laws. Jr. Metro Manila Philippines Dear Sir: Re: Land of Eternit Corporation I would like to confirm officially that our Group has decided not to proceed with the sale of the land which was proposed to you. 451121. The properties. 451122. Since 1950. Litonjua. In 1986. the management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country.7 Sometime later. 1987 that Delsaux sent a telex to Glanville stating that. ETERNIT CORPORATION (now ETERTON MULTI-RESOURCES CORPORATION). The Committee for Asia of ESAC instructed Michael Adams. Respondents. and drafted an Escrow Agreement to expedite the sale. Glanville informed Delsaux that he had met with the buyer. Petitioners. and (sic) to recognize the participation in the Corporation."5 Marquez furnished Eduardo Litonjua. Corporation (ESAC). ETEROUTREMER. MARCOS and a certain stabilization in the Philippines. Aquino as President of the Republic of the Philippines. confirmed that the Litonjua siblings had accepted the counter-proposal of Delsaux." the final offer was "US$1. JR. Marquez declared that he was authorized to sell the properties for P27. SR. DECISION CALLEJO. Ninety (90%) percent of the shares of stocks of EC were owned by Eteroutremer S. 451119. Glanville telexed Delsaux in Belgium. the Committee has decided not to stop our operations in Manila. 334 Makati Stock Exchange Bldg. LITONJUA. In a Letter dated September 12. which had given him the impression that "he is prepared to press for a satisfactory conclusion to the sale. to wit: May 22.000. accepted the counterproposal of Delsaux. production has started again last week. CV No. Inc. .000. Ermita Branch. was the General Manager and President of EC. 1987. 144805 June 8. 51022. 2006 EDUARDO V.00 with the Security Bank & Trust Company. 451120. a corporation organized and registered under the laws of Belgium. the political situation in the Philippines had improved.4 Eduardo Litonjua. confirming that the ESAC Regional Office had decided not to proceed with the sale of the subject land. 1987 Mr. it had been engaged in the manufacture of roofing materials and pipe products. as well as the Resolution2 of the CA denying the motion for reconsideration thereof.000. confirming that he had been instructed by his principal to inform Marquez that "the decision has been taken at a Board Meeting not to sell the properties on which Eternit Corporation is situated.00 to cover all existing obligations prior to final liquidation. Marquez. Glanville later showed the properties to Marquez. Inc. 1987. responded to the offer. based on the "Belgian/Swiss decision. It was only on February 12. Marquez received a telephone call from Glanville. to dispose of the eight parcels of land.G. located in Mandaluyong City. 451124 and 451125 under the name of Far East Bank & Trust Company.000. together with the necessary governmental clearances.G.000. 6767 Ayala Avenue Makati. and in a Letter dated February 26. On October 28. 451118."8 He also emphasized to Delsaux that the buyers were concerned because they would incur expenses in bank commitment fees as a consequence of prolonged period of inaction.A.000.233 square meters. Glanville followed it up with a Letter dated May 7. of the Litonjua & Company.. inquiring on his position/ counterproposal to the offer of the Litonjua siblings. as trustee.. L. 1987. a member of EC’s Board of Directors.00 and that the terms of the sale were subject to negotiation. but in case the policy would change at a later state. an Australian citizen. Branch 165.: On appeal via a Petition for Review on Certiorari is the Decision1 of the Court of Appeals (CA) in CA-G. Jr. Jr. Pasig City.9 Meanwhile. LINTONJUA. 54887. 1986.000. Marquez and the Litonjua brothers inquired from Glanville when the sale would be implemented. Marquez so that the properties could be offered for sale to prospective buyers.500. We regret that we could not make a deal with you this time. In fact. in Civil Case No. Litonjua. Marquez showed the property to Eduardo Litonjua. advising that the sale would no longer proceed. Marquez conferred with Glanville. Marquez apprised Glanville of the Litonjua siblings’ offer and relayed the same to Delsaux in Belgium.000.R. Adams engaged the services of realtor/broker Lauro G.A. 1986. The Litonjua siblings offered to buy the property for P20. and his brother Antonio K. Jr. Litonjua. He also stated that the Litonjua siblings would confirm full payment within 90 days after execution and preparation of all documents of sale.G. while Claude Frederick Delsaux was the Regional Director for Asia of ESAC. Marquez thereafter offered the parcels of land and the improvements thereon to Eduardo B. we would consult you again. with a copy of the telex sent by Delsaux. The Committee for Asia of our Group met recently (meeting every six months) and examined the position as far as the Philippines are (sic) concerned. and ANTONIO K. S. Metro Manila.6 The Litonjua brothers deposited the amount of US$1.000. No. but the latter did not respond. J.00 and P2. which affirmed the Decision of the Regional Trial Court (RTC).00 cash."10 Delsaux himself later sent a letter dated May 22. and FAR EAST BANK & TRUST COMPANY. 1987. Marquez L. Considering [the] new political situation since the departure of MR. Its manufacturing operations were conducted on eight parcels of land with a total area of 47. were covered by Transfer Certificates of Title Nos.

such ratification cannot be given any retroactive effect. Tan. 2000.) C. 1995. II 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.F.13 The trial court declared that since the authority of the agents/realtors was not in writing. GLANVILLE (Eternit Corp. Tan. that is. The trial court also pointed out that the supposed sale involves substantially all the assets of defendant EC which would result in the eventual total cessation of its operation.A. who was a real estate broker. Under Section 23 of the Corporation Code. demanding payment for damages they had suffered on account of the aborted sale. On July 3. Benito C. neither were Glanville and Delsaux authorized by its board of directors to offer the property for sale. was a special agent within the purview of Article 1874 of the New Civil Code. the complaint against Eternit Corporation now Eterton Multi-Resources Corporation and Eteroutremer. III THE COURT OF APPEALS ERRED IN NOT HOLDING THAT GLANVILLE AND DELSAUX HAVE THE NECESSARY AUTHORITY TO SELL THE SUBJECT PROPERTIES. however. (Sgd.xxx Yours sincerely. the sale is void and not merely unenforceable. S. The CA ruled that Marquez. On June 16. it was not necessary for him to be empowered as such by any written authority. Tan and Deogracias G. The CA pointed out that Delsaux was not even a member of the board of directors of EC. S. and ESAC in the RTC of Pasig City. which the corporation was obliged to consummate. and the telex dated October 28.A. Ruperto V.)11 When apprised of this development. In their answer to the complaint. EC alleged that Marquez had no written authority from the Board of Directors to bind it. The counterclaim of Eternit Corporation now Eterton Multi-Resources Corporation and Eteroutremer. EC. An amended complaint was filed. the Litonjuas.12 The fallo of the decision reads: WHEREFORE. alleging that "(1) the lower court erred in concluding that the real estate broker in the instant case needed a written authority from appellee corporation and/or that said broker had no such written authority. in which defendant EC was substituted by Eterton Multi-Resources Corporation. through counsel. However. WERE KNOWINGLY PERMITTED BY . The complaint as against Far East Bank and Trust Company is likewise dismissed for lack of cause of action. could not have been ratified by the principal. Delsaux. he needed a special authority from EC’s board of directors to bind such corporation to the sale of its properties."15 They averred that Marquez acted merely as a broker or go-between and not as agent of the corporation. wrote EC. Plaintiffs could not assume that defendants had agreed to sell the property without a clear authorization from the corporation concerned. Moreover. petitioners aver that I THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE. To: J. who was merely the representative of ESAC (the majority stockholder of EC) had no authority to bind the latter. Since the sale involved substantially all of the corporation’s assets. EC and ESAC alleged that since Eteroutremer was not doing business in the Philippines. is dismissed on the ground that there is no valid and binding sale between the plaintiffs and said defendants. In the instant petition for review. the CA rendered judgment affirming the decision of the RTC. it was equivalent to a perfected contract of sale. In any event. hence. the Litonjuas failed to prove that an agency by estoppel had been created between the parties. and as such. through resolutions of the Board of Directors and stockholders. Eufemio were impleaded as additional defendants on account of their purchase of ESAC shares of stocks and were the controlling stockholders of EC. In reply. it cannot be subject to the jurisdiction of Philippine courts. the Board and stockholders of EC never approved any resolution to sell subject properties nor authorized Marquez to sell the same. DELSAUX cc. since it was a bilateral contract to buy and sell. rejected their demand. 1986 of Jack Glanville was his own personal making which did not bind EC. and (2) the lower court committed grave error of law in holding that appellee corporation is not legally bound for specific performance and/or damages in the absence of an enabling resolution of the board of directors. Stock Ha T. OR AT THE VERY LEAST. the trial court rendered judgment in favor of defendants and dismissed the amended complaint. 16 The Litonjuas filed a motion for reconsideration. which was also denied by the appellate court. They further claimed that an agency by estoppel was created when the corporation clothed Marquez with apparent authority to negotiate for the sale of the properties. is also dismissed for lack of merit. it would necessarily need the authority from the stockholders.14 The Litonjuas appealed the decision to the CA. The Litonjuas then filed a complaint for specific performance and damages against EC (now the Eterton Multi-Resources Corporation) and the Far East Bank & Trust Company.

F. had the necessary authority to sell the subject property or.00 with the Security Bank and that an ESCROW agreement was drafted over the subject properties. Petitioners insist that respondents held themselves to the public as possessing power to sell the subject properties.17 Petitioners maintain that. the acceptance was made known to them through real estate broker Marquez. The GOOD FAITH of Petitioners in believing Eternit’s offer to sell the properties as evidenced by the Petitioners’ ACCEPTANCE of the counter-offer. We regret that we could not make a deal with you this time.000. MARCOS and a certain stabilization in the Philippines. The fact that Petitioners DEPOSITED the price of [US]$1. 4. and should be affirmed in toto.18 Petitioners insist that it is incongruous for Glanville and Delsaux to make a counter-offer to petitioners’ offer and thereafter reject such offer unless they were authorized to do so by respondent EC. Marquez was not an ordinary agent because his authority was of a special and limited character in most respects. from 1986 to 1987. I remain Yours sincerely. as hereinabove discussed. respondents aver that the issues raised by the petitioners are factual. and (sic) to reorganize the participation in the Corporation. Considering the new political situation since the departure of MR. The authority of Glanville and Delsaux to bind respondent EC is evidenced by the fact that . based on the facts of the case. or to any other person or entity for that matter. at least. The testimony of Marquez that he was chosen by Glanville as the then President and General Manager of Eternit. what is important and decisive was that Marquez was able to communicate both the offer and counter-offer and their acceptance of respondent EC’s counter-offer. AND THUS HELD THEM OUT TO THE PUBLIC AS POSSESSING POWER TO SELL THE SAID PROPERTIES. In any event. The Committee for Asia of our Group met recently (meeting every six months) and examined the position as far as the Philippines are (sic) concerned. Petitioners insist that Delsaux confirmed his authority to sell the properties in his letter to Marquez. the Committee has decided not to stop our operations in Manila[.000. are proscribed by Rule 45 of the Rules of Court. By way of comment. but in case the policy would change at a later stage we would consult you again. Delsaux and Marquez had no authority from the stockholders of respondent EC and its Board of Directors to offer the properties for sale to the petitioners. 7. His only job as a broker was to look for a buyer and to bring together the parties to the transaction.000. which evidenced the fact that Petitioners’ offer was allegedly REJECTED by both Glanville and Delsaux. In the meantime. to sell the properties of said corporation to any interested party. resulting in a perfected contract of sale. petitioners argue. 3. to wit: Dear Sir. Petitioners identified such evidence. Re: Land of Eternit Corporation I would like to confirm officially that our Group has decided not to proceed with the sale of the land which was proposed to you. The fact that the NEGOTIATIONS for the sale of the subject properties spanned SEVERAL MONTHS.000. 2. DELSAUX19 Petitioners further emphasize that they acted in good faith when Glanville and Delsaux were knowingly permitted by respondent EC to sell the properties within the scope of an apparent authority. hence. Exhibits "G" and "H" of the Respondents. On the merits of the petition. there was a perfected contract of sale of the parcels of land and the improvements thereon for "US$1.RESPONDENT ETERNIT TO DO ACTS WITHIN THE SCOPE OF AN APPARENT AUTHORITY. Glanville’s telex to Delsaux inquiring "WHEN WE (Respondents) WILL IMPLEMENT ACTION TO BUY AND SELL". Petitioners posit that the testimonial and documentary evidence on record amply shows that Glanville. Article 1874 of the New Civil Code does not apply. which authority. 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/middleman/intermediary.500. hence. Petitioners aver in their subsequent pleadings that respondent EC. The COUNTER-OFFER made by Eternit through GLANVILLE to sell its properties to the Petitioners. respondents EC (now EMC) and ESAC reiterate their submissions in the CA. They assert that the decision and resolution of the CA are in accord with law and the evidence on record. As broker. who was the President and General Manager of respondent EC. through Glanville and Delsaux.] [I]n fact production started again last week. had been allowed by respondent EC to hold themselves out in the public as having the power to sell the subject properties. conformed to the written authority of Marquez to sell the properties.00 plus P2. petitioners aver. 5. He was not authorized to sell the properties or to make a binding contract to respondent EC. thus: 1.00 to cover obligations prior to final liquidation. need not be in writing. C. 6." Petitioners insist that they had accepted the counter-offer of respondent EC and that before the counter-offer was withdrawn by respondents. More importantly. and Delsaux. They maintain that Glanville.000. who was the Managing Director for ESAC Asia.

namely: (1) When the conclusion is a finding grounded entirely on speculations. which. the performance of authorized duties of such director.Glanville and Delsaux negotiated for the sale of 90% of stocks of respondent EC to Ruperto Tan on June 1. certain and specific proof. in making its findings. mortgage and otherwise deal with such real and personal property. through its officers or agents in the normal course of business. subject to the limitations prescribed by law and the Constitution. Given the significance of their positions and their duties in respondent EC at the time of the transaction. is that Marquez was able to communicate the offer of respondent EC and the petitioners’ acceptance thereof. can be performed by the corporation only by officers or agents duly authorized for the purpose by corporate bylaws or by specific acts of the board of directors. take or grant. absurd. a formal resolution of the Board of Directors would be a mere ceremonial formality. may not be sold without express authority from the board of directors. the agency must be established by clear. In the absence of express written terms creating the relationship of an agency. otherwise known as the Corporation Code of the Philippines. are not binding on the corporation. obligations and transactions of the latter. as affirmed by the CA. a corporation is a juridical person separate and distinct from its members or stockholders and is not affected by the personal rights. 1997. respondent EC never repudiated the acts of Glanville. (5) when the findings of fact are conflicting. surmises. (3) when there is grave abuse of discretion. In fact. a corporation may sell or convey its real properties. Indeed. or misapplied facts and circumstances of substance which.25 It may act only through its board of directors or. There are. It is not to re-examine and assess the evidence on record. Glanville and Delsaux or Marquez to offer the properties for sale to prospective buyers and to accept any counter-offer. however. however. To purchase. or the acceptance of a counter-offer of prospective buyers of such properties and the execution of the deed of sale covering such property. subject to the articles of incorporation. There was no time that they acted without the knowledge of respondents. would justify a different conclusion. and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. receive. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. Anent the first issue. The property of a corporation. (6) when the Court of Appeals. (4) when the judgment is based on a misapprehension of facts. Marquez and Delsaux.27 Physical acts.23 We have reviewed the records thoroughly and find that the petitioners failed to establish that the instant case falls under any of the foregoing exceptions. is not the property of the stockholders or members. by-laws. who shall hold office for one (1) year and until their successors are elected and qualified. the existence of an agency is a fact question. petitioners maintain. recognized exceptions where the Court may delve into and resolve factual issues. (7) when the findings of the Court of Appeals are contrary to those of the trial court. or conjectures. as follows: SEC.22 It must be stressed that issues of facts may not be raised in the Court under Rule 45 of the Rules of Court because the Court is not a trier of facts.20 Whether an agency by estoppel was created or whether a person acted within the bounds of his apparent authority. convey. the corporate powers of all corporations formed under this Code shall be exercised. – Every corporation incorporated under this Code has the power and capacity: xxxx 7. as the transaction of a lawful business of the corporation may reasonably and necessarily require. (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties. It was the duty of the petitioners to prove that respondent EC had decided to sell its properties and that it had empowered Adams. and if so. likewise. It must be stressed that when specific performance is sought of a contract made with an agent.21 The findings of the trial court on such issues. absent evidence that the trial and appellate courts ignored. subject to the limitations prescribed by the law and the Constitution. Corporate powers and capacity. provides: SEC. The general principles of agency govern the relation between the corporation and its officers or agents. – Unless otherwise provided in this Code. questions of fact to be resolved on the basis of the evidence on record.28 Absent such valid delegation/authorization. and the fact that respondent ESAC owns 90% of the shares of stock of respondent EC. from among the members of the corporation. if properly considered. whether testimonial and documentary. pledge. or impossible. hold. the assailed decision of the Court of Appeals is supported by the evidence on record and the law.29 . lease. and Delsaux were authorized by respondent EC to act as its agents relative to the sale of the properties of respondent EC. like the offering of the properties of the corporation for sale. What is important. 23. are conclusive on the Court. (2) when the inference made is manifestly mistaken. Petitioners likewise failed to prove that their counter-offer had been accepted by respondent EC. and as such. The petition has no merit.24 Section 23 of Batas Pambansa Bilang 68. when authorized either by its by-laws or by its board resolution. all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks. The Board of Directors or Trustees. we agree with the contention of respondents that the issues raised by petitioner in this case are factual. or where there is no stock. through Glanville and Delsaux. sell. if considered. misconstrued.26 Under Section 36 of the Corporation Code. 36. would warrant a modification or reversal of the outcome of the case. is a question of fact. or relevant provisions of law. and whether the principal is estopped to deny the apparent authority of its agent are. including securities and bonds of other corporations. or connected with. the boundaries of their authority as agents. but not in the course of. (8) when the findings of fact are conclusions without citation of specific evidence on which they are based. the rule is that the declarations of an individual director relating to the affairs of the corporation. Glanville. Whether or not Marquez. Indeed.

" and not the entire management or Board of Directors of respondent ESAC. the personality of the principal is extended through the facility of the agent.43 It bears stressing that in an agent-principal relationship. to create or convey real rights over immovable property. requires proof of reliance upon the representations.48 An agency by estoppel.500.000.37 In this case. 1987. he confirmed. in turn. Such a relationship can only be effected with the consent of the principal. the following must be established: (1) the principal manifested a representation of the agent’s authority or knowlingly allowed the agent to assume such authority.31 By the contract of agency. for and in behalf of the petitioners. respondent EC was not a party to the transaction between them. Delsaux was unable to reply immediately to the telex of Glanville because Delsaux had to wait for confirmation from respondent ESAC.30 An unauthorized act of an officer of the corporation is not binding on it unless the latter ratifies the same expressly or impliedly by its board of directors. such third person has changed his position to his detriment. for and in its behalf. however. It appears that Marquez acted not only as real estate broker for the petitioners but also as their agent. For an agency by estoppel to exist. let alone offer for sale. The declarations of the agent alone are generally insufficient to establish the fact or extent of his/her authority. or from his silence or inaction according to the circumstances.000. The principal must intend that the agent shall act for him. EC was not bound by such acceptance. blindly to trust the agents. taken alone. he made it clear that. His business. the evidence of petitioners shows that Adams and Glanville acted on the authority of Delsaux. under any circumstances. cannot be used as basis for petitioners’ claim that he had likewise been authorized by respondent EC to sell the parcels of land. through its Committee for Asia. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the corporation is null and void.45 The settled rule is that.33 An agency may be expressed or implied from the act of the principal. to sell.000. which must not.32 Consent of both principal and agent is necessary to create an agency. and not as duly authorized agents of respondent EC. through Marquez.00 to cover all existing obligations prior to final liquidation.34 Agency may be oral unless the law requires a specific form. Adams and Glanville engaged the services of Marquez to offer to sell the properties to prospective buyers. persons dealing with an assumed agent are bound at their peril. acted on the authority of respondent ESAC. 1987.While a corporation may appoint agents to negotiate for the sale of its real properties. a special power of attorney is necessary. a board resolution evincing the grant of such authority is needed to bind EC to any agreement regarding the sale of the subject properties.000. the agent must intend to accept the authority and act on it. failed to adduce in evidence any resolution of the Board of Directors of respondent EC empowering Marquez.41 When Delsaux finally responded to Glanville on February 12.00. He has no authority to bind the principal by signing a contract of sale. Such board resolution is not a mere formality but is a condition sine qua non to bind respondent EC. As gleaned from the letter of Marquez to Glanville.35 However. or even all of such shares of stocks. in turn.47 Equally barren of merit is petitioners’ contention that respondent EC is estopped to deny the existence of a principal-agency relationship between it and Glanville or Delsaux. hence. Thus. will not justify their being treated as one corporation.000.39 and the Belgian/Swiss component of the management of respondent ESAC. the sale shall be void. the agent. we agree with the ruling of the appellate court that Marquez had no authority to bind respondent EC to sell the subject properties. 1986. the authority of the latter shall be in writing. from his silence or lack of action. otherwise. A person dealing with a known agent is not authorized. Glanville or Delsaux as its agents. in any way. or his failure to repudiate the agency knowing that another person is acting on his behalf without authority. Admittedly. needs proof that the representations predated the action taken in reliance. the latter relayed petitioners’ offer to Glanville.000. the three acted for and in behalf of respondent ESAC. the petitioners as plaintiffs below. authorized to perform all acts which the latter would have him do. In so doing. and Adams and Delsaux were members of its Board of Directors. the mere fact that a corporation owns a majority of the shares of stocks of another. and if they would hold the principal liable. is only to find a purchaser who is willing to buy the land upon terms fixed by the owner. and that.40 As such. the final say will have to be with the board of directors through its officers and agents as authorized by a board resolution or by its by-laws. a person binds himself to render some service or to do something in representation on behalf of another. such person must not act negligently but must use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority. to ascertain not only the fact of agency but also the nature and extent of authority. While Glanville was the President and General Manager of respondent EC. (2) the third person. be compelled by law or by any court. Marquez wrote the petitioner that he was authorized to offer for sale the property for P27. the burden of proof is upon them to prove it. However. becomes the principal. who. Glanville or Delsaux to offer the properties for sale and to sell the said properties to the petitioners. (3) relying upon such representation. which is similar to the doctrine of apparent authority.000.00 plus P2. an authority to find a purchaser of real property does not include an authority to sell. statements as to the extent of his powers. respondent ESAC owned 90% of the shares of stocks of respondent EC.49 Such proof . petitioners are not entitled to damages from respondent EC. and the intention of the parties must find expression either in words or conduct between them.36 Thus. However. Acceptance by the agent may be expressed. the eight parcels of land owned by respondent EC including the improvements thereon.44 The petitioners cannot feign ignorance of the absence of any regular and valid authority of respondent EC empowering Adams. in good faith. 1997. A real estate broker is one who negotiates the sale of real properties. Indeed. The bare fact that Delsaux may have been authorized to sell to Ruperto Tan the shares of stock of respondent ESAC. Glanville had to send a telex to Delsaux to inquire the position of respondent ESAC to petitioners’ offer.38 the Board of Directors of respondent ESAC. Moreover. or implied from his acts which carry out the agency. generally speaking. While it is true that petitioners accepted the counter-offer of respondent ESAC. that the latter had accepted such offer to sell the land and the improvements thereon. by legal fiction. on September 12. on June 1.42 The offer of Delsaux emanated only from the "Belgian/Swiss decision. relied upon such representation. with the consent or authority of the latter. as admitted by petitioners in their Memorandum. the petitioners failed to discharge their burden. when a sale of a piece of land or any portion thereof is through an agent. and in case either is controverted. based on the "Belgian/Swiss decision" the final offer of respondent ESAC was US$1. When petitioners offered to purchase the property for P20.46 In this case. on February 26.00 and the other terms of the sale subject to negotiations. hence.

Costs against the petitioners. Glanville and Delsaux positively and unequivocally declared that they were acting for and in behalf of respondent ESAC. In their communications to the petitioners. the petition is DENIED for lack of merit. Delsaux and Marquez. through Glanville. IN LIGHT OF ALL THE FOREGOING. Neither may respondent EC be deemed to have ratified the transactions between the petitioners and respondent ESAC.is lacking in this case. The transactions and the various communications inter se were never submitted to the Board of Directors of respondent EC for ratification. SO ORDERED. .

which reversed the Decision dated July 29. if valid. ceded to respondent. namely. to avoid criminal prosecution. petitioner denied that she incurred them and refused to pay the same. The antecedents of the case follow: On April 1. the property is not solely owned by defendant as appearing in Entry No. that on October 5. whether the Deed of Absolute Sale is valid.00 with that entity. 1998. petitioner refused to cooperate with respondent to execute the necessary documents and other formalities required by the NHMFC to effect the transfer of the title over the property. that she did not appear before a notary public. that the checks bounced for insufficiency of funds. covered by Transfer Certificate of Title No. respondent learned that petitioner had incurred arrearages amounting to P26.744. 2006 JOCELYN B. the RTC rendered a decision the dispositive portion of which states: WHEREFORE. Branch 21. that upon informing the petitioner of her arrears. 149353 June 26. and the CA Resolution2 dated August 6. respondent interposed her sole assignment of error: THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF [sic] THE DEED OF SALE BETWEEN THE PARTIES HAS NO CONSIDERATION OR INSUFFICIENCY OF EVIDENCE. second. and Elizabeth Tomelden. and that she suffered damages and lost rental as a result. as seller. that despite her efforts to assist respondent to collect from the borrowers. respondent shall assume the undue balance of the mortgage and pay the monthly amortization of P4. that the property was at that time being occupied by a tenant paying a monthly rent of P3. and averred that from June to September 1995. that she was forced to issue eight checks amounting to P350. No. that the Community Tax Certificate number on the deed was not hers and for which respondent may be prosecuted for falsification and perjury. The RTC held that the sale was void for lack of cause or consideration:5 Plaintiff Angeles’ admission that the borrowers are the friends of defendant Doles and further admission that the checks issued by these borrowers in payment of the loan obligation negates [sic] the cause or consideration of the contract of sale executed by and between plaintiff and defendant. In her appeal brief. whether petitioner is liable for damages. the CA promulgated its Decision. executed before the notary public. that. a parcel of land. The RTC identified the issues as follows: first. she could no longer locate them. and third. City of Manila. that the said deed had no valid consideration. borrowed money from respondent and issued personal checks in payment of the loan. Respondent. that she was forced by respondent to execute an "Absolute Deed of Sale" over her property in Bacoor. 1998 of the Regional Trial Court (RTC). whether petitioner is obliged to sign and execute the necessary documents to effect the transfer of her rights over the property to the respondent. denied that she borrowed money from respondent. Civil Code). AURA TINA ANGELES. that this property was mortgaged to National Home Mortgage Finance Corporation (NHMFC) to secure petitioner’s loan in the sum of P337. With costs against plaintiff. Cavite.6 On April 30.000 to answer for the bounced checks of the borrowers she referred. Petitioner. a criminal case will be filed against her. (Art.3 petitioner.-G. 382532. as well as the improvements thereon. 1996. J. as buyer. Julia Inocencio. 9055 of Transfer Certificate of Title No. that despite repeated demand. 2001 which denied petitioner’s Motion for Reconsideration. vs. 2001. Doles (petitioner). 1994. 66985. premises considered. MA. On July 29.430. the dispositive portion of which reads: . SO ORDERED.000.G.: This refers to the Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the Decision1 dated April 30. Respondent alleged that petitioner was indebted to the former in the concept of a personal loan amounting to P405. Aura Tina Angeles (respondent) filed with the RTC a complaint for Specific Performance with Damages against Jocelyn B. and that respondent suffered damages as a result and was forced to litigate." The rule under the Civil Code is that contracts without a cause or consideration produce no effect whatsoever. while admitting some allegations in the Complaint. docketed as Civil Case No.00 representing the principal amount and interest.09. that petitioner collected rent over the property for the month of January 1997 and refused to remit the proceeds to respondent. Ma. Special Power of Attorney in favor of Jocelyn Doles covering the share of Teodorico Doles on the parcel of land described in this certificate of title by virtue of the special power of attorney to mortgage. Moreover. DOLES.050. Complaint). that as a condition for the foregoing sale.4 and located at a subdivision project known as Camella Townhomes Sorrente in Bacoor. that upon verification with the NHMFC.R. the Court hereby orders the dismissal of the complaint for insufficiency of evidence. respondent became furious and threatened petitioner that if the accounts were not settled. then defendant. because of this. 1997. Virginia Jacob. etc. by virtue of a "Deed of Absolute Sale".11 for the remainder of the 25 years which began on September 3.A. Theresa Moratin.00. Zenaida Romulo. in order to satisfy her personal loan with respondent. 22. 9055. that respondent then threatened to initiate a criminal case against her for violation of Batas Pambansa Blg. inclusive of penalties and interest. She alleged that her friends. thus: "Entry No. with an area of 42 square meters. CV No.748.R. 2001 of the Court of Appeals (CA) in C. 1352. DECISION AUSTRIA-MARTINEZ. 97-82716. Respondent appealed to the CA. Petitioner. that prior to the issuance of the checks she informed respondent that they were not sufficiently funded but the latter nonetheless deposited the checks and for which reason they were subsequently dishonored. she 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. Cavite. 382532 (Annex A.

the CA cited four instances in the record to support its holding that petitioner "re-lends" the amount borrowed from respondent to her friends: first. in turn. is denied for insufficiency of evidence. 2001. and that the amount of P3. the same shall be deemed part of the balance of petitioner’s loan with the NHMFC which respondent agreed to assume. namely: when the judgment is based on a misapprehension of facts. which was predicated on that pre-existing debt. at least three of which are present in the instant case. the Court finds it necessary to re-examine the evidence presented by the contending parties during the trial of the case. II. which. hence. A new one is entered ordering defendant-appellee to execute all necessary documents to effect transfer of subject property to plaintiff-appellant with the arrearages of the former’s loan with the NHMFC. WHETHER OR NOT THE PETITIONER CAN BE CONSIDERED AS A DEBTOR OF THE RESPONDENT.17 The question that has to be resolved for the moment is whether this debt can be considered as a valid cause or consideration for the sale. the Deed of Absolute Sale was supported by a valid consideration.9 and that the documentary evidence shows that the actual borrowers.00 representing the rental for January 1997 supposedly collected by petitioner. jurisprudence has recognized several exceptions. since the same is considered just or legal if made to enforce one’s claim through competent authority under Article 133511 of the Civil Code. This Court has consistently held that a contract of sale is null and void and produces no effect whatsoever where the same is without cause or consideration. III. 2001.744. then defendant. 1998 is REVERSED and SET ASIDE. third.20 and fourth. arguing that respondent categorically admitted in open court that she acted only as agent or representative of Arsenio Pua. therefore. as well as the claim for damages and attorney’s fees. she cannot be made to sign the documents to effect the transfer of ownership over the entire property. On August 6. is void for lack of consideration. Indeed. The CA concluded that petitioner was the borrower and. WHETHER OR NOT THE CONTRACT OF SALE WAS EXECUTED FOR A CAUSE. the friends of petitioner never presented themselves to respondent and that all transactions were made by and between petitioner and respondent. To restate.00. Hence.7 that the money borrowed was deposited with the bank account of the petitioner. No costs. the principal financier and. representing both principal and interest.12 that with respect to the arrearages of petitioner on her monthly amortization with the NHMFC in the sum of P26. this appeal is hereby GRANTED. 2001. consider her as their creditor and not the respondent. WHETHER OR NOT AN AGENT WHO WAS NOT AUTHORIZED BY THE PRINCIPAL TO COLLECT DEBT IN HIS BEHALF COULD DIRECTLY COLLECT PAYMENT FROM THE DEBTOR. petitioner filed her Motion for Reconsideration with the CA. she had no legal capacity to sue petitioner. could justify a different conclusion. the Deed of Absolute Sale purports to be supported by a consideration in the form of a price certain in money16 and that this sum indisputably pertains to the debt in issue. The Petition is meritorious.000. The CA took into account the following circumstances in their entirety: the supposed friends of petitioner never presented themselves to respondent and that all transactions were made by and between petitioner and respondent. petitioner filed the present Petition and raised the following issues: I.09. which is the sum of money petitioner owed respondent amounting to P405.19 third.10 Furthermore. and when the CA manifestly overlooked certain relevant facts not disputed by the parties. The principal issue is whether the Deed of Absolute Sale is supported by a valid consideration. IN VIEW OF THE FOREGOING.430. SO ORDERED. 2001.14 Although. it is not the business of this Court to review the findings of fact made by the lower courts. would "re-lend" the amount borrowed from the respondent to her friends. the friends of petitioner. during her cross-examination:22 Atty. and fourth points. as a rule. Diza: . who co-owned the subject property. consider her as their creditor and not the respondent. the CA cites the testimony of the petitioner. and that the CA failed to consider the fact that petitioner’s father. The Decision of the lower court dated July 29.15 To arrive at a proper judgment. the friends of petitioner. at the latter’s expense. then she is not a party to the loan. Petitioner argues that since she is merely the agent or representative of the alleged debtors. the money passed through the bank accounts of petitioner and respondent.WHEREFORE. the CA held that the alleged threat or intimidation by respondent did not vitiate consent. 1. the CA issued its Resolution denying the motion on the ground that the foregoing matters had already been passed upon. if properly considered. and that the Deed of Sale executed between her and the respondent in their own names. was not impleaded as a defendant nor was he indebted to the respondent and. while payments made for the loan were deposited by the latter to respondent’s bank account. On August 28.13 On May 29. the documentary evidence shows that the actual borrowers. petitioner herself admitted that she was "re-lending" the money loaned to other individuals for profit.8 that petitioner herself admitted in open court that she was "re-lending" the money loaned from respondent to other individuals for profit.21 On the first. when the findings of facts of the courts a quo are conflicting.18 second. petitioner received a copy of the CA Resolution. On August 13. hence.

What is that transaction? witness: a. Atty. How much? . Your friends and the plaintiff did not meet personally? witness: a. Atty. Atty. Diza: q. sir.] namely. Atty. sir. Diza: q. You also mentioned that you were not the one indebted to the plaintiff? witness: a. Yes. And you have transact[ed] with the plaintiff? witness: a. sir. We are both intermediaries. Inocencio and Moraquin are my friends while [as to] Jacob and Tomelden[. sir. You are intermediaries? witness: a. sir. Yes.q. Atty. And you mentioned the persons[.] they were just referred. Atty. Diza: q. You are re-lending the money? witness: a. Did the plaintiff personally see the transactions with your friends? witness: a. sir. she knows the money will go to those persons. sir. Atty. do you have commission? witness: a. Yes. Yes. What profit do you have. To refer those persons to Aura and to refer again to Arsenio Pua. Teresa Moraquin. Maria Luisa Inocencio. Diza: q. they are your friends? witness: a. Diza: q. Zenaida Romulo. Atty. Yes. xxxx Atty. As evidenced by the checks of the debtors they were deposited to the name of Arsenio Pua because the money came from Arsenio Pua. Yes. No. Diza: q. Diza: q. Diza: q. Did the plaintiff knew [sic] that you will lend the money to your friends specifically the one you mentioned [a] while ago? witness: a. Diza: q. Diza: q. Atty. Elizabeth Tomelden.

because I am only representing him. Yes. made the following admission during her cross examination:23 Atty. It is not your money? Atty. So it is not actually your money but the money of Arsenio Pua? witness: a. Villacorta: witness: q. then plaintiff. q. witness: Court: a. Who is this Arsenio Pua? witness: a. sir. are you aware of that? witness: a. Your Honor. Villacorta: q. Yes. And these friends of the defendant borrowed money from you with the assurance of the defendant? witness: a. Witness that the defendant borrowed from you to accommodate somebody. there were checks issued. Atty. am I correct? a. Two percent to Tomelden. Villacorta: q. They go direct to Jocelyn because I don’t know them. the CA concluded that petitioner is the real borrower. Villacorta: q. By the friends of the defendant. Yes.witness: a. And is it not also a fact Madam witness that everytime that the defendant borrowed money from you her friends who [are] in need of money issued check[s] to you? There were checks issued to you? a. one percent to Jacob and then Inocencio and my friends none. I am aware of that. xxxx Atty. witness: q. So the money came from Arsenio Pua? witness: Atty. sir. respondent. Yes. Other portions of the testimony of respondent must likewise be considered:24 Atty. Is it not a fact Ms. while the respondent. Atty. the real lender. sir. Principal financier. But as correctly noted by the RTC. Yes. I am aware of that. Villacorta: q. More or less she [accommodated] several friends of the defendant? witness: a. sir. Villacorta: q. sir. Villacorta: Atty. Villacorta: q. Based on the foregoing. xxxx .

27 Though the fact or extent of authority of the agents may not. such as a bank account. may be employed. and if relations exist which will constitute an agency. if one professes to act as agent for another. Atty. be established from the declarations of the agents alone. and respondent knew that the borrowers are friends of petitioner. and that a sub-agent be appointed. If their respective principals do not actually and personally know each other. such ignorance does not affect their juridical standing as agents. the basis of agency is representation. And because of your assistance. Yes. She is also estopped to deny that petitioner acted as agent for the alleged debtors. The law in fact contemplates. particularly. her friends whom she referred to respondent. sir. it is not necessary that the principal personally encounter the third person with whom the agent interacts. If it is true that petitioner was "re-lending". am I correct? witness: a. the actual borrowers. sir. especially since the very purpose of agency is to extend the personality of the principal through the facility of the agent. her disclosed principal. under Article 1868 of the Civil Code. and so both of them are estopped to deny the same.26 Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case. It is evident from the record that petitioner merely refers actual borrowers and then collects and disburses the amounts of the loan upon which she received a commission. The CA is incorrect when it considered the fact that the "supposed friends of [petitioner]. Yes. as a general rule. impersonal dealings where the principal need not personally know or meet the third person with whom her agent transacts: precisely. So that occasion lasted for more than a year? witness: a. it will be an agency whether the parties understood the exact nature of the relation or not. And some of the checks that were issued by the friends of the defendant bounced. especially where there is no stipulation to . suffice it to say that in the normal course of commercial dealings and for reasons of convenience and practical utility it can be reasonably expected that the facilities of the agent. then the checks should have been drawn in her name and not directly paid to Pua.29 In the case at bar.30 The question is to be determined by the fact that one represents and is acting for another. it must be stressed that the manner in which the parties designate the relationship is not controlling. With respect to the admission of petitioner that she is "re-lending" the money loaned from respondent to other individuals for profit. Villacorta: q. sir. For an agency to arise.28 In this case. Yes. to carry out the task. sir. Atty. either by direct or circumstantial evidence.25 The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact. This Court has affirmed that.a. she may be estopped 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. Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua. the finding of the CA that the disbursements and payments for the loan were made through the bank accounts of petitioner and respondent. and to a great degree. If an act done by one person in behalf of another is in its essential nature one of agency. the friends whom she (petitioner) referred. Villacorta: q. such as the bank itself. the friends of the defendant who are in need of money were able to obtain loan to [sic] Arsenio Pua through your assistance? witness: a. and that respondent transacts on behalf of her "principal financier". a certain Arsenio Pua. did not present themselves to [respondent]" as evidence that negates the agency relationship—it is sufficient that petitioner disclosed to respondent that the former was acting in behalf of her principals. petitioner knew that the financier of respondent is Pua. Villacorta: q.31 That both parties acted as mere agents is shown by the undisputed fact that the friends of petitioner issued checks in payment of the loan in the name of Pua. Villacorta: q. Yes. sir. the former is the agent of the latter notwithstanding he or she is not so called. Atty. Atty. The question is ultimately one of intention. both petitioner and respondent have undeniably disclosed to each other that they are representing someone else. With respect to the second point. the purpose of agency is to extend the personality of the principal through the facility of the agent. Yes. And because of that Arsenio Pua got mad with you? witness: a.

1994. with more reason. The Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. SO ORDERED. to effect the delivery of the object of the sale at the consummation stage. nor from any other evidence on the record. the Court has no choice but to declare the sale void for lack of cause. Since the sale is predicated on that loan. that the sale might have been backed up by another consideration that is separate and distinct from the debt: respondent averred in her complaint and testified that the parties had agreed that as a condition for the conveyance of the property the respondent shall assume the balance of the mortgage loan which petitioner allegedly owed to the NHMFC. 38253236 on its face shows that the owner of the property which admittedly forms the subject matter of the Deed of Absolute Sale refers neither to the petitioner nor to her father. the prayer of respondent to compel petitioner to execute necessary documents to effect the transfer of title is premature. The complaint of respondent in Civil Case No. it states that the property is registered in the name of "Household Development Corporation. And since the sale is void. even assuming the mortgage validly exists. Respondent filed her Complaint for Specific Performance in 1997. As the complainant who initiated the case. Having failed to discharge such burden. the alleged co-owner. .35 the Court must stress that the Transfer Certificate of Title No. the petition is granted. A further scrutiny of the record shows. Since the 25 years had not lapsed.the contrary. Moreover."40 In view of these anomalies.39 What is worse. the Court notes respondent’s allegation that the mortgage with the NHMFC was for 25 years which began September 3. 2. the Court cannot entertain the possibility that respondent agreed to assume the balance of the mortgage loan which petitioner allegedly owed to the NHMFC."37 it cannot be inferred from this bare notation. Teodorico Doles.33 This Court in the recent past has declared that an assumption of a mortgage debt may constitute a valid consideration for a sale.32 In view of the two agency relationships. that the petitioner or her father held any direct interest on the property in question so as to validly constitute a mortgage thereon38 and. petitioner and respondent are not privy to the contract of loan between their principals. there is a notation that the TCT itself has been "cancelled. endowed with any ownership rights to validly mortgage and convey the property. Rather. in the first place. the Court finds it unnecessary to dwell on the issue of whether duress or intimidation had been foisted upon petitioner upon the execution of the sale. especially since the record is bereft of any factual finding that petitioner was. 97-82716 is DISMISSED. respondent bears the burden of proving the basis of her complaint." Although there is an entry to the effect that the petitioner had been granted a special power of attorney "covering the shares of Teodorico Doles on the parcel of land described in this certificate. then the sale is void for lack of consideration.34 Although the record shows that petitioner admitted at the time of trial that she owned the property described in the TCT. WHEREFORE. however.

Sometime the following year. segun hechos. petitioner.. such as. For these reasons. The equipment under the second order arrived in due time. it was agreed between the parties. Inc.. plaintiff and defendants. and that the defendants had obtained a discount from the Starr Piano Company. In 1930. and upon delivery of the same to the plaintiff and the presentation of necessary papers. Salmon and Coulette on one side. la recurrente obtuvo. and the Arco Amusement Company desiring to equipt its cinematograph with sound reproducing devices.335. Gonzalo Puyat & Sons..: This is a petition for the issuance of a writ of certiorari to the Court of Appeals for the purpose of reviewing its Amusement Company (formerly known as Teatro Arco). U. Exhibit "3". 1941 GONZALO PUYAT & SONS. a 10 per cent commission. by means of Exhibit "1". Ferrier and Daniel Me. and sentenced the petitioner to pay the respondent alleged overpayments in the total sum of $1. presidido entonces por el hoy Magistrado Honorable Marcelino Montemayor. its name was changed to Arco Amusement Company. in connection with a civil case in Vigan. vs. Salmon was the president. A.600. another order for sound reproducing equipment was placed by the plaintiff with the defendant. which is a letter signed by C.700 y $1. but a mere flat charge and rough estimate made by the defendant equivalent to 10 per cent of the price of $1.671. with one justice dissenting — held that the relation between petitioner and respondent was that of agent and principal. Being agreeable to this price. the defendant sent a cable. L-47538 June 20. J. with its office in Manila.. About the same time. and after some negotiations between the same parties. in addition to its other business. respondent. J. a corporation duly organized under the laws of the Philippine Islands. The equipment arrived about the end of the year 1929. formally authorized the order. they sought to obtain a reduction from the defendant or rather a reimbursement. insurance. The defendant did not show the plaintiff the cable of inquiry nor the reply but merely informed the plaintiff of the price of $1. for all expenses and charges. factory Richmond. entre la recurrente y la recurrida existia una relacion implicita de mandataria a mandante en la transaccion de que se trata. mediante dolo. defendant-appellee. LAUREL. banking charges. thru its then president and acting manager. Moreover. which are admitted by the respondent. Indiana. the plaintiff. inquiring about the equipment desired and making the said company to quote its price without discount.S. The appellate court further argued that even if the contract between the petitioner and the respondent was one of purchase and sale. The appellate court. and an employee named Santos.600 with its 10 per cent commission. vs. together with legal interest thereon from the date of the filing of the complaint until said amount is fully paid. plus 10 per cent commission. with office in Manila. Salmon dated November 19. on the same terms as the first order.G. another corporation doing business in the Philippine Islands. plus all expenses.04.. Coulette was the business manager. ARCO AMUSEMENT COMPANY (formerly known as Teatro Arco)." It appears that the respondent herein brought an action against the herein petitioner in the Court of First Instance of Manila to secure a reimbursement of certain amounts allegedly overpaid by it on account of the purchase price of sound reproducing equipment and machinery ordered by the petitioner from the Starr Piano Company of Richmond. INC.. the petitioner was guilty of fraud in concealing the true price and hence would still be liable to reimburse the respondent for the overpayments made by the latter. said officials of the plaintiff were convinced that the prices charged them by the defendant were much too high including the charges for out-of-pocket expense. with the price. Inc. that the plaintiff would pay for the equipment the amount of $1. This amount of $160 does not represent actual out-ofpocket expenses paid by the defendant. filed by one Fidel Reyes against the defendant herein Gonzalo Puyat & Sons. that is to say. plus all expenses incurred. Feria & Lao for petitioner. plus the 10 per cent commission agreed upon and plus all the expenses and charges. en vez de la de vendedora a compradora como ha declarado el Juzgado de Primera Instncia de Manila. Indiana. representing the defendant.700 f. and Gil Puyat on the other. The trial court held that the contract between the petitioner and the respondent was one of outright purchase and sale. freight. to the Starr Piano Company. that the latter would. The petitioner now claims that the following errors have been incurred by the appellate court: I. — by a division of four.S. while A. was duly paid by the plaintiff to the defendant. evidently the list price of $1. U. About three years later.R. was engaged in the business of operating cinematographs. After some negotiations. approached Gonzalo Puyat & Sons. cables. and $160. the petitioner acting as agent of the respondent in the purchase of the equipment in question.600 de las maquinarias y equipos en cuestion. representing the plaintiff. At the expense of the plaintiff. No. that is to say.52 or P2. in addition to the price of the equipment. the "Teatro Arco". It would seem that this last company dealt in cinematographer equipment and machinery. B. y condenar a la recurrente ha obtenido de la Starr Piano Company of Richmond. C. Inc. el consentimiento de la recurrida en cuanto al precio de $1. El Tribunal de Apelaciones incurrio en error de derecho al declarar que. etc.600 of the equipment. This agreement or order was confirmed by the plaintiff by its letter Exhibit "2". which was supposed to be the price quoted by the Starr Piano Company. and failing in this they brought the present action.A. the officials of the Arco Amusement Company discovered that the price quoted to them by the defendant with regard to their two orders mentioned was not the net price but rather the list price. plaintiffappellant. Inc. was acting as exclusive agents in the Philippines for the Starr Piano Company of Richmond. as well as to pay the costs of the suit in both instances. however. A reply was received by Gonzalo Puyat & Sons. suponiendo que dicha relacion fuerra de vendedora a compradora. S. order sound reproducing equipment from the Starr Piano Company and that the plaintiff would pay the defendant. The facts of the case as found by the trial court and confirmed by the appellate court. the price of $1.700.b. without date. Indiana. and the defendant was duly paid the price of $1. 1929. Gomez for respondent.o. are as follows: In the year 1929. by reading reviews and literature on prices of machinery and cinematograph equipment. S. Indiana. W. Inc. Gonzalo Puyat and Sons. on behalf of the plaintiff. and absolved that petitioner from the complaint. We sustain the theory of the trial court that the contract between the petitioner and the . II. El Tribunal de Apelaciones incurrio en error de derecho al declarar que. Gil Puyat.700.

411.600. it were better that. for the sound reproducing equipment subject of its contract with the petitioner. freight. 334.respondent was one of purchase and sale.. It was apparently to guard against an exhorbitant additional price that the respondent sought to limit it to 10 per cent. Bank v. was to receive the actual cost price plus ten per cent (10%). Hosser v. 1023. Moran and Horrilleno. and short of fraud. the petitioner was not duty bound to reveal the private arrangement it had with the Starr Piano Company relative to such discount to its prospective customers.. business acumen permit of the loosening of the sleeves and of the sharpening of the intellect of men and women in the business world.700 and $1. defendants-appellee. the latter as exclusive agent of the Starr Piano Company in the United States.. 173 Mass. vs. In the first place. Avanceña. Exhibits 1 and 2. sometimes add to the list price when they resell to local purchasers. The fact that the petitioner obtained more or less profit than the respondent calculated before entering into the contract or reducing the price agreed upon between the petitioner and the respondent. 47 III. as it is hereby.. by which the respondent accepted the prices of $1. C.. certain sound reproducing equipment and machinery. The respondent could not secure equipment and machinery manufactured by the Starr Piano Company except from the petitioner alone. and the respondent is estopped from questioning that additional price.. the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices fixed of $1. Bank v. It is to be observed that the twenty-five per cent (25%) discount granted by the Starr piano Company to the petitioner is available only to the latter as the former's exclusive agent in the Philippines. it alone must bear the blame. on that ground alone. because in agency. No. Palmer.. 501.) In the second place. It is out of the ordinary for one to be the agent of both the vendor and the purchaser. and was also to be reimbursed for all out of pocket expenses in connection with the purchase and delivery of such equipment. 576. . for the reasons now to be stated. mistake in their quotation. The third paragraph of the respondent's cause of action states: 3. 92. the contract is the law between the parties and should include all the things they are supposed to have been agreed upon. loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the orders as per specifications. Civil Code). 212. The decision of the appellate court is accordingly reversed and the petitioner is absolved from the respondent's complaint in G. are clear in their terms and admit no other interpretation that the respondent in question at the prices indicated which are fixed and determinate. Merrill." This is incompatible with the pretended relation of agency between the petitioner and the respondent. It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction. The respondent. The respondent admitted in its complaint filed with the Court of First Instance of Manila that the petitioner agreed to sell to it the first sound reproducing equipment and machinery. this does not necessarily make the petitioner an agent of the respondent.. As a matter of fact. and sell and deliver to the herein plaintiff.) The letters. the herein plaintiff (respondent) and defendant (petitioner) entered into an agreement. 38 Phil. Parsons Hardware Co. That on or about November 19. The distinction which the respondents seeks to draw between the cost price and the list price we consider to be spacious.700 and $1. 161. What does not appear on the face of the contract should be regarded merely as "dealer's" or "trader's talk". Diaz." without pronouncement regarding costs. therefore. It is well known that local dealers acting as agents of foreign manufacturers. under and by virtue of which the herein defendant was to secure from the United States. Conner. such as costs of telegrams. Exhibits 1 and 2. 11 Am. While the latters.. aside from obtaining a discount from the home office. granted. under and by virtue of said agreement. and the respondent was not even aware of such an arrangement. (Nolbrook v. no reason is advanced by the respondent why the petitioner should waive the 25 per cent discount granted it by the Starr Piano Company in exchange for the 10 percent commission offered by the respondent. Moreover. Copper. respectively. Doles v. JJ. it received the equipment and machinery as represented. The respondents contends that it merely agreed to pay the cost price as distinguished from the list price. and similar expenses. state that the petitioner was to receive ten per cent (10%) commission. Inc. could not have offered to pay a 10 per cent commission to the petitioner provided it was given the benefit of the 25 per cent discount enjoyed by the petitioner. The respondent could not have secured this discount from the Starr Piano Company and neither was the petitioner willing to waive that discount in favor of the respondent. Rep. Indiana. 1929. Not every concealment is fraud.. (See Quiroga vs. to hold the petitioner an agent of the respondent in the purchase of equipment and machinery from the Starr Piano Company of Richmond. This is the very essence of commerce without which merchants or middleman would not exist. much less compel a reimbursement of the excess price. the agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions received from his principal (section 254. and which stipulation is not incompatible with the contract of purchase and sale. within certain limits. Brosscell. plaintiff-appellant. (Emphasis ours.) We agree with the trial judge that "whatever unforseen events might have taken place unfavorable to the defendant (petitioner). is incompatible with the admitted fact that the petitioner is the exclusive agent of the same company in the Philippines. plus ten per cent (10%) commission and all out-of-pocket expenses incurred by the petitioner. 120 III. R. it willingly paid the price quoted. 8 Allen. for which the said defendant. 56 So. and not one of agency. and it cannot rescind the contract. as this provision is only an additional price which the respondent bound itself to pay. which can not bind either party.J. Code of Commerce). and that was the end of the matter as far as the respondent was concerned. The facts and circumstances indicated do not point to anything but plain ordinary transaction where the respondent enters into a contract of purchase and sale with the petitioner.600. and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part (article 1729. such as change in prices. Gonzalo Puyat & Sons. concur. So ordered. entitled "Arco Amusement Company (formerly known as Teatro Arco). If the respondent later on discovers itself at the short end of a bad bargain. The writ of certiorari should be.

........B.. and were never delivered to Chua Ngo... 90 lbs......... . which in part says: ORDER NO... Inc....... .. a local corporation........ to the Universal Trading Company.... Manila......... Deposit of 40% of the contract price plus the above charges to be payable immediately upon receipt of telegraphic confirmation. $3.. Inc.. It appears that on January 14.... Case $6.... Inc.. Universal Trading Company refused to pay. Balance payable upon arrival of goods in Manila...800.. CHUA NGO.. From a judgment for plaintiff. H.......... xxx xxx xxx . defendantappellant..... subject to conditions on the back of this order....... the herein litigants signed the document Exhibit 1.. Chan and H. HOLMES Sales manager Universal Trading Company.00 $1...936 Agreed and accepted: (Sgd...890... the following merchandise enumerated below: Shipping instructions Via San Francisco. $3. the price 300 boxes of Sunkist oranges to be gotten from the United States.. 1950 Onions .. 220 to case ......... This suit by Chua Ngo is to recover the corresponding price he had paid in advance. the goods were shipped from that port to Manila "F......... (See terms of agreement on reverse side. NOTE: — Onions canceled by supplier. If balance is not paid within 48 hours of notification merchandise may be resold by Universal Trading Co...... Building Juan Luna................06 per case Approved: Far Eastern Division R-236-238 Ayala $1..... B. alleging it merely acted as agent of Chua Ngo in purchasing the oranges.. Please send for our account....... 707 TO GABUARDI COMPANY OF CALIFORNIA 258 Market Street California San Francisco... 632 14 January 1946 Agreement is hereby made between Messrs. ...... INC...... Inc........ Manila... in Manila... for order as follows and under the following terms: Quantity Merchandise and description Unit Unit price Amount 300 Sunkist oranges..... Arandia for appellant.. Total amount of order .... .........) CHUA NGO Confirmed and approved: (Sgd..... S...046... (Initialed) R. San Francisco.. wrapped Grade No.R...... and........ is entitled to the return of the price corresponding to the undelivered fruit...... the defendant appealed..) RALPH E.. 1946..... the defendant forwarded and order to Gabuardi Company of San Francisco....00 300 Onions. O.. INC.... vs.. L-2870 September 19..... Manuel O..... Chua Ngo of 753 Folgueras... No..... and the deposit forfeited.. Navel.. Navel..30 $1. 1 ..: Chua Ngo delivered....G....... The latter ordered the said boxes from Gabuardi Company of San Francisco... and in due course.... O.. A.. U...... therefore...... UNIVERSAL TRADING CO. B. Arsenio Sy Santos for appellee............ Manila CONTRACT NO....) On the same date....... Case $6. California Terms: F. E.. San Francisco Quantity Articles Unit Unit price Total price 300 Sunkist oranges wrapped Grade No 1 .....82 $2. BENGZON. which reads as follows: UNIVERSAL TRADING COMPANY.00 We are advised by the supplier that the charges to bring these goods to Manila are: Oranges. plaintiff-appellee. Australian Browns.. 220 to case ...... and the Universal Trading Company.00..... to case Case $6..83 per case....." One hundred eighty boxes were lost in transit....... . J.. Chua Ngo maintains he bought the oranges from Universal Trading Company.......

882..... Fourth.... part of the orange consignment from San Francisco was lost in 3...... Delivery charges . but as independent purchaser from Gabuardi Company. It could not be Chua Ngo because the fruit had not been delivered to him.. P6. In our opinion..............616.... the price of marked "UTC Manila" and were consigned to defendant.253. And forfeiture of the deposit is incompatible with a contract of agency.43 ===== been sold "F..) RALPH R... in this Court the additional theory is advanced that it acted as agent of such 180 cases (received by defendant) is admittedly P3.. that the defendant paid in its own name to Gabuardi Company the shipment of oranges...... the answer is that such contention is based on the assumption — which we reject — that defendant merely acted as agent of plaintiff in the purchase of the oranges from Gabuardi. the judgment m ust be reversed.. 3 ! percent sales tax .. immediately after On January 21. Universal Trading oranges....... or did it agree to sell — and sold — the oranges to Chua Ngo? If the first........ said goods had been delivered to the purchaser at San Francisco on board the vessel Silversandal. The Silversandal arrived at the 180 boxes undelivered must be paid back to him.... Inc. delivered the additional sum placed an order for purchase of the same with Gabuardi Company at $6 per box.Universal Trading Company. ......30 per box. as follows: Universal Trading Gabuardi Company was agent of Chua Ngo... O.. O. Chua Ngo deposited with the defendant.... Inc. Manila".00 Unfortunately.. thereby implying that their transaction was a sale... B. we must hold that Universal Trading 300 cases of oranges at $9.. and the oranges were shipped "F.. the circumstances of record sufficiently indicate a sale............822.......380 boxes of oranges. This obviously has no merit. on account of the Sunkist executing Exhibit 1 wherein oranges were quoted at $6. And out of the 6. San Francisco. 300 boxes of oranges at $6.. 607 cases were short short landed for causes beyond defendant's control. P6. Less deposit R... together with other oranges (totaling 6... that in the transaction between plaintiff and defendant... and made claims for the lost oranges to the steamship company that insured the shipment company and the insurance company that insured the shipment. They were all Now.. First...650... port of Manila on March 7...30 plus.. In turn........ the loss must be borne by the latter. The total cost of agent of plaintiff... however... as Chua Ngo has paid for 300 boxes and has received 120 boxes only... Uncontradicted additional evidence was introduced that the mark "UTC Manila" written on all the boxes means "Universal Trading Company. Bank charges ..1 That is why the Universal has been trying to recover the loss from The 300 cases of oranges ordered by the defendant from Gabuardi Company were both the steamship company and the insurer. 1946. merchandise may be resold by the Universal Trading Company and the deposit forfeited.60 is . the defendant has been pressing such claims for itself...... Exhibit 1 says that "if balance is not paid within 48 hours of notification............. no commission was paid....... 270... In our opinion. if the latter.. sufficient fruit to comply with its contract with Chua Ngo... No. and later (March 9. inasmuch as the goods had P2....60. the arrangement between the parties was this: Chua Ngo purchased from Universal Trading Company...56 Fifth. San Francisco".. the amount of P3..650.. In view of the foregoing....... defendant It appears that whereas in the lower court defendant sustained the theory that it acted as failed to deliver to Chua Ngo 180 cases of the 300 cases contracted for...822. the latter 218.. e....... 196. could be fulfilled — and asking for deposit of 65% of the price and certain additional charges.43 to complete the price. because under ==== the law.. As to the contention that defendant incurred no liability because it is admitted that the oranges were lost due to causes beyond the control of the defendant.. wrote Chua Ngo two letters informing him that the contract for oranges (and onions) had been confirmed by the supplier — i. Instead... 1062 ...00 acted thus because it was not acting as agent of Chua Ngo. Second......... all claims for losses thereof against the insurance company and against the shipping company should Custom charges...... the latter received no commission... As between Gabuardi and the Universal Trading. and finally.......00 purchased from Gabuardi Company at $6 plus.. B. the appealed judgment for plaintiff in the sum of P3. whoever was the owner of the oranges at the time of such loss. it should be affirmed..." "Resold" implies the goods had been sold to Chua Ngo.. Consequently......... Third... Gabuardi Company.882.....36. Who is to suffer that loss? Naturally.00 transit... The above are the main facts according to the stipulation of the parties...... etc.. Inasmuch as good faith is to be presumed.......380 cases) for other customers........ 1946)......... loaded in good condition on board the S/S Silversandal in the port of San Francisco. On January 16 and January 19.. If of P2. it could not properly do that..... if the purchase of the oranges had been made on behalf of Chua Ngo..00 have been assigned to Chua Ngo.... (Sgd......56 171. 1946.. the defendant charged the plaintiff the sum of P218.87 for 3 ! percent sales tax. the Universal Trading Co.. HOLMES Sales Manager xxx xxx xxx The crucial question is: Did Universal Trading Company merely agree to buy for and on behalf of Chua Ngo the 300 boxes of oranges...... 1946.......

JJ. concur. Pablo.affirmed with costs.. Tuason.J. Montemayor and Reyes. . C. Paras. Moran. Ozaeta..

Exhibit A. petitioner. Partial shipments permitted. IMMEDIATELY upon written Confirmation. S. 1955 Acceptance This Buyer's Order is subject to confirmation by the exporter.) Illegible Date Nov. equally assorted. 1949 (Exhibit E). Said surveyor took swatches of the textile and had the same analyzed by the Institute of Science (Exhibit E-1) and submitted a report or survey under date of April 9.R.96 which included the amount paid by plaintiff for said textile and the warehouse expenses. Payment FAR EASTERN EXPORT & IMPORT CO. L-7144 May 31. The defense set up is that the Far Eastern Export and Import Company only acted as a broker in this transaction.. documentation. Ignacio Delizalde.. covered by bill of lading No. subject to the terms and conditions listed below: ====================================================== Quantity Unit Particulars Amount 10. N.. 1949. Invoice No. On February 11. Manila. per yd. 1948 Authorized official Confirmed Accepted (Sgd. Upon instructions of the defendants plaintiff deposited the goods with the United Warehouse Corporation (Exhibits H. which are for the buyers accounts. Laurel. and having arrived at an agreement with Bernardo Lim. that after placing the order the defendants took no further action and the cargo was taken directly by the buyer Lim Teck Suan. 1949.00 Item herein sold are FOB-FAS X C. LIM TECK SUAN. MONTEMAYOR. buyers choice.66 is left. 13472 Width: 41/42 inches. vs. 4. & F CIF ====================================================== TERMS AND CONDITIONS Payment will be by "Confirmed Irrevocable Letter of Credit" to be opened in favor of Frenkel International Corporation. New York. as per attached samples. 125 (Exhibit C). and sentencing the defendant-petitioner Far Eastern Export & Import Co. Manila Ship to LIM TECK SUAN Date Written 11/17/48 475 Nueva St.686. 1684-M (Exhibit D) issued by Frenkel International Corporation direct to the plaintiff. New York U. 1948. Arnold Maersk. forwarding. S. freight. for the full amount of the above cost of merchandise plus (approximately) for export packing: insurance. As to the facts and the issue in the case we are reproducing the findings of the Court of Appeals. representing the net direct loss. seller agrees to reimburse buyer for all banking expenses. at $1. plaintiff withdrew from the United Bonded Warehouse. the textile arrived at Manila on board the vessel M. respondent. plaintiff established a letter of credit No. attached to the agreed statement of facts.A. As per suggestion of the Far Eastern Export and Import Company contained in its letter dated June 16. The plaintiff complained to the defendant of the inferior quality of the textile received by him and had them examined by Marine Surveyor Del Pan & Company. H-1 to H-6. showing samples thereof. No. already prepared which reads: FAR EASTERN EXPORT & IMPORT COMPANY 75 Escolta 2nd Floor Brias Roxas Bldg. Marciano Almario and Jose T. J. Ten (10) colors.G. Manila Your No. Deducting this amount from the sum of P23. which findings are binding on this Tribunal in case of similar appeals: Sometime in November. the shipment having been made to him and all the documents were also handled by him directly without any intervention on the part of the defendants. the fifteen cases of Ashtone Acetate and Rayon Suiting for the purpose of offering them for sale which netted P11. Weight: Approximately 8 oz. In accordance with said Exhibit A. an agent of the Far Eastern Export & Import Company. went to the store of Lim Teck Suan situated at 267 San Vicente Street. a difference of P11.: This is a petition for certiorari to review a decision of the Court of Appeals dated September 25.13 per yard F.000 yds Ashtone Acetate & Rayon-No. etc. Delizalde returned on November 17 with the buyer's order. to pay the plaintiff-respondent Lim Teck Suan later to be referred to as Suan. the sum of P11. 276 I hereby commission you to procure for me the following merchandise. Bank Documents should be for a line of 45 days to allow for presentation and payment against "ON BOARD" bills of lading. 17.60. 1953. 1948 to be signed by our representative upon confirmation. Y. Shipment Period of Shipment is to be within December. 6390 (Exhibit B) in favor of Frenkel International Corporation through the Hongkong and Shanghai Bangking Corporation.907. Confirmed Accepted Signed Nov. and offered to sell textile. Manila. that upon receipt of Lim Teck .500. Our No. Jose P. Juan Nabong and Crisolito Pascual for petitioner. 52 Broadway. later referred to as export company.30.S. reversing the decision of the Court of First Instance of Manila. with legal interest from the date of the filing of the complaint and to pay the costs.4476. Our Guarantee In case shipment is not affected. $11.476. the General Manager of Lim Teck Suan. Port Area. Lojom for respondent.

J.. On January 25. presumably the supplier of the textile sold. informed Jose Velasco. To put up a cash deposit equivalent to 50 % of the order. customs duties. On January 15.. also the supplier of the whisky sold.F. defendant contends that it merely acted as agent for Velasco and could not be held responsible for the substitution of Blended Whisky for Bourbon Whisky and that furthermore the Blended Whisky was a reasonable substitute for Bourbon. Manoeran had docked and that they would appreciate it if he would pay the amount of P3. Inc. transhipping charges. for comment. We notice the following similarities.. 340 Echaque... 1946 the Universal Trading Co. "3. are all for your account. but in the present case although Suan received the merchandise he immediately protested its poor quality and it was deposited in the warehouse and later withdrawn and sold for the best price possible. basing its decision of reversal on the case of Jose Velasco. was signed an invoice under the name of the Universal Trading Co. if order is not available.. Inc. the Court of Appeals reversed the judgment entered by the Court of First Instance of Manila.. For its defense. the same speaks of the items .. or through bills of lading payable to A. Inc. etc.. what the Universal Trading Co. giving a total amount of P5. In the Velasco case.. In the present case.. or thru bills of lading payable to A. In the present case.. if any.. Frenkel International Corporation. That Messrs. all at the suggestion of the Export company. 340 Echaque.. After due hearing the Court of First Instance of Manila held that the transaction was purchase and sale and ordered the defendant to refund to the plaintiff his deposit of P1. 1945 a salesman or agent of the Universal Trading Co.Case $17. wrote Exhibit 4 to Mr. The lower court acquitted the defendants from the complaint asking for damages in the sum of P19.. As already stated. for order as follows and under the following terms: Quantity Merchan dise and Unit Unit Amount Price Description 100 Panamanian Agewood Bourbon Whisky .. Wilson Company. gives a balance of P3. the export company acted as agent for Frenkel International Corporation. that after the ship arrived.00 representing the difference in price between the textile ordered and those received..400. Manila.I. that his company was in a position to accept and fill in orders for Panamanian Agewood Bourbon Whisky because there were several thousand cases of this article ready for shipment to the company by its principal office in America. a statement of bank charges. Wilson Company.. Jr.' On November 6. the same date that the contract or agreement. Velasco refused to received it. It is true that in the Velasco case.. was acting as agent for A. plus profits unrealized and the cost of this suit. however. 4504 where the transaction therein involved was found by the court to be one of purchase and sale and not of brokerage or agency..... and any storage that may be incurred due to your not taking delivery of the order upon being notified by us that the order is ready for delivery... The present case is in our opinion a stronger one than that of Velasco for holding the transaction as one of purchase and sale because as may be noticed from the agreement (Exhibit "A"). It turned out... for December shipment. 1946 another invoice was issued containing besides the list price of $1. War risk insurance. California. Exhibit A. 45 Off.10 which after deducting the deposit of $1.. Wilson Company or making a cash deposit. upon the arrival of the whisky and because it did not conform to specifications.700 which is 50% of the price of the whisky pursuant to agreement made. In the case of Velasco. $1. In the Velasco case. Los Angeles.700 _______ Total amount of order . Jr. Inc. Manila.990. internal revenue taxes.Suan's complaint the defendants passed it to its principal. vs. instead of 'to open up irrevocable letter of credit for the value of the order with any of the local banks.990.. Velasco was supposed to be ordering the whisky thru the Universal Trading Co. and the Universal Trading Company. Acting upon this offer and representative Velasco went to the Universal Trading Co...." Accordingly. the Universal Trading Co... Suan according to the first part of the agreement is said merely to be commissioning the Export Company to procure for him the merchandise in question. This order may be subject to delay because of uncertain shipping conditions..700.00 $1.. Inc. the price of the merchandise bought was paid for by Suan by means of an irrevocable letter of credit opened in favor of the supplier. Velasco was given the choice of either opening a similar irrevocable letter of credit in favor of the supplier A. J. Frenkel International Corporation.. C. was issued to Velasco for the 100 cases of Panamanian Agewood Bourbon Whisky for the price of $1. which decision on appeal was affirmed by this Court. S. That the Universal Trading Company agrees to order the above merchandise from their Los Angeles Office at the price quoted above.. Velasco refused to receive the shipment and in turn filed action against the defendant for the return of his deposit of $ 1. Wilson Company. Reasonable substitute.690. "b.. 1263 South North Avenue.700 which invoice manifested that the article was sold to Jose Velasco.10 direct to them. Jose Velasco. port charges..500. "5... Manila.01. Gaz. 1945. just as in the other case. In the present case. We have carefully examined the Velasco case and we agree with the Court of Appeals that the facts in that case are very similar to those in the present case. obligates myself/themselves to take the above merchandise when advised of its arrival from the United States and to pay in cash the full amount of the order in the Philippine Currency at the office of the Universal Trading Company..700 with interest. Jr..700 or P3. Jr. Inc.700 Terms of Agreement: "1. Velasco advising him that the S. "4. J... tried to deliver to Velasco was not Panamanian Agewood Bourbon Whisky but Panamanian Agewood Blended Whisky. Manila. Velasco deposited with the defendant the sum of $1. To open up irrevocable letter of credit for the value of the order with any of the local banks. whenever possible. Jose Velasco..700 with legal interest from the date of the filing of the suit with costs. will be shipped in lieu of items called for. J. "2. and dismissed the counterclaim filed by the defendants without pronouncement as to costs. The terms of this agreement will be either of the following: "a. and government taxes. and after a conversation with the latter's official entered into an agreement couched in the following terms: "Agreement is hereby made between Messrs. Universal Trading Co. we have the following statement by the court itself which we reproduced below: Prior to November 8. and the latter maintained that the merchandise was up to standard called for.

the Export company being an agent of the Frenkel International Corporation could not. 72 Phil.(merchandise) therein involved as sold. In both cases there was no privity of contract between the buyers — Suan and Velasco and the suppliers Frenkel International Corporation and A. and Reyes. the agents Universal Trading Co. respectively. by the suppliers.. that same agent could not very well act as agent for local buyers. Bautista Angelo. and the sale was even confirmed by the Export company. and the export company dealt directly with the local merchants Velasco and Suan without expressly indicating or revealing their principals. Bengzon. B.. He could not serve two masters at the same time. concur. with costs. L. Concepcion. proof that there was no agency or brokerage. A. In both cases. J. have acted as an agent or broker for Suan. As already stated.. where a foreign company has an agent here selling its goods and merchandise. JJ. as it claims. it was held in the Velasco case that the transaction therein entered into was one of purchase and sale. we agreed with the Court of Appeals that the transaction entered into here is one of purchase and sale. the same is hereby affirmed. and that the profit of the latter was undoubtedly the difference between the price listed to the buyers and the net or special price quoted to the sellers. Pablo. Wilson Company. J. Arco Amusement. Labrador. As was held by this Tribunal in the case of Gonzalo Puyat & Sons Incorporated vs. Finding no reversible error in the decision appealed from. In both cases no commission or monetary consideration was paid or agreed to be paid by the buyers to the Export company and the Universal Trading Co. and for the same reasons given there. because the interests of his foreign principal and those of the buyer would be in direct conflict. Reyes. . In the present case. 402...

for the reason that the terms of the said contract. Inc. On the same day said contract were executed on June 16. at least partly. with Tong as principal. appellant must have understood the contract to one. "Contract of Purchase and Sale". valued at P7.: In June. The Surety company is appealing said decision. the dispositive part of which reads as follows: IN VIEW OF ALL THE FOREGOING. Tong failed to remit the value within sixty days.00 with legal rate of interest from the date of the filing of this complaint until said amount is fully paid. LIM TAN TONG and MANILA SURETY & FIDELITY CO. Inc. plus the costs of this suit.000. and with the trial courts permission.. claiming that the latter owed him a larger amount. It is appellant's contention that it cannot be held liable on its bond for the reason that the latter was filed on the theory that the contract between the plaintiff and Tong was one of agency as a result of which.. Inc. II.R. . Manila. Leyte Cebu Bohol and Negros Oriental and all the provinces in the island of Mindanao. defendants-appellants... The trial court erred in holding that the contract between the Pearl Island Commercial Corporation and Lim Tan tong was one of agency so that breach thereof would come within the terms of the surety bond posted by appellant therein. that payment for any floor wax purchased shall he delivered to plaintiff within sixty days from the date of shipment. Under the circumstances... said surety Company guaranteed the faithful performance of tong as agent. shown by the very title of said contract (Exhibit A). by reason of the appointment of Tong as exclusive agent for plaintiff for the Visayas-Mindanao provinces. the bond being conditioned on the faithful performance of Tong's duties. while providing for sale of Bee Wax from the plaintiff to Tong and purchase of the same by Tong from the plaintiff. we are afraid that the Surety Company is not now in a position . plaintiff filed this present action not only against Tong. but that it turned out that said contract was one of purchase and sale. designated as sole distributor of said article in the provinces of Samar. the plaintiff was to shoulder the loss.00 plus legal interest from the date of the filing of this complaint. and that in case of loss due to fortuitous event or force majeure. vs.337. J. plus P500 as attorney's fees. Furthermore.337. and despite the demand made by plaintiff on him to send that amount. plaintiff-appellee. On June 18. to sell to defendant Tong at factory price in Manila. at its expense. plaintiff shipped 299 cases of Bee Wax. (c) The two defendants shall pay jointly and severally another amount of P500 to the plaintiff as attorney's fees. duly received by the latter. that (this is important) Tong was to furnish surety bond to cover all shipments of the floor wax that are damaged or unmerchantable. filed the surety bond (Exhibit B). the lower court. B.G. To enforce payment of the balance of P6. defendant Manila Surety & Fidelity Co. 1957 PEARL ISLAND COMMERCIAL CORPORATION. Appellant assigns the following errors: I.. of agency because the bond itself (Exhibit B) says the following: WHEREAS. binding itself unto the plaintiff in the sum of P5. provides that tong was to furnish surety bond to cover all shipments made by the plaintiff to him. Besides.000. INC. Exhibit A. and appellant never undertook to guaranty the faithful performance of Tong as a purchaser. to recover from the latter the amount of its bond of P5.000 with legal rate of interest from the date of the filing of this complaint until fully paid. the Surety Company had Ko Su Kuan and Marciano Du execute in its favor an indemnity agreement that they would indemnify said surety company in whatever amount it may pay to the plaintiff by reason of the bond filed by it. However. had executed an indemnity agreement in its favor. 1951. The appeal originally taken to the Court of Appeals was later certified to us as involving only questions of law. plus the costs of this suit. to Tong. MONTEMAYOR. paragraph 4 of the contract entitled "Security". the above bounden principal has been appointed as exclusive agent for Pearl Islands Commercial Corporation of Manila. 1951. . the Court renders judgment in favor of the plaintiff and against the defendants as follows: (a) The Court orders the defendants Lim Tan Tong and the Manila Surety & Fidelity Co. until it is fully paid. wherein the latter. namely. No. F. to pay jointly and severally the plaintiff Pearl Island Commercial Corporation the sum of P5. a careful examination of the said contract shows that appellant is only partly right. he sent only P770. The plaintiff undertook not to appoint any other distributor within the said territory. After trial.337. engaged in the manufacture of floor wax under the name of "Bee Wax". It would appear that for its security. filed a third-party complaint against Ko Su Kuan and Marciano Du who. 1951. Diaz and Baizas for appellee. that Tong could sell the article in his territory at any price he saw that fit. The trial court erred in ordering the defendant-appellant herein to pay attorney's fees and other charges stated in the judgement. leaving a balance of P6. for the Visayas-Mindanao Provinces. plaintiff Pearl Island Commercial Corporation. O.. Philippines. in the City of Manila. L-10517 June 28. was going to buy the said floor wax for resale in the territory above-mentioned. but also against the Surety Company. The Surety Company in its answer filed a cross-claim against Tong. as already stated. which he admits to be still with him. the sum of P5. Inc. presided by Judge Hermogenes Concepcion. De Santos and Herrera for appellant Manila Surety & Fidelity Co. in accordance with the agreement. rendered judgment.107. also designates Tong as the sole distributor of the article within a certain territory. provided the goods were still in transit. entered into a contract.000. (b) the Court orders the defendant Lim Tan Tong to pay to the plaintiff the sum of P1. (d) The Court orders the cross-defendant Lim Tan Tong and the third-party defendants Ko Su Kuan and Marciano Du to pay jointly and severally to the Manila Surety & Fidelity Co. .. but which he refuses to remit to the plaintiff. with defendant Lim Tan Tong.

It is in some respects. appellant can recover from Ko Su Kuan and Marciano Du whatever amounts. even confusing. including attorney's fees it may pay to plaintiff. at the same time it appoints him sole distributor within a certain area.107 minus the P770 he had paid on account). In view of the foregoing.337. While it speaks of sale of Bee Wax to Tong and his responsibility for the payment of the value of every shipment so purchased. admits keeping the same (P7. Anyway. the decision appealed from is hereby affirmed.to deny its liability for the shipment of the 299 cases of Bee Wax duly received by Tong and his failure to pay its value of P7. and said two persons evidently have not appealed from the decision. either as purchaser or as agent. it seems to have been the sole concern and interest of the plaintiff to be sure that it was paid the value of all shipments of Bee Wax to Tong and the Surety Company by its bond. that plaintiff allegedly owes him a larger amount.000. . the amount of the bond. admits its value. namely.107. Whether the article was purchased by Tong or whether it was consigned to him as agent to be sold within his area. with costs. Moreover. minus P770 or a balance of P6. but that he is retaining it for reasons of his own. the contract (Exhibit A) is not entirely clear. especially by the judgment because by its express terms. in the final analysis said payment by Tong. the Surety Company is adequately protected. the fact is that Tong admits said shipment. of course. True. up to the limit of P5. the plaintiff undertaking not to appoint any other agent or distributor within the same area.

1967.50) will be given to her as soon as it was sold. it is a fact that on October 19. Salud Bantug. which reads: To Whom It May Concern: This is to certify that I have received from Mrs. dated January 10. Exhibit "A". that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold. Salud kung talagang kailangan mo ay bukas ay dadalhan kita ng pera. to indemnify the offended party in the amount of P559. but from its nature and the circumstances it can be inferred that a period was intended in which case the only action that can be maintained is a petition to ask the court to fix the duration thereof. petitioner. Ludy Pursuant to this letter. (pp. and the latter's maid. to indemnify the complainant in the amount of P550. 1966.00 on October 24. 6) as against the theory of the petitioner that the obligation does not fix a period.R.G. J. she wrote a letter to Salud Bantug which reads as follows: Dear Salud. or a total of P240. and she paid P90.00 on April 18.00. Exhibit "A". Demands for the payment of the balance of the value of the tobacco were made upon the appellant by Ayroso.30 per kilo. Salud Bantug. No.30 a kilo. of Gapan. As no further amount was paid. Maria de Guzman Vda. dahil kokonte pa ang nasisingil kong pera.: Petitioner Lourdes Valerio Lim was found guilty of the crime of estafa and was sentenced "to suffer an imprisonment of four (4) months and one (1) day as minimum to two (2) years and four (4) months as maximum. de Ayroso. or. Although the appellant denied that demands for payment were made upon In this petition for review by certiorari. 1967. (pp. 14. and the tobacco was loaded in the jeep and brought by the appellant. Rollo) . immediately demandable as soon as the tobacco was sold" (Decision. 1967. Genoveva Ruiz. 1966. 3-4. Bantug. vs. the complainant filed a complaint against the appellant for estafa.00 on March 8. respondent. but the appellant often eluded her. appeal was taken to the then Court of Appeals which affirmed the decision of the lower court but modified the penalty imposed by sentencing her "to suffer an indeterminate penalty of one (1) month and one (1) day of arresto mayor as minimum to one (1) year and one (1) day of prision correccional as maximum. B). that the obligation was immediately demandable as soon as the tobacco was disposed of. The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P 799. The appellant is a businesswoman. and to pay the costs. Maria de Guzman Vda. 1984 LOURDES VALERIO LIM. Of the total value of P799.." (p. Pupunta lang kami ni Mina sa Maynila ngayon. to wit: 1. the appellant went to the house of Maria Ayroso and proposed to sell Ayroso's tobacco.50. 2. This agreement was made in the presence of plaintiff's sister. dated April 18. A. the appellant sent a money order for P100. (Exh. Salud G. The appellant at that time was bringing a jeep. The appellant was to receive the overprice for which she could sell the tobacco. Patnubayan tayo ng mahal na panginoon Dios. 1966. 24. Rollo) From this judgment.. 2. and particularly by her sister. which provides that the courts may fix the Hindi ako nakapunta dian noon a 17 nitong nakaraan. p. going receipt (Exhibit "A") gives rise to an obligation wherein the duration of the period depends upon the will of the debtor in which case the only action that can be maintained is a petition to ask the court to fix the duration of the period. 15. and another for P50.50 without subsidiary imprisonment. 1197 of the New Civil Code does not apply" as against the alternative theory of the petitioner that the fore. Nueva Ecija. Salvador Bantug drew the document. Article 1197 of the New Civil Code. Hence. Whether or not the Honorable Court of Appeals was legally right in holding that "Art. Huwag kang mabahala at tiyak na babayaran kita. thereby precluding criminal liability of petitioner for the crime charged. On January 10. is a contract of agency to sell or a contract of sale of the subject tobacco between petitioner and the complainant.50. PEOPLE OF THE PHILIPPINES. Exh. RELOVA. the appellant had paid to Ayroso only P240. L-34338 November 21." (p. magintay ka hanggang dito sa linggo ito at tiak na ako ay magdadala sa iyo. and to pay the costs of suit. six hundred fifteen kilos of leaf tobacco to be sold at Pl.00. Whether or not the Honorable Court of Appeals was legally right in holding that the foregoing document (Exhibit "A") "fixed a period" and "the obligation was therefore. her. Rollo) It is clear in the agreement. The findings of facts of the appellate court are as follows: . de Ayroso. 4. with subsidize imprisonment in case of insolvency. Medio mahirap ang maningil sa palengke ng Cabanatuan dahil nagsisilipat ang mga suki ko ng puesto. Ngayon kung gosto mo ay kahit konte muna ay bibigyan kita. and that the "camarin" the appellant was empty. 16. 14. Salud Bantug further testified that she had gone to the house of the appellant several times. Ayroso agreed to the proposition of the appellant to sell her tobacco consisting of 615 kilos at P1. Whether or not the honorable Court of Appeals was legally right in holding that the foregoing receipt is a contract of agency to sell as against the theory of the petitioner that it is a contract of sale. and this was paid on three different times. Rollo) The question involved in this case is whether the receipt. 1967 as evidenced by the receipt Exh. and 3. Exh. This was signed by the appellant and witnessed by the complainant's sister. Lourdes Valerio Lim poses the following questions of law. Gosto ko Salud ay makapagbigay man lang ako ng marami para hindi masiadong kahiyahiya sa iyo.

Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso's tobacco. SO ORDERED.. does not apply. Rollo) The fact that appellant received the tobacco to be sold at P1. ACCORDINGLY. . the petition for review on certiorari is dismissed for lack of merit. With costs. Anent the argument that petitioner was not an agent because Exhibit "A" does not say that she would be paid the commission if the goods were sold. Certainly.30 per kilo and the proceeds to be given to complainant as soon as it was sold. The appellant is a businesswoman. but it would have been Ayroso who would have gone to the house of the appellant and deliver the tobacco to the appellant. if she was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco. the Court of Appeals correctly resolved the matter as follows: . 19.. it would not have been the appellant who would have gone to the house of Ayroso.duration of the obligation if it does not fix a period. the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The agreement (Exhibit "A') constituted her as an agent with the obligation to return the tobacco if the same was not sold. (p. and it is unbelievable that she would go to the extent of going to Ayroso's house and take the tobacco with a jeep which she had brought if she did not intend to make a profit out of the transaction. strongly negates transfer of ownership of the goods to the petitioner.

The SLDRs prescribed delivery of the sugar to the party specified therein and did not authorize the transfer of said party's rights and interests. 1214M and a letter of authority from STM authorizing CSC "to withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery Receipt-Refined Sugar (SDR) No. 1989 and three checks postdated November 13. STM issued 16 checks in the total amount of P31.000 bags had been released.750. SLDR No.00 per bag as "per sales order VMC Marketing No. 1989. 1213. 1214M."[2] The SLDR also contains an additional note which reads: "subject for (sic) availability of a (sic) stock at NAWACO (warehouse). 1214M. CSC then sent petitioner a letter dated January 23. it was discovered that Teresita Ng Go who testified for CSC was the same Teresita Ng Sy who could not be reached through summons.000. 1989. On April 27. (VMC). 1990 informing it that SLDR No. DECISION QUISUMBING. CSC issued one check dated October 25. petitioner reiterated that all the sugar corresponding to the amount of STM's cleared checks had been fully withdrawn and hence. however. issued Official Receipt No.00 with petitioner as payee. 1214M because STM had already dwithdrawn all the sugar covered by the cleared checks. STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No.[7] CSC. 1994 modifying said decision. P2. were not documents of title. 1990.[6] On March 2. after 2. Among these was SLDR No.00 as attorney's fees and litigation expenses. 1214M for P 14. CSC's complaint alleged that STM had fully paid petitioner for the sugar covered by SLDR No. 042 dated October 16. but mere delivery receipts issued pursuant to a series of transactions entered into between it and STM.[8] Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks. 1214 dated October 16. The facts of this case as found by both the trial and appellate courts are as follows: St.000 bags covered by SLDR No.000. P3. petitioner replied that it could not allow any further withdrawals of sugar against SLDR No. there would be no more deliveries of the commodity to STM's account.. the latter had no justification for refusing delivery of the sugar. 1214M and sought the award of P1. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co.000 bags. 1214M had been "sold and endorsed" to it but that it had been refused further withdrawals of sugar from petitioner's warehouse despite the fact that only 2. 1994. That same day.. Aside from SLDR No.200.R. 1989 in payment. CSC sent petitioner a letter demanding the release of the balance of 23. Petitioner also noted that CSC had represented itself to be STM's agent as it had withdrawn the 2. INC.000. Therese Merchandising) and herein petitioner. Private respondent CSC surrendered SLDR No. 1990. 1214M."[4] On October 27. Each bag contained 50 kilograms and priced at P638. During the trial. CSC prayed that petitioner be ordered to deliver the 23. 90-1118. J. 1214M "for and in behalf" of STM. The latter. 1989. Both decision and resolution amended the judgment dated February 13. Petitioner also contended that it had no privity of contract with CSC.000 bags. Petitioner explained that the SLDRs. petitioner.. but instead used her as its witness. of the Regional Trial Court of Makati City."[3] On October 25. the case proceeded only against the latter. CV No. said checks also covered SLDR No. petitioner refused to allow further withdrawals of sugar against SLDR No. COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATION. Since the former could not be served with summons. 1214M to the petitioner's NAWACO warehouse and was allowed to withdraw sugar. Branch 147.00 in unrealized profits.00. did not bother to pursue its case against her.000.000 bags."[1] The transaction it covered was a "direct sale.104.000 bags had been withdrawn. Seven days later. which gave rise to the instant case. On January 31. 1989. CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No. . in CA-G.000. respondents. in Civil Case No. as well as the respondent court's resolution of September 30. In the course of their dealings. 1990. Petitioner's primary defense a quo was that it was an unpaid seller for the 23. Dated October 16.000. 1989 acknowledging receipt of the said checks in payment of 50.. Inc. it could no longer authorize further delivery of sugar to CSC.[5] CSC thus inquired when it would be allowed to withdraw the remaining 23. Therefore. 31717. 1989 in the total quantity of 25.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals dated February 24. in turn. vs. 1214M.000 bags. Enclosed in the letter were a copy of SLDR No.900. 1991.000 bags against SLDR No. However.000 bags of sugar. Defendants were Teresita Ng Sy (doing business under the name of St. CSC filed a complaint for specific performance.000 bags. 1214M covers 25. which it had issued. 33743 dated October 27. 1214M.00 as exemplary damages.VICTORIAS MILLING CO. docketed as Civil Case No. 90-118. petitioner issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases.

Therese Merchandising for the amount of P31. as attorney's fees. in view of the foregoing.00 as unrealized profits. 1214 has not been fully paid is supported only by the testimony of Arnulfo Caintic. 1213 and 1214. 1214M were separate and independent transactions and that the details of the series of purchases were contained in a single statement with a consolidated summary of cleared check payments and sugar stock withdrawals because this a more convenient system than issuing separate statements for each purchase. SLDR No.00. The Court notes that the testimony of Arnulfo Caintic is merely a sweeping barren assertion that the purchase price has not been fully paid and is not corroborated by any positive evidence. witness for defendant Victorias Milling Company.' "On the other hand. the Court hereby renders judgment in favor of the plaintiff and against defendant Victorias Milling Company: "1) Ordering defendant Victorias Milling Company to deliver to the plaintiff 23. Therese Merchandising. As earlier stated."[10] Petitioner appealed the trial court’s decision to the Court of Appeals. the claim of defendant Victorias Milling Company that the purchase price of the 25.000.000. the SLDR no. 1214. which is 10% of the acquisition value of the undelivered bags of refined sugar in the amount of P13.000.000. There is an insinuation by Arnulfo Caintic in his testimony that the postdated checks issued by the buyer in payment of the purchased price were dishonored. 1989 (date of the two SLDRs) is duly supported by Exhibits C to C-15 inclusive which are post-dated checks dated October 27. Therese Merchandising in favor of Victorias Milling Company at the time it purchased the 50.000 bags of sugar. the official reciept no.00 (Exhibits B and B-1).00 as attorney's fees.500. and P1.00. which is a computer printout of defendant Victorias Milling Company showing the quantity and value of the purchases made by St. October 16.000.00 as exemplary damages and the amount of P1.Petitioner also alleged that CSC did not pay for the SLDR and was actually STM's co-conspirator to defraud it through a misrepresentation that CSC was an innocent purchaser for value and in good faith. Said checks appear to have been honored and duly credited to the account of Victorias Milling Company because on October 27. The appellate court considered the following issues: (a) Whether or not the transaction between petitioner and STM involving SLDR No.357.000.00 for the 25.950.000.900.000 bags of refined sugar due under SLDR No. P10. as follows: "WHEREFORE.500. It is clear in Exhibit 'F' that with respect to the sugar covered by SLDR No. said witness failed to present in Court any dishonored check or any replacement check. Petitioner also prayed that crossdefendant STM be ordered to pay it P10.000. 1213 on the same date. 34734 in favor of St.000 bags of sugar covered by SLDR No.000. issued to cover the purchase. The testimony of Teresita Ng Go is further supported by Exhibit F. petitioner averred that the dealings between it and STM were part of a series of transactions involving only one account or one general contract of sale.000 bags of sugar bought by her covered by SLDR No.000 bags of sugar purchased by St. Teresita Ng Go.00 as attorney's fees. Since no settlement was reached at pre-trial.000. Therese Merchandising covered by SLDR No.000. 1989 Victorias Milling Company issued official receipt no. plus the costs. independent. STM or any of its authorized agents could withdraw bags of sugar only against cleared checks of STM.000 bags of sugar bought by her covered by SLDR No. in payment of the purchase price of the sugar covered by SLDR No. CSC was already precluded from seeking delivery of the 23. the trial court rendered its judgment favoring private respondent CSC. the trial court heard the case on the merits. that she had fully paid the purchase price of P15. the amount of P800.00 as moral damages.000. However."[9] It made the following observations: "[T]he testimony of plaintiff's witness Teresita Ng Go. "SO ORDERED. and P1.000. Private respondent CSC countered that the sugar purchases involving SLDR No. and single transaction. Said witness likewise failed to present any bank record showing that the checks issued by the buyer. "2) Ordering defendant Victorias Milling Company to pay the amount of P920.950. 21214M was only one of 22 SLDRs issued to STM and since the latter had already withdrawn its full quota of sugar under the said SLDR.000. (b) Whether or not CSC had . 1214 as well as the purchase price of P15.00 as exemplary damages.570. and the status of payment. 1214M was a separate. Pursuant to this contract. On appeal. 1214 the same has been fully paid as indicated by the word 'cleared' appearing under the column of 'status of payment. 1989 issued by St. 1214 were dishonored.00 in exemplary damages.00 of the 25.000. Petitioner then prayed that CSC be ordered to pay it the following sums: P10.

and (c) Whether or not CSC as buyer from STM of the rights to 25. We see no reason to overturn the findings of the trial court on this point. "After a second look at the evidence. p.586 cannot be made the basis for such a finding. "3) Pay the costs of suit. as attorneys fees. 33] and Marianito L.00 which is 10% of the value of the undelivered bags of refined sugar. on the other hand.586 bags of sugar covered by SLDR No. "Testimonial evidence (Testimonies of Teresita Ng [TSN. 78. In its resolution dated September 30. and that all sugar corresponded to cleared checks had been withdrawn." (emphasis in the original) private respondent's withdrawing 2. (Art.. Defendantappellant. Plaintiffappellee is. p."[11] Both parties then seasonably filed separate motions for reconsideration. rendered respondent like the other persons.586 bags of sugar remained undelivered. alleged that sugar delivery to the STM corresponded only to the value of cleared checks. Santos [TSN. 1214M. positing the following errors as grounds for review: "1. 18. 16. "Exhibit ‘F' We relied upon in fixing the number of bags of sugar which remained undelivered as 12. " 2) Pay to plaintiff-appellee P792. 1431.000 bags of refined sugar under SLDR No. precisely because of its theory that all sales in question were a series of one single transaction and withdrawal of sugar depended on the clearing of checks paid therefor. "SO ORDERED. Rules of Court) and estopped from doing so. It did not present evidence to show how many bags of sugar had been withdrawn against SLDR No. and STM's empowering other persons as its agents to withdraw sugar against the same SLDR No.000 bags allegedly unwithdrawn. 81 SCRA 252. Abalos. Records p."[12] The appellate court explained the rationale for the modification as follows: "There is merit in plaintiff-appellee's position. 1214M.the capacity to sue on its own on SLDR No. 1214M. Defendant-appellant did not rebut plaintiff-appellee's assertions. an agent of STM as held in Rallos v."[13] Hence..950. and 36]) presented by plaintiff-appellee was to the effect that it had withdrawn only 2.00 had been cleared.000 bags of sugar from SLDR 1214M.. to wit: "WHEREFORE. the appellate court modified its decision to read: "WHEREFORE. Id.000. 1214M.000 bags of sugar covered by SLDR No. Exhibit K.000 bags of sugar from SLDR after which it was not allowed to withdraw anymore. The Court of Appeals erred in not holding that STM's and private respondent's specially informing petitioner that respondent was authorized by buyer STM to withdraw sugar against SLDR No. The rationale for this is to afford the party against whom the evidence is presented to object thereto if he deems it necessary. the Court hereby MODIFIES the assailed judgment and orders defendant-appellant to: "1) Deliver to plaintiff-appellee 12. 1214M could compel petitioner to deliver 23. pp. and precluded it from subsequently claiming and proving being an assignee of SLDR No. On February 24. 58) cannot be used to prove the proposition that 12. "(2) Pay costs of suit. 1994. the instant petition. Id. . 17 October 1990. et al. 1214M "for and in our (STM) behalf. 10 October 1990. 1214M and from suing by itself for its enforcement because it was conclusively presumed to be an agent (Sec. Documentary evidence (Exhibit I. The rule is explicit that courts should consider the evidence only for the purpose for which it was offered. (People v. the Court of Appeals rendered its decision modifying the trial court's judgment. Rule 131. p. 2. 1994. Civil Code). the Court hereby modifies the assailed judgment and orders defendant-appellant to: "(1) Deliver to plaintiff-appellee 23. 1214M. "SO ORDERED. correct in its argument that Exhibit ‘F' which was offered to prove that checks in the total amount of P15. Felix Go Chan & Realty Corp. 80) show that plaintiff-appellee had sent demand letters to defendant-appellant asking the latter to allow it to withdraw the remaining 23. therefore. 1 CA Rep 783).918. (Formal Offer of Evidence for Plaintiff.000 bags of sugar for STM.

1214M was a conditional sale or a contract to sell and hence freed petitioner from further obligations. the very word "agency" has come to connote control by the principal. and due process.Whether or not the Court of Appeals erred in not ruling that the sale of sugar under SLDR No.the principal..[21] One factor which most clearly distinguishes agency from other legal concepts is control.[23] The Court of Appeals...[20] and in the absence of such intent. there must be an actual intention to appoint[18] or an intention naturally inferable from his words or actions. there must be an intention to accept the appointment and act on it.. with the consent or authority of the latter.Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence. 1214M. "4. now a matter for our consideration.[19] and on the part of the agent. we find from the records that petitioner raised this issue for the first time on appeal. the Court of Appeals opted to address this issue. in finding that CSC. respondent's admission of its balance. " 3. Petitioner heavily relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No.. except for 69 bags of sugar.Whether or not the Court of Appeals committed an error of law in not applying the "clean hands doctrine" to preclude CSC from seeking judicial relief. "6. It is settled that an issue which was not raised during the trial in the court below could not be raised for the first time on appeal as to do so would be offensive to the basic rules of fair play. The Court of Appeals erred in not holding that the conditions of the assigned SLDR No. and the non-availability of sugar freed petitioner from further obligation. there is generally no agency. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another. 1285 and 1626 of the Civil Code when it ruled that compensation applied only to credits from one SLDR or contract and not to those from two or more distinct contracts between the same parties. (a) its subject matter being generic. and erred in denying petitioner's right to setoff all its credits arising prior to notice of assignment from other sales or SLDRs against private respondent's claim as assignee under SLDR No. The issues will be discussed in seriatim. 1214.[15] Nonetheless. The Court of Appeals erred in concluding that the settlement or liquidation of accounts in Exh." It is clear from Article 1868 that the basis of agency is representation.."[16] The Civil Code defines a contract of agency as follows: "Art. 000 bags. 1868. 1279. hence." 2."[14] Simply stated. and which would justify review of its conclusion of facts by this Honorable Court. `F' an account stated and its balance binding. The Court of Appeals erred in manifestly and arbitrarily ignoring and disregarding certain relevant and undisputed facts which. The Court of Appeals erred in not holding that the "clean hands" doctrine precluded respondent from seeking judicial reliefs (sic) from petitioner. (4). its only remedy being against its assignor.. had they been considered. opined: "This Court has ruled that where the relation of agency is . 1214M so as to preclude petitioner from offsetting its credits on the other SLDRs.the agent . The Court of Appeals misapplied the law on compensation under Arts.[22] The control factor. 1214 dated October 16.Whether or not the Court of Appeals erred in applying the law on compensation to the transaction under SLDR No. has caused the courts to put contracts between principal and agent in a separate category.[17] On the part of the principal.agrees to act under the control or direction of another . "5. more than any other. The pertinent portion of said letter reads: "This is to authorize Consolidated Sugar Corporation or its representative to withdraw for and in our behalf (stress supplied) the refined sugar covered by Shipping List/Delivery Receipt = Refined Sugar (SDR) No. would have shown that petitioner was not liable. and (b) the sale of sugar being subject to its availability at the Nawaco warehouse. 1214M to show that the latter was STM's agent. because the law on compensation applies precisely to two or more distinct contracts between the same parties (emphasis in the original). 1214M as an assignee. 1989 in the total quantity of 25. Indeed. justice. ‘F’ between petitioner and STM. namely. so as to extinguish or reduce its liability to 69 bags. Anent the first issue. was not an agent of STM. one person . and STM's acquiescence thereto by silence for almost one year did not render Exh.. made the sale conditional and prevented STM or private respondent from acquiring title to the sugar... the issues now to be resolved are: (1).. (2). (3).. estopped to sue upon SLDR No.

it appears plain to us that private respondent CSC was a buyer of the SLDFR form. and not an agency.It should be viewed in the context of all the circumstances obtaining. on this score.dependent upon the acts of the parties.. 51 O. Here. SO ORDERED. with the burden of proof resting upon the persons alleging the agency. 1214M contains the following terms and conditions: "It is understood and agreed that by payment by buyer/trader of refined sugar and/or receipt of this document by the buyer/trader personally or through a representative. Bellosillo. 1214M was a separate and independent transaction.. petitioner contends that the sale of sugar under SLDR No. Private respondent CSC was not subject to STM's control. petitioner and CSC. 1214M after she had sold her rights under said SLDR to CSC. public policy or public order. The contract is the law between the contracting parties. morals. good customs. No reversible error could thereby be imputed to respondent appellate court when. On the second issue. the law makes no presumption of agency. 1214M were sold and transferred by STM to it . Ultimately. This conspiracy is allegedly evidenced by: (a) the fact that STM's selling price to CSC was below its purchasing price. petitioner is now obliged to deliver it to the purchaser or its assignee. p. (b) CSC's refusal to pursue its case against Teresita Ng Go. 1214M had been "sold and endorsed" to it. Petitioner prays that the doctrine of "clean hands" should be applied to preclude CSC from seeking judicial relief... proceeding from the theory that the transactions entered into between petitioner and STM are but serial parts of one account. no error was committed by the respondent appellate court when it held that CSC was not STM's agent and could independently sue petitioner.[25] That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency.[30] And where the terms and conditions so stipulated are not contrary to law. bereft of concrete proof. Further.[28] However. plaintiff-appellee has shown that the 25. The question of whether 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. Buena. and the Court of Appeals concurred. 000 bags of sugar covered by the SLDR No. Jr. were not mutually creditors and debtors of each other. be made thus capacitating plaintiff-appellee to sue in its own name. Since said sugar had been fully paid for. petitioner insists that its debt has been offset by its claim for STM's unpaid purchases. and (c) the authority given by the latter to other persons to withdraw sugar against SLDR No..[26] That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No. . Petitioner clearly had the obligation to deliver said commodity to STM or its assignee. plaintiff-appellee informed defendant-appellant that SLDFR No. as assignee of STM. 78). the contract is valid and must be upheld. The fact alone that it (STM) had authorized withdrawal of sugar by plaintiff-appellee "for and in our (STM's) behalf" should not be eyed as pointing to the existence of an agency relation . and not an agent of STM. petitioner submits that STM and private respondent CSC have entered into a conspiracy to defraud it of its sugar. 3536]. it refused to apply Article 1279 of the Civil Code to the present case. Noteworthy. the instant petition is DENIED for lack of merit. Hence.[31] Having transferred title to the sugar in question. Regarding the third issue. 1214M had been "sold and endorsed" to it by STM (Exhibit I. 1214M. but also its nature and extent (Antonio vs. Records. and De Leon. without need of joining its imputed principal STM as co-plaintiff. WHEREFORE. defendant-appellant failed to sufficiently establish the existence of an agency relation between plaintiff-appellee and STM. that petitioner had been paid for the sugar purchased under SLDR No. 1214M is a conditional sale or a contract to sell. to show not only the fact of its existence. Although it would seem STM represented plaintiff-appellee as being its agent by the use of the phrase "for and in our (STM's) behalf" the matter was cleared when on 23 January 1990."[24] In the instant case. As to the fourth issue. Said terms clearly establish a contract of sale. it was not a serial part of a single transaction or of one account contrary to petitioner's insistence. SLDR No. concur. title to refined sugar is transferred to buyer/trader and delivery to him/it is deemed effected and completed (stress supplied) and buyer/trader assumes full responsibility therefore…"[29] The aforequoted terms and conditions clearly show that petitioner transferred title to the sugar to the buyer or his assignee upon payment of the purchase price. that the purchase of sugar covered by SLDR No. without being rebutted. we find here the records bare of convincing evidence whatsoever to support the petitioner's allegations of fraud. pursuant to Article 1279 of the Civil Code.[27] The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale. the trial court found.. Costs against petitioner. We are now constrained to deem this matter purely speculative. with title to the sugar still remaining with the vendor. not a contract to sell.A conclusion that there was a valid sale and transfer to plaintiff-appellee may. despite careful scrutiny. and it is always a fact to be proved. However. (Chairman). Petitioner is now estopped from alleging the contrary. Evidence on record shows. therefore. Enriquez [CA]. JJ. Mendoza.G. what is decisive is the intention of the parties.

Ruiz. at which moment to save himself he shot the gate crasher. After a re-investigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the complaint. Ruiz. If the employer is not legally obliged to give. and among the persons employed by it was the plaintiff DOMINGO DE LA CRUZ. We confess that we are not aware of any law or judicial authority that is directly applicable to the present case. Viewed from another angle it may be said that the damage suffered by the plaintiff by reason of the expenses incurred by him in remunerating his lawyer. No. 431 of the same Court. resulting in loss of a member of the body or of any one of the senses. though vainly. in Criminal Case No. they are the parties that may be held responsible civilly for damages and if this is so. Ruiz. 8449 of the Court of First Instance of Ilocos Norte. So the damage suffered by plaintiff was caused rather by the improper filing of the criminal charge. it is to the interest of the employer to render legal assistance to its employee. a total of P15. as well as the agreed statement of facts. for judicial authorities and enlightenment. In the afternoon of July 4.G. De la Cruz was again accused of the same crime of homicide. and so theoretically. which was granted by the court in January 1943. In the year 1941 the Northern Theatrical Enterprises Inc. Conrado Rubio for appellant. resulting in the latter's death. In other words. found that plaintiff had no cause of action and dismissed the complaint without costs. Had no criminal charge been filed against him. performs an act which eventually results in his incurring in expenses. one can imagine that it would be to the interest of the employer to give legal help to and defend its employee in order to show that the latter was not guilty of any crime either deliberately or through negligence. we fail to see now this responsibility can be transferred to the employer .. naturally said employee may not recover the amount he may have paid a lawyer hired by him. 1947.. and Benjamin Guerrero for appellees. He demanded from his former employer reimbursement of his expenses but was refused. NORTHERN THEATRICAL ENTERPRISES INC. acquittal. vs. For the killing." The trial court is right. MONTEMAYOR. he was finally acquitted of the charge on January 31. The question posed by this appeal is whether an employee or servant who in line of duty and while in the performance of the task assigned to him. Plaintiff was not employed to represent the defendant corporation in its dealings with third parties. hired as a special guard whose duties were to guard the main entrance of the cine. to recover not only the amounts he had paid his lawyers but also moral damages said to have been suffered.: The facts in this case based on an agreed statement of facts are simple. 1709-1729 of the old Civil Code). that of acting as 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. or employer and employee. namely. In a case like the present or a similar case of say a driver employed by a transportation company. or permanent physical disability or even death. refer to cases of physical injuries. but rather by a third party or stranger not in the employ of his employer. In both criminal cases De la Cruz employed a lawyer to defend him.. He was a mere employee hired to perform a certain specific duty or task. one Benjamin Martin wanted to crash the gate or entrance of the movie house. possibly at the instance of the heirs of the deceased gate crasher and by the State through the Fiscal. caused not directly by his master or employer or his fellow servants or by reason of his performance of his duty. 1954 DOMINGO DE LA CRUZ. the plaintiff was innocent and blameless.000. it does not at present count with the sanction of manmade laws. is not caused by his act of shooting to death the gate crasher but rather by the filing of the charge of homicide which made it necessary for him to defend himself with the aid of counsel. We say improper filing. a domestic corporation operated a movie house in Laoag. If despite his innocence and despite the absence of any criminal responsibility on his part he was accused of homicide. and such driver is later charged criminally in court. his neglect of his interests and his family as well in the supervision of the cultivation of his land. plaintiff-appellant. That is why. But a case involving damages caused to an employee by a stranger or outsider while said employee was in the performance of his duties. Ruiz. Martin attacked him with a bolo. due to his worry. The learned trial court in the last paragraph of its decision dismissing the complaint said that "after studying many laws or provisions of law to find out what law is applicable to the facts submitted and admitted by the parties. After trial. because should the employee be finally held criminally liable and he is found to be insolvent. has found none and it has no other alternative than to dismiss the complaint. While it might yet and possibly be regarded as a normal obligation. De la Cruz was charged with homicide in Criminal Case No. there would have been no expenses incurred or damage suffered. defendants-appellees. L-7089 August 31. judging by the results of the court proceedings. J. the Court of First Instance of Ilocos Norte after rejecting the theory of the plaintiff that he was an agent of the defendants and that as such agent he was entitled to reimbursement of the expenses incurred by him in connection with the agency (Arts. We agree with the trial court that the relationship between the movie corporation and the plaintiff was not that of principal and agent because the principle of representation was in no way involved. who while in the course of employment runs over and inflicts physical injuries on or causes the death of a pedestrian. Infuriated by the refusal of plaintiff De la Cruz to let him in without first providing himself with a ticket. may recover said damages against his employer. and realizing the importance and far-reaching effect of a ruling on the subject-matter we have searched. after which he filed the present action against the movie corporation and the three members of its board of directors. then the responsibility for the improper accusation may be laid at the door of the heirs of the deceased and the State. De la Cruz defendant himself as best he could until he was cornered. legal assistance to its employee and provide him with a lawyer. But we are not prepared to say and to hold that the giving of said legal assistance to its employees is a legal obligation. light or serious. and these cases are mainly governed by the Employer's Liability Act and the Workmen's Compensation Act. as regards master and servants. ET AL. De la Cruz appealed directly to this Tribunal for the reason that only questions of law are involved in the appeal.R. All the laws and principles of law we have found. suffered in line of duty and in the course of the performance of the duties assigned to the servant or employee. the employer would be subsidiarily liable. Ilocos Norte. we repeat. presents a novel question which under present legislation we are neither able nor prepared to decide in favor of the employee. As such guard he carried a revolver. to maintain peace and order and to report the commission of disorders within the premises. On July 8. On the basis of the complaint and the answer filed by defendants wherein they asked for the dismissal of the complaint. 1941. 1948.

much less initiated the criminal proceedings and whose only connection or relation to the whole affairs was that he employed plaintiff to perform a special duty or task.. the shooting to death of the deceased by the plaintiff was not the proximate cause of the damages suffered but may be regarded as only a remote cause. No costs. Bautista Angelo. JJ. the filing of the criminal charges.B.L. namely. J. because from the shooting to the damages suffered there was not that natural and continuous sequence required to fix civil responsibility. In view of the foregoing. Still another point of view is that the damages incurred here consisting of the payment of the lawyer's fee did not flow directly from the performance of his duties but only indirectly because there was an efficient. concur. Padilla.who in no way intervened. Reyes. intervening cause. . A. the judgment of the lower court is affirmed. Bengzon. and Reyes. Labrador. which task or duty was performed lawfully and without negligence. Concepcion. In other words...

1992. 75981 in . December 3. the Register of Deeds of Cebu Province issued TCT No. giving her the special authority to sell. 31465. transfer and convey the land at a fixed price of Two Hundred Pesos (P200.00). petitioner Tan visited the property with Engineer Ledesma. measuring 104. who had been paid his commission. malice and in order to evade payment of broker’s fee. or at the rate of Two Hundred Pesos (P200. defendants Eduardo and Norma Gullas are hereby ordered to pay jointly and severally plaintiffs Manuel Tan. IT IS SO ORDERED. On July 17. they requested that the selling price be reduced to Five Hundred Thirty Pesos (P530. as well as moral and exemplary damages and attorney’s fees. 1992. Private respondent Eduardo Gullas admitted that petitioners were in his office on July 3. to see private respondent Eduardo Gullas in his office at the University of Visayas. private respondents agreed to sell the property to the Sisters of Mary. who had already seen and inspected the land.. UPON THE AEGIS OF THE FOREGOING. Private respondents refused to pay the broker’s fee and alleged that another group of agents was responsible for the sale of land to the Sisters of Mary. No. documentary stamps and other internal revenue taxes. in the afternoon. at a commission of 3% of the gross price. EDUARDO R. vs.00) per square meter. Sisters of Mary). Province of Cebu.60).[16] MANUEL B. 46539.[8] However.: This is a petition for review seeking to set aside the decision[1] of the Court of Appeals[2] in CA-G. 1992. Branch 22 in Civil Case No. 1992. petitioners. were the registered owners of a parcel of land in the Municipality of Minglanilla. and subsequently executed a special power of attorney[9] in favor of Eufemia Cañete. introduced the property to the Sisters of Mary ahead of the petitioners. petitioner Tan contacted Engineer Edsel Ledesma.00) as attorney’s fees and costs of litigation. found the same suitable for their purpose and expressed their desire to buy it. petitioners filed a complaint[13] against the defendants for recovery of their broker’s fee in the sum of One Million Six Hundred Fifty Five Thousand Four Hundred Twelve and 60/100 Pesos (P1. In their reply and answer to counterclaim. the two men accompanied Sisters Michaela Kim and Azucena Gaviola. For lack of merit.00) as broker’s fee with legal interest at the rate of 6% per annum from the date of filing of the complaint. GULLAS.00) per square meter instead of Five Hundred Fifty Pesos (P550. the lower court rendered judgment in favor of petitioners. they executed a special power of attorney[5] authorizing petitioners Manuel B.[11] Thereafter. The Sisters. 1) The sum of SIX HUNDRED TWENTY FOUR THOUSAND AND SIX HUNDRED EIGHTY FOUR PESOS (P624. respondents. In the morning of July 1. in evident bad faith.822. with Transfer Certificate of Title No.412. they were not the efficient procuring cause in bringing about the consummation of the sale because another broker. Roberto Pacana. and 2) The sum of FIFTY THOUSAND PESOS (P50.[15] petitioners alleged that although the Sisters of Mary knew that the subject land was for sale through various agents.00) per square meter. J.684. The records show that private respondents. Gregg Tecson and Alexander Saldaña. Inc. the former were already decided in buying the property through Pacana. 1992. a religious organization interested in acquiring a property in the Minglanilla area. TAN. but that their efforts in consummating the sale were frustrated by the private respondents who. which reversed and set aside the decision[3] of the Regional Trial Court of Cebu City. They further pointed out that the deed of sale was undervalued obviously to evade payment of the correct amount of capital gains tax. CEB-12740. it was petitioners who introduced them to the owners thereof. the dispositive portion of which reads: WHEREFORE. 2002] the name of the Sisters of Mary of Banneaux. GULLAS and NORMA S. Tecson and Alexander Saldaña. By virtue hereof.000.[10] The buyers subsequently paid the corresponding taxes. GREGG M.114 sq. petitioners went to see private respondent Eduardo Gullas to claim their commission.[14] Private respondents maintained that when petitioners introduced the buyers to private respondent Eduardo Gullas. 143978. They alleged that they were the efficient procuring cause in bringing about the sale of the property to the Sisters of Mary. (hereafter. dealt directly with the buyer whom petitioners introduced to them.[12] Earlier. private respondents countered that.00) per square meter. The power of attorney was non-exclusive and effective for one month from June 29. to negotiate for the sale of the land at Five Hundred Fifty Pesos (P550. but only to ask for the reimbursement of their cellular phone expenses. After trial. construction manager of the Sisters of Mary of Banneaux.[4] On June 29. Tan. but the latter told them that he and his wife have already agreed to sell the property to the Sisters of Mary. a licensed real estate broker. Thereafter. defendants’ counterclaim is hereby DISMISSED.00) per square meter. Inc. On July 3.R. 1992. In their answer. TECSON and ALEXANDER SALDAÑA. on July 3. attorney-in-fact Eufemia Cañete executed a deed of sale in favor of the Sisters of Mary for the price of Twenty Million Eight Hundred Twenty Two Thousand Eight Hundred Pesos (P20.[6] and his associates Gregg M. Gullas and Norma S. 1992. judgment is hereby rendered for the plaintiffs and against the defendants.655.800. m. Spouses Eduardo R. It was the first time that the buyers came to know that private respondent Eduardo Gullas was the owner of the property.[G. 1992. representing the Sisters of Mary.[7] On the same date. DECISION YNARES-SANTIAGO.R. Private respondent Eduardo Gullas referred the prospective buyers to his wife. contrary to petitioners’ claim. Gullas. On August 28. CV No.

for their part. since the actual purchase price was undervalued for taxation purposes.. petitioners. and that the amount of P50.000. Mrs. There was nothing illegal or amiss in this arrangement. While the lack of a date and an oath do not necessarily render said Special Power of Attorney invalid.800. II. and petitioners Gregg M. the Sisters of Mary.[21] Indeed.00 as attorney’s fees awarded to them is insufficient. On the other hand.e. Clearly. on the other hand. attorney’s fees and the costs of litigation to petitioners.180. The records show that petitioner Manuel B. Private respondents argued that the lower court committed errors of fact and law in holding that it was petitioners’ efforts which brought about the sale of the property and disregarding the previous negotiations between private respondent Norma Gullas and the Sisters of Mary and Pacana. Private respondents. Petitioners.00 per square meter. The only piece of evidence that the private respondents were able to present is an undated and unnotarized Special Power of Attorney in favor of Pacana. we should now resolve how much commission are petitioners entitled to? Following the stipulation in the Special Power of Attorney.” (Emphasis supplied) During the trial.[17] Petitioners. it should be borne in mind that the contract involves a considerable amount of money. i. however. At the very least. for others.420. negotiating contracts relative to property with the custody of which he has no concern. as brokers. maintain that they were not aware that their respective agents were negotiating to sell said property to the same buyer.[20] we defined a “broker” as “one who is engaged. There was nothing on record which established the existence of a previous negotiation among Pacana. on a commission. Having ruled that petitioners are entitled to the brokers’ commission. “An agent receives a commission upon the successful conclusion of a sale. The petition is impressed with merit. Nachura who was supposedly the one actively negotiating on behalf of the Sisters of Mary. Tecson and Alexander Saldaña are his associates. the actual purchase price for which the land was . ATTORNEYS’ FEES AND INTEREST IN THE FOREBEARANCE OF MONEY. in matters of trade. petitioners argued that the legal interest imposed on their claim should have been pegged at 12% per annum instead of the 6% fixed by the court. which meant that private respondents were not precluded from granting the same authority to other agents with respect to the sale of the same property. The authority given to petitioners was non-exclusive. the argument of the private respondents that Pacana was the one entitled to the stipulated 3% commission is untenable. even if no sale is eventually made. They also claimed that the lower court erred in not awarding moral and exemplary damages in spite of its finding of bad faith. it was established that petitioners. As correctly observed by the trial court. There was no dispute as to the role that petitioners played in the transaction. IN DISMISSING THE COMPLAINT. as brokers. petitioners are entitled to 3% commission for the sale of the land in question. THE APPELLATE COURT GROSSLY ERRED IN THEIR FINDING THAT THE PETITIONERS ARE NOT ENTITLED TO THE BROKERAGE COMMISSION. private respondent authorized another agent in the person of Mr. commerce or navigation. P530. Hence.00 or at P200.[18] The Court of Appeals reversed and set aside the lower court’s decision and rendered another judgment dismissing the complaint.00 per square meter. would alter the result of the case. RJL Martinez Fishing Corporation. a broker earns his pay merely by bringing the buyer and the seller together. In fact. They further alleged that the lower court had no basis for awarding broker’s fee. However. Tan is a licensed real estate broker. were given the written authority to sell by the private respondents. It is curious that Mrs. x x x a broker is one whose occupation is to bring the parties together.Both parties appealed to the Court of Appeals. were authorized by private respondents to negotiate for the sale of their land within a period of one month reckoned from June 29. Private respondents’ contention that Pacana was the one responsible for the sale of the land is also unsubstantiated. should be entitled to the commission whether or not the sale of the property subject matter of the contract was concluded through their efforts.822. They were not able to participate in its consummation only because they were prevented from doing so by the acts of the private respondents. therefore.[19] Hence. Gullas and the Sisters of Mary.00. In the case of Alfred Hahn v. Finally. ever presented in court. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW)[22] we ruled that. the negotiator between other parties. which if reconsidered. petitioners set the sale in motion. it is inconsistent with sound business practice that the authority to sell is contained in an undated and unnotarized Special Power of Attorney. or at P530. Petitioners maintain that their commission should be based on the price at which the land was offered for sale. Bobby Pacana to sell the same property. per se. The problem arose when it eventually turned out that these agents were entertaining one and the same buyer. considering the non-exclusivity of petitioners’ authority to sell. The trial court’s evaluation of the witnesses is accorded great respect and finality in the absence of any indication that it overlooked certain facts or circumstances of weight and influence. assailed the lower court’s basis of the award of broker’s fee given to them. THE APPELLATE COURT HAS DEPRIVED THE PETITIONERS OF MORAL AND EXEMPLARY DAMAGES. considering that it was the petitioners who were responsible for the introduction of the representatives of the Sisters of Mary to private respondent Eduardo Gullas.00 per square meter as agreed upon and not on the alleged actual selling price of P20. Neither was Atty. In Schmid and Oberly v. 1992. They contended that their 3% commission for the sale of the property should be based on the price of P55. Gullas herself was not presented in court to testify about her dealings with Pacana. it is readily apparent that private respondents are trying to evade payment of the commission which rightfully belong to petitioners as brokers with respect to the sale. They failed to present witnesses to substantiate this claim. Private respondents failed to prove their contention that Pacana began negotiations with private respondent Norma Gullas way ahead of petitioners. Petitioners raise following issues for resolution: I.” (Underscoring ours). this appeal. never acting in his own name but in the name of those who employed him.

Gullas to pay jointly and severally petitioners Manuel B. Gregg Tecson and Alexander Saldaña the sum of Six Hundred Twenty-Four Thousand and Six Hundred Eighty-Four Pesos (P624. the petition is GRANTED. To rule otherwise would constitute unjust enrichment on the part of petitioners as brokers. SO ORDERED. Branch 22. The decision of the Regional Trial Court of Cebu City.00) as attorney’s fees and costs of litigation. in Civil Case No. we affirm the amount of P50.000. in view of the foregoing.00 awarded by the trial court to the petitioners. Therefore. and the sum of Fifty Thousand Pesos (P50. 2000 decision of the Court of Appeals is REVERSED and SET ASIDE.00 per square meter.sold was only P200. In the matter of attorney’s fees and expenses of litigation. is REINSTATED. equity considerations dictate that petitioners’ commission must be based on this price. CEB-12740 ordering private respondents Eduardo Gullas and Norma S. WHEREFORE.00) as broker’s fee with legal interest at the rate of 6% per annum from the filing of the complaint. . The May 29.684. Tan.000.

[4] At a conference of BMW Regional Importers held on April 26. petitioner was informed that BMW was arranging to grant the exclusive dealership of BMW cars and products to CMC. a nonresident foreign corporation. That the ASSIGNOR and the ASSIGNEE shall continue business relations as has been usual in the past without a formal contract.[2] Nonetheless. but any such suit without ASSIGNEE's consent will exclusively be the responsibility and for the account of the ASSIGNOR. he filed a complaint for specific performance and damages against BMW to compel it to continue the exclusive dealership. for such purpose. 1993. 10625. and of the appellate court's order denying petitioner's motion for reconsideration. it said. BMW would have no alternative but to terminate petitioner's exclusive dealership effective June 30. On April 29. Germany. mentioning among other things.R." But on February 16. the ASSIGNOR is the present owner and holder of the BMW trademark and device in the Philippines which ASSIGNOR uses and has been using on the products manufactured by ASSIGNEE. for the present. BMW expressed willingness to continue business relations with the petitioner on the basis of a "standard BMW importer" contract. COURT OF APPEALS and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT (BMW). On February 24. 1993. and for which ASSIGNOR is the authorized exclusive Dealer of the ASSIGNEE in the Philippines. decline in sales. Hahn was surprised to find Alvarez among those invited from the Asian region. Hahn's amended complaint alleged in pertinent parts: 2. the ASSIGNOR shall inform the ASSIGNEE immediately of any such use or infringement of the said trademark which comes to his knowledge and upon such information the ASSIGNOR shall automatically act as Attorney-In-Fact of the ASSIGNEE for such case. vs. J. he remained BMW's exclusive dealer in the Philippines because the assignment was made in consideration of the exclusive dealership. in view of the foregoing and in consideration of the stipulations hereunder stated. the same being evidenced by certificate of registration issued by the Director of Patents on 12 December 1963 and is referred to as Trademark No. which had expressed interest in acquiring the same.: This is a petition for review of the decision[1] of the Court of Appeals dismissing a complaint for specific performance which petitioner had filed against private respondent on the ground that the Regional Trial Court of Quezon City did not acquire jurisdiction over private respondent. Per the agreement. 113074. claiming that the termination of his exclusive dealership would be a breach of the Deed of Assignment. BMW proposed that Hahn and CMC jointly import and distribute BMW cars and parts. if this was not acceptable to petitioner. On May 14. 2. and inadequate showroom and warehouse facilities. deteriorating services. DECISION MENDOZA. . with principal office at Munich. 1993. petitioner. otherwise. petitioner executed in favor of private respondent a "Deed of Assignment with Special Power of Attorney. 1997] ASSIGNOR is hereby named and constituted as ASSIGNEE's Attorney-In-Fact. 1993. WHEREAS. and petitioner's alleged failure to comply with the standards for an exclusive BMW dealer. the ASSIGNOR hereby affirms the said assignment and transfer in favor of the ASSIGNEE under the following terms and conditions: 1. ALFRED HAHN. authority and responsibility to prosecute unilaterally or in concert with ASSIGNEE. mandatory and prohibitory injunction to enjoin BMW from terminating his exclusive dealership. 1967. in view of ASSIGNEE's limited production. In the same letter petitioner explained that the decline in sales was due to lower prices offered for BMW cars in the United States and the fact that few customers returned for repairs and servicing because of the durability of BMW parts and the efficiency of petitioner's service. expressed dissatisfaction with various aspects of petitioner's business. On March 7.[3] Hahn insisted that as long as the assignment of its trademark and device subsisted. the ASSIGNOR has agreed to transfer and consequently record said transfer of the said BMW trademark and device in favor of the ASSIGNEE herein with the Philippines Patent Office." which reads in full as follows: WHEREAS." On the other hand. Because of Hahn's insistence on the former business relation. The following are the facts: Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila. Jose Alvarez. BMW withdrew on March 26. 1993 its offer of a "standard importer contract" and terminated the exclusive dealer relationship effective June 30. The ASSIGNEE shall take appropriate steps against any user other than ASSIGNOR or infringer of the BMW trademark in the Philippines. the parties "continue[d] business relations as has been usual in the past without a formal contract. and for that purpose. any such infringer of the subject mark and for purposes hereof the . 1993.[G. Hahn found the proposal unacceptable. private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existing under the laws of the former Federal Republic of Germany. Later he filed an amended complaint to include an application for temporary restraining order and for writs of preliminary. 1993. in a letter. with full power. respondents. January 22. the dealership of ASSIGNOR shall cover the ASSIGNEE's complete production program with the only limitation that. Germany. 1993 in Singapore. . . NOW THEREFORE. petitioner received confirmation of the information from BMW which. Petitioner protested. Defendant [BMW] is a foreign corporation doing business in the Philippines with principal offices at Munich. No. in a meeting with a BMW representative and the president of Columbia Motors Corporation (CMC). It may be served with summons and other court processes through the Secretary of the Department of Trade and Industry of the Philippines. the latter shall not be able to supply automobiles to ASSIGNOR.

without proof of service on BMW. . 1993.. Pursuant thereto.. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the Philippines up to the present. and that the respondent judge's deferment of his action thereon until after trial on the merit constitutes. it rendered judgment finding the trial court guilty of grave abuse of discretion in deferring resolution of the motion to dismiss. 15. to enjoin the trial court from proceeding further in Civil Case No. a writ of preliminary injunction was issued.. 1993. Petitioner Alfred Hahn opposed the motion. In a letter dated February 24. THE RESPONDENT JUDGE ACTED WITH UNDUE HASTE OR OTHERWISE INJUDICIOUSLY IN PROCEEDINGS LEADING TOWARD THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION. 1993. .. Plaintiff executed in favor of defendant BMW a Deed of Assignment with Special Power of Attorney covering the trademark and in consideration thereof. 1993. follows that the exclusive dealership should continue for so long as defendant BMW enjoys the use and ownership of the trademark assigned to it by Plaintiff.. with petitioner Hahn testifying... It thus. BMW asked for the immediate issuance of a temporary restraining order and. and that Hahn was an indentor or middleman transacting business in his own name and for his own account..00. On July 13. pursuant to Rule 14. AND THEREBY FAILING TO IMMEDIATELY DISMISS THE CASE A QUO. established BMW's goodwill and market presence in the Philippines. 1993. through its firm name "HAHN MANILA" and without any monetary contribution from defendant BMW. after hearing. On March 7. 1993.. . . . On June 17. 1993 issued a temporary restraining order. grave abuse of discretion. following the posting of the required bond. that he gave warranties as exclusive BMW dealer. Summons and copies of the complaint and amended complaint were thereafter served on the private respondent through the Department of Trade and Industry. contending that the trial court did not acquire jurisdiction over it through the service of summons on the Department of Trade and Industry. defendant BMW advised Plaintiff that it was willing to maintain with Plaintiff a relationship but only "on the basis of a standard BMW importer contract as adjusted to reflect the particular situation in the Philippines" subject to certain conditions. Q-93-15933 and raffled to Branch 104 of the Quezon City Regional Trial Court. The case was docketed as Civil Case No. otherwise. On December 20.. Q-93-15933.. Plaintiff. the hearing on the application for the writ of preliminary injunction proceeded ex parte. for a writ of preliminary injunction.. we rule and so hold that petitioner's (BMW) motion to dismiss could be resolved then and there. Private respondent pointed out that. summons and copies of the complaint and amended complaint were later sent by the DTI to BMW via registered mail on June 15.. 10. as shown by the fact that BMW invoices and order forms were used to document his transactions. unless the trial court's order was set aside. It contended that the execution of the Deed of Assignment was an isolated transaction. He argued that BMW was doing business in the Philippines through him as its agent.. Plaintiff has invested a lot of money and resources in order to single-handedly compete against other motorcycle and car companies . 1993[5] and received by the latter on June 24. that BMW officials periodically inspected standards of service rendered by him. defendant BMW would terminate Plaintiff's exclusive dealership and any relationship for cause effective June 30. THE RESPONDENT JUDGE PATENTLY ERRED IN DEFERRING RESOLUTION OF THE MOTION TO DISMISS ON THE GROUND OF LACK OF JURISDICTION.. that Hahn was not its agent because the latter undertook to assemble and sell BMW cars and products without the participation of BMW and sold other products. . Plaintiff was duly acknowledged as the "exclusive Dealer of the Assignee in the Philippines" . BMW filed a petition for certiorari with the Court of Appeals alleging that: I. the trial court issued an order granting the writ of preliminary injunction upon the filing of a bond of P100. 1993. . BMW moved to dismiss the case. 1993.. . 1993. it would be forced to submit to the jurisdiction of the court by filing its answer or to accept judgment in default. Moreover. and that he was described in service booklets and international publications of BMW as a "BMW Importer" or "BMW Trading Company" in the Philippines. The Court of Appeals enjoined the trial court from hearing petitioner's complaint. . It stated: Going by the pleadings already filed with the respondent court before it came out with its questioned order of July 26. II. On June 30. . The order. Without seeking reconsideration of the aforementioned order. under its first whereas clause.000. The trial court[6] deferred resolution of the Motion to dismiss until after trial on the merits for the reason that the grounds advanced by BMW in its motion did not seem to be indubitable. to our mind. AND IN PRESCRIBING THE TERMS FOR THE ISSUANCE THEREOF. 8. . On July 1. because it (BMW) was a foreign corporation and it was not doing business in the Philippines. Plaintiff has built buildings and other infrastructures such as service centers and showrooms to maintain and promote the car and products of defendant BMW. 5. which on June 14. 1967.. The actuations of defendant BMW are in breach of the assignment agreement between itself and plaintiff since the consideration for the assignment of the BMW trademark is the continuance of the exclusive dealership agreement. § 14 of the Rules of Court... when the very question was whether the court had jurisdiction over it.

Plaintiff has built buildings and other infrastructures such as service centers and showrooms to maintain and promote the car and products of defendant BMW. participating in the management. nor having. if there be no such agent. albeit of BMW cars and products. § 14 provides: §14. the Court of Appeals dismissed petitioner's complaint against BMW. for which reason he is to be considered. BMW may be considered doing business in the Philippines and the trial court acquired jurisdiction over it (BMW) by virtue of the service of summons on the Department of Trade and Industry. under governing statutes. however. — If the defendant is a foreign corporation. and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works. if Hahn is not the agent of BMW but an independent dealer. Pursuant thereto. . Hahn performed after-sale services. or on any of its officers or agents within the Philippines. No. after stating that any ruling which the trial court might make on the motion to dismiss would anyway be elevated to it on appeal. commercial brokers or commission merchants. Section 1(f)(1) of the Rules and Regulations implementing (IRR) the Omnibus Investment Code of 1987 (E. Upon confirmation in writing that the vehicles had been registered in the Philippines and serviced by him. appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more. "doing business" includes: (1). The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private respondent BMW.A. . Payment was made by the buyer directly to BMW. on the government official designated by law to that effect. 226) provided: (f) "Doing business" shall be any act or combination of acts. A foreign firm which does business through middlemen acting in their own names. BMW. however. (sic) with Hahn maintaining that on the basis thereof. as doing business. such as indentors. In particular.O. (Emphasis added) What acts are considered "doing business in the Philippines" are enumerated in §3(d) of the Foreign Investments Act of 1991 (R. 7042) as follows:[7] d) the phrase "doing business" shall include soliciting orders. for which he .. a nominee director or officer to represent its interests in such corporation. or the exercise of some of the functions normally incident to. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the Philippines up to the present. commercial brokers or commission merchants shall be the ones deemed to be doing business in the Philippines. (Emphasis supplied) Thus." In addition. through its firm name "HAHN MANILA" and without any monetary contributions from defendant BMW. therefore. nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.. Hahn was credited with a commission equal to 14% of the purchase price upon the invoicing of a vehicle order by BMW. shall not be deemed doing business in the Philippines. this appeal. including. But such indentors. Consequently. Service upon foreign corporations. whether called "liaison" offices or branches. No. 13) In support of this conclusion. Otherwise. and the trial court did not acquire jurisdiction over it (BMW). Upon receipt of the orders. Hahn claimed he took orders for BMW cars and transmitted them to BMW. Plaintiff invested a lot of money and resources in order to single-handedly compete against other motorcycle and car companies. enumerated in Article 44 of the Code. and reconfirmed the orders by signing and returning to Hahn the acceptance sheets. established BMW's goodwill and market presence in the Philippines. BMW is doing business in the Philippines while the latter asserts that it is not. warranty services.. If he is. service may be made on its resident agent designated in accordance with law for that purpose. or. Hahn received an additional 3% of the full purchase price. BMW. It ruled that BMW was not doing business in the country and. the appellate court cited the following allegations in Hahn's amended complaint: 8. and/or the exercise of rights as such investor. jurisdiction over it could not be acquired through service of summons on the DTI pursuant to Rule 14. entity or corporation in the Philippines. commercial gain or of the purpose and object of the business organization: Provided.. let alone direction of. What truly divide (sic) the parties and to which they greatly differ is the legal conclusions they respectively draw from such facts. The Court of Appeals held that petitioner Alfred Hahn acted in his own name and for his own account and not as agent or distributor in the Philippines of BMW on the ground that "he alone had contacts with individuals or entities interested in acquiring BMW vehicles." (p. Rule 14. to the motion to dismiss. dismissing petitioner's case.. a foreign corporation. [T]here is not much appreciable disagreement as regards the factual matters relating. That the phrase "doing business" shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business. supervision or control of any domestic business. 13) To the contrary. It held that petitioner was a mere indentor or broker and not an agent through whom private respondent BMW transacted business in the Philippines. As the above quoted allegations of the amended complaint show. the phrase includes "appointing representatives or distributors in the Philippines" but not when the representative or distributor "transacts business in its name and for its own account. notified Hahn of the scheduled production month for the orders." (p. based on Alfred Hahn's allegations that he had invested his own money and resources in establishing BMW's goodwill in the Philippines and on BMW's claim that Hahn sold products other than those of BMW. and in progressive prosecution of. Section 14. for this reason. service contracts. Moreover. The court upheld private respondent's contention that Hahn acted in his own name and for his own account and independently of BMW. Hence. BMW fixed the down payment and pricing charges. doing business in the Philippines. Title to cars purchased passed directly to the buyer and Hahn never paid for the purchase price of BMW cars sold in the Philippines... Plaintiff. is not considered doing business in the Philippines within the meaning of the Foreign Investments Act of 1991 and the IRR. Petitioner's appeal is well taken. the Court of Appeals itself resolved the motion. there is nothing to support the appellate court's finding that Hahn solicited orders alone and for his own account and without "interference from. Then. Petitioner contends that the Court of Appeals erred (1) in finding that the trial court gravely abused its discretion in deferring action on the motion to dismiss and (2) in finding that private respondent BMW is not doing business in the Philippines and. Independence characterizes Hahn's undertakings. or a nonresident joint stock company or association. opening offices. firm.

[17] It is not true then that the question whether BMW is doing business could have been resolved simply by considering the parties' pleadings. 14) This finding is based entirely on allegations of BMW in its motion to dismiss filed in the trial court and in its petition for certiorari before the Court of Appeals. Rule 16. As soon as BMW invoices the vehicle ordered. however. There are genuine issues of facts which can only be determined on the basis of evidence duly presented. Such determination does not foreclose a contrary finding should evidence later show that it is not transacting business in the country.[13] The Court of Appeals also found that petitioner Alfred Hahn dealt in other products. this was done without solicitation on its part. This Court held that these acts constituted doing business in the Philippines.[8] These allegations were substantially admitted by BMW which. which should have indicated to the Court of Appeals the necessity of affirming the trial court's order deferring resolution of BMW's motion to dismiss. Court of Appeals. and as soon as he confirms in writing.[18] A determination that the foreign corporation is doing business is only tentative and is made only for the purpose of enabling the local court to acquire jurisdiction over the foreign corporation through service of summons pursuant to Rule 14. As soon as the vehicles are fully manufactured and full payment of the purchase prices are made. the issue posed by the petitioner as to . 9. then it cannot really be said to be doing business in the Philippines. So. This case fits into the mould of Communications Materials. Thereafter. there are facts in the record which suggest that BMW exercised control over Hahn's activities as a dealer and made regular inspections of Hahn's premises to enforce compliance with BMW standards and specifications. On the other hand. All orders were on invoices and forms of BMW.6. According to Hahn. on this basis. v.[12] in which the foreign corporation entered into a "Representative Agreement" and a "Licensing Agreement" with a domestic corporation. as well as a full ventilation. Anyway. in its petition for certiorari before the Court of Appeals. Petitioner alleged that whether or not he is considered an agent of BMW.[10] For example.received reimbursement from BMW. stated:[9] 9. §14. as Signetics claims. The arrangement showed that the foreign corporation's purpose was to penetrate the Philippine market and establish its presence in the Philippines. If it is true. he will receive an additional three percent (3%) of the full purchase prices as commission. It is now settled that. The court need not go beyond the allegations of the complaint in order to determine whether it has jurisdiction. The fact that Hahn invested his own money to put up these service centers and showrooms does not necessarily prove that he is not an agent of BMW. by virtue of which the latter was appointed "exclusive representative" in the Philippines for a stipulated commission. in its letter to Hahn dated February 23.) The bills of lading are made up in the name of the purchasers. As to the service centers and showrooms which he said he had put up at his own expense. and that TEAM Pacific is not its agent. §14. In addition. and not exclusively in BMW products. (The payments may be made by the purchasers or third-persons or even by Hahn. An agent receives a commission upon the successful conclusion of a sale. he delivers the vehicles to the purchasers. which claimed that Hahn was not its agent and that. Hahn is credited with a commission of fourteen percent (14%) of the full purchase price thereof. however. 1996. which should not thus be within the province of a mere motion to dismiss. even as it announced in the Asian region that Hahn was the "official BMW agent" in the Philippines. and. It is Hahn who picks up the vehicles from the Philippine ports. BMW cannot short circuit the process on the plea that to compel it to go to trial would be to deny its right not to submit to the jurisdiction of the trial court which precisely it denies.[11] In effect. that requires the contravention of the allegations of the complaint. which it even later disposed of. that its only involvement in the Philippines was through a passive investment in Sigfil.5. BMW periodically inspected the service centers to see to it that BMW standards were maintained. the vehicles are shipped to the Philippines. ruled that Hahn was not an agent of BMW. of the main merits of the case. Hahn said that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. Pursuant to these contracts. Inc. BMW stated: In the last years we have pointed out to you in several discussions and letters that we have to tackle the Philippine market more professionally and that we are through your present activities not adequately prepared to cope with the forthcoming challenges. [16] This was denied by BMW. Indeed this is not the only factual issue raised. Here the record of the case bristles with factual issues and it is not at all clear whether some allegations correspond to the proof. but Hahn-Manila is therein indicated as the person to be notified. for purposes of having summons served on a foreign corporation in accordance with Rule 14. it is sufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines. BMW was holding Hahn accountable to it under the 1967 Agreement. For as already noted. that the petitioner's right to question the jurisdiction of the court over its person is now to be deemed a foreclosed matter. (p. even if no sale is eventually made.[14] But this allegation was denied by Hahn[15] and therefore the Court of Appeals should not have cited it as if it were the fact. It is a defense. As this Court has explained: This is not to say. also.4. while it was true that it had sold cars to Philippine buyers. that the vehicles have been registered in the Philippines and have been serviced by him. Contrary to the appellate court's conclusion. private respondent need not apprehend that by responding to the summons it would be waiving its objection to the trial court's jurisdiction. the fact is that BMW did business in the Philippines because it sold cars directly to Philippine buyers. for purposes of conducting pre-delivery inspections. the domestic corporation sold products exported by the foreign corporation and put up a service center for the products sold locally. it would seem from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain BMW standards that BMW was terminating Hahn's dealership. a broker earns his pay merely by bringing the buyer and the seller together. §3 authorizes courts to defer the resolution of a motion to dismiss until after the trial if the ground on which the motion is based does not appear to be indubitable. Indeed. 9. this arrangement shows an agency. BMW held out private respondent Hahn as its exclusive distributor in the Philippines. in effect.

disposed of the whole case with finality and thereby deprived petitioner of his right to be heard on his cause of action. absent an invocation of separate or independent reliefs of its own. Although the injunction was issued ex parte. the decision of the Court of Appeals is REVERSED and the case is REMANDED to the trial court for further proceedings. be considered to have voluntarily submitted itself to the court's jurisdiction. the fact is that BMW was subsequently heard on its defense by filing a motion to dismiss. that by its participation during the trial on the merits. is another matter that would yet have to await the reception and admission of evidence. Since these points have seasonably been raised by the petitioner. by ruling that BMW is not doing business on the basis merely of uncertain allegations in the pleadings.. with the same result if it had denied the motion and conditionally assumed jurisdiction. there should be no real cause for what may understandably be its apprehension.e. It is the Court of Appeals which. i. but which has ceased to do business at the time of the filing. Nor was there justification for nullifying the writ of preliminary injunction issued by the trial court.[19] Far from committing an abuse of discretion. SO ORDERED. . can still be made to answer for a cause of action which accrued while it was doing. it may. WHEREFORE.whether a foreign corporation which has done business in the country. of a complaint. the trial court properly deferred resolution of the motion to dismiss and thus avoided prematurely deciding a question which requires a factual basis. business.

California. requests for price quotations of desired machinery or equipment. manufacturers or suppliers for whom petitioner acts as distributor and.36 on the ground that of the total income of P 630. (5) United States manufacturer or supplier credits the petitioner for commission. for compensation or profit. petitioner's transactions or activities are outlined as follows: (1) Philippine buyer ascertains from petitioner whether or not a certain machinery or equipment it desires to buy is available from the U. (7) United States manufacturer or supplier invoices goods for petitioner's agent in San Francisco. factory which is furnished petitioner and fixed by the United States manufacturer or supplier.b.) (2) as distributor of United States manufacturers and/or suppliers. manufacturers or suppliers represented by the former and. or negotiate freights or other business for owners of vessels. or other means of . the buyer opens with a local bank a letter of credit in favor of the petitioner's agent in San Francisco. 1985 COMMISSIONER OF INTERNAL REVENUE. manufacturer. the Philippine buyer opens with a local bank a letter of credit in favor of the United States manufacturer or supplier to cover payment of the goods ordered. 70-73. which reads: (t) "Commercial broker" includes persons other than importers.94 as broker's percentage tax on the assumption that the income consisted entirely of commissions.339. pp. J. or bona fide employees. California. sell or bring about sales for purchases of merchandise for other persons. if available.635. (2) If agreeable. (4) Upon notice of the acceptance of the purchase order.635.. The single issue posed in this petition for review is whether the P 360. who. United States of America to cover the price of the goods ordered. petitioner vs. P 360.35 earned by respondent taxpayer in its capacity "as distributor" of American machineries and equipment should be considered as commission subject to commercial broker's tax under the Tax Code or profit from sales which is not subject thereto. or bring proposed buyers and sellers together. (3) Upon notification that the purchase order is accepted. payment of the goods. pp.36 allegedly erroneously paid as commercial broker's percentage tax.G.R. Philippine buyer places the purchase order with the petitioner. Later however respondent sought a partial refund of P 21. its (petitioner's) transactions or activities are outlined as follows: (1) Philippine buyer ascertains from petitioner whether or not a certain machinery or equipment which the said buyer desires to purchase is available from the U.620. manufacturer. (6) The said agent procures the goods from the U.62 from both its activities as sales representative and as distributor of American manufacturers/suppliers and paid thereon P 37. of P 21.35 was not broker's commission but simply overprice or profit (plus exchange income on overprice) realized from ordinary sales of machineries and equipment it had purchased from American companies.: Appeal by the Commissioner of Internal Revenue from the decision of the Court of Tax Appeals in CTA Case No. (CTA rec. (8) Petitioner's agent prepares sales invoice of the petitioner and ships the goods to the Philippine buyer.620.339.S.S. respondent taxpayer realized an income of P 630. MANILA MACHINERY & SUPPLY COMPANY and the COURT OF TAX APPEALS. L-25653 February 28. respondents. (2) Petitioner furnishes the Philippine buyer with price quotation based on price list f.. the taxpayer appealed to the Court of Tax Appeals from which it obtained as aforesaid a favorable judgment. 1250 ordering the refund to respondent Manila Machinery & Supply Co. (3) If agreeable. Philippine buyer places purchase order either directly with the United States manufacturer and/or supplier or with petitioner who forwards it to the U. producers. if available. PLANA. 70-73. No.o. (4) United States manufacturer or supplier ships the goods to Philippine buyer and collects from the U.S.837. The merit of respondent's stand is clear on the face of the appealed decision Petitioner (taxpayer) contends that it is not a commercial broker within the definition provided in Section 194(t) of the Revenue Code.S. The following partial stipulation of facts outlines the two different modes of business operation of private respondent (petitioner in the CTA ): (1) as sales representative of certain United States manufacturers and/or suppliers. (5) Petitioner prepares the purchase instructions in accordance with the purchase order of the Philippine buyer and forwards the same to its agent in the United States. requests for price quotation of the desired machinery or equipment. which is now assailed.S.) It appears that during the tax period in question. correspondent of the local bank where the letter of credit was opened. manufacturer or supplier. After the request for refund had been denied by the Bureau of Internal Revenue.62. (CTA rec.

Subject to the terms and conditions hereinafter set forth. . or otherwise disposing of goods.. (h) . pp.) Respondent cites the agreement of petitioner with the Toledo Scale Corporation (CTA rec. manufactured or sold by the Company within the territory indicated hereinafter..) Briggs & Straton Corporation Distributor' is an individual or firm under agreement with Briggs & Straton Corporation. (See BIR rec.. and produced by the Manufacturer.. manufacturers (BIR rec. the evidence of record regarding petitioner's transactions which gave rise to the income in question indicates the status of petitioner as an independent dealer and not as a commercial broker. authorized to act either as principal or agent in the transaction of its business.S..) Substantial evidence has been construed to mean not necessarily preponderant proof as is required in ordinary civil action.) Toledo Scale Corporation II. WHEREFORE. M. 63. California. 4348. hereinafter listed. Export Distributor's Sales Agreement. or for the skippers. was the purchaser and owner of the machineries it sent to the Philippine buyers. pp. is "to make and enter into all kinds of contracts. agreements. pp. this Court is generally confined to questions of law. (Emphasis supplied. 53-56). for resale. (a) To sell only to the Distributor Toledo Machines for use in the Distributor's territory." (De Lamera vs. et al. Export Representative Agreement. Petitioner's contracts with several U. .transportation. acquiring. (2) that if petitioner had no stock available in the Philippines. and obligation with any persons. CTA rec. pp. loss or damage after the shipment has been delivered f. 90-93. This conclusion is established by the fact that when petitioner received purchase order from local buyers and there was no stock available. selling. consignment.S. Pertinent portions of these contracts read: Joy Manufacturing Company l. which authorizes petitioner "to solicit sales of" certain products of the latter corporation. 98.. Exh.S. ." (BIR rec. A perusal of the records of the case at bar equally yields the conclusion that petitioner. IV. whose principal business is the resale of products or commodities at wholesale to Dealers. therefore.. Distributor's Contract.. . 70-73) negate agency. Distributor shall not act as the agent for the Company under this agreement.) Petitioner was in turn paid through the letters of credit opened by the Philippine buyers with local banks in favor of agent M... shall end with its delivery f... But respondent merely quoted that portion wherein petitioner is authorized to act as agent or representative but did not mention petitioner's equal authority to act as distributor or independent dealer with respect to the same corporation. as an indication of brokerage. nor shall Distributor have any right or power hereunder to act for or to bind the company in any respect or to pledge its credit . the instant petition controverts the factual findings of the court a quo. p. 111 & 124.) Petitioner is. 21-22).. or indent orders. (Emphasis supplied. 79. factory or while in possession of any transportation company . (d) The responsibility of the Company for merchandise ordered. or consignors or consignees of freight carried by vessels or other means of transportation..S. This is to be accomplished by the Representative purchasing certain products.. CTA rec. Republic Act 1125. .. Rule 44.. all risks of fire. V. Stifacts.). either as principal or agent.50). the appealed decision is affirmed. wares.S. and (3) that the U. b..b..) The Jeffrey Manufacturing Company The purpose of this agreement is to effect through the Representative a wider sales outlet for the Manufacturer's products. upon commission. manufacturers indubitably show that it acted as an independent dealer. Smith in San Francisco. Court of Agrarian Relations. pp.S. . . CTA rec.o. 85. 83.. It is expressly the intention of the parties hereto that the Distributor's status is that of an independent contractor.. (BIR rec.. but such kind of "relevant evidence as a reasonable man might accept as adequate in support of a conclusion. except the following machines.) There is no circumstance of record indicating that the findings of the lower court are not supported by substantial evidence.. The term includes commission merchants. The findings of fact of said Court are not to be disturbed unless clearly shown to be unsupported by substantial evidence. . It is well settled that in passing upon petitions for review of the decisions of the Court of Tax Appeals. etc. pp. Distributor Agreement. through its agent. However. U.. Manufacturers invoiced the goods to petitioner's agent in California who prepared the sales invoice and shipped the goods to the Philippine buyers (See CTA rec. Sections 18-19. pp.59-128." the U. SO ORDERED. p.. (Rules of Court. pp.. 90-93. (Emphasis supplied. and merchandise of all kinds. corporation or corporations.. it sent the orders to its agent in California and required the latter "to purchase from .A. CTA rec. manufacturers or suppliers the items called for in the purchase orders (See BIR rec. and diligently promoting their sale in the Representative's territory. pp. or other associations for the purchasing.. One of the purposes of petitioner corporation. by the Distributor . as stated in its articles of incorporation. 49. Smith.) The facts (1) that petitioner shouldered the losses resulting from some of the transactions in questions (See BIR rec. 17 SCRA 368. the Company grants to the Distributor the exclusive right to purchase for resale the following listed articles and machines. shall be borne by the Distributor.. In effect. (Emphasis supplied. 78. p. it forwarded the purchase order to its agent in California who procured the machineries from U. Section 2.S. o. factory.

7. He "offers and agrees. at the price set opposite each item and delivered at the point(s) specified .) And most probably for this reason. or consignors or consignees of freight carried by vessels or other means of transportation. vs. under C. G. Case No. pp. if this (his) bid be accepted within 20 calendar days from the date of opening. In computing his bid. Inasmuch as there is no dispute by the parties herein on the trial court's account of it. but for a third person. 7. 55-56 CTA rec. will be received . If the bid of the petitioner is accepted by PHILCUSA. for compensation or profit. 44-46 BIR rec. Teodoro G.T. pp. (2) sales tax. Exh." Exh.. petitioner. He pays the usual bank charges. The Bureau of Internal Revenue determined that the various transactions under the above bid were carried out by Tan Eng Hong as a commercial broker and. Accordingly.) However.) The petitioner.A. The Commissioner of Internal Revenue. 436. and then publicly opened for furnishing commodities for delivery C & W Manila. the total C & F dollar cost is converted to pesos on the basis of P2. or other means of transportation. Then. We deem it best to reproduce the said account hereunder: To start with. pp. 65 CTA rec. accordingly. also Exh. The term includes commission . he made deliveries to PHILCUSA of the bidded goods for which he received in payment the total sum of P94. in view of the foregoing considerations. L-17648. 8.. it is only after the petitioner has been finally awarded the bid contract that PHILCUSA comes to know of the names of the foreign suppliers of the commodities to be imported and the sole purpose seems to be to secure and facilitate the dollar payment of the imported goods to said suppliers abroad. the Philippine Council For United States Aid (PHILCUSA) called a public bidding for the supply of certain materials which it intended to give as aid to the Philippines. To resolve the issue. Collector of Internal Revenue.. who. 1966 THE COLLECTOR (now COMMISSIONER) OF INTERNAL REVENUE." (Exh.94 issued by the respondent Collector of Internal Revenue is hereby cancelled and withdrawn.: This is an appeal from the decision of the Court of Tax Appeals in C. manufacturers. sell or bring about sales or purchases of merchandise for other persons. L-16893 October 22. Z. assessed against the sum received. (Exh.) In carrying out a commercial venture under the aforequoted arrangement. (Par. did Tan Eng Hong act as a commercial broker? We do not think so. Respondent.94.00 to $1. J.) The quotations of the petitioner is in Philippine currency for the C & F Philippine Port Value.T. is then added thereto in order to arrive at the correct total quotation. Exh. He is also exempt from the payment of the following: (1) Foreign exchange tax.R. or negotiate freights or other business for owners of vessels. p. the instant appeal refers alone to the correctness or error of the above finding that Tan Eng Hong was not a commercial broker. but is not required to make payment of pesos into the counterpart fund nor pay the foreign exchange premium as no actual sale of dollars is involved. TAN ENG HONG. Tan Eng Hong went to the Court of Tax Appeals. the petitioner is also requested to submit a performance bond and to apply at the Philippine National Bank for the corresponding letters(s) of credit in favor of his suppliers abroad. 19-20 BIR rec. he receives a letter of award wherein he is required to inform PHILCUSA of the (1) Net C & F dollar cost to his suppliers per item and per each supplier's group. or bring proposed buyers and sellers together. p. Petitioner. this Court held that the essential feature of a broker is the fact that he acts not for himself.685. p." absolving Tan Eng Hong from certain tax liabilities as a commercial broker. PHILCUSA announces that "Sealed bids . H. (3) customs duties. producers. Sometime in 1952. other than importer. inclusive. Hence. and his profit in pesos which he personally and solely fixes. fixed and percentage taxes and surcharge in the amount of P7. REGALA.00. to furnish any or all of the items of which prices are quoted. 1964. G. . p. and the deficiency assessment for fixed and percentage taxes in the total sum of P7. F. BIR rec. H. submits his signed proposal together with a proposal bond. respondent. on a petition for review. and (6) delivery charges. After due trial and hearing. In the case of Kuenzle & Streiff Inc. 65 CTA rec. No. he is not required to secure an import license for the goods imported for PHILCUSA.. . Without pronouncement as to costs. Taking issue with the Bureau's ruling that he was acting as a commercial broker in supplying the goods under the above bid.R. 44-46. pp.A. the petitioner applies for a letter of credit with the Philippine National Bank in his own name and for his own account and in favor of his suppliers abroad. except when otherwise provided in the contract. 64 CTA rec. Tan Eng Hong won the bid so that from 1952 to 1955. As was therein held: Section 194(t) of the Revenue Code defines a commercial broker in the following manner: "(t) "Commercial broker" includes all persons. (5) arrastre charges. the said Court rendered judgment with the following dispositive portion — WHEREFORE. No. or for the shoppers. 436 entitled "Tan Eng Hong.. (2) Names and addresses of his suppliers. vs.71. as a qualified bidder. Office of the Solicitor General for petitioner.. The sole and principal predicate of the trial court's decision abovementioned was its finding that "petitioner Tan Eng Hong was not a broker but the importer of the goods sold to PHILCUSA. 14.513. Exh.G.513. The Commissioner of Internal Revenue urges that he was so. and (3) Names of independent inspection firms that will undertake the inspection prior to the shipment of the goods. Landas for respondent. the decision appealed from is hereby reversed. it is necessary to discuss the specific details of the transactions in dispute. (Exh. or bona fide employees. Case No." Consequently. the petitioner authorizes the Philippine National Bank to deliver all documents drawn under this credit to PHILCUSA.. 32 CTA rec. (4) municipal taxes. The dollars that are being used in all the PHILCUSA purchases belong to the United States Mutual Security Administration (hereinafter referred to as MSA) and are actually paid for by the Philippine Government by general payments from the special appropriation directly into the counterpart fund. October 31. vs.

C. Behn. The bid contracts were strictly between Tan Eng Hong and PHILCUSA just as the former's contracts with his foreign supplier were strictly between them alone. This condition may not be said to obtain in the case on hand. the foreign supplier could not have compelled PHILCUSA otherwise. WHEREFORE. if somehow the foreign supplier had defaulted in the performance of its obligations to Tan Eng Hong. Reyes. PHILCUSA could not have had any action or remedy against the said foreign supplier. Nolting and Garcia. v.P. . first and foremost. 2158). 53 O. It would indeed be quite difficult to sustain any assertion that Tan Eng Hong was acting for and in behalf of PHILCUSA or his foreign supplier or both. he was discharging his own. 1956. It seems obvious from the facts of this case that Tan Eng Hong undertook the importation of the goods needed by PHILCUSA for himself and not for PHILCUSA. (Emphasis ours). and the sale must proceed from his efforts acting as a broker. he was. for one reason or another PHILCUSA had refused to accept the delivery of the said goods to it by Tan Eng Hong. the negotiator between other parties.J. for others. If. serving his own interest and no one else's. never acting in his own name. it appears that Tan Eng Hong signed and submitted his bids or proposals under his name and the corresponding letters of credit were sent to his business address. v.L. performance bonds. the essential feature of a broker is the fact that he acts not for himself..G. The means employed by him and his efforts must result in the sale. It was he himself who contracted with his foreign supplier for the purchase of the said goods. A broker is generally defined as one who is engaged. Dizon. personal obligation as the winner in the bidding called by PHILCUSA. Bengzon. but... Ltd. We said: . Meyer & Co. the decision appealed from is hereby affirmed in full. No. The foreign supplier and PHILCUSA had no privity of contractual relations whatsoever to the end that neither of them could have had any claim against each other for whatever fault or breach Tan Eng Hong might have committed relevant to the transactions in dispute. Similarly. In Behn Meyer case. He must find the purchaser.R. No pronouncement on costs. G. invoices and all other documents relative to the transactions were in his name. but in the name of those who employed him. Tan Eng Hong and the foreign supplier only. . Ltd. . The broker must be the efficient agent or the procuring cause of the sale. negotiating contracts relative to property with the custody of which he has no concern. as well as by the rulings handed down in at least two cases by this Court. for a third person. Tan Eng Hong did not merely bring PHILCUSA and his foreign supplier to come to an agreement for the sale of certain commodities.e.. concur. Tan Eng Hong would have been liable in damages to PHILCUSA if he had failed to import the said goods so that when he carried out the importation. (Reyes v. Collector of Internal Revenue. Makalintal..merchants. Mosqueda. Sanchez and Castro. In effecting the importation of the said goods. J. L-8669. The letters of credit. J. 274). Concepcion. i. May 25. 70 Phil. All these indicate the distinct and independent personality of Tan Eng Hong as an importer and not a commercial broker. He imported the commodities not because PILCUSA had asked him to but because he had obligated himself to deliver the same to PHILCUSA when he participated and won in the public bidding called by the said agency. Upon the records of this case. 35 Phil." There does not seem to be any room for doubt that the petitioner falls within the above definition. 36.. (Ker & Co. Zaldivar. he is strictly a middleman and for some purposes the agent of both parties. Under the said section.. JJ. on a commission.B.

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