Sevilla v. The Court of Appeals ; G.R. Nos. L-41182-3.

April 15, 1988

FACTS:

In 1960, the Tourist World Services Inc. (TWS) and Sevilla entered into  a lease
contract for the use as branch office. In the said contract, both parties were held
solidarily liable for the prompt payment of the monthly rental agreed on. When the
branch office was opened, it was run by appellant Sevilla wherein any airline fare
brought in on her efforts, 4% of that would go to her and 3% was to be withheld by
TWS.

The TWS  appears to have been informed that Sevilla was connected with a rival firm,
the Philippine Travel Bureau, and, since the branch office was anyhow losing, the
TWS considered closing down its office. The premises were locked and neither  the
appellant Sevilla nor any of her employees could enter, a complaint was filed by the
herein appellants against the appellees with a prayer for the issuance of mandatory
preliminary injunction.

In the appeal, Lina Sevilla claims she was not an employee of the TWS to the end that
her relationship with TWS was one of a joint business venture. She declares that she
did not receive any salary from TWS and only earned commissions. Sevilla likewise
claimed that she shared in the expenses maintaining the office and TWS shouldered
the rental in consideration for the 3% split in the commissions procured.

TWS contend that the appellant was an employee of the appellee Tourist World
Service, Inc. and as such was designated manager and she had no say on the lease
executed.

ISSUE:

Whether or not appellant Sevilla was in a joint venture with TWS or at least its agent
coupled with an interest which could not be terminated or revoked unilaterally by
TWS.

HELD:

It is the Court’s considered opinion, that when the petitioner, Lina Sevilla, agreed to
(wo)man the private respondent, Tourist World Service, Inc.’s Ermita office, she
must have done so pursuant to a contract of agency. It is the essence of this
contract that the agent renders services “in representation or on behalf of another.”  In
the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her
principal, Tourist World Service, Inc. As compensation, she received 4% of the
proceeds in the concept of commissions. And as we said, Sevilla herself, based on her
letter of November 28, 1961, presumed her principal’s authority as owner of the
business undertaking. We are convinced, considering the circumstances and from the
respondent Court’s recital of facts, that the parties had contemplated a principal-
agent relationship, rather than a joint management or a partnership.
The agency that we hereby declare to be compatible with the intent of the
parties, cannot be revoked at will. 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. Accordingly, the revocation complained of should entitle the
petitioner, Lina Sevilla, to damages.

NOTE: agency is never presumed and that he who alleges that it exists has the burden
of proof.
Principles:
The essential elements of agency are: (1) there is consent, express or implied of
the parties to establish the relationship; (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.
Agency is basically personal, representative, and derivative in nature. The authority of
the agent to act emanates from the powers granted to him by his principal; his act is
the act of the principal if done within the scope of the authority. Qui facit per alium...
facit se. "He who acts through another acts himself."[19]... 

G.R. No. 205657 INTERNATIONAL EXCHANGE BANK NOW UNION BANK

OF THE PHILIPPINES vs SPOUSES JEROME AND QUINNIE BRIONES,
AND JOHN DOE
 

Facts: Spouses Briones took out a loan which was executed though a promissory note
which appointed the bank as attorney-in-fact of the spouse with the obligation among
others to file an insurance claim in case of loss or damage to the vehicle of the car.

The vehicle was subsequently carnapped. iBank instead of filing for insurance filed in
behalf of Spouses it collected from former. Now respondents was forced to claim for
insurance.

Issues:

1) Whether an agency relationship existed between the parties.

2)Whether the agency relationship was revoked or terminated when Spouses Briones
themselves claimed for insurance.

3) Whether petitioner is entitled to the return of the mortgaged vehicle or, in the
alternative, payment of the outstanding balance of the loan taken out for the
mortgaged vehicle.

Rulings:

1) The Supreme Court ruled in affirmative. All the elements of agency exist in this
case. Under the promissory note with chattel mortgage, Spouses Briones
appointed iBank as their attorney-in-fact, authorizing it to file a claim with the
insurance company if the mortgaged vehicle was lost or damaged. Petitioner was also
authorized to collect the insurance proceeds as the beneficiary of the insurance policy.
Sections 6 and 22 of the promissory note state:

1. The MORTGAGOR agrees that he will cause the mortgaged property/ies to be

insured against loss or damage by accident, theft and fire . . . with an insurance
company/ies acceptable to the MORTGAGEE … ; that he will make all loss, if any,
under such policy/ies payable to the MORTGAGEE or its assigns … [w]ith the
proceeds thereon in case of loss, payable to the said MORTGAGEE or its assigns …
 shall be added to the principal indebtedness hereby secured … [M]ortgagor hereby
further constitutes the MORTGAGEE to be its/his/her Attorney-in-Fact for the
purpose of filing claims with insurance company including but not limited to apply,
sign, follow-up and secure any documents, deeds . . . that may be required by the
insurance company to process the insurance claim …
2. In case of loss or damage, the MORTGAGOR hereby irrevocably appoints the
MORTGAGEE or its assigns as his attorney-in-fact with full power and authority to
file, follow-up, prosecute, compromise or settle insurance claims; to sign, execute
and deliver the corresponding papers, receipt and documents to the insurance
company as may be necessary to prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its interest. (Emphasis supplied, citation
omitted)

Article 1370 of the Civil Code is categorical that when “the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control.”

The determination of agency is ultimately factual in nature and this Court sees no
reason to reverse the findings of the Regional Trial Court and the Court of Appeals.
They both found the existence of an agency relationship between the Spouses Briones
and iBank, based on the clear wording of Sections 6 and 22 of the promissory note
with chattel mortgage, which petitioner prepared and respondents signed.

2) The Court ruled that the agency was not revoked. In the promissory note with
chattel mortgage, the Spouses Briones authorized petitioner to claim, collect, and
apply· the insurance proceeds towards the full satisfaction of their loan if the
mortgaged vehicle were lost or damaged. Clearly, a bilateral contract existed
between the parties, making the agency irrevocable. Petitioner was also aware of
the bilateral contract; thus, it included the designation of an irrevocable agency in the
promissory note with chattel mortgage that it prepared for the Spouses Briones to
sign.

3) The Court ruled that it was as the agent, petitioner was mandated to look after the
interests of the Spouses Briones. However, instead of going after the insurance
proceeds, as expected of it as the agent, petitioner opted to claim the full amount from
the Spouses Briones, disregard the established principal-agency relationship, and put
its own interests before those of its principal.

The facts show that the insurance policy was valid when the vehicle was lost, and that
the insurance claim was only denied because of the belated filing. Having been
negligent in its duties as the duly constituted agent, petitioner must be held liable for
the damages suffered by the Spouses Briones because of non-performance of its
obligation as the agent, and because it prioritized its interests over that of its principal.

Furthermore, petitioner’s bad faith was evident when it advised the Spouses Briones
to continue paying three (3) monthly installments after the loss, purportedly to show
their good faith. A principal and an agent enjoy a fiduciary relationship marked
with trust and confidence, therefore, the agent has the duty “to act in good faith
[to advance] the interests of [its] principal.”
If petitioner was indeed acting in good faith, it could have timely informed the
Spouses Briones that it was terminating the agency and its right to file an insurance
claim, and could have advised them to facilitate the insurance proceeds themselves.
Petitioner’s failure to do so only compounds its negligence and underscores its bad
faith. Thus, it will be inequitable now to compel the Spouses Briones to pay the full
amount of the lost property.