G.R. No.

L-8169 January 29, 1957

THE SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner,

vs.
FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY COMMERCIAL CASUALTY
INSURANCE CO., SALVADOR SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS
(First Division),

Nature of the case: Appeal by certiorari under Rule 46 to review a judgment of the Court of Appeals
which reversed that of the Court of First Instance of Manila. This is an action for recovery of sum of
money.
Facts of the case:
On the afternoon of September 1947, a car (plymouth) belonging to the plaintiff Salvador Sison was
brought by his son, Perlito Sison, to the gasoline and service station owned by the defendant The Shell
Company but operated by the defendant Porfirio de la Fuente, for the purpose of car washed and
greased for P8.00.
Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance Company
insured the car for P10,000. Defendant de la Fuente did the washing and greasing with the aid of two
employees: Adriano, a greaseman, and de los Reyes, an assistant and washer. To complete the job,
the car was put on the lifter, so the job was almost done, Except for an ungreased part below the car
and the greasemen couldn't reach. So Adriano dropped the lifter slightly, and while doing that, the car
fell for an unknown reason and sustained damage of P1,651.38.

The insurance companies, having paid the damage and charging the balance of P100.00 to Sison, have
filed the action with Sison to recover the total amount of the damage from the defendants on the basis
of negligence.

On December 6, 1947, the insurers and the car's owner filed a complaint in CFI of Manila against the
Shell and de la Fuente, seeking to recover from them, jointly and severally, the sum of P1,651.38,
following the trial, the Court dismissed the complaint. The plaintiffs filed an appeal, the Court of Appeals
reversed the decision and ordered the defendant to pay

Issue of the Case: Is Porfirio de la Fuente is an agent of Shell Company?

Ruling: Yes. De la Fuente owed his position to the Shell Company, which could remove him or terminate
his services at any time. He was given possession of the gasoline and service station under
consideration, as well as all the equipment required to operate it, which was owned by the Shell
Company, which assumed control and that the receipts signed by the operator indicated that He was
a mere agent, the finding of the Court of Appeals that the operator was an agent of the Shell Co, of
the Phils.

Rationale: To determine the nature of a contract courts do not have or are not bound to rely upon the
name or title given by the contracting parties, court rely the way the contracting parties do or perform
their respective obligations stipulated and should such performance conflict with the name or title given
the contract by the parties, the former must prevail over the latter. Because the agent's or his
employees' act within the limits of his authority is the principal's act, the agent's breach of the
responsibility is one for which the principle is liable. The latter was negligent and the company must
answer for the negligent act of its mechanic which was the cause of the fall of the car from the lifter.
The judgment under review is affirmed, with costs against the petitioner.
Philpotts v. Philippine Manufacturing Co., 40 Phil 471 – November 8, 1919 W. G.
PHILPOTTS, Petitioner, v. PHILIPPINE MANUFACTURING. COMPANY and F. N.
BERRY, Respondents.
Nature of the case: proceeding to obtain a writ of mandamus (a command to an inferior court or
ordering a person to perform a public or statutory duty.)

Facts of the Case:

Philpotts, is a stockholder in the Philippine Manufacturing Company, one of the respondents, Philpotts
seeks a writ of mandamus to compel the respondents to allow the plaintiff, in person or through an
authorized agent, to inspect and examine the records of the business transacted by said company. The
corporation prohibited petitioner to inspect anything relating to the company's activities, and the
petition asks for a peremptory order requiring the respondents to place the records of all business
transactions of the company. Petitioner also seeks to exercise this right through an agent or attorney.
Counsel for the defendants admits that there is a right of examination in the shareholder given by
section 51 of the Corporation Law, but insists that this right must be exercised in person.

Issue:
Whether the right granted to a shareholder by the law to inspect the records can also be exercised by
the stockholder's proper agent or attorney as well as the stockholder in person?

Ruling: Yes, the right of inspection granted to a stockholder can be exercised by the stockholder himself
or by any proper agent or attorney in fact, with or without the stockholder's presence. This is consistent
with the basic rule that what a man may do in person, he may do through another.

Section 51 of Act No. 1459 states in the second paragraph that "the record of all business transactions
of the corporation and the minutes of any meeting shall be open to the inspection of any director,
member, or stockholder of the corporation at reasonable hours."

This conclusion is supported by the undeniable weight of authority in the United States, where it is
generally held that the provisions of law granting stockholders of corporations the right of inspection
are to be liberally construed and that said right may be exercised through any other properly authorized
person. "The right may be regarded as personal, in the sense that only a stockholder may enjoy it; but
the inspection and examination may be made by another," as stated in Foster vs. White. Otherwise, it
would be useless in many cases.

The demurrer is overruled; and it is ordered that the writ of mandamus shall issue as prayed.
Orient Air Services v. CA, 197 SCRA 645- May 1991

AMERICAN AIRLINES, INCORPORATED, vs. COURT OF APPEALS and ORIENT AIR

SERVICES & HOTEL REPRESENTATIVES, INCORPORATED

Nature of the Case: This is a consolidation of two (2) petitions for review on certiorari of the decision
of the Court of Appeals in case, entitled "American Airlines, Inc. vs. Orient Air Services” which
affirmed, with modification, a decision of the Regional Trial Court of Manila, which dismissed the
complaint and granted defendant's counterclaim.

Facts of the Case: American Air, is a passenger and cargo airline, they signed a General Sales Agency
Agreement with Orient Air, appointing the Orient as its sole general sales agent for the selling of air
passenger transportation. For several months, Orient Air failed to submit the net proceeds of sales,
forcing American Air to collect the proceeds of tickets sold by Orient Air and terminate their agreement.

American Air filed a lawsuit against Orient Air for the recovery of past-due payments in the possession
of Orient Air. Orient Air said that because of the unpaid overriding commissions, they kept the sales
profits instead of remitting the balance to American Air.

American Air claimed that in order for it to be entitled to the overriding commission, the sale had to be
conducted by Orient Air and with the use of American Air's ticket stocks. Orient Air, on the other hand,
claims that the contractual provision of a 3 percent overriding commission includes American Air's
overall revenue, not just that obtained from ticketed sales performed by Orient Air since it was an
exclusive General Sales Agent. The CA ruled that Orient Air is entitled to commissions and ordered
American Air to reinstate Orient Air as its General Sales Agent.

Issue:
1) Whether or not Orient Air is entitled to receive commissions.
2) Whether CA is correct in reinstating Orient Air as an agent.

Ruling:
Yes. Orient Air was entitled to an overriding commission based on total flown revenue. American Air's
termination of the Agreement was, therefore, without cause and basis, for which it should be held
liable. Orient Air was justified in retaining and refusing to remit the sums claimed by American Air.

No. CA in effect compels American Air to extend its personality to Orient Air, which 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. the agent, by legal fiction, becomes the principal, authorized to perform all acts
which the latter would have him do. In an agent-principal relationship, the principal is extended through
the facility of the agent. 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 Court , therefore, set aside the portion of the ruling of the respondent appellate court reinstating Orient Air as
general sales agent of American Air.

the Court AFFIRMS the decision of the respondent Court of Appeals. Costs against petitioner American Air
 B. H. MACKE, ET AL., plaintiffs-appellees,
vs.
JOSE CAMPS, defendant-appellant.

Facts:

Macke and Chandler work as partners at the firm Macke, Chandler & Company. They sold different
items for the Washington Café to Ricardo Flores, who appeared as Jose Camps' agent. Flores paid a
P174 deposit, leaving a balance of P177.50, and informed them that he did not have the sufficient
cash on hand and he has to wait for Jose Camps' return. However, Jose Camps failed to pay the
balance, and denying Flores' authority. As evidence, a formal contract was shown. According to the
written contract, Galmes (the building's owner) subleased the building where the company was
performed, which Jose Camps signed as "sublessee" and Ricardo Flores signed as "managing agent".

ISSUE: Whether or not Ricardo Flores is an agent of Jose Camps.

Ruling:
Flores was the agent of the defendant, in the bar of the Washington Cafe with authority to bind the
defendant, his principal, for the payment of the goods mentioned in the complaint. One who presents
someone with apparent authority as his agent and puts him out to the public may not deny the
person's power to act as his agent to the damage of the third parties transacting with agent in good
faith and in the honest belief that he is what he appears to be.

The judgment of the trial court is affirmed with the costs of his instance against the appellant.
 ELitonjua v. Eternit Corp. (now Eterton Multi-Resources Corp.), Eteroutremer, S.A. and
Far East Bank & Trust Co. G.R. No. 144805 June 8, 2006 Callejo, Sr.

Facts: Eternit Corp. is engaged in the manufacture of roofing materials and pipe products. Its
manufacturing operations were conducted on 8 parcels of land located in Mandaluyong City, covered
by TCTs with Far East Bank & Trust Company as trustee. 90% of shares were owned by
Eteroutremer S.A. Corporation (ESAC), a corporation organized and registered under the laws of
Belgium. The management of ESAC grew concerned about the political situation in the Philippines
and wanted to stop its operations in the country. The committee of ESAC instructed Michael Adams,
member of EC’s board to dispose the 8 parcels of land. Adam engaged in a broker so that the
properties could be offered for sale. Glanville(EC Pres) showed the properties to the broker, Marques
then offered the parcels of land and improvements thereon to Eduardo Litonjua of Lintonjua Co.,
then in a letter, Marques declared the he was authorized to sell properties for 27M and terms were
subject to negotiation.

The siblings Litonjua offered to buy the said property for 20M cash. Marques told Glanville (President
of EC) and Delsaux (Regional Director of ESAC) , but Delsaux informed Glanville about a counter
proposal to increase to cover all existing obligations prior to final liquidation. Litonjua brother’s
accepted and deposited an amount of 1MDollars, however Marques received a phone call from
Glanville that the sale will no longer push through, saying that the Committee has decided not to stop
the operations in Manila.

Litonjuas demanded payment for damages they had acquired because of the cancelled sale. EC
rejected their demand. Litonjuas filed a complaint for specific performance and damages against EC
and Far East Bank and ESAC in the RTC of Pasig city.

The respondents alleged that since ESAC is not doing business in the Philippines it cannot be subject
to the jurisdiction of the Philippine Courts. And that the stockholders never approved the selling of the
properties. That Glanville and Delsaux were not authorized by the Board and no authority from
stockholders were acquired.

RTC Decision: since the authority of the agents was not in writing, the sale is void. Such was not
approved by the principal.

Issue: Whether or not Glanville, Delsaux and Adam are authorized agents of the EC?

Ruling: NO
They are not, the Court held that ―It bears stressing that 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 essential element of consent is manifest from the principle that ―No person may be represented
by another without his will; and that no person can be compelled against his will to represent
another. To establish an agency, both the principal and the agent must consent: The principal must
intend that the agent act for him; the agent must intend to accept and act on the authority; and the
parties' intention must be expressed in words or action between them.
 Spouses Viloria v. Continental Airlines, 663 SCRA 57
Nature: This is a petition for review under Rule 45 of the Rules of Court from the Court of Appeals (CA)

Facts: July 1997, while in US, Fernando purchased two round-trip tickets (400D) from San Diego-New
York on Continental Airlines from the travel firm Holiday Travel. after being advised by Mager, one of
its employees, that there were no more open seats on the Amtrak (train). When he found that Amtrak
seats were available at any time, he requested a reimbursement from CAI, saying that Margaret
deceived him. CAI, stated that the tickets were non-refundable. He also did not get the two tickets
reissued, so he eventually filed a lawsuit for a refund plus damages. CAI claimed in its defense that it
could not be held responsible for any of Margaret's actions since she was not an employee or an agent
of the company.

The RTC issued its Decision, saying that Spouses Viloria are entitled to a refund as a result of Mager's
misrepresentation in gaining their permission to buy the tickets. Citing Articles 1868 and 1869 of the
Civil Code, the RTC ruled that Mager is CAI’s agent, hence, bound by her bad faith and
misrepresentation. CAI impliedly if not expressly acknowledged its principal-agent relationship with
Margaret by its offer in the letter dated March 24, 1998 (the letter explaining to spouses that they can
get tickets re-issued because of Margaret’s actions)

The CA ruled that Holiday Travel was not an agent of CAI and that there was only a contract of sale.
Reversed RTC and said that there was no principal-agency relationship thus CAI cannot be held liable
for Margaret’s act. Spouses Viloria, who have the burden of proof to establish the fact of agency, failed
to present evidence demonstrating that Holiday Travel is CAI’s agent.

Issue: Does a principal-agent relationship exist between CAI and Holiday Travel?

Ruling: Yes, principal-agent relationship exist between CAI and Holiday Travel exists, it mentioned the
case of Rallos vs. Go, the essential elements of agency are: (1) there is consent, express or implied (2)
the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself, and (4) the agent acts within the scope of his authority.

The first and second elements are present as CAI does not deny that it established an agreement with
Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on
CAI’s behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in
a representative capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage
entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI
has not made any allegation that Holiday Travel exceeded the authority that was granted to it.
When Fernando informed CAI that it was Holiday Travel who issued to them the subject tickets, CAI
did not deny that Holiday Travel is its authorized agent.

In an agency, the principal keeps ownership and control over the property and the agent merely acts
on the principal’s behalf and under his instructions. On the other hand, the contract is a sale if the
parties intended that the delivery of the property will effect a relinquishment of title, control and
ownership in such a way that the recipient may do with the property as he pleases. In this case, it is
undisputed that CAI and not Holiday Travel who is the party to the contracts of carriage executed by
Holiday Travel with third persons who desire to travel via Continental Airlines, and this conclusively
indicate
 Sevilla v. CA, 160 SCRA 171

DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,

vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.

Facts: Mrs. Noguera entered into a lease agreement with TWSI, which was signed on its behalf by Mr.
Canilao, to be utilized as a branch office of the latter. Mrs. Sevilla also signed as someone jointly and
severally accountable with TWSI for early payment of the monthly rental. Mrs. Sevilla runs the said
branch and is also an independent agent selling tickets for several airlines, for which she earns a 7%
fee. She gives 3% of her earnings to TWSI.

Tourist World Service, Inc. appears to have been informed that Lina Sevilla was connected with a rival
firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office.

Canilao, the corporate secretary, went over to the branch office, and, finding the premises locked,
and, unable to contact petitioner, he padlocked the premises to protect the interest of TWSI. When
Sevilla or any of her workers were able to enter the closed premises, the she filed a complaint
against the TWS, requesting the issue of a required preliminary injunction. Both appellees filed
counterclaims.

The trial court ordered the matter to be dismissed without prejudice due to the parties' apparent lack
of interest. Holding that TWS being the true lessee was within its prerogative to terminate the lease
and padlock the premises. It also found that Sevilla was a mere employee of TWS, hence bound by
the acts of her employer.

CA, Affirmed. Hence this petition.

Issue: Whether there is a contract of agency between TWSI and petitioner.

Ruling:
Lina Sevilla, the petitioner, must have consented to operate the TWSI's Ermita office under the terms
of an agency contract. The essence of the contract is that the agent performs services "in
representation of or on behalf of another." Sevilla solicited airplane tickets in the matter at hand, but
she did so for and on behalf of her principal, TWSI. She was compensated with 4% of the earnings in
the form of commissions. However, the agency to be consistent with the parties' intent cannot be
withdrawn at any time. The reason is that it is one coupled with an interest, the agency having been
created for the mutual interest of the agent and the principal.

It appears that Lina Sevilla is a bonafide travel agent, and as such, she had acquired an interest in the
business entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof,
holding herself solidarily liable for the payment of rentals. She continued the business, using her own
name, after Tourist World had stopped operations. Her interest, obviously, is not limited to the
commissions she earned as a result of her business transactions, but one that extends to the very
subject matter of the power of management delegated to her. It is an agency that, as we said, cannot
be revoked at the pleasure of the principal. The private respondent, Tourist World Service, Inc., are ORDERED
to indemnify the petitioner, Lina Sevilla
 DELA CRUZ vs NORTHERN THEATRICAL

GR No.-L7089

August 31,1954

Montemayor

FACTS:

the plaintiff DOMINGO DE LA CRUZ,was hired as a special guard by Northern Theatrical whose duties
were to guard the main entrance of the cinema, to maintain peace and order and to report the
commission of disorders within the premises. In the afternoon of July 4, 1941, one Benjamin Martin
wanted to crash the gate or entrance of the movie house. Angry by the refusal of plaintiff De la Cruz
to let him in, Martin attacked him with a bolo. De la Cruz defendant himself as best he could until he
was cornered, at which moment to save himself he shot the gate crasher, resulting in the latter's death.

De la Cruz was charged with homicide in Criminal Case No. 8449 of the Court of First Instance of Ilocos
Norte. After a re-investigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the
complaint, which was granted by the court. De la Cruz was again accused of the same crime of homicide,
in Criminal Case No. 431 of the same Court. After trial, he was finally acquitted of the charge

He demanded from his former employer reimbursement of his expenses but was denied, he filed the
present action against the movie corporation and the three members of its board of directors, to recover
not only the amounts he had paid his lawyers but also moral damages he have been suffered, due to
his worry,

The Court of First Instance of Ilocos Norte after rejecting the theory of the plaintiff that he was an
agent of the defendants and that as such agent he was entitled to reimbursement of the expenses
incurred by him in connection with the agency, dismissed the complaint.

ISSUE:

W/N an agent who’s in the line of duty performs an act that resulted in his incurring expenses caused
by a stranger. May the latter recover the said expenses against his former employer.

RULING:

No, the relationship between the movie corporation and the plaintiff was not that of principal and agent
because the principle of representation was is not involved. Plaintiff was not employed to represent the
defendant corporation in its dealings with third parties. He was a mere employee hired to perform a
certain specific duty or task, that of acting as special guard and staying at the main entrance of the
movie house to stop gate crashers and to maintain peace and order within the premises.

The Court fail to see now this responsibility can be transferred to the employer who in no way
intervened, much less initiated the criminal proceedings and whose only connection or relation to the
whole affairs was that he employed plaintiff to perform a special duty or task, which task or duty was
performed lawfully and without negligence. Judgment of the lower court is affirmed.
NIELSON & COMPANY, INC., vs. LEPANTO CONSOLIDATED MINING COMPANY

Nature: Action to recover certain sums of money

FACTS: On January 1937, Nielson executed an agreement with Lepanto, Lepanto owned the mining
properties. Nielson operated and maintained the said properties for Php 2,500.00 / month as
management fee plus 10% participation in the net profits for 5 years. In 1940, the 10% share was
uncertain. Lepanto’s Board of Directors authorized C.A. De Witt, president to enter with an
agreement with Nielson modifying same provisions effective January 1, 1940 such that Nielson shall
receive: 1. 10% of the dividends paid during the contract period and every end of the year; 2. 10%
of any depletion reserve that may be set up; 3. 10% of any amount expended during the year out of
surplus earnings for capital account.
In 1941, the parties renewed their contract for another 5 years but the Pacific War broke out in
December 1941. In January 1942, the operation was disrupted. The U.S. Army ordered that the mill,
power plant, supplies, equipment, concentrates on hand and mines be destroyed to prevent the
Japanese from using. Thereafter, the Japanese army occupied the mining properties and was ousted
only in August 1945. Lepanto then rebuilt the mines and mills including setting up new organizations,
repairs, clearings, salvages, etc. The reconstruction was completed until 1948. On June 26, 1948 the
mines resumed the operation under the exclusive management of Lepanto. However, after the mines
were liberated in 1945, a disagreement arose between Nielson and Lepanto over the status of the
operating contract which expired in 1947. Under the terms the management contract shall remain in
suspension in case of fortuitous event or force majeure such as war, which adversely affects the work
of the mining and milling. On February 6, 1958, Nielson brought an action against Lepanto before the
Court of First Instance (CFI) of Manila to recover damages suffered for the refusal of Lepanto to
comply with the terms of a management contract entered into between them on January 30, 1937.
In its answer, Lepanto denied the allegations and set up certain defenses, prescription and laches as
bars against the institution of the action. After trial, the court rendered a decision dismissing the
complaint with costs. The court stated that it did not find sufficient evidence to establish the
counterclaim of Lepanto therefore, and dismissed it. Nielson appealed. The Supreme Court reversed
the decision of the trial court and ordered Lepanto to pay: 1. 10% Share of cash dividends of December 1941
in the amount of Php 17,500.00 with legal interest thereon from the date of the filling of the complaint; 2. Management
fee for January 1942 in the amount of Php 2,500.00 with legal interest thereon from the date of the filing of the
complaint; 3. Management fees for the 60-month period of extension amounting to Php 150,000.00 with legal interest; 4.
10% Share in the cash dividends during the period of extension; 5. 10% of the depletion reserve amounting to Php
53,928.88 with legal interest; 6. 10% of the expenses of the capital account amounting to Php 694,364.76 with legal
interest; 7. To issue and deliver to Nielson shares of stock at a par value equivalent to the total of Nielson’s 10% share in
the stock dividends declared on November 28, 1948 and August 22, 1950; and 8. The sum of Php 50,000.00 as attorney’s
fee and the cost that Lepanto seeks for reconsideration.
ISSUE: Whether or not the management contract is a contract of agency?
HELD: NO. The Supreme Court ruled that the management contract is not a contract of agency as
defined in Article 1709 of the Old Civil Code, but as a contract of lease of services as defined in
Article 1544 of the same Code. Article 1709 defines the contract of agency as “one person binds
himself to render some service or to do something for the account or at the request of another.”
While Article 1544 defines contract of lease of service as “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.” The court determined the nature of the management contract in question wherein there was
agreement for Nielson for 5 years had the right to renew, to explore, to develop, and to operate the
mining claims of Lepanto. In the performance of this principal undertaking Nielson was not acting as
an agent but one as performing material acts for an employer, for a compensation.
In agency, the agent exercises discretionary powers, while in lease of service, the lessor (like a servant) ordinarily
performs ministerial functions. In performing its principal undertaking, N was not acting as an agent of L, in the sense
that the term “agent” is interpreted under the law of agency but as one who was performing material acts for an
employer for a compensation. ordering the appellee Lepanto to pay appellant Nielson the different amounts
GONZALO PUYAT AND SONS vs ARCO AMUSEMENT COMPANY (formerly known as Teatro
Arco)

G.R. No. L-47538 | June 20,1941 | Laurel, J

This is a petition for the issuance of a writ of certiorari to the Court of Appeals

FACTS:

Arco Amusement was engaged in the business of operating cinematographs while Gonzalo Puyat &
Sons (GPS) was the exclusive agent in the Philippines for the Starr Piano Company (SPC). to equip its
cinematograph with sound reproducing devices, Arco approached GPS, through its president, Gil Puyat,
and an employee named Santos. After some negotiations, it was agreed between the parties that GPS
would order sound reproducing equipment from SPC and that Arco would pay GPS, in addition to the
price of the equipment, a 10% commission, plus all expenses such as freight, insurance, etc. When
GPS inquired SPC the price (without discount) of the equipment, the latter quoted such at $1,700.00
Indiana. Being agreeable to the price, Arco formally authorized the order. The following year, both
parties agreed for another order of sound reproducing equipment on the same terms as the first at
$1,600.00 plus 10% plus all other expenses. 3 years later, Arco discovered that the prices quoted to
them by GPS with regard to their first 2 orders mentioned, were not the net prices but rather the latter
has obtained a discount from SPC thus, equipment is deemed overpriced and GPS had to reimburse
the excess amount.

ISSUE: WON the contract is a contract of agency

RULING:

No. The contract between the petitioner and the respondent was one of purchase and sale. The letters,
Exhibits 1 and 2, by which the respondent accepted the prices of $1,700.00 and $1,600.00, respectively,
for the sound reproducing equipment subject of its contract with petitioner, are clear in their terms and
agreement it admit no other interpretation that the prices indicated which are fixed and determinate.
The respondent admitted in its complaint with the CFI of Manila that the petitioner agreed to sell to it
the first sound reproducing equipment. *To hold the petitioner an agent of the respondent in the
purchase of equipment and machinery from the SPC, is contrary with the admitted fact that the
petitioner is the exclusive agent of the same company in the Philippines. It is out of the ordinary for
one to be the agent of both the vendor and the purchaser.

This is a petition for the issuance of a writ of certiorari to the Court of Appeals

-in agency to sell, agent Sale – Art. 1458 -in a sale, buyer receives the goods as
receives the goods/property the owner
as the goods of the principal -buyer pays the price
-agent delivers the proceeds -buyer cannot return the object sold
of the sale - buyer can deal with the thing as he
-Agent can return the object pleases
in case he is unable to sell it
to 3rd persons
-as to the thing received,
agent is bound to act
according to the instructions
of his principal
 KER & CO., LTD., petitioner,
vs.
JOSE B. LINGAD, as Acting Commissioner of Internal Revenue, respondent.
Facts: Ker and CO, Ltd. was assessed by the Commissioner of Internal Revenue Domingo the sum of
P20,272.33 as the commercial broker’s percentage tax, surcharge and compromise penalty. Ker and
Co, Ltd. Request for the cancellation of the assessment but then later on denied. As a result, it filed a
petition for review with Court of Tax Appeals. The Court of Tax Appeals held Ker taxable except the
the compromise penalty of P500, and reduced the amount to P19,772.33. Such liability arose from
the contract of Ker as the distributor with the United States Rubber International as its company,
from July 1, 1948 to continue in force until terminated by either party giving to the other sixty days'
notice. The shipments would cover products "for consumption in Cebu, Bohol, Leyte, Samar, Jolo,
Negros Oriental, and Mindanao except [the] province of Davao", petitioner, as Distributor, being
prohibited from disposing such products elsewhere than in the mentioned places unless written
consent would first be obtained from the Company. Then came this crucial stipulation: "The Company
shall from time to time consign to the Distributor and the Distributor will receive, accept and/or hold
upon consignment the products specified under the terms of this agreement in such quantities as in
the judgment of the Company may be necessary for the successful solicitation and maintenance of
business in the territory, and the Distributor agrees that responsibility for the final sole of all goods
delivered shall rest with him. All goods on consignment shall remain the property of the Company
until sold by the Distributor to the purchaser or purchasers, but all sales made by the Distributor shall
be in his name, in which the sale price of all goods sold less the discount given to the Distributor by
the Company in accordance with the provision of paragraph 13 of this agreement, whether or not
such sale price shall have been collected by the Distributor from the purchaser or purchasers, shall
immediately be paid and remitted by the Distributor to the Company. It is further agreed that the
agreement does not constitute Distributor the agent or legal representative of the Company for any
purpose whatsoever. Distributor is not granted any right or authority to assume or to create any
obligation or responsibility, express or implied, in behalf of or in the name of the Company, or to bind
the Company in any manner or thing whatsoever."

Issue: W/N the relationship of Ker&Co and US Rubber International was that of a vendor – vendee
(Contract of Sale) or principal – broker (Contract of Agency).

Ruling: The court ruled that the relationship of the petitioner to US Rubber International is of broker
and principal. That the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S.
Rubber International is borne out by the facts that petitioner can dispose of the products of the
Company only to certain persons or entities and within restricted limits, unless excepted by the
contract or by the Rubber Company. The mere disclaimer in a contract that an entity like Ker is not
“the agent or legal representative for any purpose whatsoever” does not suffice to the conclusion
that it is an independent merchant if the control over the goods for resale of goods consigned is
pervasive in character. WHEREFORE, the Court of Tax Appeals decision of October 19, 1962 is
affirmed.
 Medrano v. Court of Appeals, 452 SCRA 77
BIENVENIDO R. MEDRANO and IBAAN RURAL BANK, petitioners,
vs.
COURT OF APPEALS, PACITA G. BORBON, JOSEFINA E. ANTONIO and ESTELA A. FLOR, respondents

Nature: This is a petition for review of the Decision1 of the Court of Appeals (CA) affirming the Decision of the RTC

FACTS: Medrano was the Vice-Chairman of Ibaan Rural Bank, In 1986, Mr. Medrano asked Ms. Flor, a cousin-in-law,
to look for a buyer of a foreclosed asset of the bank, a 17-hectare mango plantation at P2,200,000.00, located in
Ibaan, Batangas. Mr. Lee, a businessman from Makati City, was a client of respondent Mrs. Borbon, a real estate
broker. The two met over a prior transaction where Lee responded to an ad in a newspaper by Borbon for an 8-
hectare property, planted with atis trees. Lee expressed that he preferred a land with mango trees instead. Borbon
promised to get back to him as soon as she would be able to find a property according to what he wants.

Borbon relayed to her associates and friends that she had a ready buyer for a mango lot.. Flor then advised her that
her cousin-in-law owned a mango plantation which was up for sale. She told Flor to confer with Medrano and to
give them a written authority to negotiate the sale of the property. Upon being informed by Flor that Medrano was
selling his mango orchard, Borbon informed Lee that they had found a property according to his specifications. An
ocular inspection of the property together with Lee was planned; unfortunately, it never pushed through for reasons
beyond the respondents control. Since Lee was in a hurry to see the property, he asked the respondents the exact
address and the directions on how to reach Ibaan, Batangas. The respondents thereupon instructed him to look for
Ganzon, an oficer of the Ibaan Rural Bank and the person to talk to regarding the property. While the letter
authority issued in favor of the respondents was nonexclusive, no evidence was adduced to show that there were
other persons, aside from the respondents, who informed Lee about the property for sale. Ganzon testified that no
advertisement was made announcing the sale of the lot, nor did she give any authority to other brokers/agents to
sell the subject property. However, despite of the respondent’s participation in finding a buyer for the petitioner’s
property, the petitioners refuse to pay them commission, asserting that they are not the efficient getting cause of
the sale. It was alleged that they since they did not participate in the negotiation of the sale, they were not entitled
to their commission.

Issue: Whether or not the brokers are entitled to commission for the sale of the subject property?

Ruling: The brokers were entitled to the commission. The Supreme Court said that the aggrieved brokers were the
procuring causes in the transaction although they did not participate in the negotiation of the sale. Prepared with an
authority to procure a purchaser and with a license to act as broker, the Court see no reason why the respondents
cannot recover compensation for their efforts when, in fact, they are the cause of the sale. Procuring cause is
meant to be the proximate cause. The term procuring cause, in describing a brokers activity, refers to a cause
originating a series of events which, without break in their continuity, result in accomplishment of prime objective of
the employment of the broker producing a purchaser ready, willing and able to buy real estate on the owners terms
Indeed, the evidence on record shows that the respondents were instrumental in the sale of the property to Lee.
Without their intervention, no sale could have been consummated. They were the ones who set the sale of the
subject land in motion.

RTC: judgment is hereby rendered in favor of Borbon, Flor and Antonio and against the Medrano

The business of a real estate broker or agent, generally, is only to find a purchaser, and the settled rule as stated by
the courts is that, in the absence of an express contract between the broker and his principal, the implication generally
is that the broker becomes entitled to the usual commissions whenever he brings to his 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 principal, although
the particulars may be arranged and the matter negotiated and completed between the principal and the purchaser
directly.

Unable to agree with the RTC decision, petitioner Ibaan Rural Bank filed its notice of appeal,

CA: The petition is denied. SC: the petition is DENIED due course. The Decision of the Court of Appeals is AFFIRMED.