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

ISSUE: W/N Plaintiff De la Cruz is

considered as an agent of the corporation
and as such entitled to reimbursement
for expenses incurred in conncection
with agency
RULING: No, Plaintiff is mere
The relationship between the
movie corporation and plaintiff was not
that of principal and agent because the
principle of representation as a
characteristic of agency was in no way
Plaintiff was not employed to
represent corporation in its dealings with
3rd parties
Plaintiff is a mere employee
hired to perform a certain specific duty
or task, that of acting as a special guard
and staying at the main entrance of the
movie house to stop gate crashers and to
maintain peace and order within the
Sub issue: W/N an employee or servant
who in line of duty and while in the
performance of the task assigned to him,
performs an act which eventually results
in his incurring in expenses caused not
directly by his master or employer or by
reason of his performance of his duty,
but rather by a 3rd party or stranger not in
the employ of his employer may recover
said damages against his employer
Ruling: No
Although the employer has a moral
obligation to give employee legal
assistance to aid the latter in his case, he
has no legal obligation to do so.
If the employer is not legally obliged to
give legal assistance to employee and
provide him with a lawyer, naturally said

employee may not recover the amount

he may have paid a lawyer hired by him.
Damages suffered by plaintiff by
reason of expenses incurred by him in
remunerating his lawyer is not caused by
his act of shooting to death the gate
crasher but rather by filing the charge of
homicide which made it necessary for
him to defend himself with the aid of
Had no criminal charge against
him, there would have been no expenses
incurred or damages suffered.
*Ker and Co, Ltd. was assessed
by then Commissioner of Internal
Revenue Domingo the sum of P
20,272.33 as the commercial brokers
compromise penalty.
* There was a request on the part
of Ker for the cancellation of such
assessment which request was turned
*As a result, it filed a petition for
review with Court of Tax Appeals
*CTA: Ker taxable except as to
the compromise penalty of P500, the
amount due from it being fixed at
*Such liability arose from a
contract of Ker with the United States
Rubber International. The former being
referred to as the distributor and the
latter specifically designated as the
*The contract was to apply to
transactions between the former and Ker,
as distributor from July 1, 1948 to
continue in force until terminated by
either party giving to the other 60 days

*The shipments would cover

products for consumption in Cebu,
Bohol, Leyte Samar, Jolo, Negros
Oriental and Mindanao except province
of Davao, Ker as distributor being
precluded from disposing such products
elsewhere than in the above places
unless written consent would first be
obtained from the company
*Ker as distributor is required to
exert every effort to have the shipment
of the products in the maximum quantity
and to promote in every way the sale
sale thereof.
* Crucial stipulation: The
company shall from time to time consign
to Ker and Ker will receive, accept
and/hold upon consignment the products
specified under the terms of this
agreement in such quantities as in the
judgment of company may be necessary
*It is further agreed that this
agreement does not constitute Ker the
agent or legal representative of the
company for any purpose whatsoever
ISSUE: W/N the relationship thus
created is one of vendor and vendee
(contract of sale) or of broker and
principal (contract of agency)
RULING: Broker and principal- contract
of agency
By taking the contractual
stipulations as a whole and not just the
disclaimer, it would seem that the
contract between them is a contract of
The CTA, in considering such
stipulations provided in the contract,
concluded that all these circumstances
are irreconcilably antagonistic to the
idea of an independent merchant
:CTA: upon analysis of the
whole, together with actual conduct of
the parties thereto, that the relationship

between them is one of brokerage or

National Internal Revenue Code: defined
Commercial broker as all persons, other
than importer, manufacturers, producers
or bona fide employees who, for
compensation or profit, sell or bring
about sales or purchase of merchandise
for other persons or bring proposed
buyers and sellers together and also
includes commission merchants such as
Ker in this case
*The mere disclaimer in a
contract that an entity like Ker is not
the agent or legal representative for any
purpose whatsoever does not suffice to
yield the conclusion that it is an
independent merchant if the control over
the goods for resale of goods consigned
is pervasive in character
*thus, SC rejected Kers petition
to reverse decision of CTA


*Escandor-engaged, under the
name and style of Guardex Enterprises
in (a) manufacture and sale of firefighting equipment such as fire
extinguishers, fire hose cabinets and
related products, and (b) occasionally,
the building or fabrication of fire trucks
*Junbee Orbeta- a freelance
Orbeta somehow learned that
Escandor had offered to fabricate a fire
truck for Rubberworld )Phil) inc thus he
wrote Escandor inquiring about the
amount of commission for the sale of a
fire truck. Escandor replied saying that it
was P15,000 per unit

*4 days later, Orbeta offered to

look after Escandors pending proposal
to sell a fire truck to Rubberworld, ans
asked for P250 as representation
expenses to which Escandor agreed and
gave him the money
*When Escandor didnt get any
word from Orbeta after 3 days, she
herself inquired in writing from
Rubberworld about her offer of sale of a
fire truck. She then sent a revised price
quotation some ten days laeter.
*in the meantime, Orbeta sold to
other individuals some of Escanodors
fire extinguishers, receiving traveling
expenses in connection therewith as well
as the corresponding commissions and
after that he then dropped out of sight.
*About 7 months afterwards,
Escandor herself finally concluded a
contract with Rubberworld for the
latters purchase of a fire truck
*Orbeta suddenly reappeared an
asked for his commission for the sale of
the fire truck to Rubberworld to which
Escandor refused, saying that he had had
nothing to do with the offer, negotiation
and consummation of the sale
*Orbeta then filed a complaint
against Escandor with the Ministry of
Labor which ruled in his favor. It was
affirmed by the National Labor
Relations Commission on appeal taken
by Escandor
ISSUE: W/N Orbeta is an agent of
Guardex Enterprises thus entitled to
sales commission
The claim that she gave verbal
authority to Orbeta to offer to a fire truck
to Rubberworld was belied from the fact
that months
prior to Orbetas
approaching Escandor, the latter already
had made a written offer of a fire truck

to Rubberworld. All that she consented

to was for Orbeta to follow up that
pending offer. It seems fairly evident
that the representation allowance of
P250 was meant to cover the expenses
for the follow up offered by Orbeta-an
ambiguous fact which does not of itself
suggest the creation of an agency and is
not at all inconsistent with the theory of
its absence in this case.
Even if Orbeta is considered to
have been Escandors agent for the time
he was supposed to follow up the offer
to sell, such agency would have been
deemed revoked upon the resumption of
direct negotiations between Escandor
and Rubberworld, Orbeta having in the
meantime abandoned all efforts (if
indeed any were exerted) to secure the
deal in Escandors behalf.
*No jurisdiction for Labor
Arbiter or NLRC in dealing with this
case since jurisiction vested in tehm by
the Labor Code extends generally
speaking only to cases arising from
employer-employee relationship.
*American Airlines, inc, an air
carrier offering passenger and air cargo
transportation in the Phils, and Orient
Air Services and Hotel Representatives
entered into a General Sales Agency
authorized the latter to act as its
exclusive general sales agent within the
Phils for the sale of air passenger
provisions are:
Orient Air Services shall perform
these services:

a. solict and promote passenger

traffic for the services of American and
if necessary, employ staff competen and
sufficient to do so
b. provide and maintain a
suitable area in its place of business to
be used exclusively for the transaction of
the business of American
c. arrange for distribution of
Americans timetables, tariffs and
promotional material to sales agents nad
the general public in the assigned
d. service and supervise sales
agents in the assigned territory including
if required by American the control of
remittances and commissions retained
e. hold out a passenger
reservation facility to sales agents and
general public in the assigned territory
*Alleging that Orient Air had
reneged on its obligations under the
Agreement by failing to remit the net
proceeds of sale in the amount of US $
254,400, American Air by itself
undertook the collection of the proceeds
of tickets sold originally by Orient Air
and terminated forthwith the Agreement
*American Air instituted suit
against Orient Air for Accounting with
Preliminary Attachment or Garnishment,
Mandatory Injunction and Restraining
Order averring the basis for the
termination of the Agreement as well as
Orient Airs previous record of failures
to promptly settle past outstanding
refunds of which there were available
funds in the possession of the Orient Air
to the damage and prejudice of American
TC ruled in favor of Orient Air to
which the
Intermediate Appelalate
Court (now CA) affirmed TCs decision
with modifications with respect to
monetary awards granted.

ISSUE: W/N Orient Air is entitled to the

3% overriding commission
It is a well settled principle that
in the interpretation of a contract, the
entirety thereof must be taken into
consideration to ascertain the meaning of
its provisions. The various stipulations in
the contract must be read together to
give effect to all
interpreted in accordance with the
foregoing principles, entitles Orient Air
to the 3% overriding commission based
on total revenue or as referred to by the
parties, total flown revenues.
As the designated General Sales
Agent of American Air, Orient Air was
responsible for the promotion and
marketing of American Airs 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 2 kinds: first,
a sales agency commission, ranging
from 7 to 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.
The second type of commissions
would accrue for sales of American Air
services made not on its ticket stocket
but on the ticket stock of other air
carriers sold by such carriers or other
authorized ticketing facilities or travel
In addition, it is clear from the
records that American Air was the party
responsible for the preparation of the
ambiguity in this contract of adhesion
is to be taken contra proferentem

construed against the party who cause

the ambiguity and could have avoided it
by the exercise of a little more care.

* Petitioners were engaged in the
business of purchase and sale of jewelry
and respondent Brigida Luz, also known
as Aida Luz, was their regular customer.
respondent Deganos, brother of Luz,
received several pieces of gold and
jewelry from petitioners amounting to
P382, 816. These items and their prices
were indicated in seventeen receipts
covering the same. 11 of the receipts
stated that they were received for a
certain Aquino, a niece of Deganos, and
the remaining 6 receipts indicated that
they were received for Luz.
* Deganos was supposed to sell
the items at a profit and thereafter remit
the proceeds and return the unsold items
to Bordador. Deganos remitted only the
sum of P53, 207. He neither paid the
balance of the sales proceeds, nor did he
return any unsold item to petitioners.
* The total of his unpaid account
to Bordador, including interest, reached
the sum of P725, 463.98. Petitioners
eventually filed a complaint in the
barangay court against Deganos to
recover said amount.
* In the barangay proceedings,
Luz, who was not impleaded in the caes,
appeared as a witness for Deganos and
ultimately, she and her husband, together
with Deganos signed a compromise
agreement with petitioners.
*In that compromise agreement,
Deganos obligated himself to pay
petitioners, on installment basis , the

balance of his account plus interest

thereon. However, he failed to comply
with his aforestated undertakings.
complaint for recovery of sum of money
and damages, with an application for
preliminary attachment against Deganos
and Luz.
* Deganos and Luz was also
charged with estafa
8 During the trial of the civil cae,
petitioners claimed that Deganos acted
as agent of Luz when received the
subject items of jewelry, and because he
failed to pay for the same, Luz, as
principal, and her spouse are solidarily
liable with him
* Trial court ruled that only
Deganos was liable to Bordador for the
amount and damages claimed. It held
that while Luz did have transactions
with petitioners in the past, the items
involved were already paid for and all
that Luz owed Bordador was the sum or
P21, 483 representing interest on the
principal account which she had
previously paid for.
* CA affirmed TCs decision
ISSUE: W/N Luz are liable to petitioners
for the latters claim for money and
damages in the sum of P725,463.98, plus
interests and attorneys 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
Evidence does not support the
theory of Bordador that Deganos was an
agent of Luz and that the latter should
consequently be held solidarily liable
with Deganos in his obligation to

The basis for agency is

representation. Here, there is no showing
that Luz consented to the acts of
Deganos or authorized him to act on her
behalf, much less with respect to the
particular transactions involved.
It was grossly and inexcusably
negligent of petitioner to entrust to
Deganos, not once or twice but on at
least six occasions as evidenced by 6
receipts, several pieces of jewelry of
substantial value without requiring a
written authorization from his alleged
A person dealing with an agent is
put upon inquiry and must discover upon
his peril the authority of the agent.
Records show that neither an
express nor an implied agency was
proven to have existed between Deganos
and Luz. Evidently, Bordador who were
negligent in their transactions with
Deganos cannot seek relief from the
effects of their negligence by conjuring a
supposed agency relation between the
two respondents where no evidence
supports such claim

* De la Pena y de Ramon and De
Ramon, in her own behalf and as the
legal guardian of her son Roberto De la
Pena, filed in the CFI a written
complaint against Hidalgos
* De La Pena y de Ramon, as the
judicial administrator of the estate of the
deceased De la Pena y Gomiz, with the
consent of the court filed a second
amended complaint prosecuting his
action solely against Frederico Hidalgo
* CFI ruled in favor of plainiffadministrator for the sum of P13, 606.19

and legal interest from the date of the

filing of the complaint and the costs of
the trial.
* De la Pena y Ramon filed a
third amended complaint with the
permission of the court alleging, among
other things, as a first cause of action,
when Frederico Hidalgo had possession
of and administered the following
properties to wit, 1 house and lot; at
Calle San Luis; another house and lot at
Calle Cortada; another house and lot at
Calle San Luis, and a fenced lot on the
same street, all of the district of Ermita,
and another house and lot at Calle
Looban de Paco, belonging to his
principal, De la Pena y Gomiz,
according to the power of attorey
executed in his favor
*Hidalgo, as such agent,
collected the rents and income from said
properties, amounting to P50, 244,
which sum, collected in partial amounts
and on different dates, he should have
deposited, in accordance with the verbal
agreement between the deceased and
himself in the general treasury of the
Spanish Government at an interest of 5%
per annum, which interest on accrual
was likewise to be deposited in order
that it also might bear interest; that
Hidalgo did not remit or pay to Gomiz,
during his lifetime, nor to any
representative of the said Gomiz, the
sum aforestated nor any part thereof with
the sole exception of P1,289.03, nor has
he deposited the unpaid balance of said
sum in the treasury, according to
agreement, wherefore he has become
liable to his principal and to the
administrator for the said sum, together
with its interest amounting to
* The court ruled in favor of De
la Pena and said that Hidalgo, as

administrator of the estate of deceased

Gomiz, actually owed De la Pena
ISSUE: W/N Hidalgo is considered an
agent of Gomiz and as such must
reimburse present administrator, De la
Gomiz, before embarking for
Spain, executed before a notary a power
of attorney in favor of Hidalgo as his
agent and that he should represent him
and administer various properties he
owned and possessed in Manila.
After Hidalgo occupied the
position of agent and administrator of De
la Pena y Gomizs property for several
years, the former wrote to the latter
requesting him to designate a person
who might substitute him in his said
position in the event of his being obliged
to absent himself from these Islannds
From the procedure followed by
the agent, Hidalgo, it is logically inferred
that he had definitely renounced his
agency and that the agency was duly
terminated according to the provisions of
art 1782
Although the word Renounce
was not employed in connection with the
agency executed in his favor, yet when
the agent informs his principal that for
reasons of health and by medical advice
he is about to depart from the place
where he is exercising his trust and
where the property subject to his
administration is situated, abandons the
property, turns it over to a third party,
and transmits to his principal a general
statement which summarizes and
embraces all the balances of his accounts
since he began to exercise his agency to
the date when he ceased to hold his trust,
it then reasonable and just to conclude

that the said agent expressly and

definitely renounced his agency.


* Duran, a nephew of Orense,
with the latters knowledge and consent,
executed before a notary a public
instrument whereby he sold and
conveyed to plaintiff company for
P1,500 the said property
* The vendor, Duran reserving to
himself the right to repurchase it for the
same price within a period of 4 years
from the date of said instrument
* That plaintiff company had not
entered into possession of the purchased
property, owing to its continued
occupancy by Orense and his nephew,
Duran by virtue of a contract of lease
executed by the plaintiff to Duran
*said instrument of sale was
publicly and freely confirmed and
ratified by Orense in a verbal declaration
made by him
*that, in order to perfect the title
to the said property, the plaintiff had to
demand of Orense that he execute in
legal form a deed of conveyance of the
property, but that the defendant Orense
refused to do so, without any justifiable
cause or reason
This suit involves the validity
and efficacy of the sale under right of
redemption of a parcel of land and a
masonry house with a nipa hut erected
thereon, effected by Duran, a nephew of
the owner of the property, Orense for the
sum of P1,500 by means of a notarial
After the lapse of 4 years
stipulated for the redemption, Orense
refused to deliver the property to the

purchaser, the firm of Gutierrez

Hermanos and to pay the rental thereof
at the rate of P30 per month for its use
and occupation when the period for its
repurchase terminated.
Counsel for the firm filed a
complaint praying, among other
remedies, that Orense be compelled to
execute a deed for the transfer and
conveyance to the plaintiff company of
all the right, title and interest which
Orense had in the property sold, and to
pay the same the rental of the property
ISSUE: W/N Duran, nephew of the
owner of the property, Orense, is an
agent and was authorized to sell the land
in favor of petititioner
Reecords in this case shows that
Orense did give his consent in order that
his nephew, Duran might sell the
property in question to company and that
he did thereafter confirm and ratify the
sale by means of a public instrument
executed before a notary
It having been proven at the trial
that Orense gave his consent to the said
sale, it follows that he conferred verbal,
or at least implied, power of agency
upon his nephew Duran who accepted it
in the same way by selling the said
The principal must therefore
fulfill all the obligations contracted by
the agent, who acted within the scope of
his authority
Even if consent was granted
subsequently to the sale, it is
unquestionable that Orense, the owner of
the property, approved the action of his
nephew, who in this acted as the
manager of his uncles business and
Orenses ratification produced the effect

of an express authorization to make the

said sale
The sale of the said property
made by Duran to the company was
indeed null and void in the beginning,
but afterwards become perfectly valid
and cured of the defect of nullity it bore
at its execution by the confirmation
solemnly made by the said owner upon
his stating under oath to the judge that
he himself consented to his nephews
making the said sale
M.B. Florentino & Co, Ltd, filed
with the CFI of La Union against Johnlo
Trading Company and Lipsett Pacific
Corporation a case for the collection of
the sum of P14,304.19 and damages in
the sum of P10,000.
* collaterally, plaintiff alleged
that Johnlo had transferred to Lipsett all
its equipment and properties in the
Philippines with intent to defraud its
creditors and, as said Johnlo has no other
property in the Phils to pay its
indebtedness, it prayed that said
properties be attached.
*Motion for attachment was
granted but was later amended at the
request of the plaintiff, upon its finding
that all of the said properties had been
transferred to other persons and the
proceeds of the sale deposited with the
National City Bank of New York
*Consequentlym the deposit in
the amount of P25,000 was garnished in
compliance with the order of the court
* Johnlo Company is a joint
venture organized by 2 foreign
corporations to engage soley in the
demilitarization of ammunition at
Rosario, La Union, and Bauan,
Batangas, under a direct contract with

our Government wherein as a special

concession, it was not required to
register with the Bureau of Commerce
nor to obtain a license to do business in
the Phils as required by law because the
business to be undertaken was single and
* because of that concession, it
was not also required to designate any
agent in the Phils upon whom legal
process may be served under the law in
cases of litigation
* However, the summons for
Johnlo Company in this case was served
on Charles Balcoff upon the claim that
he is its representative in the Phils.
* as no one appeared in behalf of
Johnlo, the court, upon petition of the
plaintiff declared said company in
* after being informed that it was
declared in default, Johnlo Company,
through counsel, filed motion for recon
and prayed for the setting aside of said
order upon the ground that Balcoff, not
being its agent nor representative, the
Court had not yet acquired jurisdiction
over its person, and therefore, the period
for filing its answer had not yet
commenced to run
ISSUE: W/N Balcoff is deemed not just
a counsel but also an agent of Johnlo
RULING: yes, both counsel and
It may be stated that an attorney
cannot, without authority to do so,
accept service of process which
commences action against his client
As a general rule, an attorney-atlaw has no authority merely by virtue of
his general employment as such to waive
or admit service for his client of original

process by which the court for the first

time acquires jurisdiction of the client
The record is not quite clear that
Balcoff acted merely as counsel in his
relation to Johnlo. There is proof to
show that he acted in a representative
capacity in and outside of court, so much
so that he undertook to settle claims that
had been filed against it
The service made upon him of
the summons intended for Johnlo can be
deemed sufficient in contemplation of
law to bind his client, Johnlo upon the
theory that, as the only person in the
Phils charged with the duty of settling
claims against it, he must be presumed,
to communicate to his client the service
made upon him of any process that may
result in a judgment and execution that
may deprive it of its property and the
circumstances, that the corporation will
be duly informed of the pendency of the
Balcoff acted in this case not
merely as counsel of Johnlo Company
but also as its representative in the
settlement of claims