ORIENT AIR SERVICES & HOTEL REPRESENTATIVES vs.
COURT OF APPEALS It is a well settled principle that in the interpretation of a contract, the entirety thereof must
(197 SCRA 645)
FACTS:
American Airlines, inc, an air carrier offering passenger and air cargo transportation in the
Phils, and Orient Air Services and Hotel Representatives entered into a General Sales Agency
Agreement whereby the former authorized the latter to act as its exclusive general sales
agent within the Phils for the sale of air passenger transportation
Some of the pertinent provisions are:
Orient Air Services shall perform these services:
a. solict and promote passenger traffic for the services of American and if necessary, employ
staff competen and sufficient to do so
b. provide and maintain a suitable area in its place of business to be used exclusively for the
transaction of the business of American
c. arrange for distribution of American’s timetables, tariffs and promotional material to sales
agents nad the general public in the assigned territory
d. service and supervise sales agents in the assigned territory including if required by
American the control of remittances and commissions retained
e. hold out a passenger reservation facility to sales agents and general public in the assigned
territory
Alleging that Orient Air had reneged on its obligations under the Agreement by failing to
remit the net proceeds of sale in the amount of US $ 254,400, American Air by itself
undertook the collection of the proceeds of tickets sold originally by Orient Air and
terminated forthwith the Agreement
American Air instituted suit against Orient Air for Accounting with Preliminary Attachment or
Garnishment, Mandatory Injunction and Restraining Order averring the basis for the
termination of the Agreement as well as Orient Air’s previous record of failures “to promptly
settle past outstanding refunds of which there were available funds in the possession of the
Orient Air to the damage and prejudice of American Air
TC ruled in favor of Orient Air to which the Intermediate Appelalate Court (now CA) affirmed
TC’s decision with modifications with respect to monetary awards granted.
ISSUE:
W/N Orient Air is entitled to the 3% overriding commission
HELD:
Yes
be taken into consideration to ascertain the meaning of its provisions. The various
stipulations in the contract must be read together to give effect to all. The Agreement, when
interpreted in accordance with the foregoing principles, entitles Orient Air to the 3%
overriding commission based on total revenue or as referred to by the parties, “total flown
revenues”.
As the designated General Sales Agent of American Air, Orient Air was responsible for the
promotion and marketing of American Air’s services for air passenger transportation and the
solicitation of sales therefor. In return for such efforts and services, Orient Air was to be paid
commissions of 2 kinds: first, a sales agency commission, ranging from 7 to 8% of tariff fares
and charges from sales by Orient Air when made on American Air ticket stock; and second, an
overriding commission of 3% of tariff fares and charges for all sales of passenger
transportation over American Air services.
The second type of commissions would accrue for sales of American Air services made not on
its ticket stocket but on the ticket stock of other air carriers sold by such carriers or other
authorized ticketing facilities or travel agents.
In addition, it is clear from the records that American Air was the party responsible for the
preparation of the Agreement. Consequently, any ambiguity in this “contract of adhesion” is
to be taken “contra proferentem” –construed against the party who cause the ambiguity and
could have avoided it by the exercise of a little more care.
RALLOS vs. FELIX GO CHAN & SONS REALTY CORP.
(18 SCRA 251)
FACTS:
Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land
known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of
Title No. 11116 of the Registry of Cebu.They executed a special power of attorney in favor of
their brother, Simeon Rallos, authorizing him to sell such land for and in their behalf. After
Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. New TCTs
were issued to the latter. Petitioner Ramon Rallos, administrator of the Intestate Estate of
Concepcion filed a complaint praying (1) that the sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be unenforceable, and said share be reconveyed to her estate;
(2) that the Certificate of ‘title issued in the name of Felix Go Chan & Sons Realty Corporation
be cancelled and another title be issuedin the names of the corporation and the “Intestate
estate of Concepcion Rallos” in equal undivided and (3) that plaintiff be indemnified by way
of attorney’s fees and payment of costs of suit.
ISSUES:
1) WON sale was valid although it was executed after the death of the principal,
Concepcion.
2) WON sale fell within the exception to the general rule that death extinguishes the
authority of the agent
3) WON agent’s knowledge of the principal’s death is a material factor.
 4) WON petitioner must suffer the consequence of failing to annotate a notice of
death in the title (thus there was good faith on the part of the Respondent vendee)

HELD:
CFI: Sale of land was null and void insofar as the one-half pro-indiviso share of Concepcion
Rallos Ordered the issuance of new TCTs to respondent corporation and the estate of
Concepcion in theproportion of ½ share each pro-indiviso and the payment of attorney’s fees
and cost of litigation Respondent filed cross claim against Simon Rallos(*Simon and Gerundia
died during pendency of case) juan T. Borromeo, administrator of the Estate of Simeon Rallos
was ordered to pay defendant the price of the ½ share of the land (P5,343.45) plus attorney’s
fees [Borromeo filed a third party complaint against Josefina Rallos, special administratrix of
the Estate of Gerundia] Dismissed without prejudice to filing either a complaint against the
regular administrator of the Estate of Gerundia Rallos or a claim in the Intestate-Estate of
Cerundia Rallos, covering the same subject-matter

CA: CFI Decision reversed, upheld the sale of Concepcion’s share.MR: denied.innocent
purchaser for a value of a land.

AIR FRANCE vs. COURT OF APPEALS

(126 SCRA 448)

SANTOS vs. BUENCONSEJO

(14 SCRA 407)

FACTS:
Lot- originally owned in common by Anatolio Buenconsejo (1/2) and Lorenzo and Santiago
Bon (1/2)
 Anatolio’s rights, interests and participation over the portion of the said lot was transferred
and conveyed to Atty. Tecla San Andres Ziga –awardee in an auction sale (decision in juvenile
delinquency and domestic relations court)
 By virtue of Certificate of redemption- rights, interests, claim and/or participation of Atty
Ziga were transferred and conveyed to petitioner(Santos) in his capacity as attorney-in-fact of
the children of Anatolio
 It would appear that petitioner Santos had redeemed the aforementioned share of Anatolio
, upon the authority of a special power ofattorney (SPA) executed in his favor by the children
of Anatolio
 Santos now claims to have acquired the share of Anatolio in the said lot – caused a
subdivision plan- he wants said to segregate his allegedshare in the lot and a TCT issued in his
name
ISSUE:
WON Santos can claim ownership over the said portion of the lo
HELD:
NO.
Said SPA athorized him to act on behalf of the children of Anatolio, hence, it could not have
possibly vested in him any property right inhis own name
 Children of Anatolio had no authotity to execute said power of attorney, because Anatolio
is still alive, in fact he opposed the petition ofSantos
 Assuming SPA-valid, Santos could have acquired no more than the share pro-indiviso of
Anatolio so that he cannot, without theconformity of the other co-owners, or a judicial
decree of partition, adjudicate to himself in fee simple a determinate portion of said Lot
ALBALADEJO y CIA vs. PHIL. REFINING CO.
(45 PHIL. 556)
FACTS:
1918- Albaladejo y Cia (ltd part-engaged in buying and selling) and Visayan Refining (corp-
engaged in manufacturing of oil) entered into a contract whereby Albaladejoy binds itself to
sell to Visayan, all the copra purchased by it- contract: 1yr
 Due to the agreement- Albaladejo bought copra extensively for Visayan. At the end of 1 yr,
both parties continued the existing agreement by tacit consent
 1920- Visayan closed down its factory at Opon Cebu and withdrew from the copra market
 Because of the large requirements of Visayan, Albaladejo extended its business that during
the course of the next 2-3 years, it established some 20 agencies or sub-agencies
 After the Visayan had ceased to buy copra, their accounts were liquidated. It appeared that
per the last account rendered, a balance of P288in favor of Visayan was shown – Albaladejo
expressed its approval of the said account- no dissatisfaction was expressed by Albaladejo
until 6 wks after when it filed a case
 2 CoA:
1. Negligent failure of Visayan to provide opportune transportation for the copra collected by
the plaintiff –allegedly, it suffered thediminishment of weight
2. Recovery of the amount expended by plaintiff in maintaining and extending its
organization. It is alleged that the extension of the business was due to the repeated
assurances of Visayan that it would soon resume its business
 TC: not negligent wrt 1st CoA but ordered Visayan to pay 30% of the costs wrt 2nd CoA
 ALBALADEJO: contract between the plaintiff and the Visayan Refining Co. created the
relation of principal and agent between the parties, and the reliance is placed upon article
1729 of the Civil Code which requires the principal to indemnify the agent for damages
incurred in carrying out the agency
HELD:
according to CoA
1. NO NEGLIGENCE
 TC judge carefully examined the movements of the fleet of boats maintained by
Visayan and found that Visayan had used reasonable promptitude in its efforts to get
the copra from the places where it had been deposited for shipment.
 Shrinkage was extremely moderate and this fact goes to show that there was no
undue delay on the part of the Visayan
 As per agreement, copra should be paid for according to its weight upon arrival at
Opon regardless of its weight when first purchased
2. NOT ENTITLED TO RECOVER
 Careful examination of the evidence, series of letters of Visayan to Albaladejo,
convincing enough to support the ruling that supposed liability does not exist
 The correspondence sufficiently shows on its face that there was no intention on the
part of the company to lay a basis for contractual liability of any sort; and the plaintiff
must have understood the letters in that light.
3. NO PRINCIPAL-AGENT RELATIONSHIP
 It is true that the Visayan Refining Co. made the plaintiff one of its instruments for the
collection of copra; but it is clear thatin making its purchases from the producers the
plaintiff was buying upon its own account and that when it turned over the copra to the
Visayan Refining Co., pursuant to that agreement, a second sale was effected.
 In paragraph three of the contract it is declared that during the continuance of this
contract the Visayan Refining Co. would not appoint any other agent for the purchase of
copra in Legaspi; and this gives rise indirectly to the inference that the plaintiff was
considered its buying agent. But 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
 In some letters, the term agents were used but But this designation was evidently used
for convenience; and it is very clear that in its activities as a buyer the plaintiff was
acting upon its own account and not as agents, in the legal sense, of the Visayan
Refining Co. The title to all of the copra purchased by the plaintiff undoubtedly remained
in it until it was deliveredby way of subsequent sale to said company