1. AIR FRANCE v CA 126 SCRA 448 7.
7. However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused to honor the
2. Filipinas Life Assurance Co. v Pedrosa 543 SCRA 542
3. Manila Remnant vs. CA 191 SCRA 622
4. Rural Bank of Milaor vs. Francisca Ocfemia 325 SCRA 99
5. VICENTE VERZOSA v. SILVINO LIM 45 Phil. 416
6. DOMINION INSURANCE V. CA 376 SCRA 239
7. ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. [PRC] 45 Ph 556
8. CONSTANTE AMOR DE CASTRO VS CA 314 SCRA 607
___________________________________________________________________
G.R. No. L-57339 December 29, 1983
AIR FRANCE, petitioner, vs.
HONORABLE COURT OF APPEALS, JOSE G. GANA (Deceased), CLARA A. GANA, RAMON
GANA, MANUEL GANA, MARIA TERESA GANA, ROBERTO GANA, JAIME JAVIER GANA,
CLOTILDE VDA. DE AREVALO, and EMILY SAN JUAN, respondents.
MELENCIO-HERRERA, J.:
Nature: Petition for review on certiorari assailing the Decision of then respondent Court of Appeals 1
promulgated "Jose G. Gana, et al. vs. Sociedad Nacionale Air France", which reversed the Trial Court's
judgment dismissing the Complaint of private respondents for damages arising from breach of contract
of carriage, and awarding instead P90,000.00 as moral damages.
FACTS:
1. Late Jose G. Gana and his family (the GANAS), purchased from AIR FRANCE (9) "open-
dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route. On 24 April 1970,
AIR FRANCE exchanged or substituted the aforementioned tickets with other tickets for
the same route. At this time, the GANAS were booked for the Manila/Osaka segment on AIR
FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip on AIR FRANCE Flight
187 on 22 May 1970.
2. The aforesaid tickets were valid until 8 May 1971. The GANAS did not depart on 8 May 1970.
Instead, Jose Gana sought the assistance of Teresita Manucdoc, a Secretary of the Sta. Clara
Lumber Company where Jose Gana was the Director and Treasurer, for the extension of the
validity of their tickets, which were due to expire on 8 May 1971.
3. Teresita enlisted the help of Lee Ella Manager of the Philippine Travel Bureau. Ella sent
the tickets to Cesar Rillo, Office Manager of AIR FRANCE. The tickets were returned to Ella
who was informed that extension was not possible unless the fare differentials resulting
from the increase in fares triggered by an increase of the exchange rate of the US dollar to the
Philippine peso and the increased travel tax were first paid. Ella then returned the tickets to
Teresita and informed her of the impossibility of extension.
4. In the meantime, the GANAS had scheduled their departure on 7 May 1971 or one day
before the expiry date. Teresita requested travel agent Ella to arrange the revalidation
of the tickets. Ella gave the same negative answer and warned her that although the tickets
could be used by the GANAS if they left on 7 May 1971, the tickets would no longer be valid
for the rest of their trip because the tickets would then have expired on 8 May 1971.
Teresita replied that it will be up to the GANAS to make the arrangements.
5. With that assurance, Ella on his own, attached to the tickets validating stickers for the
Osaka/Tokyo flight, one a JAL. sticker and the other an SAS (Scandinavian Airways System)
sticker. The SAS sticker indicates thereon that it was "Reevaluated by: the Philippine
Travel Bureau, Branch No. 2" (as shown by a circular rubber stamp) and signed "Ador", and
the date is handwritten in the center of the circle. Then appear under printed headings the
notations: JL. 108 (Flight), 16 May (Date), 1040 (Time), OK (status). Apparently, Ella made
no more attempt to contact AIR FRANCE as there was no more time.
6. Notwithstanding the warnings, the GANAS departed from Manila in the afternoon of 7
May 1971 on board AIR FRANCE Flight 184 for Osaka, Japan. There is no question with
respect to this leg of the trip.
tickets because of their expiration, and the GANAS had to purchase new tickets. They
encountered the same difficulty with respect to their return trip to Manila as AIR FRANCE also
refused to honor their tickets. They were able to return only after pre-payment in Manila,
through their relatives, of the readjusted rates. They finally flew back to Manila on separate
Air France Frights on 19 May 1971 for Jose Gana and 26 May 1971 for the rest of the
family.
8. On 25 August 1971, the GANAS commenced before the then Court of First Instance of
Manila, Branch III, Civil Case No. 84111 for damages arising from breach of contract of
carriage.
9. AIR FRANCE traversed the material allegations of the Complaint and alleged that the GANAS
brought upon themselves the predicament they found themselves in and assumed the
consequential risks; that travel agent Ella's affixing of validating stickers on the tickets
without the knowledge and consent of AIR FRANCE, violated airline tariff rules and
regulations and was beyond the scope of his authority as a travel agent; and that AIR
FRANCE was not guilty of any fraudulent conduct or bad faith.
10. TC dismissed the Complaint of the GANAS based on Partial and Additional Stipulations of Fact
.
11. The GANAS appealed to the CA. During the pendency of the appeal, Jose Gana, the principal
plaintiff, died.
12. CA set aside and reversed the TCs decision ordering Air France to pay appellants moral
damages in the total sum P90,000.00 plus costs.
13. Reconsideration sought by AIR FRANCE was denied, hence, petitioner's recourse before this
instance, to which we gave due course.
ISSUE:
1. Whether or not, under the environmental milieu the GANAS have made out a case for breach
of contract of carriage entitling them to an award of damages? No!
2. Whether or not Teresita was the agent of the GANAS and notice to her of the rejection of
the request for extension of the validity of the tickets was notice to the GANAS, her
principals? YES!
HELD: No! SC reversed the affirmative ruling of the CA. (As for the mainFIRST issue)
AIR FRANCE cannot be faulted for breach of contract when it dishonored the tickets of the GANAS
after 8 May 1971 since those tickets expired on said date; nor when it required the GANAS to buy
new tickets or have their tickets re-issued for the Tokyo/Manila segment of their trip. Neither can
it be said that, when upon sale of the new tickets, it imposed additional charges representing fare
differentials, it was motivated by self-interest or unjust enrichment considering that an increase of fares
took effect, as authorized by the Civil Aeronautics Board (CAB) in April, 1971. This procedure is well in
accord with the IATA tariff rules which provide:
6. TARIFF RULES
7. APPLICABLE FARE ON THE DATE OF DEPARTURE
3.1 General Rule.
All journeys must be charged for at the fare (or charge) in effect on the date on which
transportation commences from the point of origin. Any ticket sold prior to a change
of fare or charge (increase or decrease) occurring between the date of
commencement of the journey, is subject to the above general rule and must be
adjusted accordingly. A new ticket must be issued and the difference is to be
collected or refunded as the case may be. No adjustment is necessary if the increase
or decrease in fare (or charge) occurs when the journey is already commenced. 4
The GANAS cannot defend by contending lack of knowledge of those rules since the evidence
bears out that Teresita, who handled travel arrangements for the GANAS, was duly informed by
travel agent Ella of the advice of Reno, the Office Manager of Air France, that the tickets in
question could not be extended beyond the period of their validity without paying the fare
differentials and additional travel taxes brought about by the increased fare rate and travel taxes.
Teresita was the agent of the GANAS and notice to her of the rejection of the request for extension
of the validity of the tickets was notice to the GANAS, her principals. (AGENCY: NOTICE TO THE
AGENT IS NOTICE TO THE PRINCIPAL)
The circumstances that AIR FRANCE personnel at the ticket counter in the airport allowed the GANAS
to leave is not tantamount to an implied ratification of travel agent Ella's irregular actuations. It should be
recalled that the GANAS left in Manila the day before the expiry date of their tickets and that "other
arrangements" were to be made with respect to the remaining segments. Besides, the validating stickers
that Ella affixed on his own merely reflect the status of reservations on the specified flight and could not
legally serve to extend the validity of a ticket or revive an expired one.
The conclusion is inevitable that the GANAS brought upon themselves the predicament they were
in for having insisted on using tickets that were due to expire in an effort, perhaps, to beat the
deadline and in the thought that by commencing the trip the day before the expiry date, they could
complete the trip even thereafter.
It should be recalled that AIR FRANCE was even unaware of the validating SAS and JAL. stickers
that Ella had affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE merely acted
within their contractual rights when they dishonored the tickets on the remaining segments of the
trip and when AIR FRANCE demanded payment of the adjusted fare rates and travel taxes for the
Tokyo/Manila flight.
WHEREFORE, the judgment under review is hereby reversed and set aside, and the Amended Complaint
filed by private respondents hereby dismissed.
No costs.
Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente Pedrosa, Teresita
Pedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008
Quisumbing, J.
FACTS:
Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued by Filipinas Life
Assurance Co. Pedroso claims Renato Valle was her insurance agent since 1972 and Valle collected
her monthly premiums. In the first week of January 1977, Valle told her that the Filipinas Life Escolta
Office was holding a promotional investment program for policyholders. It was offering 8% prepaid
interest a month for certain amounts deposited on a monthly basis. Enticed, she initially invested and
issued a post-dated check for P10,000. In return, Valle issued Pedroso his personal check for P800
for the 8% prepaid interest and a Filipinas Life Agent receipt.
Pedroso called the Escolta office and talked to Francisco Alcantara, the administrative assistant, who
referred her to the branch manager, Angel Apetrior. Pedroso inquired about the promotional investment
and Apetrior confirmed that there was such a promotion. She was even told she could push through
with the check she issued. From the records, the check, with the endorsement of Alcantara at the back,
was deposited in the account of Filipinas Life with the Commercial Bank and Trust Company, Escolta
Branch.
Relying on the representations made by Filipinas Lifes duly authorized representatives Apetrior and
Alcantara, as well as having known agent Valle for quite some time, Pedroso waited for the maturity
of her initial investment. A month after, her investment of P10,000 was returned to her after she made
a written request for its refund. To collect the amount, Pedroso personally went to the Escolta branch
where Alcantara gave her the P10,000 in cash. After a second investment, she made 7 to 8 more
investments in varying amounts, totaling P37,000 but at a lower rate of 5% prepaid interest a month.
Upon maturity of Pedrosos subsequent investments, Valle would take back from Pedroso the
corresponding agents receipt he issued to the latter.
Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance policyholder, about the
investment plan. Palacio made a total investment of P49,550 but at only 5% prepaid interest. However,
when Pedroso tried to withdraw her investment, Valle did not want to return some P17,000 worth of it.
Palacio also tried to withdraw hers, but Filipinas Life, despite demands, refused to return her money.
ISSUE: WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the claim of
Pedroso and Palacio or WON its agent Renato Valle is solely liable to Pedroso and Palacio
HELD:
Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were received by Valle
and remitted to Filipinas Life, using Filipinas Lifes official receipts. Valles authority to solicit and
receive investments was also established by the parties. When Pedroso and Palacio sought
confirmation, Alcantara, holding a supervisory position, and Apetrior, the branch manager, confirmed
that Valle had authority. While it is true that a person dealing with an agent is put upon inquiry and
must discover at his own peril the agents authority, in this case, Pedroso and Palacio did exercise due
diligence in removing all doubts and in confirming the validity of the representations made by Valle.
Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract of
agency, 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. The general rule is that the principal is
responsible for the acts of its agent done within the scope of its authority, and should bear the damage
caused to third persons. When the agent exceeds his authority, the agent becomes personally liable
for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable
together with the agent if the principal allowed the agent to act as though the agent had full powers.
The acts of an agent beyond the scope of his authority do not bind the principal, unless the principal
ratifies them, expressly or impliedly.
Ratification adoption or confirmation by one person of an act performed on his behalf by another
without authority
Even if Valles representations were beyond his authority as a debit/insurance agent, Filipinas Life thru
Alcantara and Apetrior expressly and knowingly ratified Valles acts. Filipinas Life benefited from the
investments deposited by Valle in the account of Filipinas Life.
Manila Remnant vs. CA
G.R. No. 82978. November 22, 1990
Fernan
FACTS:
Manila Remnant Co. owns Capital Homes Subdivision with Artemio Valencia as President
A.U. Valencia and Co., is the authorized agent of Manila Remnant to develop the aforesaid
subdivision with authority to manage the sales thereof, execute contracts to sell to lot buyers
and issue official receipts. Artemio Valencia is also the president of this company.
Sometime in March 1970, Manila Remnant thru A.U. Valencia, executed contracts to sell with
Ventanilla covering two lots amounting to P66k to paid monthly for 10 years. Ventanilla paid
the downpayment.
After 10 days, Artemio Valencia sold the same lots without informing Ventanilla to Crisostomo,
his sales agent without any consideration.
Artemio Valencia then transmitted the fictitious Crisostomo contracts to Manila Remnant while
he kept in his files the contracts to sell in favor of the Ventanillas. All the amounts paid by the
Ventanillas were deposited in Valencia's bank account and this is remitted to Manila Remnant
in favor of Crisostomo. Receipts issued by Manila Remnant in favor of Crisostomo are kept by
Valencia. Ventanilla is not aware of Valencias scheme and thus continued paying their
monthly installments.
Sometime in May 1973, Manila Remnant terminated its collection agreement with AU Valencia
due to discrepancies and irregularities discovered in its collections and remittances. Valencia
was also removed as the President of Manila Remnant.
The Ventanilla couple unaware of the circumstances happened continued paying their
installments to Valencia. It is only in 1978 they learned the termination of Valencia, thus they
went immediately to Manila Remnant to pay their balance but to their shock they discovered
from Gloria Caballes, an accountant of Manila Remnant, that their names did not appear in the
records of A.U. Valencia and Co. as lot buyers.
Thus, the Ventanillas commenced an action for specific performance, annulment of deeds and
damages against Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo.
 Lower courts rendered judgment in favor of Ventanilla, and in the decision, the court ordered
defendants A.U. Valencia and Co. Inc., Manila Remnant and Carlos Crisostomo jointly and
severally to pay the Ventanillas the amount of P100,000.00 as moral damages, P100,000.00
as exemplary damages, and P100,000.00 as attorney's fees and in case the transfer of lots
cannot be effected for any legal reason, the defendants should reimburse jointly and severally
to the Ventanillas the total amount of P73,122.35 representing the total amount paid for the
two lots plus legal interest thereon from March 1970 plus damages.
While petitioner Manila Remnant has not refuted the legality of the award of damages per se,
it believes that it cannot be made jointly and severally liable with its agent A.U. Valencia and
Co. since it was not aware of the illegal acts perpetrated nor did it consent or ratify said acts of
its agent.
ISSUE: Whether or not petitioner Manila Remnant should be held solidarily liable together with A.U.
Valencia and Co. and Carlos Crisostomo for the payment of moral, exemplary damages and attorney's
fees in favor of the Ventanillas
RULING:
Yes. Due to the following:
(1) The unique relationship existing between the principal and the agent at the time of the dual
sale must be underscored. Bear in mind that the president then of both firms was Artemio U.
Valencia, the individual directly responsible for the sale scam. Hence, despite the fact that the
double sale was beyond the power of the agent, Manila Remnant as principal was chargeable
with the knowledge or constructive notice of that fact and not having done anything to correct
such an irregularity was deemed to have ratified the same.
(2) The principle of estoppel, Manila Remnant is deemed to have allowed its agent to act as
though it had plenary powers. Article 1911 of the Civil Code provides:
"Even when the agent has exceeded his authority, the principal is solidarily liable with the agent
if the former allowed the latter to act as though he had full powers."
Authority by estoppel has arisen in the instant case because by its negligence, the principal,
Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not
granted to it.
Rural Bank of Milaor vs. Francisca Ocfemia et. al
G.R. No 137686
February 8, 2000
FACTS: Several parcels of land were mortgaged by the respondents during the lifetime of the
respondents grandparents to the Rural bank of Milaor as shown by the Deed of Real Estate Mortgage
and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the respondents,
were not able to redeem the mortgaged properties consisting of seven parcels of land and so the
mortgage was foreclosed and thereafter ownership was transferred to the petitioner bank. Out of the
seven parcels of land that were foreclosed, five of them are in the possession of the respondents because
these five parcels of land were sold by the petitioner bank to the respondents as evidenced by a Deed of
Sale. However, the five parcels of land cannot be transferred in the name of the parents of Merife Nino,
one of the respondents, because there is a need to have the document of sale registered. The Register
of deeds, however, said that the document of sale cannot be registered without the board resolution of
the petitioner bank confirming both the Deed of sale and the authority of the bank manager, Fe S. Tena,
to enter such transaction.
The petitioner bank refused her request for a board resolution and made many alibis. Respondents
initiated the present proceedings so that they could transfer to their names the subject five parcel of land
and subsequently mortgage said lots and to use the loan proceeds for the medical expenses of their
ailing mother.
ISSUE: May the Board of Directors of a rural banking corporation be compelled to confirm a deed of
absolute sale of real property owned by the corporation which deed of sale was executed by the bank
manager without prior authority of the board of directors of the rural banking corporation?
HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena to enter
into binding contracts. After the execution of the Deed of Sale, respondents occupied the properties in
dispute and paid the real estate taxes. If the bank management believed that it had title to the property,
it should have taken measured to prevent the infringement and invasion of title thereto and possession
thereof. Likewise, Tena had previously transacted business on behalf of the bank, and the latter had
acknowledged her authority. A bank is liable to innocent third persons where representation is made in
the course of its normal business by an agent like Manager Tena even though such agent is abusing her
authority. Clearly, persons dealing with her could not be blamed for believing that she was authorized to
transact business for and on behalf of the bank.
The bank is estopped from questioning the authority of the bank to enter into contract of sale. If a
corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent
authority, it holds the agent out to the public as possessing the power to do those acts; thus, the
corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped
from denying the agents authority.
[ GR No. 20145, Nov 15, 1923 ]
VICENTE VERZOSA v. SILVINO LIM +
DECISION
45 Phil. 416
STREET, J.:
This action was instituted in the Court of First Instance of the City of Manila by Vicente Verzosa and Ruiz,
Rementeria y Compaia, as owners of the coastwise vessel Perla, against Silvino Lim and Siy Cong
Bieng & Company, Inc., as owner and agent, respectively, of the vessel Ban Yek, for the purpose of
recovering a sum of money alleged to be the damages resulting to the plaintiffs from a collision which
occurred on March 9, 1921, between the two vessels mentioned, it being alleged that said collision was
due to the inexperience, carelessness and lack of skill on the part of the captain of the Ban Yek and to
his failure to observe the rules of navigation appropriate to the case. The defendants answered with a
general denial, and by way of special defense asserted, among other things, that the collision was due
exclusively to the inexperience and carelessness of the captain and officers of the steamship Perla; for
which reason the defendants in turn, by way of counterclaim, prayed judgment for the damages suffered
by the Ban Yek from the same collision. At the hearing the trial judge absolved the defendants from the
complaint and likewise absolved the plaintiffs from the defendants' counterclaim. From this judgment both
parties appealed.
It appears in evidence that at about five o'clock in the afternoon of March 9, 1921, the coastwise steamer
Ban Yek left the port of Naga on the Bicol River, in the Province of Camarines Sur, with destination to the
City of Manila. At the time of her departure from said port the sea was approaching to high tide but the
current was still running in through the Bicol River, with the result that the Ban Yek had the current against
her. As the ship approached the Malbong bend of the Bicol River, in the municipality of Gainza, another
vessel, the Perla, was sighted coming up the river on the way to Naga. While the boats were yet more
than a kilometer apart, the Ban Yek gave two blasts with her whistle, thus indicating an intention to pass
on the left, or to her own port side. In reply to this signal the Perla gave a single blast, thereby indicating
that she disagreed with the signal given by the Ban Yek and would maintain her position on the right, that
is, would keep to the starboard. The Ban Yek made no reply to this signal. As the Perla was navigating
with the current, then running in from the sea, this vessel, under paragraph 163 of Customs Marine
Circular No. 53, had the right of way over the Ban Yek, and the officers of the Perla interpreted the action
of the Ban Yek in not replying to the Perla's signal as an indication of acquiescence of the officers of the
Ban Yek in the determination of the Perla to keep to the starboard.
The river at this point is about two hundred and fifty feet wide, and the courses thus being respectively
pursued by the two vessels necessarily tended to bring them into a head-on collision. When the danger
of such an occurrence became imminent, Captain Garrido of the Perla, seeing that he was shut off by
the Ban Yek from passing to the right, put his vessel to port, intending to avoid collision or minimize its
impact by getting farther out into the stream. An additional reason for this maneuver, as stated by Captain
Garrido, is that the captain of the Ban Yek waived his hand to Garrido, indicating that the latter should
turn his vessel towards the middle of the stream. At about the same time that the Perla was thus deflected
from her course the engine on the Ban Yek was reversed and three blasts were given by this vessel to
indicate that she was backing.
Now, it appears that when the engine is reversed, a vessel swings to the right or left in accordance with
the direction in which the blades of the propeller are set; and as the Ban Yek began to back, her bow was
thrown out into the stream, a movement which was assisted by the current of the river. By this means the
Ban Yek was brought to occupy an oblique position across the stream at the moment the Perla was
passing; and the bow of the Ban Yek crashed into the starboard bumpers of the Perla, carrying away
external parts of the ship and inflicting material damage on the hull. To effect the repairs thus made
necessary to the Perla cost her owners the sum of P17,827, including expenses of survey.
The first legal point presented in the case has reference to the sufficiency of the protest. In this connection
it appears that within twenty-four hours after the arrival of the Perla at the port of Naga, Captain Garrido
appeared before Vicente Rodi, the auxiliary justice of the peace of the municipality of Naga, and made
before that officer the sworn protest which is in evidence as Exhibit B. This protest is sufficient in our
opinion to answer all the requirements of article 835 of the Code of Commerce. A regular justice of the
peace would without doubt be competent to take a marine protest, and the same authority must be
conceded to the auxiliary justice in the absence of any showing in the record to the effect that the justice
of the peace himself was acting at the time in the municipality (Adm. Code, sec. 211; sec. 334, Code of
Civ. Proc., subsecs. 14, 15). We note that in his certificate to this protest Vicente Rodi added to the
appellation of auxiliary justice of the peace, following his name, the additional designation "notary public
ex-officio." However, under subsection (c) of section 242 of the Administrative Code, it is plain that an
auxiliary justice of the peace is not an ex-officio notary public. It results that the taking of this protest must
be ascribed to the officer in his character as auxiliary justice of the peace and not in the character of
notary public ex-officio. It is hardly necessary to add that this court takes judicial notice of the fact that
Naga is not a port of entry and that no customs official of rank is there stationed who could have taken
cognizance of this protest.
Upon the point of responsibility for the collision we have no hesitancy in finding that the fault is to be
attributed exclusively to the negligence and inattention of the captain and pilot in charge of the Ban Yek.
The Perla undoubtedly had the right of way, since this vessel was navigating with the current, and the
officers in charge of the Perla were correct in assuming, from the failure of the Ban Yek to respond to the
single blast of the Perla, that the officers in charge of the Ban Yek recognized that the Perla had a right
of way and acquiesced in her resolution to keep to the right. The excuse urged for the Ban Yek is that
this vessel is somewhat larger than the Perla and that it was desirable for the Ban Yek to keep on the
side of the long arc of the curve of the river; and in this connection it is suggested that the river is deeper
on the outer edge of the bend than on the inner edge. It is also stated that on a certain previous occasion
the Ban Yek on coming out from this port had gotten stuck in the mud in this bend by keeping too far to
the right. Moreover, it is said to be the practice of ships in navigating this stream to keep nearer the
outside than to the inside of the bend. These suggestions are by no means convincing. It appears in
evidence that the river bottom here is composed of mud and silt, and as the tide at the time of this incident
was nearly at its flood, there was ample depth of water to have accommodated the Ban Yek if she had
kept to that part of the stream which it was proper for her to occupy. We may further observe that the
disparity in the size of the vessels was not such as to dominate the situation and deprive the Perla of the
right of way under the conditions stated. Blame for the collision must therefore, as already stated, be
attributed to the Ban Yek.
On the other hand no fault can be attributed to the officers navigating the Perla either in maintaining the
course which had been determined upon for that vessel in conformity with the marine regulations
applicable to the case or in deflecting the vessel towards the middle of the stream after the danger of
collision became imminent. The trial judge suggests in his opinion that when Captain Garrido saw that
the Ban Yek was holding her course to the left, he (Garrido) should have changed the course of the Perla
to port more promptly. The validity of this criticism cannot be admitted. Among rules applicable to
navigation none is better founded on reason and experience than that which requires the navigating
officers of any vessel to assume that an approaching vessel will observe the regulations prescribed for
navigation (G. Urrutia & Co. vs. Baco River Plantation Co., 26 Phil., 632, 637). Any other rule would
introduce guess work into the control of ships and produce uncertainty in the operation of the regulations.
Our conclusion is that his Honor, the trial judge, was in error in not awarding damages to the Perla; but
no error was committed in absolving the plaintiffs from the defendants' cross-complaint.
The sum of P17,827 in our opinion represents the limit of the plaintiffs' right of recovery. In the original
complaint recovery is sought for an additional amount of P18,000, most of which consists of damages
supposed to have been incurred from the inability of the Perla to maintain her regular schedule while laid
up in the dock undergoing repairs. The damages thus claimed, in addition to being somewhat of a
speculative nature, are in our opinion not sufficiently proved to warrant the court in allowing the same.
Having determined the amount which the plaintiffs are entitled to recover, it becomes necessary to
consider the person, or persons, who must respond for these damages. Upon this point we note that
Silvino Lim is impleaded as owner; and Siy Cong Bieng & Co. is impleaded as the shipping agent (casa
naviera), or person in responsible control of the Ban Yek at the time of the accident. We note further that
in article 826 of the Code of Commerce it is declared that the owner of any vessel shall be liable for the
indemnity due to any other vessel injured by the fault, negligence, or lack of skill of the captain of the first.
We say "owner," which is the word used in the current translation of this article in the Spanish Code of
Commerce. It is to be observed, however, that the Spanish text itself uses the word naviero; and there is
some ambiguity in the use of said word in this article, owing to the fact that naviero in Spanish has several
meanings. The author of the article which appears under the word naviero in the Enciclopedia Juridica
Espaola tells us that in Spanish it may mean either owner, outfitter, charterer, or agent, though he says
that the fundamental and correct meaning of the word is that of "owner." That naviero, as used in the
Spanish text of article 826, means owner is further to be inferred from article 837, which limits the civil
liability expressed in article 826 to the value of the vessel with all her appurtenances and all the freight
earned during the voyage. There would have been no propriety in limiting liability to the value of the
vessel unless the owner were understood to be the person liable. It is therefore clear that by special
provision of the Code of Commerce the owner is made responsible for the damage caused by an accident
of the kind under consideration in this case; and in more than one case this court has held the owner
liable, when sued alone (Philippine Shipping Co. vs. Garcia Vergara, 6 Phil., 281; G. Urrutia & Co. vs.
Baco River Plantation Co., 26 Phil., 632).
But while it is thus demonstrated that Silvino Lim is liable for these damages in the character of owner, it
does not necessarily follow that Siy Cong Bieng & Co., as charterer or agent (casa naviera), is exempt
from liability; and we are of the opinion that both the owner and agent can be held responsible where
both are impleaded together. In Philippine Shipping Co. vs. Garcia Vergara (6 Phil., 281), it seems to
have been accepted as a matter of course that both owner and agent of the offending vessel are liable
for the damage done; and this must, we think, be true. The liability of the naviero, in the sense of charterer
or agent, if not expressed in article 826 of the Code of Commerce, is clearly deducible from the general
doctrine of jurisprudence stated in article 1902 of the Civil Code, and it is also recognized, but more
especially as regards contractual obligations, in article 586 of the Code of Commerce. Moreover, we are
of the opinion that both the owner and agent (naviero) should be declared to be jointly and severally
liable, since the obligation which is the subject of this action had its origin in a tortious act and did not
arise from contract. Article 1137 of the Civil Code, declaring that joint obligations shall be apportionable
unless otherwise provided, has no application to obligations arising from tort.
For the reasons stated the judgment appealed from will be affirmed in so far as it absolves the plaintiffs
from the defendants' cross-complaint but will be reversed in so far as it absolves the defendants from the
plaintiffs' complaint; and judgment will be entered for the plaintiffs to recover jointly and severally from
the defendants Silvino Lim and Siy Cong Bieng & Co. the sum of seventeen thousand eight hundred and
twenty-seven pesos (P17,827), with interest from the date of the institution of the action, without special
pronouncement as to costs of either instance. So ordered.
Johnson, Malcolm, Avancea, Villamor, and Romualdez, JJ., concur.
DOMINION INSURANCE V. CA
February 6, 2002
Pardo
SUMMARY: Guevarra instituted a civil case for the recovery of a sum of money against Dominion
Insurance. He sought to recover sums he had advanced in his capacity as manager. Dominion
denied any liability to Guevarra. RTC ruled that Dominion was to pay Guevarra. CA affirmed. SC
also ruled that Dominion should pay Guevarra, but not under the law on agency, but the law on
obligations and contracts. This is because Guevarra deviated from the instructions of Dominion
under which he would have had authority to settler the latters claims, i.e. to pay through the
revolving fund. Nevertheless, recovery may be made under Art. 1236.
DOCTRINE: When a special power of attorney is required for the agent to do a certain act, the
agent, in the performance of such act, must comply with the specifications embodied in the special
power of attorney giving him authority to do such.
For example, here, a special power of attorney was needed for Guevarra to settle the claims of
Dominions clients. And for this purpose, there was a memorandum. However, the memorandum
stated that Guevarra was to settle the claims using the money in a revolving fund. Guevarra did not
comply with this, so e expenses Guevarra incurred in the settlement of the claims of the insured my
not be reimbursed from Dominion, at least under the law of agency.
FACTS: Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion
Insurance. He sought to recover P156,473.90, which he claimed to have advanced in his capacity as
manager of Dominion to satisfy claims filed by Dominions clients. Dominion denied any liability to
Guevarra and asserted a counterclaim for premiums allegedly unremitted by the latter.
The pre-trial conference never pushed through despite being scheduled and postponed nine times over
the course of six months. Finally, the case was called again for pre-trial and Dominion and counsel failed
to show up. The trial court declared Dominion in default and denied any reconsideration.
On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90 claimed
as the total amount advanced by the latter in the payment of the claims of Dominions clients. The CA
affirmed.
ISSUES + RATIO:
WON Guevarra acted within his authority as agent for Dominion NO
A perusal of the Special Power of Attorney would show that Dominion and Guevarra intended
to enter into a principal-agent relationship. Despite the word special, the contents of the document
reveal that what was constituted was a general agency. The agency comprises all the business of the
principal, but, couched in general terms, is limited only to acts of administration. A general power permits
the agent to do all acts for which the law does not require a special power.
Art. 1878 enumerates the instances when a special power of attorney is required, including (1)
to make such payments as are not usually considered as acts of administration; (15) any other act of
strict dominion.
The payment of claims is not an act of administration. The settlement of claims is not included
among the acts enumerated in the Special Power of Attorney, neither is it of a character similar to the
acts enumerated therein. A special power of attorney would have been required before Guevarra could
settle the insurance claims of the insured.
Guevarras authority to settle claims is embodied in the Memorandum of Management
Agreement which enumerated the scope of Guevarras duties and responsibilities. However, the
Memorandum showed the instruction of Dominion that payment of claims shall come from a revolving
fund. Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the
settlement of the claims of the insured may not be reimbursed from Dominion.
WON Guevarra is entitled to reimbursement of amounts YES
However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right
to recovery may still be justified under the general law on Obligations and Contracts, particularly, Art.
12361.
In this case, when the risk insured against occurred, Dominions liability as insurer arose. This
obligation was extinguished when Guevarra paid such claims. Thus, to the extent that the obligation of
Dominion had been extinguished, Guevarra may demand reimbursement from his principal. To rule
otherwise would result in unjust enrichment of Dominion.
RULING: Dominion is ordered to pay Guevarra P112,6762.11, representing the total amount advanced
by the latter in the payment of the claims of the formers clients, minus the amount in the revolving fund
and the outstanding balance and remittance.
ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. [PRC]
FACTS
Albaladejo y Cia is a limited partnership, which was engaged in the buying and selling of copra in Legaspi,
and in the conduct of a general mercantile business. Visayan Refining Co. [PRCs successor] was
engaged in operating its extensive plant for the manufacture of coconut oil.
On August 1918, Albaladejo made a contract with the Visayan Refining, wherein they agreed that VRC
will buy for a period of 1 year all the copra that Albaladejo purchased in Albay. It was also agreed upon
that during the continuance of the contract, VRC will not appoint any other agent for the purchase of
copra in Legaspi, nor buy copra from any vendor in the same place. In addition, VRC would provide
transportation for the copra delivered to it by Albaladejo.
At the end of said year, both parties found themselves satisfied with the existing arrangement, and they
continued by tacit consent to govern their future relations by the same agreement. On July 9, 1920, VRC
closed down its factory at Opon and withdrew from the copra market.
After VRC ceased to buy copra, the copra supplies already purchased by Albaladejo were gradually
shipped out and accepted by the VRC, and in the course of the next 8-10 months, the accounts between
the two parties were liquidated. The last account rendered by VRC to Albaladejo showed a balance of
P288 in favor of VRC. Albaladejo addressed a letter to the PRC (which had now succeeded to the rights
and liabilities of VRC), expressing its approval of said account.
Albaladejo filed a complaint against PRC, seeking to recover P110k, the alleged amount that Albaladejo
spent in maintaining and extending its organization. Albaladejo alleges that such maintenance and
extension was made at the express request of PRC. On the other hand, PRC contends that the contract
between them created the relation of principal and agent; therefore, the principal should indemnify the
agent for damages incurring in carrying out the agency. The lower court ruled in favor of Albaladejo, but
granted only 30% of the amount prayed for, in view of the fact that Albaladejos transactions in copra
amounted in the past to only about 30% of the total business it transacted.
ISSUE & HOLDING
WON the contract is one of agency. NO
RATIO
The relation between the parties was not that of principal and agent in so far as relates to the purchase
of copra by Albaladejo. While VRC made Albaladejo one of its instruments for the collection of copra, in
making its purchases from the producers, Albaladejo was buying upon its own account. When Albaladejo
turned over the copra to VRC, a second sale was effected.
In the contract, it is declared that during the continuance of the agreement, VRC would not appoint any
other agent for the purchase of copra in Legaspi; and this gives rise indirectly to the inference that
Albaladejo was considered its buying agent. However, the use of this term in one clause of the contract
cannot dominate the real nature of the agreement as revealed in other clauses, no less than in the caption
of the agreement itself. This designation was used for convenience. The title to all of the copra purchased
by Albaladejo remained in it until it was delivered by way of subsequent sale to VRC.
Lastly, the letters from VRC to Albaladejo that the Court quoted did not indicate anything to the effect that
VRC is liable for the such expenses incurred by Albaladejo, as the letters only noted the dire condition of
VRCs copra business, as well as its hopes to enter the market on a more extensive scale [which was
unfortunately unrealized].
CONSTANTE AMOR DE CASTRO VS CA
GR NO. 115838
JULY 18, 2002
FACTS:
Private respondent Artigo sued petitioners Constante and Amor De Castro to collect the unpaid
balance of his brokers commission from the De Castros.
The appellants, De Castros, were co-owners of 4 lots in Cubao, Quezon City. The appellee,
Artigo, was authorized by appellants to act as real estate broker in the sale of these properties for the
amount of P23,000,000.00, 5% of which will be given to the agent as commission. Appellee first found
the Times Transit Corporation and 2 lots were sold. In return, he received P48,893.76 as commission.
Appellee apparently felt short changed because according to him, his total commission should
be P352,500.00 which is 5% of the agreed price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the 2 lots and that it was he who introduced the buyer to appellants and unceasingly
facilitated the negotiation which ultimately led to the consummation of the sale. Hence, he sued to collect
the balance of P303,606.24 after having received P48,893.76 in advance.
Appellants argued that appellee is selfishly asking for more than what he truly deserved as
commission to the prejudice of other agents who were more instrumental to the consummation of the
sale and that there were more or less 18 others who took active efforts.
The De Castros argued that Artigos complaint should have been dismissed for failure to
implead all the co owners of the 2 lots. . The De Castros contend that failure to implead such
indispensable parties is fatal to the complaint since Artigo, as agent of all the four co-owners, would be
paid with funds co-owned by the four co-owners.
It was shown also that Constante Amor De Castro signed the authorization of Artigo as owner
and representative of the co-owners.
ISSUE:
Whether or not the complaint merits dismissal for failure to implead other co-owners as
indispensable parties
HELD:
No. The De Castros contentions are devoid of legal basis. The CA explained that it is not
necessary to implead the co-owners since the action is exclusively based on a contract of agency
between Artigo and Constante. The rule on mandatory joinder of indispensable parties is not applicable
to the instant case.
Constante signed the note as owner and as representative of the other co-owners. Under this
note, a contract of agency was clearly constituted between Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constantes individual or representative capacity, or both, the De Castros
cannot seek the dismissal of the case for failure to implead the other co-owners as indispensable parties.
The De Castros admit that the other co-owners are solidarily liable under the contract of agency, citing
Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against the De Castros theory that the
other co-owners should be impleaded as indispensable parties.
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a
contract of agency, each obligor may be compelled to pay the entire obligation. The agent may recover
the whole compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors. This
article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has not been fully collected.