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Agency and Partnership Digests 4 PDF
Agency and Partnership Digests 4 PDF
yen 1
A&P Compiled Digests No. 4
DEL ROSARIO v. LA BADENIA Issue: Whether the plaintiffs are agents of the company or merelt
33 PHIL 316 merchants.
Nature: Action to recover sum of P1,795.25 a balance alleged to be due Held/Ratio: THEY ARE AGENTS.
Teofila del Rosario de Costa as the agent of the defendant corporation for
services rendered and expenses incurred in the sale of its products. The head office at Manila was fully informed of plaintiffs' relations
with the general agent in extending the sales of its products.
Facts: o Plaintiffs made direct remittances to the head office in Manila
and these remittances were credited to the account of the agency
at Legaspi, and acknowledgment was made directly to the
The plaintiffs are residents of Legaspi, Albay, and the defendant plaintiffs.
corporation is engaged in the manufacture and sale of tobacco o Neither the head office nor Aragon appear to have made any
products with its head office in the city of Manila. distinction between the business done by Aragon and that
1911: the defendant corporation, a new concern, inaugurated an done by the plaintiffs. The purchases, sales and remittances
extensive selling campaign for the purpose of introducing its made by the plaintiffs do not seem to have been considered as
products to the retail trade. those of an independent business concern, but rather as a part of
Celestino Aragon, a general agent of the defendant corporation, was the work of the Legaspi agency under the control and supervision
in charge of this campaign in Albay, Sorsogon, and other provinces in of Aragon.
the southern end of Luzon. o The fact that the defendant corporation carried the Legaspi
He established a central distributing agency or depot at Legaspi account in the name of the general agent, Aragon, and
with the plaintiff, Teofila del Rosario de Costa, nominally in carried no account with the plaintiffs, would seem to
charge, though her husband, Bernardino de Costa appears to negative the contention that plaintiffs were simply
have been the actual manager of the agency. merchants purchasing their goods in Manila at wholesale
The business relations between the plaintiffs and the defendant and selling them locally on their own account.
extended from February 1, 1911, to March 24, 1912, and during
this time no settlement of their accounts was ever had.
The active management and participation of the plaintiffs in the
When Aragon, the general agent, came to Legaspi in 1911 he
conduct of the business at Legaspi are fully recognized in the
established his headquarters there and took up his residence with
following letters written by the assistant manager of the defendant
the plaintiffs, using the lower part of their house as a store room or
corporation to one of the plaintiffs.
depository for large quantities of cigarettes and cigars. He
employed a number of persons as solicitors and paid their
salaries; he paid the internal revenue fees incident to the Aragon did not consider the plaintiffs as independent merchants
conduct of the business in Legaspi, and also the rent of the operating on their own account, but rather as agents cooperating with
building in which he lived with the plaintiffs and which he him and working under his supervision.
made use of as the general headquarters for the agency. o This fact is clearly borne out by the nature of the entries made in
The record shows that business amounting to more than P24,000 his books of account. A reference to that statement taken from
(wholesale) was done by the Legaspi agency from February 1, 1911, to the books of account shows that the plaintiffs were given
March 24, 1912. All goods sent to Legaspi were charged by the credit on various items, such as advertising expenses, the free
head office at Manila against the general agent, Aragon, while on distribution of cigars and cigarettes for advertising purposes,
the books kept by Aragon these goods were charged against the freight and carriage charges on shipments to neighboring
plaintiffs, and as goods were withdrawn by himself, he credited towns, and the like, and it does not seem at all likely that
the amount of the withdrawals to the account of the plaintiffs. plaintiffs would have been allowed credit on such items if they
The business at Legaspi appears to have been that of a distributing had been conducting the business solely on their own account.
agency actively in charge of the plaintiffs but over which the general o Aragon extended credit to certain purchasers of cigars and
agent maintained a close supervision. Goods were withdrawn from cigarettes and the entries made by him on his books of account
the depository at Legaspi from time to time by the general agent show that he knew that the plaintiffs were also extending credit
for shipment to other points; goods were likewise withdrawn by to some of the purchasers of the goods shipped from Legaspi. He
plaintiffs and shipped to neighboring towns without any approved the very items now questioned when as general
intervention on the part of the general agent. All accounts incident agent of the defendant corporation he signed the statement
to the business were carried on the books of Aragon. The plaintiffs do of account showing a balance of P1,795.25 in favor of the
not appear to have kept a separate set of books. plaintiffs.
The account as carried on the books of Aragon, the general agent, was
between Teofila del Rosario de Costa and La Badenia, the defendant
It is contended that it is unreasonable that plaintiffs would have so
corporation.
large a balance in their favor, and that they are now merely seeking
On March 24, 1912, the general agent had a settlement with the to saddle upon the defendant corporation a lot of unpaid accounts. In
plaintiffs and acknowledged over his signature that these books view of the fact that plaintiffs are only seeking to enforce the payment
showed a balance in favor of the plaintiffs amounting to P1,795.25. of a balance admitted by the general agent of the defendant
When it was time to pay, however, the defendant corporation refused corporation to be rightly due them, we fail to see how it can be
to pay over to plaintiffs the balance of P1,795.25, claiming that reasonably urged that plaintiffs are attempting to saddle these
plaintiffs had been improperly allowed a credit of P1,850.68 unpaid claims on the defendant.
which represented unpaid accounts due the business in Legaspi
for cigars and cigarettes sold by it.
DEFENDANT CORPORATION’S ARGUMENT: Plaintiffs were simply The general agent who was in control of the Legaspi business,
merchants who purchased the goods at fixed wholesale prices and and who was fully conversant with all of its details, clearly
sold them on their own account, and that they were never employed as recognized the right of the plaintiffs to have credit on their
their agents. account for the amount of these unpaid claims.
PLAINTIFF’S CONTENTION: That they were the agents of the The defendant carried no account whatever with the plaintiffs, and
defendant corporation; that they received commissions on the sales having intrusted the entire management of the Legaspi business to
made by the agency; and that they were authorized to extend a Aragon, it cannot now come into court and repudiate the account
reasonable credit under the supervision of the general agent. confirmed by him, unless it can show that he acted beyond the
scope of his authority in making the arrangement he did with
the plaintiffs.
LOWER COURT’s DECISION: the specific goods sold to the delinquent
Aragon's powers as a selling agent appear to have been very
debtors, whose unpaid accounts form the basis of this litigation, had broad, and there is no evidence in the record to indicate that he
already been paid for by the plaintiffs and that this was conclusive acted beyond his powers in conducting the business at Legaspi
evidence that the plaintiffs were not acting as the agents of the defendant as he did; and there can be no doubt that plaintiffs had been
corporation, and that in effect, the purpose of this suit was to recover authorized by him to extend credit on behalf of the agency. There is
back money already paid for the goods purchased and sold by the no other reasonable explanation of the entries made by Aragon in
plaintiffs.
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A&P Compiled Digests No. 4
his books of account, and his approval of the balance in favor of the "Monte Carlo Madness" because it was to be shown in Cebu on
plaintiffs. August 29 and 30, 1933. Lazarus Joseph agreed to said exhibition.
the bodega of the Lyric Film Exchange, Inc., was burned, together
with the film "Monte Carlo Madness" which was not insured.
It is further contended that the goods were charged to plaintiffs at
wholesale prices, and that they were to have as profits any amounts
ISSUE: whether or not the defendant company, the Lyric Film Exchange,
received over and above the wholesale cost price on the goods sold
Inc., is responsible to the plaintiff, International Films (China) Ltd., for the
by them, and it is urged that such an arrangement indicates that
destruction by fire of the film in question, entitled "Monte Carlo
they were independent merchants doing business on their own
Madness".
account.
Argument of Plaintiff Company: defendant's failure to return the film
"Monte Carlo Madness" to the former was due to the fact that the period
Even granting that such was the arrangement made with the for the delivery thereof, which expired on June 22, 1933, had been
plaintiffs by Aragon, it does not necessarily follow that they were extended in order that it might be shown in Cebu on August 29 and 30,
conducting an independent business on their own account. 1933, in accordance with an understanding had between Lazarus Joseph,
As already stated, the record does not disclose what were the new agent of the plaintiff company, and the defendant.
the precise terms of arrangement made with the plaintiffs.
The record does show however, that in many instances the Argument of Defendant Company: when it wanted to return the film
plaintiffs were allowed commissions on sales made by them, but "Monte Carlo Madness" to Bernard Gabelman, the former agent of the
whether or not these were in addition to other profits allowed plaintiff company, because of the arrival of the date for the return
them the record does not show. Upon a careful examination of thereof, under the contract Exhibit C, said agent, not having a safety vault,
the whole record we are satisfied that plaintiffs were not requested Vicente Albo, chief of the film department of the defendant
conducting an independent business but were the agents of the company, to keep said film in the latter's vault under Gabelman's own
defendant corporation operating under the supervision of the responsibility, verbally stipulating at the same time that the defendant
general agent, Aragon. company, as subagent of the International Films (China) Ltd., might show
the film in question in its theaters.
INTERNATIONAL FILMS v. LYRIC FILM HELD: NO. The defendant company, as subagent of the plaintiff in the
63 PHIL 778 exhibition of the film "Monte Carlo Madness", was not obliged to insure it
against fire, not having received any express mandate to that effect, and it
IFC leased “Monte Carlo madness” film; verbal agreement re: sub-agency is not liable for the accidental destruction thereof by fire.
and keeping the film in vault; new agent Joseph agreed to sub-agency;
vault burned down; SC: defendant not obliged to fulfill more than what’s RATIO: It does not appear sufficiently proven that the understanding
mandated; no mandate to insure against fire had between Lazarus Joseph, second agent of the plaintiff company, and
Vicente Albo, chief of the film department of the defendant company, was
FACTS: that the defendant company would continue showing said film under the
Bernard Gabelman was the Philippine agent of the plaintiff same contract Exhibit C.
company International Films (China), Ltd. by virtue of a power of If the verbal contract had between Bernard Gabelman, the former
attorney executed in his favor on April 5, 1933 (Exhibit 1) agent of the plaintiff company, and Vicente Albo, chief of the film
the International Films (China), Ltd., through its said agent, leased department of the defendant company, was a sub-agency or a
the film entitled "Monte Carlo Madness" to the defendant company, submandate, the defendant company is not civilly liable for the
the Lyric Film Exchange, Inc., destruction by fire of the film in question because as a mere
One of the conditions of the contract was that the defendant submandatary or subagent, it was not obliged to fulfill more than
company would answer for the loss of the film in question whatever the contents of the mandate and to answer for the damages caused
the cause. to the principal by his failure to do so (art. 1718, Civil Code). The
Vicente Albo (chief of the film department of the Lyric Film fact that the film was not insured against fire does not constitute
Exchange, Inc.) informed said agent of the plaintiff company that the fraud or negligence on the part of the defendant company, the Lyric
showing of said film had already finished and asked, at the same Film Exchange, Inc., because as a subagent, it received no
time, where he wished to have the film returned to him. instruction to that effect from its principal and the insurance of the
In answer, Bernard Gabelman informed Albo that he wished to see film does not form a part of the obligation imposed upon it by law.
him personally in the latter's office.
Gabelman went to Vicente Albo's office and asked whether he could
deposit the film in question in the vault of the Lyric Film Exchange, PNB v. AGULEDO
Inc., as the International Films (China) Ltd. did not yet have a safety 58 PHIL 655
vault, as required by the regulations of the fire department.
After the case had been referred to O'Malley, Vicente Albo's chief, FACTS:
the former answered that the deposit could not be made inasmuch On November 9, 1920, the defendant-appellant Paz Agudelo y
as the film in question would not be covered by the insurance Gonzaga executed in favor of her nephew, Mauro A. Garrucho, the
carried by the Lyric Film Exchange, Inc. document conferring upon him a special power of attorney
Bernard Gabelman then requested Vicente Albo to permit him to sufficiently broad in scope to enable him to sell, alienate and
deposit said film in the vault of the Lyric Film Exchange, Inc., under mortgage in the manner and form he might deem convenient, all her
Gabelman's own responsibility. As there was a verbal contract real estate situated in the municipalities of Murcia and Bacolod,
between Gabelman and the Lyric Film Exchange Inc., whereby the Occidental Negros, consisting in lots Nos. 61 and 207
film "Monte Carlo Madness" would be shown elsewhere, O'Malley On December 22, 1920, Amparo A. Garrucho executed the document
agreed and the film was deposited in the vault of the defendant whereby she conferred upon her brother Mauro A Garrucho a
company under Bernard Gabelman's responsibility. special power of attorney sufficiently broad in scope to enable him
Bernard Gabelman severed his connection with the plaintiff to sell, alienate, mortgage or otherwise encumber, in the manner
company, being succeeded by Lazarus Joseph. Bernard Gabelman, and form he might deem convenient, all her real estate situated in
upon turning over the agency to the new agent, informed the latter
the municipalities of Murcia and Bago, Occidental Negros.
of the deposit of the film "Monte Carlo Madness" in the vault of the Nothing in the aforesaid powers of attorney expressly
defendant company as well as of the verbal contract entered into authorized Mauro A. Garrucho to contract any loan nor to
between him and the Lyric Film Exchange, Inc., whereby the latter constitute a mortgage on the properties belonging to the
would act as a subagent of the plaintiff company, International respective principals, to secure his obligations.
Films (China) Ltd., with authority to show this film "Monte Carlo On December 23, 1920, Mauro A. Garrucho executed in the favor of
Madness" in any theater where said defendant company, the Lyric
the Philippine National bank, whereby he constituted a mortgage on
Film Exchange, Inc., might wish to show it after the expiration of the lot No. 878 of the cadastral survey of Murcia, Occidental Negros,
contract Exhibit C. with all the improvements thereon, described in transfer certificate
ask for the return not only of the film "Monte Carlo Madness" but of title No. 2415 issued in the name of Amparo A. Garrucho (his
also of the films "White Devils" and "Congress Dances". sister), to secure the payment of credits, loans, commercial
the Lyric Film Exchange, Inc., returned the films entitled "Congress overdrafts, etc., not exceeding P6,000.
Dances" and "White Devils" to Lazarus Joseph, but not the film
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A&P Compiled Digests No. 4
On August 24, 1931, the said Mauro A. Garrucho executed in favor of although on properties belonging to his principal Paz Agudelo y
the Philippine National Bank, whereby he constituted a mortgage Gonzaga.
on lots Nos. 61 and 207 (owned by the defendant), issued in the Furthermore, the promissory notes executed by Mauro A. Garrucho
name of Paz Agudelo y Gonzaga, to secure the payment of credits, in favor of the Philippine National Bank, evidencing loans of P6,000
loans and commercial overdrafts which the said bank might furnish and P16,000 have been novated by the promissory notes for
him to the amount of P16,00, payable on August 24, 1922, executing P21,000 executed by Mauro A. Garrucho, not only without
the corresponding promissory note to that effect. express authority from his principal Paz Agudelo y Gonzaga but
The mortgage deeds as well as the corresponding promissory notes also under his own signature.
for P6,000 and P16,000, respectively, were executed in Mauro A. Furthermore, the records do not show that the loan obtained by
Garrucho's own name and signed by him in his personal Mauro A. Garrucho, was for his principal Paz Agudelo y Gonzaga.
capacity, authorizing the mortgage creditor, the Philippine The special power of attorney, does not authorize Mauro A.
National Bank, to take possession of the mortgaged properties, Garrucho to constitute a mortgage on the real estate of his principal
by means of force if necessary, in case he failed to comply with to secure his personal obligations. Therefore, in doing so by virtue
any of the conditions stipulated therein. of the document, he exceeded the scope of his authority and his
Mauro A. Garrucho was unable to pay his loans principal is not liable for his acts.
On July 15, 1922, Mauro A. Garrucho, executed in favor of the PNB It is noted that Mauro A. Garrucho was not authorized to execute
the deed whereby he constituted a mortgage on lots Nos. 61 and promissory notes even in the name of his principal Paz Agudelo y
207, together with the improvements thereon, described in transfer Gonzaga, nor to constitute a mortgage on her real properties to
certificates of title Nos. 2216 and 1148, respectively, issued in the secure such promissory notes. The plaintiff Philippine National
name of Paz Agudelo y Gonzaga, and on lot No. 878 of the cadastral Bank should know this inasmuch as it is in duty bound to ascertain
survey of Murcia, described in transfer certificate of title No. 2415, the extent of the agent's authority before dealing with him.
issued in the name of Amparo A. Garrucho. Therefore, Mauro A. Garrucho and not Paz Agudelo y Gonzaga
In connection of the credits, loans, and commercial overdrafts is personally liable for the amount of the promissory note.
amounting to P21,000 which had been granted him, Mauro A.
Garrucho, on the said date July 15, 1922, executed the WON Paz Agudelo y Gonzaga is liable for the lien on lot No. 878, which
promissory note, for P21,000 as a novation of the former was tranferred to her by her niece. YES
promissory notes for P6,000 and P16,000, respectively.
In view of the aforesaid consolidated mortgage, the Philippine Paz Agudelo y Gonzaga in an affidavit dated January 15, 1926 , and
National Bank, on the said date of July 15, 1922, cancelled the in a letter dated January 16, 1926, gave her consent to the lien on lot
mortgages constituted on lots Nos. 61, 207 and 878 described in No. 878, the ownership of which was transferred to her by her niece
Torrens titles Nos. 2216, 1148 and 2415, respectively. Amparo A. Garrucho.
On November 25, 1925, Amparo A. Garrucho (the sister) sold lot No. However, this acknowledgment, however, does not extend to lots
878 described in certificate of title No. 2415, to Paz Agudelo y Nos. 207 and 61, respectively, inasmuch as, although it is true that a
Gonzaga (the defendant) mortgage is indivisible as to the contracting parties and as top their
On January 15, 1926, in the City of Manila, Paz Agudelo y Gonzaga successors in interest (article 1860, Civil Code), it is not so with
signed the affidavit, Exhibit N, which reads as follows: respect to a third person who did not take part in the constitution
“...further agree to the amount of the lien thereon stated in the thereof either personally or through an agent, inasmuch as he can
mortgage deed executed by Miss Amparo A. Garrucho in favor of the make the acknowledgment thereof in the form and to the extent he
Philippine National Bank.” may deem convenient, on the ground that he is not in duty bound to
acknowledge the said mortgage.
ISSUE/HELD: Therefore, the only liability of the defendant-appellant Paz
WON Paz Agudelo y Gonzaga is liable for the payment of the loans Agudelo y Gonzaga is that which arises from the aforesaid
obtained by Mauro A. Garrucho from the Philippine National Bank for the acknowledgment, but only with respect to the lien and not to
security of which he constituted a mortgage on the aforesaid real estate the principal obligation secured by the mortgage
belonging to the defendant-appellant Paz Agudelo y Gonzaga. NO acknowledged by her to have been constituted on said lot No.
878 . Such liability is not direct but a subsidiary one.
there is nothing in the said mortgage deeds to show that Mauro A. In view of the foregoing consideration, when an agent negotiates a
Garrucho is attorney in fact of Amparo A. Garrucho and of Paz loan in his personal capacity and executes a promissory note
Agudelo y Gonzaga, and that he obtained the loans mentioned in the under his own signature, without express authority from his
aforesaid mortgage deeds and constituted said mortgages as principal, giving as security therefor real estate belonging to
security for the payment of said loans, for the account and at the the letter, also in his own name and not in the name and
request of said Amparo A. Garrucho and Paz Agudelo y Gonzaga. representation of the said principal, the obligation do
From the titles as well as from the signatures therein, Mauro A. constructed by him is personal and does not bind his aforesaid
Garrucho, appears to have acted in his personal capacity. In the principal.
aforesaid mortgage deeds, Mauro A. Garrucho, in his capacity as
mortgage debtor, appointed the mortgage creditor Philippine Wherefore, it is hereby held that the liability constructed by the
National Bank as his attorney in fact so that it might take actual aforesaid defendant-appellant Paz Agudelo y Gonzaga is merely
and full possession of the mortgaged properties by means of subsidiary to that of Mauro A. Garrucho, limited lot No. 878 of the
force in case of violation of any of the conditions stipulated in cadastral survey of Murcia, Occidental Negros, described in Torrens
the respective mortgage contracts. title No. 2415. However, inasmuch as the principal obligator, Mauro
If Mauro A. Garrucho acted in his capacity as mere attorney in A. Garrucho, has been absolved from the complaint and the plaintiff-
fact of Amparo A. Garrucho and of Paz Agudelo y Gonzaga, he appellee has not appealed from the judgment absolving him, the law
could not delegate his power, in view of the legal principle does not afford any remedy whereby Paz Agudelo y Gonzaga may be
of "delegata potestas delegare non potest" (a delegated power required to comply with the said subsidiary obligation in view of
cannot be delegated), inasmuch as there is nothing in the records the legal maxim that the accessory follows the principal. Wherefore,
to show that he has been expressly authorized to do so. the defendant herein should also be absolved from the complaint
He executed the promissory notes evidencing the aforesaid loans, which is hereby dismissed, with the costs against the appellee. So
under his own signature, without authority from his principal and, ordered.
therefore, were not binding upon the latter(Agudelo). Neither is
there anything to show that he executed the promissory notes in PHILIPPINE PRODUCTS v. PRIMATERIA
question for the account, and at the request, of his respective 15 SCRA 301
principals.
Furthermore, it is noted that the mortgage deeds, Exhibits C and J, FACTS:
were cancelled by the documents, Exhibits I and L, on July 15, 1922, Defendant Primateria Societe Anonyme Pour Le Commerce
and in their stead the mortgage deed, Exhibit C, was executed, in Exterieur (Primateria Zurich) was engaged in "Transactions in
which there is absolutely no mention of Mauro A. Garrucho being international trade with agricultural products, particularly in oils,
attorney in fact of anybody, and which shows that he obtained such fats and oil-seeds and related products."
credit fro himself in his personal capacity and secured the payment The record shows that:
thereof by mortgage constituted by him in his personal capacity, Primateria Zurich, through defendant Alexander B. Baylin, entered
into an agreement with plaintiff Philippine Products Company,
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A&P Compiled Digests No. 4
whereby the latter undertook to buy copra in the Philippines for the And obviously, liability of the agent is necessarily premised on the
account of Primateria Zurich, during "a tentative experimental inability to sue the principal or non-liability of such principal. In the
period of one month from date." absence of express legislation, of course.
The contract was renewed by mutual agreement. During such
period, plaintiff caused the shipment of copra to foreign countries, NPC v. NATIONAL MERCHANDISING
pursuant to instructions from defendant Primateria Zurich, thru 177 SCRA 789
Primateria (Phil.) Inc. — referred to hereafter as Primateria
Philippines — acting by defendant Alexander G. Baylin and Jose M. FACTS:
Crame, officers of said corporation. NAMERCO is the representative of New York firm International
As a result, the total amount due to the plaintiff was P33,009.71. Commodities Corporation. NAMERCO and NPC executed a contract
This is an action to recover from defendants, the sum of P33,009.71 for purchase by NPC from the NY firm 4K long tons of crude sulfur
with interest and attorney's fees of P8,000.00. for its Ma. Cristina Fertilizer Plant for 450K. Domestic Insurance
CFI Manila Trial: it was proven that the amount due from defendant Company executed a performance bond in favor of NPC to
Primateria Zurich, on account of the various shipments of copra, guarantee the seller's obligation.
was P31,009.71, because it had paid P2,000.00 of the original claim The contract stipulated that sulfur was to be delivered at Iligan City
of plaintiff. There is no dispute about accounting. within 60 days from notice of establishment of a letter of credit and
And there is no question that Alexander G. Baylin and Primateria faulure would subject the seller and the surety to pay liquidated
Philippines acted as the duly authorized agents of Primateria damages.
Zurich in the Philippines. As far as the record discloses, Baylin On November 12, 1956, NPC advised President of Namerco of the
acted indiscriminately in these transactions in the dual capacities opening on Nov. 8 of a letter of credit. The notice was received by
of agent of the Zurich firm and executive vice-president of the NY firm on Nov. 15. Thus the deadline was set on January 15. NY
Primateria Philippines, which also acted as agent of Primateria firm was not able to supply and consequently, the NPC had to shut
Zurich. It is likewise undisputed that Primateria Zurich had no down the fertilizer plant.
license to transact business in the Philippines. NPC informed Namerco that non-availability of vessel does not
For failure to file an answer within the reglementary period, excuse nonperformance. On May 8, 1957, the Government
defendant Primateria Zurich was declared in default. Corporation Counsel rescinded the contract of the sale and later
LOWER COURT: defendant Primateria Zurich liable to the plaintiff demanded from Namerco payment of 360K as liquidated damages.
for the sums of P31,009.71, with legal interest from the date of the Demand was made upon the surety also.
filing of the complaint, and P2,000.00 as and for attorney's fees; and The NPC sued the NY firm, Namerco and the insurance company for
absolving defendants Primateria (Phil.), Inc., Alexander G. Baylin, liquidated damages. The TC dismissed the case against the NY firm
and Jose M. Crame from any and all liability. as it had no jurisdiction over it. It ordered the respondents to pay
PLAINTIFF”S APPEAL: that Primateria Zurich is a foreign liquidated damages. Meanwhile, Melvin Wallick, the assignee of the
corporation within the meaning of Sections 681 and 69 of the NY firm sued Namerco. But this case the TC dismissed.
Corporation Law, and since it has transacted business in the NAMERCO contends that the delivery of the sulfur conditioned on
Philippines without the necessary license, as required by said the availability of a vessel to carry the shipment and acted within
provisions, its agents here are personally liable for contracts made the scope of authority as agent when it signed the contract of sale.
in its behalf. Plaintiff also alleges that the appellees as agents of
Primateria Zurich are liable to it under Art. 18972 of the New Civil ISSUES:
Code 1. WON the delivery of the sulfur was conditioned on the availability
of a vessel. NO
ISSUE: WON the agents may be held personally liable on contracts 2. WON NAMERCO acted within the bounds of its authority. NO
made in the name of the entity with third persons in the 3. WON the stipulation for liquidated damages was enforceable
Philippines.- NO despite a finding that the contract was executed by the agent in
excess of its authority. YES
RATIO: 4. WON Domestic Insurance Company is liable to NPC. YES
At any rate, the plaintiff could never recover from both the principal
(Primateria Zurich) and its agents. It has been given judgment RATIO:
against the principal for the whole amount. It asked for such
judgment, and did not appeal from it. It clearly stated that its appeal 1. The invitation to bid issued by NPC provides that nonavailability of
concerned the other three defendants. a steamer to transport the sulfur is not a ground for non-payment of
There is no proof that, as agents, they exceeded the limits of their the liquidated damages in case of nonperformance. NAMERCO's
authority. own bid was even more explicity. True that the NY firm said that the
In fact, the principal — Primateria Zurich — who should be the one sale was subject to availability of a steamer but NAMERCO did not
to raise the point, never raised it, denied its liability on the ground disclose this to NPC.
of excess of authority.
At any rate, article 1897 does not hold that in cases of excess of 2. NAMERCO acted beyond the bounds of its authority because it
authority, both the agent and the principal are liable to the violated its principal's cabled instructions (1) that the delivery of
other contracting party. the sulfur should be C&F Manila and not C&F Iligan City; (2) that the
This view of the cause dispenses with the necessity of deciding the sale be subject to the availability of a steamer and (3) that the seller
other issues, namely: whether the agent of a foreign corporation should be allowed to withdraw right away the full amount of the
doing business, but not licensed here is personally liable for letter of credit and not merely 80% thereof.
contracts made by him in the name of such corporation. NAMERCO is liable for damages pursuant to CC1897 which
Although, the solution should not be difficult, since it was already provides that the agent who exceed the limits of his authority
held that such foreign corporation may be sued here (General without giving the party with whom he contracts sufficient
Corporation vs. Union Ins., 87 Phil. 509). notice of his powers is personally liable to such party. The NY
firm bluntly told NAMERCO that the latter was never
authorized to enter into the contract and that it acted contrary
1 Section 68 of the Corporation Law states: "No foreign corporation or to the repeated instructions of the former. Manresa says that
corporation formed, organized, or existing under any laws other than the agent who exceeds the limits of his authority is personally
those of the Philippines shall be permitted to transact business in the liable and the third person who contracts with the agent in
Philippines, until after it shall have obtained a license for that purpose such a case would be defrauded if he would not be allowed to
from the Securities and Exchange Commission .. ." And under Section 69, sue the agent.
"any officer or agent of the corporation or any person transacting
business for any foreign corporation not having the license prescribed 3. Article 1403 refers to the unenforceability of the contract against
shall be punished by imprisonment for etc. ... ." the principal. Here, the contract containing the stipulation is not
2 Art. 1897. The agent who acts as such is not personally liable to the being enforced against the principal but against the agent and its
party with whom he contracts, unless he expressly binds himself or surety. CC 1897 implies that the agent who acts in excess of his
exceeds the limits of his authority without giving such party sufficient authority is personally liable to the party with whom he contracted.
notice of his powers. CC 1898 does not apply as NPC was unaware of the limitations on
the powers granted by the NY firm to NAMERCO.
aj.amin.cha.janz.krizel.paco.vien.yen 5
A&P Compiled Digests No. 4
NAMERCO never disclosed to to NPC the cabled or written When the determination was communicated to defendant, it
instructions of its principal. For that reason and because protested. Money was the credited Welch’s account and interest
NAMERCO exceeded the limits of its authority, it virtually was even paid for the time the money was withheld.
acted in its own name and not as agent and it is, therefore Welch, Fairchild & Co. pointed out that it had acted throughout
bound by the contract of sale which, however is not merely in the capacity of agent for La Compania and was
enforceable against its principal. therefore not legally bound by the promise made by it in the
letter to the effect that the policy of insurance would be
4. It was NAMERCO that actually solicited the bond from the insurance delivered to PNB Manila by La Compania.
company and as earlier explained, NAMERCO is being held liable PNB made demands upon La Compania, but the latter claimed that
under the contract because it virtually acted in its own name. It it never received any policy of insurance upon the ship as it was
became the principal in the performance of the bond. The insurance insured in San Francisco by the agent in behalf of La Compania.
company acted as a surety for NAMERCO. Rule is that want of Because La Compania became insolvent, PNB made formal demand
authority of the person who executes an obligation as the agent or upon the defendant basing it on the letter that the defendant wrote.
representative of the principal will not as a general rule, affect the The defendant refused even if it had received the proceeds of the
surety's liability thereon, especially in the absence of fraud, even insurance way before.
though the obligation is not binding on the principal. It must be noted that the principal is indebted to the agent because
of repeated transactions which were the same as the one in this
case and that the proceeds of the insurance policy was not enough
NATIONAL BANK & WELCH FAIRCHILD to cover the entire debt.
44 PHIL 780
CHARACTERS: ISSUE/HELD:
PNB – plaintiff, lender of money WON PNB could collect from Welch, Fairchild & Co. YES.
Welch, Fairchild & Co. – defendant, owner of 325 shares of La
Compania, agent who borrowed money for the principal RATIO: (copy-paste)
La Compania Naviera Inc. – not a party in the case at bar, buyer of While it is true that an agent who acts for a revealed principal in the
the ship, principal making of a contract does not become personally bound to the other
Welch & Co. – correspondent of Welch, Fairchild & Co. in San party in the sense that an action can ordinarily be maintained upon
Francisco, USA such contract directly against the agent (art. 1725, Civ. Code), yet
Mr. Fairchild – president of Welch, Fairchild & Co. that rule clearly does not control this case; for even conceding that
Benito Juarez – the ship (oo, character siya :p) the obligation created by the letter of August 8, 1918, was directly
binding only on the principal, and that in law the agent may stand
FACTS: apart therefrom. yet it is manifest upon the simplest principles of
La Compania bought Benito Juarez. jurisprudence that one who has intervened in the making of a
It was through the efforts of Mr. Fairchild that the consent of the contract in the character of agent cannot be permitted to intercept
proper authorities in Washington, D.C. was obtained for the transfer and appropriate the thing which the principal is bound to deliver,
of the ship to Philippine registry. and thereby make performance by the principal impossible. The
While the ship was being delivered to the agent of the buyer in San agent in any event must be precluded from doing any positive act
Francisco (Welch & Co., I think), it was found out that it needed that could prevent performance on the part of his principal. This
repairs before it could be transported to the Philippines. It also much, ordinary good faith towards the other contracting party
became impracticable to deliver the bill of sale and insurance requires. The situation before us in effect is one where,
money to Anglo-London and Paris National Bank, PNB’s agent in notwithstanding the promise held out jointly by principal and agent
San Francisco which was supposed to deliver the purchase money in the letters of August 8 and 10, 1918, the two have conspired to
(Ignore the agency between PNB ang Anglo-London. Not the subject make an application of the proceeds of the insurance entirely
agency in this case.). contrary to the tenor of said letters. This cannot be permitted.
Because of this, defendant wrote a letter to PNB to request the latter The idea on which we here proceed can perhaps be made more
to cable Anglo-London to release the money and make payment for readily apprehensible from another point of view, which is this: By
the ship upon Welch &Co.’s application without requiring the virtue of the promise contained in the letter of August 8, 1918, the
delivery of the bill of sale or insurance policy. It was written in the bank became the equitable owner of the insurance effected on the
letter that “the Compania Naviera will deliver to you here the bill of Benito Juarez to the extent necessary to indemnify the bank for the
sale also the insurance policy covering the voyage to Manila”. money advanced by it, in reliance upon that promise, for the
La Compania also addressed a letter to PNB confirming the request purchase of said vessel; and this right of the bank must be respected
and authorizing the bank to send the necessary cablegram. by all persons having due notice thereof, and most of all by the
PNB sent the cablegram authorizing payment without the defendant which took out the insurance itself in the interest of the
production of the bill of sale or insurance policy. Anglo-London did, parties then concerned, including of course the bank. The defendant
and the ship was delivered. therefore cannot now be permitted to ignore the right of the bank
After the repair of the ship, it was insured by Welch & Co to the and appropriate the insurance to the prejudice of the bank, even
value of $150,000 and was dispatched on its voyage to the Phils. though the act be done with the consent of its principal.
The vessel encountered a storm off the Island in Hawaii and became As to the argument founded upon the delay of the bank in asserting
a total loss. its right to the insurance money, it is enough to say that mere delay
When the insurance was taken out to cover the voyage to Manila, no unaccompanied by acts sufficient to create an equitable estoppel
policy was issued by any insurer; but the insurance was placed by does not destroy legal rights, but such delay as occurred here is in
Welch & Co. of San Francisco, upon the instructions of Welch, part explained by the fact that the loan to La CompañÃa Naviera did
Fairchild & Co., as agents of the CompañÃa Naviera, and it was taken not mature till May 17, 1919, and a demand for the surrender of the
out in the ordinary course of business to protect the interests of all proceeds of the insurance before that date would have seemed
parties concerned. (copy-paste) premature. Besides, it is to be borne in mind that most of the
The risk was distributed among several companies, some in remote insurance was not in fact collected until in June of 1919. x x x the
centers; and it was many months before Welch & Co., of San bank was not slow in asserting its right to the remittance that came
Francisco, had collected the full amount due from the insurers. through the bank in June to Welch, Fairchild & Co., consisting of
However, as the money came to the hands of Welch & Co., of San $13,000 of the proceeds of this insurance.
Francisco, it was remitted by draft or telegraphic transfer to Welch,
Fairchild & Co. in Manila. (copy-paste)
The amount of $13,000 was mistakenly remitted to PNB in New TUAZON v. OROSCO
York, and it was only a month after this that PNB Manila received 5 PHIL 596
authority to pay defendant the said amount. This drew the attention
of the bank to the fact that the transfer was related to the proceeds FACTS:
of the insurance on Benito Juarez. PNB Manila first determined to Juan de VARGAS (OROZCO's husband) executed a power of attorney
intercept the transfer and withhold the credit from the defendant. to Enrique GRUPE, authorizing him, among other things, to dispose
aj.amin.cha.janz.krizel.paco.vien.yen 6
A&P Compiled Digests No. 4
of all his property, and particularly of a certain house and lot own benefit, and not incurred for the benefit of his principal,
located at Calle Nueva, Malate, Manila VARGAS this is UNTENABLE!3
GRUPE was also authorized to mortgage the house for the purpose In the first place, a debt incurred by the agent is binding
of securing the payment of any amount advanced by OROZCO who, directly upon the principal, provided the former acted
inasmuch as the house and lot belongs to the conjugal partnership, within the scope of his authority. (Art. 1727, Civil Code)
was a necessary party to its sale or encumbrance As can be gleaned from the facts presented above, it is clear
GRUPE later obtained a loan in the amount of P3,500 payable in one that GRUPE signed the debt agreement as attorney in fact for
(1) year from the plaintiff TUASON, secured by a mortgage on the VARGAS. The money was delivered to OROZCO and to secure
subject house and lot. In the caption of the instrument evidencing the payment of the debt, the house and lot was mortgaged
the debt, it appeared that GRUPE acted for himself and also in behalf all these acts by GRUPE are all in accord with instructions
of VARGAS (his principal). Meanwhile, OROZCO appeared for the contained in the power of attorney. He was merely acting on
purpose of complying with the requirement contained in the power the authority granted to him!
of attorney (i.e. to confirm/consent to the mortgage on the house Secondly, the fact that the agent GRUPE has also bound himself
and lot). Said instrument of debt was duly registered with the to pay the debt does not necessarily mean that he did so for his
Registry of Property own interest and not for the benefit of his principal. Such act
In the same instrument of debt, GRUPE declared: on the part of GRUPE, as a matter of fact, redounds to the
(1) that of the P3,500, he has delivered to OROZCO P2,200, benefit of VARGAS because GRUPE’s personal involvement in
retaining the remaining P1,300 for himself for use in his the payment of the debt served as an additional security
business; therefor. In effect, VARGA’s aim to secure the debt has been
(2) that he assumes liability for the whole sum of P3,500, which he practically assured because his creditor had more than
promises to repay in current gold or silver coin, without adequate securities for its payment
discount on the date of the maturity of the loan; The individual liability of the agent here merely
(3) that he shall likewise be liable for all expenses incurred and constitutes a further security (aside from the other
damages suffered by his creditor TUASON by reason of his material mortgages) in favor of the creditor and does not
failure to comply with any or all of the conditions stipulated; affect or preclude the liability of the principal. The law
(4) that he shall pay further interest at the rate of 1% per month does not provide that the agent can not bind himself
from the date of default until the debt is fully paid; and personally to the fulfillment of an obligation incurred by
(5) that he also pledges as special security for the payment of the him in the name and on behalf of his principal. On the
debt shares of stock in the "Compañia de los Tranvias de contrary, it provides that such act on the part of an agent
Filipinas," which shares he has delivered to TUASON duly would be valid. (Art. 1725, Civil Code)
indorsed so that the latter in case of his insolvency may
dispose of the same without any further formalities C. The Mortgage is very much valid and very much enforceable. In
OROZCO denied having received the sum of P2,200. She also other words, TUASON still has a claim in the house and lot even if it
repudiated the Deed of Mortgage executed over the subject house were admitted that GRUPE was the principal debtor
and lot. OROZCO principally argued that GRUPE was TUASON’s Having been duly recorded in the Register of Property, the
principal debtor, not VARGAS or herself. Hence, he should go after mortgage duly executed directly subjects the property thus
GRUPE’s property rather than foreclose the mortgaged house and encumbered, whoever its possessor may be, to the fulfillment
lot of the obligation for the security of which it was created. (Art.
Consequently, TUASON filed suit for recovery of the money 1876, Civil Code and Art. 105, Mortgage Law)
borrowed from him against OROZCO. Trial court sustained Based on the foregoing provisions of the Civil Code and the
TUASON’s complaint and ordered OROZCO to pay – hence, this Mortgage law, even if we assume that GRUPE did bound
appeal by OROZCO himself personally to pay the debt in question and that
VARGAS his principal in the agency was indeed not the
ISSUES: WON the mortgage over the house and lot is valid. WON OROZCO principal debtor, the right in rem arising from the mortgage
is liable to pay TUASON would still have justified the creditor TUASON in bringing his
action directly against the property encumbered irrespective
HELD: YES. YES. Trial court’s judgment is AFFIRMED. OROZCO is ordered of the personal liability incurred by GRUPE. The result would
to pay TUASON the sum of P2,200, together with interest thereon until be practically the same even if it were admitted that OROZCO's
the debt shall have been fully discharged, plus costs. contention is correct
RATIO: D. OROZCO further alleged that GRUPE pledged to TUASON his shares
A. OROZCO’s bare denial of ever receiving the P2,200 cannot overcome of stock in the "Compañia de los Tranvias de Filipinas" to secure the
the convincing proof to the contrary as presented by TUASON payment of the entire debt, and contended that it must be shown
(1) She was one of the parties to that debt instrument and signed what has become of these shares as the value of which might be
it this necessarily implies an admission on her part that the amply sufficient to pay the debt, before proceeding to foreclose the
statements in the agreement relating to her are true mortgage This contention CANNOT BE SUSTAINED
(2) She also personally intervened in the execution of the In view of the provisions of laws above quoted, TUASON has
mortgage and there she attested that the mortgage had been the right to proceed against the mortgaged property no matter
created with her knowledge and consent this furthers the what. But more importantly, it was incumbent upon OROZCO
assumption that she had received that amount and that for the to show that the debt had been paid with those shares.
purpose of securing its payment, the mortgage was executed Payment is not presumed but must be proved. It is a defense
(3) In addition, OROZCO also wrote TUASON’s attorneys which the defendant may interpose. It was therefore her duty
promising to pay the debt. She confirmed the authenticity of to show this fact affirmatively. She failed, however, to do so.
this letter! this puts beyond doubt the truth of her receiving
the money E. Finally, OROZCO contended that in order to render judgment
(4) 13 years had elapsed since she signed the mortgage deed. against the mortgaged property, it would be necessary that the
During all this time she never denied having received the minor children of VARGAS be made parties-defendant in this action,
money. The only explanation for this is that she actually they having an interest in the property this contention, again,
received the money as set forth in the debt instrument! MUST FAIL
*The fact that OROZCO received the money from her husband's agent and Under Art 154 of the Civil Code, which was in force at the time
not from the creditor directly does not affect the validity of the mortgage. of the death of VARGAS, OROZCO had the parental authority
Nowhere does it appear in the agency contract that the money loaned over her children and consequently the legal representation of
was to be delivered to her by the creditor himself and not through the their persons and property. It can not be said, therefore, that
agent or any other person. The important thing was that she should have they were not properly represented at the trial. Furthermore,
received the money
this action was brought against OROZCO in her capacity as when the terms are clear and leave no doubt as to the intention of
administratrix of the estate of the deceased VARGAS the contracting parties, contracts are to be interpreted according to
their literal meaning."
FINAL NOTE: VARGAS incurred his debt during the subsistence of his He was aware of the risk that his ticket could expire, as it did, before
marriage with OROZCO, thus, such debt should not be paid out of he returned to the Philippines. The 2 employees did not extend the
property belonging to OROZCO exclusively but must be borne by the validity of the ticket. Both had no authority to do so. Cervantes
conjugal partnership. This fact should be borne in mind in case the knew this from the very start when he called up the Legal
proceeds of the mortgaged property be not sufficient to allay the debt Department of PAL in the Philippines before he left for US. He knew
and interest thereon. The judgment of the court below should be that to secure an extension, he would have to file a written request
modified in so far as it holds the OROZCO personally liable for the for extension at the PAL's office in the Philippines. Despite this
payment of the debt. knowledge, Cervantes persisted to use the ticket in question.
Since the PAL agents are not privy to the said Agreement and
Cervantes knew that a written request to the legal counsel of PAL
CERVANTES v. CA was necessary, he cannot use what the PAL agents did to his
304 SCRA 25 advantage. The said agents acted without authority when they
confirmed the flights of the petitioner.
FACTS:
Philippines Air Lines, Inc. (PAL), issued to Nicholas Cervantes, a (2) Notwithstanding PAL's failure to raise the defense of lack of
round trip plane ticket for Manila-Honolulu-Los Angeles-Honolulu- authority of the said PAL agents in its answer or in a motion to
Manila, which ticket expressly provided an expiry of date of 1 year dismiss, the omission was cured since the said issue was litigated
from issuance (until March 27, 1990). The issuance of the said plane upon, as shown by the testimony of Cervantes in the course of trial.
ticket was in compliance with a Compromise Agreement entered Cervantes - the defense of lack of authority on the part of the PAL
into between the contending parties in 2 previous suits before the employees was deemed waived under Rule 9, Section 2 of the
RTC in Surigao City. Revised Rules of Court. The lack of authority of the PAL employees
4 days before the expiry date of subject ticket, Cervantes used it. was neither raised in the answer nor in the motion to dismiss.
Upon his arrival in LA on the same day, he immediately booked his The question of whether there was authority on the part of the PAL
LA-Manila return ticket with the PAL office, and it was confirmed employees was acted upon by the trial court when was presented as
for the April 2, 1990 flight. a witness and the depositions of the PAL employees, Georgina M.
Upon learning that the same PAL plane would make a stop-over in Reyes and Ruth Villanueva, were presented.
San Francisco, Cervantes made arrangements with PAL for him to
board the flight In San Francisco instead of boarding in Las Angeles. (3) In awarding moral damages for breach of contract of carriage, the
On April 2, 1990, when Cervantes checked in at the PAL counter in breach must be wanton and deliberately injurious or the one
San Francisco, he was not allowed to board. The PAL personnel responsible acted fraudulently or with malice or bad faith.
concerned marked the following notation on his ticket: "TICKET Cervantes knew there was a strong possibility that he could not use
NOT ACCEPTED DUE EXPIRATION OF VALIDITY." the subject ticket, so much so that he bought a back-up ticket to
Cervantes filed a Complaint for Damages, for breach of contract of ensure his departure. Should there be a finding of bad faith, we are
carriage RTC in Surigao City. But the said complaint was dismissed of the opinion that it should be on Cervantes. What the employees of
for lack of merit. PAL did was one of simple negligence
Cervantes interposed an appeal to the CA – affirmed RTC. Neither can the claim for exemplary damages be upheld. Such kind
of damages is imposed by way of example or correction for the
ISSUES: public good, and the existence of bad faith is established. The
(1) WON the act of the PAL agents in confirming subject ticket wrongful act must be accompanied by bad faith, and an award of
extended the period of validity of Cervantes' ticket. NO damages would be allowed only if the guilty party acted in a
(2) WON the defense of lack of authority was correctly ruled upon. YES wanton, fraudulent, reckless or malevolent manner. There is no
(3) WON the denial of the award for damages was proper. YES showing that PAL acted in such a manner. An award for attorney's
fees is also improper.
RATIO:
The Petition is DENIED and the decision of the Court of Appeals AFFIRMED
(1) Under Art. 1989, the acts an agent beyond the scope of his authority in toto.
do not bind the principal, unless the latter ratifies the same
expressly or impliedly. Furthermore, when the 3rd person
(Cervantes) knows that the agent was acting beyond his power or SMITH BELL v. SOTELO
authority, the principal cannot be held liable for the acts of the 44 PHIL 874
agent. If the said 3rd person is aware of such limits of authority, he is *from ADAPT 2009
to blame, and is not entitled to recover damages from the agent,
unless the latter undertook to secure the principal's ratification. FACTS:
Cervantes - the confirmation by the PAL's agents in Los Angeles and On August 1918, Smith, Bell and Co. (Company), and Vicente Sotelo
San Francisco changed the compromise agreement between the (Sotelo), entered into a contract where the Company obligated itself
parties. to sell and Sotelo to buy 2 steel tanks (P21,000 total), 2 expellers
The plane ticket itself provides that it is not valid after March 27, (P25,000 each), and two electric motors (P2,000 each). With
1990. It is also stipulated in paragraph 8 of the Conditions of respect to delivery dates, the stipulations were:
Contract4. 2 tanks Within 3 or 4 mos., no obligation on the
Lufthansa vs. Court of Appeals - the Tolentinos were issued first Company’s part
class tickets on April 3, 1982, which will be valid until April 10, 2 expellers September 1918 or as soon as possible
1983. On June 10, 1982, they changed their accommodations to 2 electric motors Within 90 days, not guaranteed
economy class but the replacement tickets still contained the same
restriction. On May 7, 1983, Tolentino requested that subject tickets Arrival dates:
be extended, which request was refused by the petitioner on the
ground that the said tickets had already expired. The non-extension 2 tanks April 27, 1919 (8 mos. after signing)
of their tickets prompted the Tolentinos to bring a complaint for 2 expellers October 26, 1918 (1 mo. “late”)
breach of contract of carriage against the petitioner. In ruling 2 electric motors February 27, 1919 (3 mos. “late”)
against the award of damages, the Court held that the "ticket
constitute the contract between the parties. It is axiomatic that Sotelo refused to receive and pay. The Company sued him. Sotelo
countered that the deliveries were late and made counterclaims
against the Company. The lower court absolved Sotelo with regards
4 8. This ticket is good for carriage for one year from date of issue, except to the tanks and the motors, but ordered him to receive and pay for
as otherwise provided in this ticket, in carrier's tariffs, conditions of the expellers. Both parties appealed.
carriage, or related regulations. The fare for carriage hereunder is subject
to change prior to commencement of carriage. Carrier may refuse Issue: WON the Company has fulfilled its obligation to deliver in due
transportation if the applicable fare has not been paid. time.
aj.amin.cha.janz.krizel.paco.vien.yen 8
A&P Compiled Digests No. 4
defendant NGA and defendant Medalla who did not disclose that he attachment - the filing of a bond - was not fulfilled, so it cannot be
was acting as a mere agent of plaintiff . said that the injunction was superseded).
Thereupon NGA paid defendant Medalla the sum of P25,974.90, for Jimena and Tolentino died successively during the pendency of the
freight services in connection with the shipment of 8,550 sacks of case in the trial court and were, accordingly, substituted by their
rice. respective widows and children.
SSC wrote defendant Medalla demanding that he turn over to CFI decided in favor of Victor Jimena’s heirs, declaring among
plaintiff the amount of P27,000.00 paid to him by NFA (ewan ko others that they be entitled to half of the shares of the royalties of
bakit naging F ang G bigla, di sinabi, hahaha). Lincallo in his contracts with Gold Star, Marinduque Iron Mines and
Medalla, however, "ignored the demand." Alejandro Marquez, that both mining companies pay directly to the
Plaintiff was therefore constrained to file the instant complaint former half of the shares of the royalties until said contracts were
against NFA terminated, that Lincallo pay the heirs the capital Victor Jimena
LOWER COURT: in favor of the SSC. NFA and Gil Medalla are jointly gave him to purchase the mining claims and the latter’s shares with
and severally liable to pay SSC. interest, and that Gold Star Mining Co., Inc. pay them the sum of
CA: affirmed the judgment of the lower court P30,691.92 solidarily with Ananias Isaac Lincallo for violation of an
injunction.
ISSUE: WON NFA is liable noting the general rule provided for in Art. The defendants appealed to the CA, which affirmed CFI Manila’s
1883 of the Civil Code of the Philippines- YES decision.
purchase price was not received on Monday afternoon. There was a of the plaintiff company's agent before any attempt was made to
letter regarding the cancellation. revoke his agency. It follows that Barretto's right to enforce the
agreement to sell was in no wise affected by the attempt of the
ISSUE/HELD: WON Macondray is entitled to damages from Sellner for plaintiff company to "cancel" the agreement; and that the plaintiff
selling the land to BArretto for and on behalf of MAcondray after Sellner’s company suffered no damage by the consummation of the
authority had been revoked? No. agreement by the acceptance of the stipulated purchase price by the
defendant real estate agent.
RATIO: (copy-paste)
From the very nature of the transaction it was understood that the DANON v. BRIM & CO.
purchaser should have a reasonable time in which to examine the 42 PHIL 133
deed of transfer and the other documents of title, and that
defendant exercising an authority impliedly if not expressly FACTS:
conferred upon him, gave the purchaser a reasonable time in which Antonio A. Brimo, manager of BRIMO & CO, in a conversation with
to satisfy himself as to the legality and correctness of the documents Julio DANON, informed the latter that he (BRIMO) desired to sell his
of title. That the company through its manager Young, acquiesced in factory, the Holland American Oil Co., for the sum of P1.2M
and ratified what had been done by defendant in this regard when, BRIMO agreed and promised to pay DANON a commission of 5% of the
with full knowledge of all the facts, Young advised the defendant, stipulated price provided the latter could sell said factory for that
during Barretto's absence in Tayabas, that the deal must be closed amount. No definite period of time was fixed within which DANON
up without delay on Barretto's return to Manila. should effect the sale
No reason appears, nor had any reason been assigned for the Meanwhile, another broker, a certain SELLNER, was also negotiating
demand by the plaintiff company for the delivery of the purchase the sale of the same factory for BRIMO. The records are not clear but it
price at the hour specified under threat in the event of failure to appears that DANON was aware that he was not alone as broker. The
make payment at that hour it would decline to carry out the records seem to point that DANON exerted earnest effort to forestall
agreement, other than that the manager of the plaintiff company his competitor by being the first to find a purchaser and effect the sale
had been annoyed by the delays which occurred during the earlier In time, DANON found a willing purchaser. It appears that after having
stage of the negotiations, and had changed his mind as to the the conversation with BRIMO, DANON went to see Mauro PRIETO,
desirability of making the sale at the price agreed upon, either president of the STA ANA Oil Mill, and offered to sell to him BRIMO’s
because he believed that he could get a better price elsewhere, or property at P1.2M
that the land was worth more to his company than the price he had
STA ANA was at that time in need of such a factory. As such, PRIETO,
agreed to take for it.
its president, eagerly expressed interest in DANON’s offer. PRIETO
The commission agreed upon was all over P17,175 which the
immediately sought to ascertain whether BRIMO really wanted to sell
defendant could secure from the property, and it is clear that
said factory, and after getting such confirmation from BRIMO, sought
allowing the defendant this commission, and offsetting it against the
also to inspect the factory (which he did)
unpaid balance of the market value of the land, the plaintiff
PRIETO then set for an appointment with BRIMO to perfect the
company is not entitled to a money judgment against defendant.
negotiation. However, such appointment never pushed through
(kasi dapat yung damages Is yung actual market value daw)
because at that time, the other broker, SELLNER, had already found a
We do not mean to question the general doctrine as to the
purchaser for the same property who ultimately bought it for P1.3M
power of a principal to revoke the authority of his agent at will,
DANON filed the instant case to recover the sum of P60,000, alleged to
in the absence of a contract fixing the duration of the agency
be the value of services rendered by him to BRIMO as a broker
(subject, however, to some well defined exceptions). Our ruling
is that at the time fixed by the manager of the plaintiff company DANON claimed that as compensation for his services, a commission of
for the termination of the negotiations, the defendant real 5% on the said sum of P1.2M (P60,000) was promised to him by
estate agent had already earned the commissions agreed upon, BRIMO if the sale was consummated OR even if he should merely find a
and could not be deprived thereof by the arbitrary action of the purchaser ready, able and willing to buy said factory for the stipulated
plaintiff company in declining to execute the contract of sale price
for some reason personal to itself. DANON averred that BRIMO refused to sell the said factory without
any justifiable motive or reason and without having previously
The business of a real estate broker or agent, generally, is only to notifying DANON of its desistance or variation in the price and terms
find a purchaser, and the settled rule as stated by the courts is that, of the sale
in the absence of an express contract between the broker and his To that complaint the BRIMO interposed a general denial
principal, the implication generally is that the broker becomes The trial court ruled in favor of DANON and ordered BRIMO to pay the
entitled to the usual commissions whenever he brings to his sum prayed for plus costs – hence this petition by BRIMO
principal a party who is able and willing to take the property and
enter into a valid contract upon the terms then named by the ISSUE: WON DANON is entitled to recover the sum of P60,000 as
principal, although the particulars may be arranged and the matter compensation for his “services”
negotiated and completed between the principal and the purchaser
directly. (Lunney vs Harley) HELD: NO. The judgment appealed from is hereby revoked and BRIMO is
The rights of a real estate broker to be protected against the hereby absolved from all liability under the DANON’s complaint
arbitrary revocation of his agency, without remuneration for
services rendered in finding a suitable purchaser prior to the RATIO:
revocation, are clearly and forcefully stated in the following citation Note that DANON's action here is not one for damages for breach of
form the opinion in the case of Blumenthal vs. Goodall (89 Cal., 251). contract; it is an action to recover "the reasonable value" of services
The only reasons assigned for the sudden and arbitrary demand for rendered. Hence, to determine whether DANON is entitled to recover
the payment of the purchase price which was made with the the commission agreed upon, the pivotal question to be resolved is
manifest hope that it would defeat the agent's deal with Barretto, whether DANON had performed all that was required of him under his
are that the plaintiff company's manager had become satisfied that contract with BRIMO
the land was worth more than he had agreed to accept for it; and As can be gleaned from the facts, the most that can be said as to what
that he was piqued and annoyed at the delays which marked the DANON had accomplished is that he had found a person (STA ANA Oil
earlier stages of the negotiations. Mill) who MIGHT have bought the subject factory had BRIMO not sold
Time does not appear to have been of the essence of the contract. it to someone else
The agreement to sell was made without any express stipulation as However, even this point is dubious as the evidence does not show
to the time within which the purchase price was to be paid. that the STA ANA had definitely decided to buy the property in
Under all the circumstances surrounding the transaction in the case question at the price of P1.2M. The board of directors of STA ANA had
at bar, as they appear from the evidence of record, we have no not resolved to purchase said property; and even if its president,
hesitation in holding that the plaintiff company's letter of PRIETO, could legally make the purchase without board authorization,
September 2, 1912 demanding payment before five o'clock of the yet PRIETO himself did not pretend that he had definitely agreed to
afternoon of that day, under penalty of the cancellation of its buy the factory on behalf of his corporation at the price stated
agreement to sell, was an arbitrary unreasonable attempt to deny to It must be emphasized the DANON himself (in his complaint and
the purchaser the reasonable opportunity to inspect the documents testimony in open court) admitted that BRIMO agreed to pay him a
of title, to which he was entitled by virtue of the express agreement commission of 5% provided he could sell the factory at P1.2M
aj.amin.cha.janz.krizel.paco.vien.yen 12
A&P Compiled Digests No. 4
Agent not entitled to commission because it was not the efficient copy thereof. All they gave this court is their word that said Letter
procuring cause in bringing about the sale. There was no participation in dated October 28, 1976 does exist, and on that basis, they expect us
the critical events leading to the sale – negotiations, finalization of terms to accordingly rule in their favor.
and conditions, drafting of the deed, processing of documents, etc. o hypothetically assuming its existence, its alleged content, namely, a
listing of four (4) other prospective buyers, does not at all prove
that the agency contract and authority to sell in favor of
Facts: petitioners was renewed or revived after it expired on January
1, 1976.
September 16, 1975: Defendant corporation thru its co-defendant [AGENCY-RELATED RATIO]
Assistant General Manager J. Armando Eduque, granted to plaintiffs a o Petitioners did not succeed in outrightly selling said shares under
30-day authority to sell its . . . 9,800 shares of stock in Architects' the predetermined terms and conditions set out by Araneta, Inc.
Bldg., Inc. as follows: They admit that they could not dissuade Stanford from haggling
Plaintiff Inland Realty Investment Service, Inc. planned their sales for a lower price. From September 16, 1975 to January 1,
campaign, sending proposal letters to prospective buyers. One such 1976, when petitioners' authority to sell was subsisting, if at
prospective buyer to whom a proposal letter was sent to was all, petitioners had nothing to show that they actively served
Stanford Microsystems, Inc. . . . [that] counter-proposed to buy their principal's interests,
9,800 shares offered at P1,000.00 per share or for a total of o The Court of Appeals cannot be faulted for emphasizing the lapse
P9,800,000.00, P4,900,000.00 payable in five years at 12% per of more than one (1) year and five (5) months between the
annum interest until fully paid. expiration of petitioners' authority to sell and the consummation
of the sale to Stanford, to be a significant index of petitioners'
Upon plaintiffs' receipt of the said counter-proposal, it immediately
non-participation in the really critical events leading to the
[sic] wrote defendant a letter to register Stanford Microsystems, Inc. as
consummation of said sale, i.e., the negotiations to convince
one of its prospective buyers
Stanford to sell at Araneta, Inc.'s asking price, the finalization of
Defendant Araneta, Inc., thru its Assistant General Manager J.
the terms and conditions of the sale, the drafting of the deed of
Armando Eduque, replied that the price offered by Stanford was
sale, the processing of pertinent documents, and the delivery of
too low and suggested that plaintiffs see if the price and terms of
the shares of stock to Stanford. Certainly, the lapse of the period
payment can be improved upon by Stanford
of more than one (1) year and five (5) months between the
Other prospective buyers were submitted to defendants among whom
expiration of petitioners' authority to sell and the consummation
were Atty. Maximo F. Belmonte and Mr. Joselito Hernandez.
of the sale, is viewed in the context of the utter lack of evidence of
The authority to sell given to plaintiffs by defendants was petitioners' involvement in the negotiations between Araneta,
extended several times: the first being on October 2, 1975, for 30
Inc. and Stanford during that period and in the subsequent
days from said date, the second on October 28, 1975 for 30 days from
processing of the documents pertinent to said sale.
said date, and on December 2, 1975 for 30 days from said date. [SO
THE AUTHORITY TO SELL EXPIRED ON JANUARY 1976]
De los Reyes [co-plaintiff] testified that when his company was initially
granted the authority to sell, he asked for an exclusive authority and
for a longer period but Armando Eduque would not give, but he
argues that the life of the authority could always be extended for
the purpose of negotiation that would be continuing.
On July 8, 1977, plaintiffs finally sold the 9,800 shares of stock INFANTE v. CUNANAN
[in] Architects' [Bldg.], Inc. to Stanford Microsystems, Inc. for 93 PHIL 691
P13,500,000.00
On September 6, 1977, plaintiffs demanded formally [from] Quick facts: Principal terminated agency after referral of a buyer,
defendants, through a letter of demand, for payment of their 5% allegedly because of change of mind, but subsequently transacted directly
broker['s] commission at P13,500,000.00 or a total amount of with the proposed buyer
P675,000.00 . . . which was declined by [defendants] on the ground
that the claim has no factual or legal basis. FACTS:
Consejo Infante (owner of the lands) contracted the services of Jose
Cunanan and Juan Mijares, plaintiff herein, to sell the above-
TRIAL COURT: DISMISSED THE COLLECTION COMPLAINT
mentioned property for a price of P30,000 subject to the condition
that the purchaser would assume the mortgage existing thereon in
After their authority to sell expired thirty (30) days from December 2, the favor of the Rehabilitation Finance Corporation.
1975, or on January 1, 1976, petitioners abandoned the sales She agreed to pay them a commission of 5 per cent on the purchase
transaction and were no longer privy to the consummation and price plus whatever overprice they may obtain for the property.
documentation thereof, the trial court dismissed petitioners' Plaintiffs found one Pio S. Noche who was willing to buy the
complaint for collection of unpaid broker's commission. property under the terms agreed upon with defendant, but when
they introduced him to defendant, the latter informed them that she
was no longer interested in selling the property and succeeded in
COURT OF APPEALS: Affirmed TC
making them sign a document stating therein that the written
authority she had given them was already can-celled.
Hence, this appeal. defendant dealt directly with Pio S. Noche selling to him the
property for P31,000.
Upon learning this transaction, plaintiffs demanded from defendant
Issue: W/N the petitioners, regardless of whether or not their agency
the payment of their commission, but she refused and so they
contract and authority to sell had expired, they are automatically entitled
brought the present action.
to their broker's commission merely upon securing for and introducing
Argument of petitioner: authority has already been withdrawn on
to private respondent Araneta, Inc. the buyer in the person of Stanford
November 30, 1948 when, by the voluntary act of respondents, they
which ultimately acquired ownership over Araneta, Inc.'s 9,800 shares in
executed a document stating that said authority shall be considered
Architects'
cancelled and without any effect, so that when petitioner sold the
property to Pio S. Noche on December 20, 1948, she was already
Held/Ratio: NO. free from her commitment with respondents and, therefore, was
not in duty bound to pay them any commission for the transaction.
Argument of respondents: while they agreed to cancel the written
[PROCEDURAL EK-EK.] Petitioners’s contention # 1: the Letter dated authority given to them, they did so merely upon the verbal
October 28, 1976, Gregorio Araneta III, in behalf of Araneta, Inc.,
assurance given by petitioner that, should the property be sold to
renewed petitioner Inland Realty's authority to act as agent to sell the
their own buyer, Pio S. Noche, they would be given the commission
former's 9,800 shares in Architects' for another thirty (30) days from
agreed upon.
same date.
o This claim is a blatant lie. In the first place, petitioners have
ISSUE: WON respondents are entitled to the commission originally
conspicuously failed to attach a certified copy of this Letter dated
agreed upon
October 28, 1976. They have, in fact, not attached even a machine
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A&P Compiled Digests No. 4
CA: reversed the judgment of the lower court and dismissed the sale to the eventual buyer, sending follow-up letters, inviting
complaint. The motion for reconsideration filed by petitioner was the buyer to dinner and luncheon meetings, etc.
also subsequently denied.
Under the foregoing disquisition and following the precedent, as
PROCEDURAL ISSUE : WON the case for certiorari lies- NO well as roughly the proportion, set in Prats, the Court in equity
The rule is that in petitions for certiorari as a mode of appeal, only grants petitioner the sum of One Hundred Thousand Pesos
questions of law distinctly set forth may be raised. Such questions (Pl00,000.00) for the role it played in the transaction between
have been defined as those that do not call for any examination of respondent DBP and buyer Glaxo, Philippines. It is emphasized,
the probative value of the evidence presented by the parties. however, that the circumstances that came into play in this case do
Petitioner's singular assignment of error would, however, have this not meet the minimum legal standards required for the existence of
Court go over the facts of this case because it necessarily involves an agency relationship and that the award is based purely on equity
the examination of the evidence and its subsequent reevaluation. considerations.
Under the present proceeding, the same, therefore, cannot be done.
It bears emphasizing that mere disagreement between the Court of DOMINGO v. DOMINGO
Appeals and the trial court as to the facts of a case does not of itself 42 SCRA 131
warrant this Court's review of the same.
FACTS:
Vicente granted Gregorio exclusive agency to sell lot for P2 per
AGENCY ISSUE: WON Uniland can recover from DBP the 5% broker’s square meter. 5% commission was to be granted to Gregorio is
fee? NO Vicente sells the property during the period of agency or if the
It is obvious that petitioner was never able to secure the required property is sold by Vicente within three months from the
accreditation from respondent DBP to transact business on behalf of termination of the agency to a purchaser to whom it was submitted
the latter. by Gregorio during the continuance of the agency with notice ot
The letters sent by petitioner to the higher officers of the DBP and Vicente. Gregorio authorized Purisima to look for a buyer with the
the APT are merely indicative of petitioner's desire to secure such agreement that Purisima will get half of the 5% commission.
accreditation. Purisima introduced Oscar de Leon to Gregorio as a prospective
At best these missives are self-serving; the most that they prove is buyer.
that they were sent by petitioner and received by respondent DBP, Written offer of De Leon was really low but subsequent conferences
which clearly never agreed to be bound thereto. between De Leon and Gregorio led to the 109K purchase price
As declared by the trial court even when it found in favor of which Vicente agreed to. De Leon issued 1K as earnest money.
petitioner, there was no express reply from the DBP or the APT as Vicente advanced to Gregorio 300 as part of his commission. When
to the accreditation sought by petitioner. De Leon confirmed his former offer to pay, Vicente asked for an
additional 1000 which De Leon promised to give.
RE: Implied agency noting Article 1869 of the new Civil Code It was agreed that de Leon will vacate his house in September as his
UNILAND argues that it "should have been stopped, house is part of the purchase price. It was later moved to December
disauthorized and outrightly prevented from dealing by the as de Leon's wife was pregnant. It was also agreed that Vicente
DBP from the inception." On the contrary, these steps were could stay in the property until June 1956.
never necessary. Pursuant to his promise to Gregorio, Oscar gave him as a gift or
In the course of petitioner's dealings with the DBP, it was propina P1000 for succeeding in persuading Vicente to sell his lot at
always made clear to petitioner that only accredited brokers P1.20 per square meter or a total of 109K. This gift was not
may look for buyers on behalf of respondent DBP. This is not a disclosed by Gregorio to Vicente. Neither did Oscar pay Vicente
situation wherein a third party was prejudiced by the refusal the additional 1000 by way of earnest money.
of respondent DBP to recognize petitioner as its broker. When the Deed of Sale was not executed as stipulated in Oscar's
The controversy is only between the DBP and petitioner, to offer to pay, Oscar told Gregorio that he was giving up negotiations.
whom it was emphasized in no uncertain terms that the Vicente tore the Contract of Agency when Gregorio came to claim
arrangement sought did not exist. Article 1869, therefore, has the 5% commission he was entitled to receive. Gregorio was not
no room for operation in this case. worried as he still had a duplicate copy. Gregorio later found out
that Vicente proceeded with the sale, not with Oscar but his wife
RE: Formality of accreditation as merely a mechanical act Amparo. Vicente apparently told Oscar to eliminate Gregorio in the
The need for accreditation, result from the evolution of sound transaction and the former would lower the price to 104K.
business practices for the protection and benefit of all parties Vicente claims that Gregorio is not entitled to the 5% commission
concerned. They are designed and adopted specifically to because he sold the property not to Gregorio's buyer, Oscar but to
prevent the occurrence of situations similar to that obtaining another buyer, Amparo.
in this case. TC and CA ordered Vicente to pay. CA found that there was a C of
More importantly, petitioner's stance goes against the basic agency. J. Esguerra in his concurring opinion found that there was
axiom in Civil Law that no one may contract in the name of no fraud on the part of the broker as it was merely part of the whole
another without being authorized by the latter, unless the process of bringing about the meeting of the minds of the seller and
former has by law a right to represent him. From this the buyer. J. Gatmaitan held the view that such an act on the part of
principle, among others, springs the relationship of agency Gregorio was fraudulent and constituted a breach of trust, which
which, as with other contracts, is one founded on mutual should deprive him of his right to the commission.
consent: the principal agrees to be bound by the acts of the
agent and the latter in turn consents to render service on ISSUES:
behalf or in representation of the principal. 1. WON the failure on the part of Gregorio to disclose to Vicente the
payment to him by Oscar of the 1K as gift or propina constitutes
RE: Considerations of Equity fraud as to cause the forfeiture of his 5% commission on the sale
While not actively involved in the actual bidding and transfer price. YES
of ownership of the warehouse property, petitioner may be 2. WON Gregorio or Vicente should be liable directly to the intervenor
said to have initiated, albeit without proper authority, the Purisima for the latter's share in the expected commission of
transaction that eventually took place. Gregorio by reason of the sale. GREGORIO
In Prats v. Court of Appeals, there was a finding that the
petitioner therein as the agent was no longer the efficient RATIO:
procuring cause in bringing about the sale proceeding from the 1. Articles 1891 and 1909 of the NCC demand the utmost good faith,
fact of expiration of his exclusive authority. There was fidelity, honesty, candor and fairness on the part of the agent, the
therefore no basis in law to grant the relief sought. real estate broker in this case, to his principal, the vendor. The law
Nevertheless, this Court in equity granted the sum of imposes upon the agent the absolute obligation to make a full
P100,000.00, out of the P1,380,000.00 claimed as commission, disclosure or complete account to his principal of all his
by way of compensation for the efforts and assistance transactions and other material facts relevant to the agency. The
rendered by the agent in the transaction prior to the duty of the agent is likened to that of a trustee.
expiration of his authority. These consist in offering the lot for An agent who takes a secret profit in the nature of a bonus,
gratuity, or personal benefit from the vendee, without
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