YU ENG CHO V.

PAN AM
328 SCRA 717
TOPIC/DOCTRINE
The declarations of the agent alone are generally insufficient to establish the fact or
extent of his authority.
FACTS
Plaintiff Yu Eng Cho is a businessman who travels from time to time to Malaysia, Taipei
and Hongkong. On July 10, 1976, plaintiffs bought plane tickets from defendant Claudia
Tagunicar who represented herself to be an agent of defendant Tourist World Services,
Inc. (TWSI). The destination[s] are Hongkong, Tokyo, San Francisco, U.S.A. On said
date, only the passage from Manila to Hongkong, then to Tokyo, were confirmed. [PAA]
Flight 002 from Tokyo to San Francisco was on “RQ” status, meaning “on request”. Per
instruction of defendant Claudia Tagunicar, plaintiffs returned after a few days for the
confirmation of the Tokyo-San Francisco segment of the trip. After calling up Canilao of
TWSI, defendant Tagunicar told plaintiffs that their flight is now confirmed all the way.
On July 23, 1978, plaintiffs left for Hongkong and thereafter left for Tokyo. Upon their
arrival in Tokyo, they called up Pan-Am office for reconfirmation of their flight to San
Francisco. Said office, however, informed them that their names are not in the manifest.
Since plaintiffs were supposed to leave on the 29th of July, 1978, and could not remain
in Japan for more than 72 hours, they were constrained to agree to accept airline tickets
for Taipei instead, per advise of JAL officials. Upon reaching Taipei, there were no
flight[s] available for plaintiffs, thus, they were forced to return back to Manila on instead
of proceeding to the United States. A complaint for damages was filed by petitioners
against private respondents the Regional Trial Court held the defendants jointly and
severally liable, except defendant Julieta Canilao. Only respondents Pan Am and
Tagunicar appealed to the Court of Appeals. the appellate court rendered judgment
modifying the amount of damages awarded, holding private respondent Tagunicar
solely liable therefor, and absolving respondents Pan Am and TWSI from all liability.
ISSUE
Is there is an agency relationship between PAN-AM, TWSI and Tagunicar.
RULING
No.
The court held that the declarations of the agent alone are generally insufficient to
establish the fact or extent of his authority. The affidavit of a person agent where she
stated that she is an authorized agent of a particular principal has weak probative value
in light of her testimony in court to the contrary. t is a settled rule that persons dealing
with an assumed agent are bound at their peril, if they would hold the principal liable, to
ascertain not only the fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to establish it.
Here, the court held that petitioners rely on the affidavit of respondent Tagunicar where
she stated that she is an authorized agent of TWSI. Respondent Tagunicar was
prevailed upon by petitioners’ son and their lawyer to sign the affidavit despite her
objection to the statement therein that she was an agent of TWSI. They assured her
that “it is immaterial” and that “if we file a suit against you we cannot get anything from
you.” This purported admission of respondent Tagunicar cannot be used by petitioners
to prove their agency relationship. This affidavit, however, has weak probative value in
light of respondent Tagunicar’s testimony in court to the contrary. Affidavits, being taken
ex parte, are almost always incomplete and often inaccurate, sometimes from partial
suggestion, or for want of suggestion and inquiries. Their infirmity as a species of
evidence is a matter of judicial experience and are thus considered inferior to the
testimony given in court. Further, affidavits are not complete reproductions of what the
declarant has in mind because they are generally prepared by the administering officer
and the affiant simply signs them after the same have been read to her.

FACTS:
Sometime in February, 1970, the late Jose G. Gana and his family, numbering nine (the
GANAS), purchased from AIR FRANCE through Imperial Travels, Incorporated, a duly
authorized travel agent, nine (9) "open-dated" air passage tickets for the
Manila/Osaka/Tokyo/Manila route. The GANAS paid a total of US$2,528.85 for their
economy and first class fares. Said tickets were bought at the then prevailing exchange
rate of P3.90 per US$1.00. The GANAS also paid travel taxes of P100.00 for each
passenger. 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").The GANAS 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 were first 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 or one day before the expiry date. 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. There is no question
with respect to this leg of the trip.However, for the Osaka/Tokyo flight on 17 May 1971,
Japan Airlines 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 WAS RATIFIED BY ITS PRINCIPAL RENDERING THEM LIABLE?

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. The conclusion is
inevitable that the GANAS brought upon themselves the predicament they were in for
having insisted on using tickets that were due to expire in an effort, perhaps, to beat the
deadline and in the thought that by commencing the trip the day before the expiry date,
they could complete the trip even thereafter. It should be recalled that AIR FRANCE
was even unaware of the validating SAS and JAL. stickers that Ella had affixed
spuriously. Consequently, Japan Air Lines and AIR FRANCE merely acted within their
contractual rights when they dishonored the tickets on the remaining segments of the
trip and when AIR FRANCE demanded payment of the adjusted fare rates and travel
taxes for the Tokyo/Manila flight. WHEREFORE, the judgment under review is hereby
reversed and set aside, and the Amended Complaint filed by private respondents
hereby dismissed.
Toyota Shaw, Inc. v. Court of Appeals
G.R. N°11650, May 23, 1995; Davide, Jr., J.
Facts: Private respondent Luna Sosa wanted to purchase a Tovota Lite Ace and had
difficulty finding a dealer selling an available unit. He was able to contact petitioner
Tovota Shaw, Inc. and was told they had an available unit. Popong Bernardo, a sales
representative of petitioner company, entered into an Aercement with orivate
respondent in consideration of the atter's request to have the unit ready not later than
17 lune 1898 which he will use to go to his home province for his birthdav celebration. It
was also agreed upon that the balance will be paid by credit financing through B.A.
Finance. The next day, a Vehicle Sales Proposal (SP) was accomplished by Bernardo
in lieu of the delivery of the P 100,000 downpayment containing the aforementioned
manner of payment and was approved by the sales supervisor. On 17 June logo, me
Drivace venice was nor denveredras agreea upon because. as Bernardo told private
respondent. "nasulot ang unit ne ihang malakas. Private respondent then asked for the
refund of his P 100.000 downpavment which the petitioner did so on the same day by
issuing a check then signed by the former with reservation as to future claims for
damages. Thereafter. petitioner refused to accede to the demands contained in private
respondents two letters, prompting the latter to file a complaint. The trial court resolved
in favor of the latter and was subsequently affirmed by public respondent Court of
Appeals in toto hence the instant case.
Issue: WON the Agreement, executed and signed by petitioner's sales representative, a
pertected contract of sale, binding upon the petitioner:
Held: The Court resolved in the negative. This Court had already ruled that a definite
agreement on the manner of payment of the price is an essential element in the
formation of a binding and entorceable contract of sale. This 1S so because the
agreement as to the manner of payment goes into the price such that a disagreement
on the manner of payment is tantamount to a failure oad ee on me orce There was no
obligation on the part of Toyota to transfer ownership of a determinate thin to Sosa and
no correlative oblication on the part of the latter to pay therefor a price certain appears
in the Agreement. The provision on the downpavment made no specific reference to a
sale of a vehicle. It it was intended for a contract of sale, it could only reter to a sale on
installment basis, as the VSP executed the following dav confirmed Moreover, there
was absence of a meeting of minds between Toyota and Sosa. Knowing that Bernardo
was only a sales representative, hence a mere agent of petitioner, it was incumbent
upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of
Bernardo's authority in respect of contracts to sell Toyota's vehicles. A person dealing
with an agent is put upon inquiry and must discover upon his peril the authority of the
agent. Accordingly. in a sale on installment basis which is financed by a financing
company, the financing company is subrogated in the place of the seller, as the creditor
of the installment buver. Since B.A. Finance did not approve Sosas application, there
was then no meeting of minds on the sale on installment basis. The vsP was a mere
proposal which was aborted in lieu of subsequent events. It follows that the VSP
created no demandable right in tavor of Sosa for the delivery of the vehicle to him, and
its non-delivery did not cause any legally indemnifiable injury.

ALBALADEJO Y CIA., S. en C. vs. The PHILIPPINE REFINING CO., as successor to

The Visayan Refining Co.,
FACTS:
It appears that Albaladejo y Cia. is a limited partnership, organized in conformity with
the laws of these Islands, and having its principal place of business at Legaspi, in the
Province of Albay; and during the transactions which gave origin to this litigation said
firm was engaged in the buying and selling of the products of the country, especially
copra, and in the conduct of a general mercantile business in Legaspi and in other
places where it maintained agencies, or sub-agencies, for the prosecution of its
commercial enterprises. The Visayan Refining Co. is a corporation organized under the
laws of the Philippine Islands; and prior to July 9, 1920, it was engaged in operating its
extensive plant at Opon, Cebu, for the manufacture of coconut oil. On August 28, 1918,
the plaintiff made a contract with the Visayan Refining Co. Pursuant to this agreement
the plaintiff, during the year therein contemplated, bought copra extensively for the
Visayan Refining Co. At the end of said year both parties found themselves satisfied
with the existing arrangement, and they therefore continued by tacit consent to govern
their future relations by the same agreement. In this situation affairs remained until July
9, 1920, when the Visayan Refining Co. closed down its factory at Opon and withdrew
from the copra market. When the contract above referred to was originally made,
Albaladejo y Cia. apparently had only one commercial establishment, i.e., that at
Legaspi; but the large requirements of the Visayan Refining Co. for copra appeared so
far to justify the extension of the plaintiff's business that during the course of the next
two or three years it established some twenty agencies, or subagencies, in various ports
and places of the Province of Albay and neighboring provinces. After the Visayan
Refining Co. had ceased to buy copra, as above stated, of which fact the plaintiff was
duly notified, the supplies of copra already purchased by the plaintiff were gradually
shipped out and accepted by the Visayan Refining Co., and in the course of the next
eight or ten months the accounts between the two parties were liquidated. The last
account rendered by the Visayan Refining Co. to the plaintiff was for the month of April,
1921, and it showed a balance of P288 in favor of the defendant. Upon reference to
paragraph five of the contract reproduced above it will be seen that the Visayan
Refining Co. obligated itself to provide transportation by sea to Opon, Cebu, for the
copra which should be delivered to it by the plaintiff; and the first cause of action set
forth in the complaint is planted upon the alleged negligent failure of the Visayan
Refining Co. to provide opportune transportation for the copra collected by the plaintiff
and deposited for shipment at various places. ISSUE: WON 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:
NO. Attentive perusal of the contract is, however, convincing to the effect that the
relation between the parties was not that of principal and agent in so far as relates to
the purchase of copra by the plaintiff. It is true that the Visayan Refining Co. made the
plaintiff one of its instruments for the collection of copra; but it is clear that in 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 of the trade letters
also the various instrumentalities used by the Visayan Refining Co. for the collection of
copra are spoken of as agents. 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 delivered by way of subsequent sale to said company.

G.R. No. L-15568 November 8, 1919

W. G. PHILPOTTS, petitioner, vs. PHILIPPINE MANUFACTURING COMPANY and F.
N. BERRY, respondents.
Lawrence and Ross for petitioner. Crossfield and O'Brien for defendants.
STREET, J.:
The petitioner, W. G. Philpotts, a stockholder in the Philippine Manufacturing Company,
one of the respondents herein, seeks by this proceeding to obtain a writ of mandamus
to compel the respondents to permit the plaintiff, in person or by some authorized agent
or attorney, to inspect and examine the records of the business transacted by said
company since January 1, 1918. The petition is filed originally in this court under the
authority of section 515 of the Code of Civil Procedure, which gives to this tribunal
concurrent jurisdiction with the Court of First Instance in cases, among others, where
any corporation or person unlawfully excludes the plaintiff from the use and enjoyment
of some right to which he is entitled. The respondents interposed a demurrer, and the
controversy is now before us for the determination of the questions thus presented.
The first point made has reference to a supposed defect of parties, and it is said that the
action can not be maintained jointly against the corporation and its secretary without the
addition of the allegation that the latter is the custodian of the business records of the
respondent company.
By the plain language of sections 515 and 222 of our Code of Civil Procedure, the right
of action in such a proceeding as this is given against the corporation; and the
respondent corporation in this case was the only absolutely necessary party. In the Ohio
case of Cincinnati Volksblatt Co. vs. Hoffmister (61 Ohio St., 432; 48 L. R. A., 735), only
the corporation was named as defendant, while the complaint, in language almost
identical with that in the case at bar, alleged a demand upon and refusal by the
corporation.
Nevertheless the propriety of naming the secretary of the corporation as a codefendant
cannot be questioned, since such official is customarily charged with the custody of all
documents, correspondence, and records of a corporation, and he is presumably the
person against whom the personal orders of the court would be made effective in case
the relief sought should be granted. Certainly there is nothing in the complaint to
indicate that the secretary is an improper person to be joined. The petitioner might have
named the president of the corporation as a respondent also; and this official might be
brought in later, even after judgment rendered, if necessary to the effectuation of the
order of the court.
Section 222 of our Code of Civil Procedure is taken from the California Code, and a
decision of the California Supreme Court — Barber vs. Mulford (117 Cal., 356) — is
quite clear upon the point that both the corporation and its officers may be joined as
defendants.
The real controversy which has brought these litigants into court is upon the question
argued in connection with the second ground of demurrer, namely, whether the right
which the law concedes to a stockholder to inspect the records can be exercised by a
proper agent or attorney of the stockholder as well as by the stockholder in person.
There is no pretense that the respondent corporation or any of its officials has refused
to allow the petitioner himself to examine anything relating to the affairs of the company,
and the petition prays for a peremptory order commanding the respondents to place the
records of all business transactions of the company, during a specified period, at the
disposal of the plaintiff or his duly authorized agent or attorney, it being evident that the
petitioner desires to exercise said right through an agent or attorney. In the argument in
support of the demurrer it is conceded by counsel for the respondents that there is a
right of examination in the stockholder granted under section 51 of the Corporation Law,
but it is insisted that this right must be exercised in person.
The pertinent provision of our law is found in the second paragraph of section 51 of Act
No. 1459, which reads as follows: "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 provision is to be read of course in connecting with the related provisions of
sections 51 and 52, defining the duty of the corporation in respect to the keeping of its
records.
Now it is our opinion, and we accordingly hold, that the right of inspection given to a
stockholder in the provision above quoted can be exercised either by himself or by any
proper representative or attorney in fact, and either with or without the attendance of the
stockholder. This is in conformity with the general rule that what a man may do in
person he may do through another; and we find nothing in the statute that would justify
us in qualifying the right in the manner suggested by the respondents.
This conclusion is supported by the undoubted weight of authority in the United States,
where it is generally held that the provisions of law conceding the right of inspection to
stockholders of corporations are to be liberally construed and that said right may be
exercised through any other properly authorized person. As was said in Foster vs.
White (86 Ala., 467), "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.
Otherwise it would be unavailing in many instances." An observation to the same effect
is contained in Martin vs. Bienville Oil Works Co. (28 La., 204), where it is said: "The
possession of the right in question would be futile if the possessor of it, through lack of
knowledge necessary to exercise it, were debarred the right of procuring in his behalf
the services of one who could exercise it." In Deadreck vs. Wilson (8 Baxt. [Tenn.],
108), the court said: "That stockholders have the right to inspect the books of the
corporation, taking minutes from the same, at all reasonable times, and may be aided in
this by experts and counsel, so as to make the inspection valuable to them, is a
principle too well settled to need discussion." Authorities on this point could be
accumulated in great abundance, but as they may be found cited in any legal
encyclopedia or treaties devoted to the subject of corporations, it is unnecessary here to
refer to other cases announcing the same rule.
In order that the rule above stated may not be taken in too sweeping a sense, we deem
it advisable to say that there are some things which a corporation may undoubtedly
keep secret, notwithstanding the right of inspection given by law to the stockholder; as
for instance, where a corporation, engaged in the business of manufacture, has
acquired a formula or process, not generally known, which has proved of utility to it in
the manufacture of its products. It is not our intention to declare that the authorities of
the corporation, and more particularly the Board of Directors, might not adopt measures
for the protection of such process form publicity. There is, however, nothing in the
petition which would indicate that the petitioner in this case is seeking to discover
anything which the corporation is entitled to keep secret; and if anything of the sort is
involved in the case it may be brought out at a more advanced stage of the
proceedings/lawphil/net
The demurrer is overruled; and it is ordered that the writ of mandamus shall issue as
prayed, unless within 5 days from notification hereof the respondents answer to the
merits. So ordered.

Toyota Shaw Inc. vs. Court of Appeals, and Sosa 244 SCRA 320
May 1995
FACTS:
Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the
Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where
they met Popong Bernardo who was a sales representative of said branch. Sosa
emphasized that he needed the car not later than June 17, 1989 because he, his family,
and a balikbayan guest would be using it on June 18 to ao home to Marindugue where
he will celebrate his birthdav on June 19. Bernardo assured Sosa that a unit would be
ready for pick up on June 17 at 10:00 in the morning, and signed the "Agreements
Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.," a document which did not
mention anything about the full purchase price and the manner the installments were to
be paid. Sosa and Gilbert delivered the down payment of P100,000.00 on June 15,
1989 and Bernardo accomplished a printed Vehicle Sales Proposal (VSP) No. 928
which showed Sosa's full name and home address, that payment is by "installment," to
be financed by "B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00",
but the spaces provided for "Delivery Terms" were not filled-up. When June 17 came,
however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa asked that his
down payment be refunded and petitioner Toyota issued also on June 17 a Far East
Bank check for the full amount of P100,000.00, the receipt of which was shown by a
check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to
our future claims for damages." Petitioner Toyota contended that the B.A. Finance
disapproved Sosa's the credit financing application and further alleged that a particular
unit had already been reserved and earmarked for Sosa but could not be released due
to the uncertainty of payment of the balance of the purchase price. Toyota then gave
Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa
refused. The trial court found that there was a valid perfected contract of sale between
Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in
bad faith in selling to another the unit already reserved for Sosa, and the Court of
Appeals affirmed the said decision.
ISSUE:
Was there a perfected contract of sale between respondent Sosa and petitioner
Toyota? COURT RULING: The Supreme Court granted Toyota's petition and dismissed
Sosa's complaint for damages because the document entitled "Agreements Between
Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.," was not a perfected contract of
sale, but merely an agreement between Mr. Sosa and Bernardo as private individuals
and not between Mr. Sosa and Toyota as parties to a contract.
There was no indication in the said document of any obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and neither was there a correlative
obligation on the part of the latter to pav therefor a price certain. The provision on the
downpavment of P100,000.00 made no specific reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only refer to a sale on installment basis, as VSP
No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable
right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not
cause any legally indemnifiable injury.

THOMAS VS. PINEDA

FACTS OF THE CASE Summary:
Defendant managed the business as plaintiff’s employee or trustee during the Japanese
occupation of the City of Manila and on a share of the profits basis. The business
burned down. After the war, defendant established a business of the same name,
located in the same place; he also refused to make an accounting of the business. The
court held that the defendant is obliged to account for the business while he was its
manager, and that he acted in bad faith in his failure to do so. Plaintiff owns the bar and
restaurant known as Silver Dollar Café located in Plaza Santa Cruz, Manila. In the
course of time, the defendant became successively cashier and manager of the
business. On the onset of the war, plaintiff made a fictitious sale of the business to
defendant to prevent the business and its property from falling into enemy hands.
Simultaneously with, or soon after the execution of the simulated sale, the plaintiff and
defendant signed a private or secret document stating that the deed of sale conveying
the restaurant was fictitious and upon the restoration of peace and order, the document
automatically becomes null and void and of no effect. On February 3, 1945, the building
was destroyed by fire but the defendant had been able to remove some of its furniture.
According to the defendant, all of these goods were accounted for and turned over to
the plaintiff. On May 8, 1945, a bar was opened on Calle Bambang under the name
Silver Dollar Café. On September of the same year, it was transferred to its original
location in Plaza Santa Cruz. It is alleged that after liberation, plaintiff brought a certified
public accountant to the café for the purpose of examining the books of the business.
The defendant resisted, and even pointed a gun at them. Because of this incident,
plaintiff brought the present action to compel an accounting of the business. It also
asked the court to enjoin the defendant from using the name of that business, Silver
Dollar Café. The defendant avers that there was a third, verbal agreement, the import of
which was that he was to operate the business with no liability other than to turn it over
to the plaintiff as the plaintiff would find it after the war. He insists therefore that he was
relieved of any duty to make an accounting.
ISSUE OF THE CASE:
Whether or not defendant is obliged to render an accounting to the plaintiff. YES.
RULING OF THE COURT
The defendant’s contention is at war with the care and precaution which the plaintiff
took to insure his rights in the business and its assets. Unless Thomas was willing to
give away his property and its profits, no man in his right senses would have given his
manager an outright license such as the defendant claims to have gotten from his
employer. The exact legal character of the defendant’s relation to the plaintiff matters
not a bit. It was enough to show, and it had been shown, that he had been entrusted
with the possession and management of the plaintiff’s business and property for the
owner’s benefit and had not made an accounting. Neither did the defendant’s sweeping
statement at the trial – that all the proceeds from the business had been used to support
the plaintiff and his daughters to entertain or bribe Japanese officers and civilians –
dispense with defendant’s duty to account. It was clear error for the court to declare that
there were no surplus profits. The court’s inquiry ought to have been confined to the
determination of the plaintiff’s right to secure an accounting. The defendant denied that
the plaintiff had any proprietary interest in the saloon in Bambang and at Plaza Sta.
Cruz after liberation. Thomas however said that he borrowed P2000 from a friend, and
with that amount he constructed a temporary building in Bambang and with the stocks
saved by the defendant, opened the business there. He said that, as before, the
defendant now worked as manager, with the difference that under the new arrangement
he was to get one-half the net profits. The defendant said that he returned several
cases of whiskey, rum, gin and other kinds of liquor to the plaintiff, and he gave the
latter P2000 in cash. He avers that this payment was “in full and complete liquidation of
the Silver Dollar Café.” The court said that this was highly improbable, to put it mildly.
The use of the old name for the bar in Bambang suggests that the business was in fact
an extension and continuation of the Silver Dollar Café. It was also the plaintiff who
entered into a written contract of lease with the owner of the Santa Cruz location.
Thomas was even named as its proprietor. That the defendant was only a manager is
also made evident by two sets of business cards of the Silver Dollar Café which he
himself caused to be printed. On the first set, David Thomas was held out as the
proprietor and Hermogenes Pineda, as manager. On the second set, which were
ordered later, the defendant was not even mentioned as manager, but one Bill Magner,
while David Thomas’ name was retained as proprietor. At different times from May 8 to
December 15, 1945, the defendant handed the plaintiff averse amounts totaling
P24,100 without so much as asking Thomas to sign a receipt for any of them. The
defendant testified that these amounts were simple loans secured by plaintiff’s mining
shares of stock. The court held that the lack of any receipt is incompatible with the
hypothesis of loans. There is no escaping the conclusion that the plaintiff was the sole
owner of the post-war Silver Dollar bar and restaurant, that the defendant was only an
industrial partner, and that the said amounts were withdrawals on account of the profits.
As to the use of the trade name: It appears that the defendant on September 27, 1945,
registered the business and its name as his own. He contends that in 1940, the
plaintiff’s right to use this trade name expired and by abandonment and non-use, the
plaintiff ceased to have any title thereto. The alleged abandonment or non-use is
predicated on the testimony that the plaintiff expressly allowed the defendant to
appropriate the trade name in dispute. The court held that the defendant registered the
business in bad faith. The plaintiff’s non-use of his trade name did not work as a
forfeiture of his exclusive right to the name. As legal proposition and in good
conscience, the defendant’s registration of the trade name Silver Dollar Café must be
deemed to have been affected for the benefit of its owner of whom he was a mere
trustee or employee. "The relations of an agent to his principal are fiduciary and it is an
elementary and very old rule that in regard to property forming the subject matter of the
agency, he is estopped from acquiring or asserting a title adverse to that of principal.
His position is analogous to that of a trustee and he cannot consistently, with the
principles of good faith, be allowed to create in himself an interest in opposition to that
of his principal or cestui que trust. A receiver, trustee, attorney, agent or any other
person occupying fiduciary relations respecting property or persons utterly disabled
from acquiring for his own benefit the property committed to his custody for
management. This rule is entirely independent of the fact whether any fraud has
intervened. No fraud in fact need be shown, and no excuse will be heard from any such
inquiry that the rule takes so general form. The rule stands on the moral obligation to
refrain from placing one's self in position which ordinarily excite conflicts between
selfinterest at the expense of one's integrity and duty to another, by making it possible
to profit by yielding to temptation.
PALMA VS. CRISTOBAL
FACTS:
In 1909, after registration proceedings under ACT 496, the original certificate of title was
issued in the names of Palma and his wife (Luisa Cristobal). By the year 1923, said
certificate was cancelled by virtue of CFI decree, but was later substituted by another
certificate of title also in the name of Palma and his wife. His wife died. Because of its
death, a new certificate was issued, but this time only in the name of Palma only. With
such, Palma sought to eject Cristobal from a parcel of land in Tondo (TCT of w/c
registered to Palma). Cristobal raised the question of ownership and the case was
dismissed. Palma filed w/ CFI Manila praying he be declared owner of the land and for
Cristobal to be ordered to restore its possession to him and remove his house
therefrom. The CFI dismissed the case, and when the case was brought to the CA it
was similarly dismissed. The court of appeals concluded that the parcel of land in
question is a community property held by Palma in trust for the real owners (respondent
Cristobal being an heir of one of them), the registration having been made in
accordance with an understanding between the coowners, by reason of the confidence
they had in Palma and his wife. This confidence, close relationship, and the fact that co-
owners were receiving their shares in the rentals, were the reasons why no step had
been taken to partition the property. Before the death of Palma's wife, she called her
husband and enjoined him to give her co-owners their shares and he told her not to
worry about it because he would. The CA, in dismissing the case, invoked SC rulings
w/c declared that the registration of the property in the name of the trustees in
possession thereof, must be deemed to have been effected for the benefit of the
principal/cestui que trust. Thus this appeal by certiorari.
ISSUE OF THE CASE:
Whether or not the CA erred in dismissing the case
RULING OF THE COURT:
NO, the CA did not erred in dismissing the case. Palma contends that if he did commit
fraud, Cristobal was in fact a part of it, but the SC held that the fact that Cristobal has
been a party to the deception which resulted in Palma's securing in his name the title to
a property not belonging to him, is not a valid reason for changing the legal relationship
between the latter and its true owners to such an extent as to let them lose their
ownership to a person trying to usurp it. Cristobal is not barred because his appearance
as attorney for petitioner was not a misrepresentation which would induce Palma to
believe that he recognized Palma as the sole owner of the property in controversy. The
misrepresentation could deceive the court and outsiders, because they were not aware
of the understanding between the co-owners that the property be registered in the name
of Palma. Palma then claimed that even granting the property was owned by several co-
owners he now owns it because of prescription. This theory holds no water because,
according to the pronouncement of the CA, Palma held the property and secured its the
registration in his name in a fiduciary capacity, and it is elementary that a trustee cannot
acquire by prescription the ownership of a property entrusted to him. The position of a
trustee is of representative nature. His position is the position of a cestui que trust. It is
logical that all benefits derived by the possession and acts of the agent, as such agent,
should accrue to the benefit of his principal. The relations of an agent to his principal are
fiduciary and in regard to property forming the subject matter of the agency, he is
estopped from acquiring or asserting a title adverse to that of the principal. His position
is analogous to that of a trustee and he cannot consistently, with the principles of good
faith, be allowed to create in himself an interest in opposition to that of his principal or
cestui que trust.

FEDERICO VALERA VS. MIGUEL VELASCO

G.R. No. L-28050 March 13, 1928
FACTS OF THE CASE:
By virtue of the powers of attorney executed by the plaintiff-appellant, the
defendantappellee was appointed attorney-in-fact with authority to manage his property
in the Philippines, consisting of the usufruct of a real property. The liquidation of
accounts revealed that the plaintiff-appellant owed the defendant P1,100, and as
misunderstanding arose between them, the defendant-appellee brought suit against the
plaintiff-appellant . The trial court decided in favor of agent; sheriff levied upon plaintiff-
appellant’s right of usufruct, sold it at public auction and adjudicated it to defendant-
appellee in payment of his claim. Plaintiff-appellant sold his right of redemption to
Eduardo Hernandez- Hernandez conveyed the same right of redemption himself-but
then another person Salvador Vallejo, who had an execution upon a judgment against
the plaintiff rendered in another case, levied upon said right of redemption- right of
redemption sold to Vallejo and was definitely adjudicated to him. Later, he transferred
the said right of redemption to defendant-appellee. The title was consolidated in his
name, thus, the agent got the title to the right of usufruct to the aforementioned
property.

ISSUE OF THE CASE: Whether or not the agency was terminated

RULING OF THE COURT:

YES. Art 1732- Agency is terminated by:
a) Revocation
b) Withdrawal of agent
c) Death, interdiction, bankruptcy, or insolvency of the principal or of the agent.
While Art 1736- An agent may withdraw by giving notice to principal. If principal suffer
any damage, agent must indemnify him unless the agent’s reason should be the
impossibility of continuing to act as such without serious detriment to himself. The
misunderstanding between the plaintiff and the defendant over the payment of the
balance of P1, 000 due the latter more than prove the breach of the juridical relation
between them; For, although the agent has not expressly told his principal that he
renounced the agency, yet neither dignity nor decorum permits the latter to continue
representing a person who has adopted such an antagonistic attitude towards him.
When the agent filed a complaint against his principal for recovery of a sum of money
arising from the liquidation of the accounts between them in connection with the agency,
principal could not have understood otherwise than that agent renounced the agency;
because his act was more expressive than words and could not have caused any doubt.
In order to terminate their relations by virtue of the agency the defendant, as agent,
rendered his final account on March 31, 1923 to the plaintiff, as principal. Briefly, then,
the fact that an agent institutes an action against his principal for the recovery of the
balance in his favor resulting from the liquidation of the accounts between them arising
from the agency, and renders and final account of his operations, is equivalent to an
express renunciation of the agency, and terminates the juridical relation between them.
Hence, the said agent's purchase of the aforesaid principal's right of usufruct at public
auction held by virtue of an execution issued upon the judgment rendered in favor of the
former and against the latter, is valid and legal. Moreover, the defendant-appellee,
having acquired right of redemption from Salvador Vallejo, who had acquired it at public
auction by virtue of a writ of execution issued upon the judgment obtained by the said
Vallejo against the said plaintiff, the latter lost all right to said usufruct. Neither did the
trial court err in not ordering the agent to render a liquidation of accounts from March
31, 1923, inasmuch as he had acquired the rights of the plaintiff by purchase at the
execution sale, and as purchaser, he was entitled to receive the rents from the date of
the sale until the date of the repurchase, considering them as part of the redemption
price; but not having exercised the right repurchase during the legal period, and the title
of the re purchaser having become absolute, the latter did not have to account for said
rents.

G.R. No. 149353 June 26, 2006JOCELYN B. DOLES,

Petitioner, vs.MA. AURA TINA ANGELES,
Respondent.AUSTRIA-MARTINEZ, J.:
Facts:
Respondent alleged that petitioner was indebted to the former in the concept of a
personal loan amounting to P405,430.00 representing the principal amount and interest;
that on October 5, 1996, by virtue of a "Deed of Absolute Sale",3petitioner, as seller,
ceded to respondent, as buyer, a parcel of land, as well as the improvements thereon,
with an area of 42 square meters, in order to satisfy her personal loan with
respondent.Petitioner, denied that she borrowed money from respondent, and averred
that from June to September 1995, she referred her friends to respondent whom she
knew to be engaged in the business of lending money in exchange for personal checks
through her capitalist Arsenio Pua. She alleged that her friends, borrowed money from
respondent and issued personal checks in payment of the loan; that the checks
bounced for insufficiency of funds; that despite her efforts to assist respondent to collect
from the borrowers, she could no longer locate them; that she was forced to issue eight
checks amounting to P350,000 to answer for the bounced checks of the borrowers she
referred; that prior to the issuance of the checks she informed respondent that they
were not sufficiently funded but the latter nonetheless deposited the checks and for
which reason they were subsequently dishonored, that she was forced by respondent to
execute an "Absolute Deed of Sale" over her property in Bacoor, Cavite, to avoid
criminal prosecution.
RTC: Plaintiff Angeles’ admission that the borrowers are the friends of defendant Doles
and further admission that the checks issued by these borrowers in payment of the loan
obligation negates the cause or consideration of the contract of sale executed by and
between plaintiff and defendant. CA Reversed: The CA concluded that petitioner was
the borrower and, in turn, would "re-lend" the amount borrowed from the respondent to
her friends. Hence, the Deed of Absolute Sale was supported by a valid consideration,
which is the sum of money petitioner owed respondent amounting to P405,430.00,
representing both principal and interest.Petitioner filed her Motion for Reconsideration,
arguing that respondent categorically admitted in open court that she acted only as
agent or representative of Arsenio Pua, the principal financier and, hence, she had no
legal capacity to sue petitioner. Hence this petition.
Issues:
Whether or not the petitioner can be considered as a debtor of the respondent.Whether
or not an agent who was not authorized by the principal to collect debt in his behalf
could directly collect payment from the debtor.
Held:
No. No.
Ratio:
Petitioner knew that the financier of respondent is Pua; and respondent knew that the
borrowers are friends of petitioner. This Court has affirmed that, under Article 1868 of
the Civil Code, the basis of agency is representation. In the case at bar, both petitioner
and respondent have undeniably disclosed to each other that they are representing
someone else, and so both of them are estopped to deny the same. And since plaintiff,
being an agent, was not authorized by the principal to collect the debt in his behalf, and
respondent was acting only as an agent with regards to the debtors, the sale of the
respondent's property having been predicated on the loan is void for lack of
consideration

FAR EASTERN EXPORT & IMPORT CO., vs. LIM TECK SUAN;
G.R. No. L-7144

FACTS OF THE CASE:

Sometime in November, 1948, Ignacio Delizalde, an agent of the Far Eastern Export &
Import Company, went to the store of Lim Teck Suan situated at 267 San Vicente
Street, Manila, and offered to sell textile, showing samples thereof, and having arrived
at an agreement with Bernardo Lim, the General Manager of Lim Teck Suan, Delizalde
returned on November 17 with the buyer's order. plaintiff established a letter of credit
No. 6390 (Exhibit B) in favor of Frenkel International Corporation through the Hongkong
and Shanghai Bangking Corporation, attached to the agreed statement of facts. On
February 11, 1949, the textile arrived at Manila on board the vessel M. S. Arnold
Maersk. The plaintiff complained to the defendant of the inferior quality of the textile
received by him and had them examined by Marine Surveyor Del Pan & Company.
Upon instructions of the defendants plaintiff deposited the goods with the United
Warehouse Corporation. As per suggestion of the Far Eastern Export and Import
Company contained in its letter dated June 16, 1949, plaintiff withdrew from the United
Bonded Warehouse, Port Area, Manila, the fifteen cases of Ashtone Acetate and Rayon
Suiting for the purpose of offering them for sale which netted P11,907.30. Deducting
this amount from the sum of P23,686.96 which included the amount paid by plaintiff for
said textile and the warehouse expenses, a difference of P11,476.66 is left,
representing the net direct loss. The defense set up is that the Far Eastern Export and
Import Company only acted as a broker in this transaction; that after placing the order
the defendants took no further action and the cargo was taken directly by the buyer Lim
Teck Suan, the shipment having been made to him and all the documents were also
handled by him directly without any intervention on the part of the defendants; The trial
court acquitted defendants. CA reversed judgement on the case of Jose Velasco, vs.
Universal Trading Co., Inc., 45 Off. Gaz. 4504 where the transaction therein involved
was found by the court to be one of purchase and sale and not of brokerage or agency.

ISSUE OF THE CASE: Whether or not Far Eastern is liable to the direct loss and acted
as an agent

RULING OF THE COURT: In the present case, the export company acted as agent for
Frenkel International Corporation, presumably the supplier of the textile sold. In the
Velasco case, the Universal Trading Co., was acting as agent for A. J. Wilson
Company, also the supplier of the whisky sold. In the present case, Suan according to
the first part of the agreement is said merely to be commissioning the Export Company
to procure for him the merchandise in question, just as in the other case, Velasco was
supposed to be ordering the whisky thru the Universal Trading Co. In the present case,
the price of the merchandise bought was paid for by Suan by means of an irrevocable
letter of credit opened in favor of the supplier, Frenkel International Corporation. In the
Velasco case, Velasco was given the choice of either opening a similar irrevocable
letter of credit in favor of the supplier A. J. Wilson Company or making a cash deposit. It
is true that in the Velasco case, upon the arrival of the whisky and because it did not
conform to specifications, Velasco refused to received it; but in the present case
although Suan received the merchandise he immediately protested its poor quality and
it was deposited in the warehouse and later withdrawn and sold for the best price
possible, all at the suggestion of the Export company. The present case is in our opinion
a stronger one than that of Velasco for holding the transaction as one of purchase and
sale because as may be noticed from the agreement (Exhibit "A"), the same speaks of
the items (merchandise) therein involved as sold, and the sale was even confirmed by
the Export company. In both cases, the agents Universal Trading Co. and the export
company dealt directly with the local merchants Velasco and Suan without expressly
indicating or revealing their principals. In both cases there was no privity of contract
between the buyers — Suan and Velasco and the suppliers Frenkel International
Corporation and A. J. Wilson Company, respectively. In both cases no commission or
monetary consideration was paid or agreed to be paid by the buyers to the Export
company and the Universal Trading Co., proof that there was no agency or brokerage,
and that the profit of the latter was undoubtedly the difference between the price listed
to the buyers and the net or special price quoted to the sellers, by the suppliers. As
already stated, it was held in the Velasco case that the transaction therein entered into
was one of purchase and sale, and for the same reasons given there, we agreed with
the Court of Appeals that the transaction entered into here is one of purchase and sale.
As was held by this Tribunal in the case of Gonzalo Puyat & Sons Incorporated vs. Arco
Amusement, 72 Phil., 402, where a foreign company has an agent here selling its goods
and merchandise, that same agent could not very well act as agent for local buyers,
because the interests of his foreign principal and those of the buyer would be in direct
conflict. He could not serve two masters at the same time. In the present case, the
Export company being an agent of the Frenkel International Corporation could not, as it
claims, have acted as an agent or broker for Suan.