NIELSON&CO VS LEPANTO CONSOLIDATED MINING CO.

FACTS: An operating agreement was executed before World War II (on 30 January
1937) between Nielson & Co. Inc. and the Lepanto Consolidated Mining Co. whereby
the former operated and managed the mining properties owned by the latter for a
management fee of P2,500.00 a month and a 10% participation in the net profits
resulting from the operation of the mining properties, for a period of 5 years.

In the latter part of 1941, the parties agreed to renew the contract for another
period of 5 years, but in the mean time, the Pacific War broke out in December
1941.

In January 1942 operation of the mining properties was disrupted on account of the
war. The mill, power plant, supplies on hand, equipment, concentrates on hand and
mines, were destroyed. The Japanese forces thereafter occupied the mining
properties, operated the mines during the continuance of the war.

After the mining properties were liberated from the Japanese forces, LEPANTO took
possession thereof and embarked in rebuilding and reconstructing the mines and
mill. On 26 June 1948 the mines resumed operation under the exclusive
management of LEPANTO.

Shortly after the mines were liberated from the Japanese invaders in 1945, a
disagreement arose between NIELSON and LEPANTO over the status of the
operating contract which as renewed expired in 1947. Under the terms thereof, the
management contract shall remain in suspense in case fortuitous event or force
majeure, such as war or civil commotion, adversely affects the work of mining and
milling.

On 6 February 1958, NIELSON brought an action against LEPANTO to recover certain

sums of money representing damages allegedly suffered by the former in view of
the refusal of the latter to comply with the terms of a management contract.

The Trial Court dismissed the complaint.

The Supreme Court reversed the decision. It held that the war suspended the
contract by virtue of the force majeure clause. And that the intention of the parties
regarding the meaning and usage concerning the force majeure clause meant the
extension of the same for a period equivalent to the suspension.

In this motion for reconsideration, LEPANTO advances a new theory. It now asserts
that the management contract in question is a contract of agency such that it has
the right to revoke and terminate the said contract, as it did terminate the same,
under the law of agency, and particularly pursuant to Article 1733 of the Old Civil
Code (Article 1920 of the New Civil Code).
ISSUE: W/N the management contract is a contract of agency or a contract of lease
of services.

HELD: Contract of lease of services

Contract of Agency v Contract of Lease of Services:

Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the
contract of agency, one person binds himself to render some service or do
something for the account or at the request of another."

Article 1544, defining contract of lease of service, provides that "In a lease of work
or services, one of the parties binds himself to make or construct something or to
render a service to the other for a price certain."

It is true that the management contract provides that Nielson would also act as
purchasing agent of supplies and enter into contracts regarding the sale of mineral,
but the contract also provides that Nielson could not make any purchase, or sell the
minerals, without the prior approval of Lepanto. It is clear, therefore, that even in
these cases Nielson could not execute juridical acts which would bind Lepanto
without first securing the approval of Lepanto. Nielson, then, was to act only as an
intermediary, not as an agent.

From the provision of paragraph XI of the management contract, Lepanto could not
terminate the agreement at will. Lepanto could terminate or cancel the agreement
by giving notice of termination ninety days in advance only in the event that Nielson
should prosecute in bad faith and not in accordance with approved mining practice
the operation and development of the mining properties of Lepanto. Lepanto could
not terminate the agreement if Nielson should cease to prosecute the operation and
development of the mining properties by reason of acts of God, strike and other
causes beyond the control of Nielson. The management contract in question is not
revocable at the will of Lepanto. It is not a contract of agency as defined in Article
1709 of the old Civil Code, but a contract of lease of services as defined in Article
1544 of the same Code. This contract can not be unilaterally revoked by Lepanto.

SHELL CO OF THE PHIL Ltd VS FIREMENS INSURANCE OF NEWARK

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

A car was brought to a Shell gasoline station owned by Dela Fuente for washing and
greasing. The car was placed on a hydraulic lifter for greasing. As some parts of the
car couldnt be reached by the greaseman, the lifter was lowered. Unfortunately, for
unknown reasons (probably due to mechanical failure or human error), while the
lifter was being lowered, the car swung and fell from the platform. Said car was
insured against loss or damage by Firemen's Insurance Company of Newark, New
Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000.
The insurance companies after paying the sum of P1,651.38 for the damage and
charging the balance of P100.00 to Salvador Sison, in accordance with the terms of
the insurance contract, filed this action together with said Salvador Sison for the
recovery of the total amount of the damage from the defendants on the ground of
negligence.

ISSUE: W/N Dela Fuente is merely an agent of Shell Co.

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

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

SEVILLA VS CA

FACTS:

On Oct. 19, 1960, the Tourist World Service, Inc. leased an office at Mabini St.,
Manila for the former's use as a branch office. When the branch office was opened,
the same was run by the herein appellant Lina O. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla,
4% was to go to Lina Sevilla and 3% was to be withheld by the Tourist World
Service, Inc.

On or about November 24, 1961, the Tourist World Service, Inc. appears to have
been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel
Bureau, and, since the branch office was anyhow losing, the Tourist World Service
considered closing down its office.
This was firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961, the first abolishing the office of the manager and
vice-president of the Tourist World Service, Inc., Ermita Branch, and the second,
authorizing the corporate secretary to receive the properties of the Tourist World
Service then located at the said branch office. It further appears that on Jan. 3,
1962, the contract with the appellees for the use of the Branch Office premises was
terminated and while the effectivity thereof was Jan. 31, 1962, the appellees no
longer used it. As a matter of fact appellants used it since Nov. 1961. Because of
this, and to comply with the mandate of the Tourist World Service, the corporate
secretary Gabino Canilao went over to the branch office, and, finding the premises
locked, and, being unable to contact Lina Sevilla, he padlocked the premises on June
4, 1962 to protect the interests of the Tourist World Service.

When neither the appellant Lina Sevilla nor any of her employees could enter the
locked premises, a complaint was filed by the herein appellants against the
appellees with a prayer for the issuance of mandatory preliminary injunction. Both
appellees answered with counterclaims. For apparent lack of interest of the parties
therein, the trial court ordered the dismissal of the case without prejudice.

ISSUE: W/N the act of Tourist World Service in abolishing its Ermita branch proper

HELD: No. The Supreme Court held that when the petitioner, Lina Sevilla, agreed to
manage Tourist World Service, Inc.'s Ermita office, she must have done so pursuant
to a contract of agency.

In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of
her principal, Tourist World Service, Inc. As compensation, she received 4% of the
proceeds in the concept of commissions. And as we said, Sevilla herself, based on
her letter of November 28, 1961, presumed her principal's authority as owner of the
business undertaking. We are convinced, considering the circumstances and from
the respondent Court's recital of facts, that the parties had contemplated a
principal-agent relationship, rather than a joint management or a partnership.

But unlike simple grants of a power of attorney, the agency that we hereby declare
to be compatible with the intent of the parties, cannot be revoked at will. The
reason is that it is one coupled with an interest, the agency having been created for
the mutual interest of the agent and the principal. Accordingly, the revocation
complained of should entitle the petitioner, Lina Sevilla, to damages

LIM VS PEOPLE

FACTS: The appellant is a businesswoman. on January 10, 1966, the appellant went
to the house of Maria Ayroso and proposed to sell Ayroso's tobacco. Ayroso agreed
to the proposition of the appellant to sell her tobacco consisting of 615 kilos at
P1.30 a kilo. The appellant was to receive the overprice for which she could sell the
tobacco. This agreement was made in the presence of plaintiff's sister, Salud G.
Bantug. Salvador Bantug drew the document, Exh. A, dated January 10, 1966, which
reads: LibLex

'To Whom It May Concern:

This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso, of Gapan,
Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at P1.30 per kilo. The
proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P799.50) will be
given to her as soon as it was sold.'

This was signed by the appellant and witnessed by the complainant's sister, Salud Bantug,
and the latter's maid, Genoveva Ruiz. The appellant at that time was bringing a jeep, and
the tobacco was loaded in the jeep and brought by the appellant. Of the total value of
P799.50, the appellant had paid to Ayroso only P240.00, and this was paid on three different
times. Demands for the payment of the balance of the value of the tobacco were made upon
the appellant by Ayroso, and particularly by her sister, Salud Bantug. Salud Bantug further
testified that she had gone to the house of the appellant several times, but the appellant
often eluded her; and that the 'camarin' of the appellant was empty. Although the appellant
denied that demands for payment were made upon her, it is a fact that on October 19, 1966,
she wrote a letter to Salud Bantug which reads as follows:

'Dear Salud,

'Hindi ako nakapunta dian noon a 17 nitong nakaraan, dahil kokonte pa ang nasisingil kong
pera, magintay ka hanggang dito sa linggo ito at tiak na ako ay magdadala sa iyo. Gosto ko
Salud ay makapagbigay man lang ako ng marami para hindi masiadong kahiyahiya sa iyo.
Ngayon kung gosto mo ay kahit konte muna ay bibigyan kita. Pupunta lang kami ni Mina sa
Maynila ngayon. Salud kuug talagang kailangan mo ay bukas ay dadalhan kita ng pera.

'Medio mahirap ang maningil sa palengke ng Cabanatuan dahil nagsisilipat ang mga suki ko
ng puesto. Huwag kang mabahala at tiyak na babayaran kita.

'Patnubayan tayo ng mahal na panginoon Dios. (Exh. B).

Ludy'

"Pursuant to this letter, the appellant sent a money order for P100.00 on October
24, 1967, Exh. 4, and another for P50.00 on March 8, 1967; and she paid P90.00 on
April 18, 1967 as evidenced by the receipt Exh. 2, dated April 18, 1967, or a total of
P240.00. As no further amount was paid, the complainant filed a complaint against
the appellant for estafa.

ISSUE: W/N court erred in holding that the transaction is a contract of agency to sell

HELD: NO. It is clear in the agreement, 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, or, that the obligation was immediately demandable as soon as the tobacco
was disposed of. Hence, Article 1197 of the New Civil Code, which provides that the
courts may fix the duration of the obligation if it does not fix a period, does not
apply.

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, the Court of
Appeals correctly resolved the matter as follows: LLpr

" . . . Aside from the fact that Maria Ayroso testified that the appellant asked her to
be her agent in selling Ayroso's tobacco, the appellant herself admitted that there
was an agreement that upon the sale of the tobacco she would be given something.
The appellant is a businesswoman, 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. Certainly, if she
was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell
her tobacco, it would not have been the appellant who would have gone to the
house of Ayroso, but it would have been Ayroso who would have gone to the house
of the appellant and deliver the tobacco to the appellant." (p. 19, Rollo)

The fact that appellant received the tobacco to be sold at P1.30 per kilo and the
proceeds to be given to complainant as soon as it was sold, strongly negates
transfer of ownership of the goods to the petitioner. The agreement (Exhibit "A")
constituted her as an agent with the obligation to return the tobacco if the same
was not sold.

ACCORDINGLY, the petition for review on certiorari is dismissed for lack of merit.

SAN DIEGO v NOMBRE (Yap)

Facts: Respondent Adelo Nombre was the duly constituted judicial administrator. As
such, he leased one of the properties of the estatea fishpondto Pedro Escanlar,
the other respondent. The terms of the lease was for 3 years, with a yearly rental of
P3,000. The transaction was done without previous authority or approval of the
Court. A year after, Nombre was removed as administrator, and was replaced by
one Sofronio Campillanos. Escalanlar was cited for contempt for allegedly refusing
to surrender the fishpond to the newly appointed administrator. Subsequently,
Campillanos filed a motion for authority to execute a lease contract over the
fishpond, in favor of petitioner Moises San Diego, for 5 years with yearly rental of
P5,000. Escalanlar was not notified of the said motion. Nombre, on the other hand,
opposed to the motion, pointing out that the fishpond was leased by him to
Escalandar for 3 years. He alleged that the validity of the lease contract entered
into by a judicial administrator must be recognized unless declared void in a
separate action.
The lower court declared the contract in favor of Escanlar null and void for want of
judicial authority and that San Diego offered better lease conditions than Escanlar.
In light of this, Escanlar agreed to increase the rental to P5,000 after the termination
of his original contract. However, the trial judge stated that such contract was
fraudulent and executed in bad faith because Nombre was removed as
administrator and the rentals of the property was inadequate.

However, on appeal, the CA ruled:

No such limitation on the power of a judicial administrator to grant lease of property

placed under his custody is provided for in the present law. Under Art. 1647, it is
only when the lease is to be recorded in the Registry of Property that it cannot be
instituted without special authority. Thus, regardless of the period of lease, there is
no need for special authority unless the contract is to be recorded in the Registry.

Rule 85, Sec. 3 of the ROC authorizes a judicial administrator to administer the
estate of the deceased not disposed by will, for purposes of liquidation and
distribution. He may, therefore, exercise all acts of administration without special
authority of the Court; such as the leasing the property. And where the lease has
been formally entered into, the court cannot, in the same proceeding, annul the
same. The proper remedy would be a separate action by the administrator or the
heirs to annul the lease.

On appeal to the SC, petitioner contends that Art. 1878(8) limits the right of a
judicial administrator to lease the real property without prior court authority and
approval, if it exceeds 1 year. The lease in favor of Escalanlar, being 3 years and
without court approval, is therefore void.

ISSUE: W/N the provisions on Agency should apply in this case

HELD: No.

The provisions on agency should not apply to a judicial administrator. A judicial

administrator is appointed by the court. He is not only the representative of said
Court, but also the heirs and creditors of the estate. Before entering into his duties,
he is required to file a bond. These circumstances are not required in agency. The
agent is only answerable to his principal. The protection which law gives the
principal in limiting the powers and rights of an agent stems from the fact that
control by the principal can only be through agreements. Whereas, the acts of a
judicial administrator are subject to specific provisions of law and orders of the
appointing court.