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The spouses Francisco and Demetria Culaba were engaged in the sale and distribution of San Miguel
Corporation’s (SMC) beer products. SMC sold beer products on credit to the Culaba spouses in the
amount of P28,650.00. thereafter, the Culaba spouses made a partial payment of P3,740.00, leaving an
unpaid balance of P24,910.00. As they failed to pay despite repeated demands, SMC filed an action for
collection of a sum of money against them before the RTC.
The defendant-spouses denied any liability, claiming that they had already paid the plaintiff in full on
four separate occasions. To substantiate this claim, the defendants presented 4 Temporary Charge
Sales (TCS) Liquidation Receipts: 27331, 27318, 27339, 27346. Defendant Francisco Culaba testified
that he made payments to an SMC supervisor who came in an SMC van. The defendant, in good faith,
then paid to the said supervisor, and he was, in turn, issued genuine SMC liquidation receipts.
SMC, for its part, submitted a publisher’s affidavit to prove that the entire booklet of TCSL Receipts
bearing Nos. 27301-27350 were reported lost by it, and that it caused the publication of the notice of
W/N petitioners obligation is extinguished. No
Payment is a mode of extinguishing an obligation. Article 1240 of the Civil Code provides that payment
shall be made to the person in whose favor the obligation has been constituted, or his successor-ininterest, or any person authorized to receive it. In this case, the payments were purportedly made to a
“supervisor” of the private respondent, who was clan in an SMC uniform and drove an SMC van. He
appeared to be authorized to accept payment as he showed a list of customers’ accountabilities and
issued SMC liquidation receipts which looked genuine. Unfortunately for petitioner Francisco Culaba, he
did not ascertain the identity and authority of the said supervisor, nor did he ask to be shown any
identification to prove that the latter was, indeed, an SMC supervisor. The petitioners relied solely on the
man’s representation that he was collecting payments for SMC. Thus, the payments the petitioners
claimed they made were not the payments that discharged their obligation to private respondents.
The basis of agency is representation. A person dealing with an agent is put upon an inquiry and must
discover upon his peril the authority of the agent. In the instant case, the petitioners’ loss could have
been avoided if they had simply exercised due diligence in ascertaining the identity of the person to
whom they allegedly made the payments. The fact that they were parting with valuable consideration
should have made them more circumspect in handling their business transactions. Persons dealing with
an assumed agent are bound at their peril to ascertain not only the fact agency but also the nature and
extent of authority, and in case either is controverted, the burden of proof is upon them to establish it.
the petitioners in this case failed to discharge this burden, considering that the private respondent
vehemently denied that the payments were accepted by it, and were made to its authorized

National Food Authority (NFA) v. Masada Security Agency, Inc.
453 SCRA 70 (March 8, 2005)
Masada entered into a 1 year contract to provide security services to NFA-REGION 1. Upon the expiration of the
said contract, the parties extended the effectivity thereof on a monthly basis under same terms and condition.
The Regional Tripartite Wages and Productivity Board (RTWPB) issued wage orders mandating increases in the
daily wage rate. Masada requested NFA to increase the of the monthly contract rate . NFA only granted the request
only with respect to the increase in daily wage
Respondent filed a case for recovery of sum of money against NFA with the RTC.
NFA CONTENTION: Respondent cannot demand an adjustment on the said salary benefits because it is bound by
their contract expressly limiting NFA’s obligation to pay only the increment in the daily wage.
Pre-trial Issue: WON respondent is entitled to recover from NFA wage related benefits of the security guards.
RTC Ruling: NFA is liable to pay the security guards’ wage related benefits pursuant to RA 6727, because the basis
of the computation of said benefits, like overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased
minimum wage. It also found NFA liable for the consequential adjustments in administrative costs and margin.
NFA appealed to the Court of Appeals but was dismissed
ISSUE(Supreme Court): WON the liability of principals in service contracts under Section 6 of RA 6727 and the
wage orders issued by the RTWPB is limited only to the increment in the minimum wage.
Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. Section 6 of RA
6727, however, expressly lodged said obligation to the principals or indirect employers in construction projects and
establishments providing security, janitorial and similar services.
The court found merit in NFA’s contention that its additional liability under the aforcited provision is only limited to the
payment of the increment in the statutory minimum wage rate i.e. the rate for a regular eight (8) hour work day.
Expresio unius est exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it may not,
by interpretation or construction, be extended to others. Since the increase in wage referred to in Section 6 pertains
to the “statutory minimum wage” as defined herein, principals in service contracts cannot be made to pay the
corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay, premium pay and
other benefits granted to workers. While basis of said remuneration and benefits is the statutory minimum wage, the
law cannot be unduly expanded as to include those not stated in the subject provision.
Moreover, the law secures the welfare of the workers by imposing a solidary liability on principals and the service
contractors. Under the second sentence of Section 6 of RA 6727, in the event that the principal or client fails to pay
the prescribed wage rates, the service contractor shall be held solidarily liable with the former.
The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB
pursuant to RA 6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of the
Act, its obligation is limited to the payment of the increased statutory minimum wage rates which, as admitted by
respondent, had already been satisfied by NFA. Under Article 1231 of the Civil Code, one of the modes of
extinguishing an obligation is by payment. Having discharged its obligation to respondent, NFA no longer have a
duty that will give rise to a correlative legal right of respondent. The latter’s complaint for collection of remuneration
and benefits other than the increased minimum wage rate, should therefore be dismissed for lack of cause of action.
WHEREFORE, the petition is GRANTED. The February 12, 2004 decision and the April 30, 2004 resolution of the
Court of Appeals which dismissed petitioner National Food Authority’s appeal and motion for reconsideration,
respectively, in CA-G.R. CV No. 76677, are REVERSED and SET ASIDE. The complaint filed by respondent
MASADA Security Agency, Inc., docketed as Civil Case No. Q-01-43988, before the Regional Trial Court of Quezon,
City, Branch 83, is ordered DISMISSED.

as agent of all the four co-owners. 1898 by paying the repurchase price. which said sum the court ordered refunded to the said Cuevas. wherein it was held that the land and camarin in question were the property of Salvador Panganiban. In a letter. The revolutionary government to which the payment was made was not in possession of credit. provided that they are for the same transaction. and not from the act of constituting the agency. It was appellee who first found Times Transit Corporation. each obligor may be compelled to pay the entire obligation. AGUSTIN CUEVAS 7 Phil. petitioners . 2002] CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE CASTRO. who refused to receive the same. as in the liability of co-principals in a contract of agency. No. confiscation. The De Castros claim that Artigo always knew that the two lots were co-owned with their other siblings and failure to implead such indispensable parties is fatal to the complaint since Artigo. on the 10 th of the said month attempted to pay Php 200 to plaintiff. Mexican currency. Hence. vs. Artigo was authorized by appellants to act as real estate broker in the sale of these properties and five percent(5%) of which will be given to the agent as commission. who bought 2 lots. Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing delivered. by express agreement. Plaintiff redeemed the property to the revolutionary government on November 12.R. however. and the defendant. 1900. because there is no proof that the payment made by the plaintiff to Gonzales. 477 (February 14.Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the creditor. second paragraph. be applied. De castros then moved for the dismissal for failure to implead other co-owners as indispensable parties. By virtue of this solidarity. Issue: Issue: Whether the repurchase made by plaintiff from the revolutionary government vested in him the title to the property. negate this solidary responsibility. they shall be solidarily liable to the agent for all the consequences of the agency. was ordered to return the said property to the plaintiff. 115838. What the plaintiff did in this case was to reacquire the ownership of the property had been transferred by the said vendee in any manner whatsoever. 1 The essence of a pacto de retro sale is that title and ownership of the property sold is immediately vested in the vendee a retro. on December 10. Gonzales sold the property to the defendant. The parties. In the month of May 1898. the agent can recover from any principal the whole compensation and indemnity owing to him by the others. If two or more persons have appointed an agent for a common transaction or undertaking. amounting to 200 pesos. 1897. but he could not locate Gonzales due to the revolutionary war. Panganiban. 1907) The Case: An appeal from a judgment of the Court of First Instance of the Province of Pangasinan. The solidarity arises from the common interest of the principals. subject to the restrictive condition of repurchase by the vendor a retro within the period provided in Article 1606 of the New Civil Code. in itself. Seizure is not. made by Cuevas was improperly made. 1915. Neither could Article 1241 3. . or insofar as the payment has been beneficial to him. 3 Article 1241. sold under pacto de retro1 a camarin and lot to one Gonzales. Art. the property will pass to Gonzales upon paying an additional sum of Php 200. it did nothing but seize the property of the vendor. The revolutionary government then seized the land and camarin from Gonzales. The rule in this article applies even when the appointments were made by the principals in separate acts. Such benefit to the creditor need not be proved in the following cases. Facts: SALVADOR PANGANIBAN vs. and to pay the costs of proceedings. Agustin Cuevas. On the other hand. When the law expressly provides for solidarity of the obligation. The solidarity does not disappear by the mere partition effected by the principals after the accomplishment of the agency. Artigo felt short of his commission.[G. The Facts: The plaintiff. COURT OF APPEALS and FRANCISCO ARTIGO. plaintiff sought to repurchase the property. the plaintiff could not have acquired the property from the one who was not the owner thereof. A seizure or embargo is nothing but a prohibition enjoining the owner from disposing the property. De castro were co-owners of four (4) lots. including the house and lot. would be paid with funds coowned by the four co-owners. WON the complaint merits dismissal for failure to implead other co-owners as indispensable parties Ruling: Devoid of merit. July 18. respondents. who. Therefore. Payment made in good faith to any person in possession of the credit shall release the debtor.The agent may recover the whole compensation from any one of the co-principals. he sued below to collect the balance. with agreement that if the plaintiff did not repurchase within six months. the court reserving to the said plaintiff the right to bring an action for damages against the defendant and holding that the deposit in the hands of the clerk. as in this case. may. on August 1. Held: Article 1242 of the Civil Code2 is not applicable. 2 Article 1242.

Since the defendant did not make the additional payment of Php 200 in the manner agreed upon in the contract and did not make a consignation in the manner provided by law. . did not extinguish the obligation of plaintiff to pay the repurchase price.Such payment. the right of the plaintiff to redeem still exists. therefore. and he may repurchase the property upon paying to defendant the repurchase price.