ORIENT SERVICES v.

CA

FACTS:

American Airlines, Inc an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air Services
entered into a General Sales Agency Agreement whereby the former authorized the latter to act as its exclusive general sales agent
within the Philippines for the sale of air passenger transportation.

On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net
proceeds of sales for the months of January to March 1981. American Air by itself undertook the collection of the proceeds of tickets
sold originally by Orient Air and terminated forthwith their agreement.

American Air then instituted suit against Orient Air with the CFI , averring the foresaid basis for the termination of the Agreement as
well as defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in
the possession of the defendant, . . . to the damage and prejudice of plaintiff." Defendant Orient Air denied the material allegations
of the complaint with respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to
the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions.
Further, the defendant contended that the actions taken by American Air in the course of terminating the Agreement as well as the
termination itself were untenable, Orient Air claiming that American Air's precipitous conduct had occasioned prejudice to its
business interests.

ISSUE:

WON ORIENT AIR FAILED ITS OBLIGATION AS AN AGENT TO AMERICAN AIRLINES

HELD:

NO. Orient Air was clearly justified in retaining and refusing to remit the sums claimed by American Air. The latter's termination of
the Agreement was, therefore, without cause and basis, for which it should be held liable to Orient Air. Orient Air was entitled to an
overriding commission based on total flown revenue. American Air's perception that Orient Air was remiss or in default of its
obligations under the Agreement was, in fact, a situation where the latter acted in accordance with the Agreement—that of
retaining from the sales proceeds its accrued commissions before remitting the balance to American Air. Since the latter was still
obligated to Orient Air by way of such commissions.

By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality to
Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds
himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF
THE LATTER .

In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent,
by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can
only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. The Agreement
itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30 days' notice
by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the portion of the ruling of the respondent appellate
court reinstating Orient Air as general sales agent of American Air.

WHEREFORE, with the foregoing modification, the Court AFFIRMS the decision and resolution of the respondent Court of Appeals
Rallos V Go Chan Realty

FACTS:

Concepcion and Gerundia Rallos were registered co-owners of a parcel of land. On April 21, 1954, the sisters executed a
special power of attorney in favor of their brother, Simeon Rallos, authorizing him to sell for and in their behalf one of
the lots owned by them. On March 3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold the
undivided shares of his sisters Concepcion and Gerundia Felix Go Chan & Sons Realty Corporation.

Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a complaint averring that:

(1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be declared 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 issued in the names of the corporation and the "Intestate estate of Concepcion Rallos".

Felix Go Chan & Sons Realty Corporation appealed in due time to the Court of Appeals from the foregoing judgment
insofar as it set aside the sale of the one-half (1/2) share of Concepcion Rallos.

ISSUE:

What is the legal effect of an act performed by an agent after the death of his principal?

HELD:

Out of the above given principles, sprung the creation and acceptance of the relationship of agency whereby the
principal authorizes the agent to act for and in his behalf in transactions with third persons. It is basically representative
and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his
act is the act of the principal if done within the scope of the authority.

By reason of the very nature of the relationship between principal and agent, agency is extinguished by the death of the
principal or the agent. This is the law in this jurisdiction. It is the contention of respondent corporation which was
sustained by respondent court that notwithstanding the death of the principal Concepcion Rallos the act of the attorney-
in-fact, Simeon Rallos in selling the former's sham in the property is valid and enforceable inasmuch as the corporation
acted in good faith in buying the property in question.

Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore-mentioned.

ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted
in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the
stipulation in his favor.

Article 1930 is not involved because admittedly the special power of attorney executed in favor of Simeon Rallos was not
coupled with an interest and he clearly knew of the death of his principal.
AIRFANCE VS. CA, GANA

FACTS:

Jose G. Gana and his family, numbering nine purchased from AIR FRANCE through a duly authorized travel agent off
Imperial Travels 9 "open-dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route.

On 24 April 1970, AIR FRANCE exchanged or substituted the aforementioned tickets with other tickets for the same
route. At this time, the Ganas were booked for the Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970,
and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on 22 May 1970. The aforesaid tickets were valid until 8
May 1971, the date written under the printed words "Non valuable apres de (meaning, "not valid after the")

They did not depart on 8 May 1970. Sometime in January, 1971, Jose Gana sought the assistance of Teresita Manucdoc,
a Secretary of the Sta. Clara Lumber Company where Jose Gana was the Director and Treasurer, for the extension of the
validity of their tickets, which were due to expire on 8 May 1971. Teresita enlisted the help of Lee Ella Manager of the
Philippine Travel Bureau, who used to handle travel arrangements for the personnel of the Sta. Clara Lumber Company.

Ella sent the tickets to Cesar Rillo, Office Manager of AIR FRANCE. The tickets were returned to Ella who was informed
that extension was not possible unless the fare differentials resulting from the increase in fares triggered by an
increase of the exchange rate of the US dollar to the Philippine peso and the increased travel tax must first be paid.
Ella then returned the tickets to Teresita and informed her of the impossibility of extension.

In the meantime, the GANAS had scheduled their departure on 7 May 1971. In the morning of the very day of their
scheduled departure on the first leg of their trip, Teresita requested travel agent Ella to arrange the revalidation of the
tickets. Ella gave the same negative answer and warned her that although the tickets could be used by the Ganas if they
left on 7 May 1971, the tickets would no longer be valid for the rest of their trip because the tickets would then have
expired on 8 May 1971. Teresita replied that it will be up to the GANAS to make the arrangements. Ella on his own,
attached to the tickets validating stickers for the Osaka/Tokyo flight, one a JAL. sticker and the other an SAS
(Scandinavian Airways System) sticker.

The SAS sticker indicates thereon that it was "Reevaluated by: the Philippine Travel Bureau, Branch No. 2" (as shown by
a circular rubber stamp) and signed "Ador", and the date is handwritten in the center of the circle. Notwithstanding the
warnings, the Ganas departed from Manila in the afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka,
Japan.

The first leg of the trip was without issue. However, for the Osaka/Tokyo flight on 17 May 1971 AFTER THE EXPIRY, JAL
refused to honor the tickets because of their expiration, and the Ganas had to purchase new tickets.

ISSUE:

WON IRREGULAR ACTIONS OF TRAVEL AGENT ELLA WERE RATIFIED BY ITS PRINCIPAL IN ALLOWING THE GANAS TO
BOARD ON MAY 8

HELD:

NO. The circumstances that Air France personnel at the ticket counter in the airport allowed the Ganas to leave is not
tantamount to an implied ratification of travel agent Ella's irregular actuations. It should be recalled that the Ganas left
in Manila the day before the expiry date of their tickets and that "other arrangements" were to be made with respect to
the remaining segments. Besides, the validating stickers that Ella affixed on his own merely reflect the status of
reservations on the specified flight and could not legally serve to extend the validity of a ticket or revive an expired
one.
CONDE vs. CA

Facts:

Margarita Conde, Bernardo Conde and Dominga Conde, as heirs of Santiago Conde, sold with right to repurchase, within
10 years from said date, a 1 hectare parcel of agricultural land situated in Burauen, Leyte to Casimira Pasagui and Pio
Altera for P165.

Three years later, Original Certificate of Title No. N-534 covering the land in question was issued in the name of the
Alteras subject to the stipulated right of repurchase by the Condes. On 28 November 1945, Paciente Cordero, son-in-law
of the Alteras and their representative, signed a document in Bisaya stating that the Memorandum of Repurchase got
lost during World War II despite all diligent searches being made; that the two parcels of land were inherited by the
Condes; that Eusebio Amarille was authorized by the Condes to repurchase the land; that they received P165 in
consideration of the sale; and that the Condes, by virtue of the repurchase, shall repossess the said parcels of land.

Neither the vendees-a-retro, Pio Altera nor Casimira Pasagui, were signatories to that document. Many years later, the
pacto de retro document was found. In June 1965, Pio Altera sold the disputed lot to Ramon and Catalina Conde, whose
relationship to Dominga does not appear on record. Consequently, in 1969, Dominga filed with the CFI of Leyte a
complaint for quieting of title and declaration of ownership against all the respondents. The trial court dismissed the
complaint and ordered Dominga to vacate the premises and to deliver the disputed land to respondents. The Court of
Appeals affirmed the decision and ruled that Dominga failed to validly exercise her right to repurchase because the
Memorandum of Repurchase was not signed by the Alteras but by Paciente, who was not authorized to sign for the said
vendees-a-retro.

ISSUE:

Whether or not there was an implied agency when Cordero signed the Memorandum of Repurchase.

HELD:

Yes. Although the contending parties were legally wanting in their respective actuations, for example Dominga did
nothing to formalize her repurchase while the Alteras did nothing to clear their title of the encumbrance therein
regarding Dominga’s right to repurchase, the repurchase by Dominga is supported by her admission that she had been
in possession since 1945, the date of the repurchase, and has been paying land taxes thereon since then. No new
agreement was entered into by the parties as stipulated in the deed of pacto de retro, if the vendors-a-retro failed to
exercise their right of redemption within 10 years. If, as alleged, Dominga did not exert an effort to procure Pio Altera’s
signature after he had recovered from illness, neither did the Alteras repudiate the deed signed by their son-in-law for
24 years, from which the Alteras are deemed to have incurred in laches. Thus, an implied agency must have been held to
have been created by their silence or lack of action, or their failure to repudiate the agency created. (Art. 1869, New Civil
Code). Wherefore, Dominga is declared the owner of the land in question
Nielson v. Lepanto

FACTS:

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

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

In January 1942 operation of the mining properties was disrupted on account of the war. The mill, power plant, supplies
on hand, equipment, concentrates on hand and mines, were destroyed.

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

In 1945, a disagreement arose between Nielson and Lepanto over the status of the operating contract which as renewed
expired in 1947. Under the terms thereof, the management contract shall remain suspended in case a fortuitous event
adversely affects the work of mining and milling.

On 6 February 1958, Nielson brought an action against Lepanto to recover certain sums of money representing damages
allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract.

The Trial Court dismissed the complaint.

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

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

ISSUE:

Whether or not the management contract is a contract of agency or a contract of lease of services.

HELD:

It was a lease of services

Contract of Agency v Contract of Lease of Services:

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

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

It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter
into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase,
or sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could
not execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was
to act only as an intermediary, not as an agent.
From the provision of paragraph XI of the management contract, Lepanto could not terminate the agreement at will.
Lepanto could terminate or cancel the agreement by giving notice of termination ninety days in advance only in the
event that Nielson should prosecute in bad faith and not in accordance with approved mining practice the operation and
development of the mining properties of Lepanto. Lepanto could not terminate the agreement if Nielson should cease to
prosecute the operation and development of the mining properties by reason of acts of God, strike and other causes
beyond the control of Nielson. The management contract in question is not revocable at the will of Lepanto. It is not a
contract of agency as defined in Article 1709 of the old Civil Code, but a contract of lease of services as defined in
Article 1544 of the same Code. This contract can not be unilaterally revoked by Lepanto.
J-PHIL MARINE v NLRC

Facts:

Dumalaog who served as a cook aboard vessels plying overseas filed before the NLRC a complaint against
petitioners for unpaid money claims, moral and exemplary damages. According to him, he had contracted
enlargement of the heart and thyroid in the discharge of his duties as a cook, which rendered him disabled.

The Labor Arbiter dismissed the petition for lack of merit, but the NLRC reversed the Labor Arbiter’s
decision and awarded a disability benefit to Dumalaog. The CA dismissed the appeal of J-Phil which led
them to file a petition for certiorari before the SC.

However, during the pendency of this case, Dumalaog, against the advice and without the presence and
assistance of his counsel, entered into a compromise agreement with the petitioners. He signed a
Quitclaim and Release subscribed and sworn before the labor arbiter.

Dumalaog’s counsel then filed an opposition and objection to the “absolution” of the petitioners from
having to pay Dumalaog the total amount of US$50,000,00 or P2.3M. He added that there being already a
payment of P450k, it should be deducted from the judgment award of P2.3M and petitioners should pay
the remaining balance thereof. He further added that the P450k given to Dumalaog as “full and final
settlement” is unconscionably low.

Issues:

(1) Whether or not the compromise agreement is valid even if executed by the respondent against the
advice and without the assistance of his counsel

(2) Whether or not the act of the counsel as agent in assailing the compromise agreement entered into by
the principal are deemed acts of the principal himself

HELD:

YES. A compromise agreement is valid as long as it was voluntarily agreed upon and not obtained through
fraud, misrepresentation or coercion (Labor Code). In this case, Dumalaog signed the waiver voluntarily. His
counsel need not be present at the time of the signing.

NO.

The law on Agency provides that the acts of an agent are deemed the acts of the principal only if the agent
acts within the scope of his authority.

A client has the right to compromise a suit without the intervention of his lawyer except only if such
compromise is entered into with the intent of defrauding the lawyer of the fees justly due him. In this case,
it is clearly seen that the agent’s acts - assailing the compromise agreement - are contradictory to the
previous valid acts of his principal – the signing of the compromise agreement. There is no showing that the
respondent intended to defraud his counsel of his fees. The respondent’s counsel acted beyond the scope
of his authority.