Agency Digests - Compilation 5

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Angeli, Arvin, Dane, Dinnah, Du, Ellery, Gelo, Gilbert, Hana, Hannah, Jau, Jhoana, Joel, Justin, Kim, Kym, Les, Liz, Luz, Marianne, Mark, Marsie, Richard, Rhey
III. RIGHTS, OBLIGATIONS, and LIABILITY OF THE AGENT A. Rights 1. To compensation Inland Realty Investment Service, Inc. v. CA (1997, Hermosisima Jr.) PARTIES: Petitioners Inland Realty investment Service, Inc. and Rodolfo de los Reyes/ Respondents CA, Gregorio Araneta, Inc. and J. Armando Eduque FACTS: On Sept. 16, 1975, Gregorio Araneta, Inc. (D) granted Inland Realty Investment Service, Inc. (P) a 30-day authority to sell its 9,800 shares of stock in Architects Bldg., Inc. at the price of P1,500/share. P sent proposal letters to its prospective buyers, one of which was Stanford Microsystems, Inc. Stanford offered to buy the shares at P1,000/share. P sent a letter to D to register Stanford as one of its prospective buyers. D replied that the price offered by Stanford was too low and suggested if P may make it better. Ps authority to sell was extended several times: 1) Oct. 2, 1975 for 30 days 2) October 28, 1975 for 30 days and 3) Dec. 2, 1975 for 30 days. On July 8, 1977, the shares were finally sold to Stanford. P then demanded payment of their 5% brokers commission from the proceeds of P13.5M or P675,000. D declined to pay. P filed a claim for unpaid agents commission for brokering the sales transaction. TC dismissed Ps complaint holding that after the authority to sell expired 30 days from Dec. 2, 1975 or on Jan. 1, 1976, P abandoned the sales transaction and were no longer privy to the consummation and
documentation thereof. P appealed. CA dismissed appeal holding that there was no longer any agency after the last extension (Dec. 2). Ps agency contract and authority to sell expired on Jan. 1, 1976 while the consummation of the sale to Stanford occurred more than 1 year and 5 months after the said expiration (July 8, 1977).
ISSUE/HELD: WON P was instrumental in the final consummation of the sale to Stanford which was the same company name submitted to D as prospective buyer - NO WON P is entitled to brokers commission - NO P insists that in the Letter dated Oct. 28, 1976 (Exhibit L), Gregorio Araneta III, in behalf of Araneta, Inc. renewed Ps authority to sell for another 30 days. Court: P have conspicuously failed to attach a certified copy, or even a machine copy, of the said letter. They also attempted to mislead to mislead the Court by saying that the said letter was marked Exhibit L when the actual letter marked as such is dated Oct. 28, 1975, not 1976. P claims that there is another Letter dated Nov. 16, 1976 and marked Exhibit M. Court: No probative value. It allegedly contained a listing of 4 prospective buyers which does not at all prove that the agency contract and authority to sell was renewed after it expired on Jan. 1, 1976. Furthermore, it was signed by P de los Reyes, which makes such document self-serving and therefore, has no evidentiary value. RATIO: Where a party is not the efficient procuring cause in bringing about a sale, he is not entitled to the stipulated brokers commission.
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From Sept. 16, 1975 to Jan. 1, 1976, when Ps authority to sell was subsisting, if at all, P had nothing to show that they actively served their principals interests, pursued to sell the shares in accordance with the terms and conditions, and performed substantial acts that proximately and causatively led to the consummation of the sale to Stanford of Araneta, Inc.s shares in Architects. DISPOSITIVE: Instant petition is HEREBY DISMISSED. Costs against petitioners. DANON V. BRIMO (1921; Johnson, J.) Plaintiff-Appellee: Julio Danon Defendant-Appellant: Antonio A. Brimo & Co. Facts: 1. Plaintiff-Appellee instituted an action to recover the sum of P60K. He claims that he was hired by Defendant Company to look for a purchaser for its factory ("Holland American Oil Co.,") under the following terms: a. That he was to sell the property for P1.2M cash; and b. That he was to receive a commission of 5% of said sum if the sale was consummated or if he should find a purchaser ready, able, and willing to buy the factory for said sum. 2. Plaintiff-Appellee claims that although he did find a purchaser, it was Defendant-Appellant that refused to sell said factory without any justifiable reason and without notifying him. a. He claims that they preferred to sell the property to an American buyer and when he learned of such preference, he found them another (American) buyer Mr. Leas. b. However, he claims that the sale to Mr. Leas was not consummated because Sellner, another broker, allegedly came with an offer from another buyer for P1.3M while Brimo was reading Leas
letter and then and there closed the deal for the bigger amount. TC: Found in favor of the Plaintiff, ordering the Defendant to pay P60K plus costs. Appealed directly to the SC. Issues: 1. WON plaintiff was actually given authority to sell the property. 2. WON plaintiff performed what was required of him in order to entitle him to a commission. Held/Ratio: 1. NO, there was no proof of said authority. a. The only proof presented were the testimonies of Plaintiff, on the one hand, and of Brimo (manager of Defendant-company) on the other. b. It was found that he was only to broker the transaction, as evidenced by the fact that there was another broker (Sellner) who was also attempting to negotiate a sale of the same property. 2. NO, he did not. a. Although plaintiff found a prospective buyer (Mr. Prieto, president of the Santa Ana Oil Mill) for the proposed price, said sale was not perfected because Sellner found a purchaser willing to pay a higher price for the factory (P1.3M) and Mr. Prieto never came to see Brimo to perfect the negotiation. In any case, the permission of the Board of Directors of Santa Ana Oil Mill was required for the sale, and not merely the companys president. b. The action is not for damages for breach of contract but an action to recover the reasonable value for services rendered. In order to be entitled to said value, plaintiff must have performed his part of the contract (that is, to find
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a purchaser for the factory). He should have been the efficient agent or the procuring cause of the sale. His acts must result in the sale. c. Generally, broker bears the risk of the sale not pushing through. The exceptions to this general rule are when: i. If the efforts of the broker are rendered a failure by the fault of the employer; ii. Ifcapriciously he changes his mind after the purchaser, ready and willing, and consenting to the prescribed terms , is produced; or iii. If the latter declines to complete the contract because of some defect of title in the ownership of the seller, some unremoved encumbrance, some defect which is the fault of the latter, then the broker does not lose his commissions. d. Since there was no time frame within which he was to find a buyer, either party is at liberty to terminate the contract at will, subject only to the requirements of good faith. i. If the termination was done by the principal in good faith, the broker still cannot claim compensation even though the sale was made to a customer with whom the broker unsuccessfully negotiated, and even though, to some extent, the seller might justly be said to have availed himself of the fruits of the broker's labor. Dispositive: judgment revoked [sic] and defendant absolved from all liability. People v. Castillo Pardo, J., 2000 FACTS:
(Kidnap for Ransom case) Wilhelmina Andrada was engaged in the real estate business. She was Vice President and Treasurer of her own agency. Prosecution witness Nancy Millo was her secretary for ten years. Accused-appellants, spouses Macario and Mercedita Castillo were both her sales agents on commission basis. In November 1992, her agency had a house for sale. On November 25, 1992, "Albert Gutierrez" , who turned out to be accused Arnulfo Cinco, called Wilhelmina and asked for a discount on the property. He asked if they could meet the next day. Cinco called and asked if they could meet at De los Santos Hospital in Quezon City. Wilhelmina agreed. She and her secretary, Nancy, proceeded to De los Santos Hospital and met with the Cinco and another man, Fernando Malapayon. With Wilhelmina driving, they proceeded in Wilhelminas car to Lantana St. as Fernando A. Malapayon supposedly needed to fetch his wife. They reached a house with a brown gate. Fernando A. Malapayon instructed Wilhelmina to stop. She heard Nancy shout. She turned and found Fernando A. Malapayon pointing a .45 caliber pistol at Nancy, instructing her not to move. Wilhelmina tried to get out of the car but Cinco grabbed her by the neck and locked her in his grip. She wrestled herself from him and got out of the car. She saw a man in a blue shirt and asked him for help. Instead of helping, the man, one of the accused, Teodoro M. Cinco, dragged her back into the car. Nancy however, was able to escape. The 3 men then took the victim to a safe house. Fernando Malapayon then instructed Remigio Gonzales to guard Wilhelmina Andrada at all times. While held captive, the victim saw and identified Macario U. Castillo, Rafael B. Abello and Remigio R. Gonzales asthemen holding her captive. They then demanded a ransom of 8Mphp.The ransom was never paid as Wilhelmina was timely rescued by the PNP.
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It must be noted that Accused-appellants, spouses Macario and Mercedita Castillo referred Fernando Malapayon to Wilhemina. RTC convicted accused Macario U. Castillo, Mercedita PadillaCastillo, Remigio R. Gonzales, Rafael B. Abello, Fernando Malapayon, Arnulfo Cinco and Teodoro M. Cinco of Kidnapping for ransom. Of the seven (7) accused, only Mercedita Padilla-Castillo, Macario U. Castillo, Rafael B. Abello and Remigio R. Gonzales appealed. ISSUES: 1.WON Mercedita Castillo is guilty-YES First, Mercedita referred the accused, Fernando A. Malapayon to Wilhelmina. She and her spouse, accusedappellant, Macario Castillo are the links that introduced Fernando A. Malapayon to victim, Wilhelmina. Second, when "Albert Gutierrez" called Wilhelmina to inquire about the house for sale, he never mentioned that he was referred by either of the Castillos.This is suspicious. Common practice is for a buyer to inform the seller who referred him. Likewise, agents working on commission basis will not normally pass up a commission by not informing their principal of a referred buyer. Third, while Wilhelmina was held captive, Mercedita freely entered and exited the safe house. She was seen and photographed coming out of the safe house. To justify conviction upon circumstantial evidence, the combination of circumstantial evidence must leave no reasonable doubt as to the guilt of the accused. From the aforementioned circumstances, a fair and logical conclusion--
that Mercedita participated in the crime of kidnapping Wilhelmina for ransom can be reached. 2.WON Macario Castillo is guilty-YES Wilhelmina testified that when she was brought to the safe house, she saw three men, among them, accused-appellant Macario. Macario saw Wilhelmina, his employer, bound and blindfolded. She was clearly held against her will. Yet, he did not do anything to help her. The reasons which sufficed to convict Mercedita apply also to Macario 3.WON Remigio Gonzales is guilty-YES There is sufficient evidence of Remigios participation in the conspiracy to kidnap the victim. By guarding Wilhelmina at gun point, Remigio concurred with the criminal design of the principals and performed an act indispensable to the crimes commission. 4.WON Rafael Abello is guilty- NO We come to the appeal of Rafael Abello. Rafael reasons that he was at the safe house because he was hired to do a painting job. Fernando Malapayon confirmed that at about that time, he hired helpers to paint the apartment. Unlike Macario, Rafael sufficiently explained his presence at the safe house. His justification was not rebutted by the prosecution. Failure of the prosecution to overcome the constitutional presumption of innocence entitles the accused-appellant to an acquittal. INFANTE vs. CUNANAN (August 31, 1953, BAUTISTA ANGELO) Parties: CONSEJO INFANTE, petitioner; JOSE CUNANAN, JUAN MIJARES, respondents
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FACTS: Consejo Infante (owner of 2 parcels of land with a house in Mla covered by TCT No. 61786) contracted the services of Cunanan and Mijares (on or before November 30, 1948) to sell this property for P30,000 on condition that the purchaser would assume the existing mortgage with Rehabilitation Finance Corporation. She agreed to pay respondents a 5% commission on the purchase price plus whatever overprice they may obtain for the property. Respondents found Pio S. Noche who was willing to buy the property under the terms agreed upon with Infante. However, when they introduced Noche to Infante, the latter informed them that she was no longer interested in selling the property and made them sign a document acknowledging that written authority given them was already cancelled. Subsequently on December 20, 1948, Infante dealt directly with Noche selling to him the property for P31,000. Upon knowing this transaction, respondents demanded the payment of their commission, but petitioner refused. Respondents then filed present action. Petitioner admitted contracting property. However, she claims: respondents to sell her
Petitioners contention: authority was already withdrawn on November 30, 1948 when, by the voluntary act of respondents, they executed a document stating that said authority shall be considered cancelled and without any effect THUS, when petitioner sold the property to Noche on December 20, 1948, she was already free from her commitment with respondents and not duty bound to pay them any commission ISSUE: WON respondents are entitled to the agreed commission RULING: YES UNDISPUTED that respondents were authorized by petitioner to sell her property for P30,000 on condition that they will be given a 5% commission plus whatever overprice they may obtain for the property o If petitioners contention is true then, no doubt that she would have no obligation to pay respondents the commission which was promised them under the original authority SINCE old Civil Code recognized her right to withdraw such authority A principal may withdraw the authority given to an agent at will (Article 1733) HOWEVER, this very fact is disputed Thus, respondents claim that while they agreed to cancel the written authority given to them, they did so only with the verbal assurance by petitioner that, should the property be sold to Pio S. Noche, they would be given the commission agreed upon Although the verbal assurance does not appear in the written cancellation and also disputed by petitioner STILL respondents were allowed to present oral evidence to prove it, and this is
1. to have agreed only to pay them a commission of P1,200 on condition that they buy her a property somewhere in Taft Avenue where she can transfer after the sale of her property 2. that while respondents tried to sell her property, they sold the property at Taft Avenue to another party which failure resulted to the agreement of the cancellation of the authority given to respondents CFI: preponderance of evidence was in favor of respondents sentenced petitioner to pay respondents P2,500 with legal interest from February 2,1949 plus the costs of action CA: affirmed
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now assigned as error in this petition for review o plea that oral evidence should not have been allowed to prove the alleged verbal assurance SC: well taken since written authority given to respondents has been cancelled in a written statement o RULE: "When the terms of an agreement have been reduced to writing, it is to be considered as containing all those terms, and, therefore, there can be, between parties and their successors in interest, no evidence of the terms of the agreement other than the contents of the writing" o Exceptions: "(a)Where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings"; and "(b) Where there is an intrinsic ambiguity in the writing."
HERE, point raised not one of the exceptions terms of the cancellation document CLEAR and they do not contain any reservation which may in any way run counter to the clear intention of the parties Yet, even disregarding the oral evidence of respondents in contravention of the parole conclusion reached by CFI and CA to the effect that respondents are entitled to the commission originally agreed upon o CA found that after petitioner had given the written authority to respondents to sell her land for the sum of P30,000, respondents found a buyer (Pio S. Noche) who was willing to buy the property under the terms agreed upon, and this matter was immediately made known to petitioner however the latter (as a scheme) told respondents that she was no longer interested in the deal and was able to make them sign a document agreeing to the cancellation of the written authority o Fact that petitioner changed her mind even if respondents had found a buyer who was willing to close the deal is a matter that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the petitioner However, it is a different situation if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest resulting act is unfair amounting to bad faith This act cannot be sanctioned without according the party prejudiced the reward which is due him as in this case Petitioner took advantage of the services by respondents, but
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believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation UNSANTIONABLE and cant be used as a way to evade payment of the commission agreed upon DISPOSITIVE: decision appealed from is hereby affirmed LABRADOR, J., concurring and dissenting: concur in the result YET disagree with ruling that respondents cant introduce evidence of the circumstances under which the document was signed, i.e. upon promise by respondent that should the property be sold to petitioner's buyer they would nevertheless be entitled to the commission agreed upon o Such evidence is not excluded by the parole evidence rule, because it does not tend to alter or vary the terms of the document o This document was merely a withdrawal of the authority granted the petitioner to sell the property, not an agreement that they shall not be paid their commission Sanchez v Medicard Philippines Inc 2005 Ponente: Sandoval-Gutierez Principal: Medicard Phils. Inc Agent: Carlos Sanchez (Pet) Facts: Medicard, respondent, appointed petitioner as its special corporate agent. As such agent, Medicard gave him a commission based on the cash brought in (he gets commission for every insurance sold). Through
petitioners efforts, Medicard and United Laboratories Group of Companies (Unilab) executed a Health Care Program Contract. Under the contract - Unilab shall pay Medicard a fixed monthly premium for the health insurance of its personnel. Unilab paid premium for 1 year and Sanchez got 18% of the amount paid by Unilab to Medicard. Following year, it was renewed through Sanchezs efforts insurance premium was increased along with Sanchezs commission. Prior to expiration of this renewed contract, Medicard proposed, though Sanchez, an increase in premium payments from Unilab. Unilab said it was too high, prompting Dr. Nicanor Montoya (Medicards president and general manager), also a respondent, to request petitioner to reduce his commission, but the latter refused. Unilab then confirmed its decision not to renew the health program contract with Medicard. In order not to prejudice its personnel by the termination of their health insurance, Unilab, through respondent Ejercito, negotiated with Dr. Montoya and other officers of Medicard, to discuss ways in order to continue the insurance coverage of those personnel. Under the new scheme, Unilab shall pay Medicard only the amount corresponding to the actual hospitalization expenses incurred by each personnel (i.e. Unilab will pay a lot less than it would under the previous scheme) Medicard did not give petitioner any commission under the new scheme. Petitioner demanded from Medicard payment of P338,000.00 as his commission plus damages, but the latter refused to heed his demand. He filed complaint for collection of money against Medicard in RTC dismissed. CA affirmed. CA ratio: no proof that the execution of the new contract between the parties under the cost plus system is a
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strategy to deprive petitioner of his commission; that Medicard did not commit any fraudulent act in revoking its agency contract with Sanchez; that when Unilab rejected Medicards proposal for an increase of premium, their Health Care Program Contract on its third year was effectively revoked; and that where the contract is ineffectual, then the agent is not entitled to a commission. Issue: WON CA erred in holding that the contract of agency (the one under the old contract) has been revoked by Medicard (under the new scheme), hence, petitioner is not entitled to a commission. Held: Yes. Sanchez did not help in the consummation of the contract creating the new scheme under Medicard and Unilab Ratio: GEN RULE: in order for an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. In other words, an agent receives his commission only upon the successful conclusion of a sale EXC: In Prats v CA as a measure of equity an agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring back together the parties, such that a sale was finalized and consummated between them. Manotok Bros. v CA applied this rule - agent (in Manotok) is entitled to a commission since he was the efficient procuring cause of the sale, notwithstanding that the sale took place after his authority had lapsed. Through petitioners efforts, Medicard was able to enter into a one-year Health Care Program Contract with
Unilab. As a result, Medicard paid petitioner his commission. Again, through his efforts, the contract was renewed and once more, he received his commission. Before the expiration of the renewed contract, Medicard, through petitioner, proposed an increase in premium, but Unilab rejected this proposal. Unilab, through respondent Ejercito, negotiated with respondent Dr. Montoya of Medicard, in order to find mutually beneficial ways of continuing the Health Care Program. The negotiations resulted in a new contract wherein Unilab shall pay Medicard the hospitalization expenses actually incurred by each employees, plus a service fee. It is clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner. We hold that such revocation is authorized by Article 1924 agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. Moreover, petitioner did not render services to Medicard, his principal, to entitle him to a commission. There is no indication from the records that he exerted any effort in order that Unilab and Medicard, after the expiration of the Health Care Program Contract, can renew it for the third time. In fact, his refusal to reduce his commission constrained Medicard to negotiate directly with Unilab. Petition DENIED DOMINGO vs. DOMINGO GR No. L-30573, Oct. 29, 1971 (J. Makasiar) Petitioners: Vicente Domingo represented by his heirs Respondents: Gregorio Domingo [Vicente Domingos agent & broker] Intervenor: Teofilo Purisima
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Facts:
Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agency to sell his Lot No. 883, Piedad Estate in a document. Said lot has an area of 88,477 sq. m. o said lot must be sold for P2 per sq. m. Gregorio is entitled to 5% commission on the total price if the property is sold: by Vicente or by anyone else during the 30-day duration of the agency or by Vicente within 3 months from the termination of the agency to a purchaser to whom it was submitted by Gregorio during the effectivity of the agency with notice to Vicente
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contract is in triplicate (Original and 1 copy w/ Gregorio and last copy with Vicente)
Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without notifying Vicente. promising Teofilo of the 5% commission Teofilo introduced Oscar de Leon to Gregorio as a prospective buyer, Oscar submitted a written offer which was very much lower than the P2/sq. m. price. Gregorio was directed by Vicente to tell Oscar to raise his offer Oscar raised his offer to P1.20 per sq. m. or P109,000 in total. Vicente agreed to said offer. Upon Vicentes demand, Oscar issued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Gregorio. Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente. -
The written agreement, Exhibit C, between the parties was amended. o Oscar will vacate on or about September 15, 1956 his house and lot at Denver St., QC, which is part of the purchase price o Later on, it was again amended to state that Oscar will vacate his house and lot on Dec. 1, 1956 because his wife was pregnant at that time. Oscar gave Gregorio P1,000 as a gift or propina for succeeding in persuading Vicente to sell his lot at P1.20 per sq. m. gregorio did not disclose said gift or propina to Vicente. Moreover, Oscar did not pay Vicente the additional P1,000 Vicente asked from him as earnest money. The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from his brother in the US, which he communicated to Gregorio. Gregorio did not see Oscar for several weeks thus sensing that something fishy might be going on. So, he went to Vicentes house where he read a portion of the agreement to the effect that Vicente was still willing to pay him 5% commission, P5,450. Thereafter, Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was executed by Amparo de Leon, Oscars wife, over their house and lot in favor of Vicente. After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded in writing the payment of his commission. Gregorio also conferred with Oscar. Oscar told him that Vicente went to him and asked him to eliminate Gregorio in the transaction and that he would sell his property to him for P104,000. In his reply, Vicente stated that Gregorio is not entitled to the 5% commission because he sold the property not to Gregorio's buyer, Oscar de Leon, but
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to another buyer, Amparo Diaz, wife of Oscar de Leon. CA: exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to Oscar.
Issue: WON Gregorios act of accepting the gift or propina from Oscar constitutes a fraud which would cause the forfeiture of his 5% commission [YES] Ratio: Article 1891: o Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal. o Every stipulation exempting the agent from the obligation to render an account shall be void. and Article 1909 o The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation The modification contained in the first paragraph Article 1891 consists in changing the phrase "to pay" to "to deliver", which latter term is more comprehensive than the former. Paragraph 2 of Article 1891 is a new addition designed to stress the highest loyalty that is required to an agent condemning as void any stipulation exempting the agent from the duty and liability imposed on him in paragraph one thereof. Article 1909 demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his -
principal, the vendor. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as of the strictest justice. Gregorio Domingo as the broker, received a gift or propina from the prospective buyer Oscar de Leon, without the knowledge and consent of his principal, Vicente Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial advance of P3000 on his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the property at P1.20 per sq. m. The duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal. An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it.
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Rationale: prevent the possibility of any wrong not to remedy or repair an actual damage o agent thereby assumes a position wholly inconsistent with that of being an agent for hisprincipal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy. As a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his principal. o
Dispositive: CA decision reversed. PRATS vs. COURT OF APPEALS January 31, 1978 Justice Fernandez Facts Antonio Prats, doing business under the name of Philippine Real Estate Exchange, filed a complaint for recovery of sum of money and damages against Alfonso Doronilla. Doronilla is the owner of a piece of land in Montalban, Rizal. He offered the property to the Social Security System but failed to consummate any sale. His offer to sale having failed, Doronilla gave the plaintiff an exclusive option and authority in writing on February 14, 1968 to negotiate the sale of his property subject to the following conditions: o The exclusive option and authority is good for a period of sixty (60) days from the date of conformity; provided, however, that should negotiations have been started with a buyer, said period is automatically extended until said negotiations is terminated, but not more than fifteen (15) days; o The written offers must be made by the prospective buyers o If no written offer is made until the last day of this authorization, this option and authority shall expire and become null and void. As a result of the grant of the exclusive option and authority to negotiate the sale, Doronilla wrote a letter to SSS withdrawing his previous offer to sell the same and requesting the return to him of all papers concerning his offered property on February 20, 1968.
Situations where the duty mandated by Art 1891 does not apply - agent or broker acted only as a middleman with the task of merely bringing together the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of the transaction - agent or broker had informed the principal of the gift or bonus or profit he received from the purchaser and his principal did not object Teofilo Purisimas entitlement to his share in the 5% commission - Teofilo can only recover from Gregorio his share of whatever amounts Gregorio Domingo received by virtue of the transaction as his sub-agency contract was with Gregorio Domingo alone and not with Vicente Domingo, who was not even aware of such sub-agency. - Since Gregorio already received a total of P1,300 from Oscar and Vicente, P650 of which should be paid by Gregorio to Teofilo.
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SSS complied with the request. On February 27, Doronilla received a letter from SSS, inviting him to meet with the Chairman of SSS. Doronilla declined the invitation and requested them instead to deal directly with the plaintiff. On March 16, at the suggestion of Doronilla, plaintiff wrote a letter to SSS to the effect that plaintiff would be glad to sit with the officials of SSS to discuss the sale of the property. April 18 Doronilla extended the plaintiffs exclusive option and authority to expire on May 18. This was not extended anymore. May 30 Philrex wrote to Doronilla advising the latter that SSS has agreed to purchase the parcel of land. June 20 SSS passed a resolution which formalized its counter-offer of 3.25 per square meter. July 17 SSS passed a resolution approving the purchase of Doronillas piece of land. Doronilla received the full purchase price of his lot. Hence, PHILREX (plaintiff) demanded payment of its professional services as real estate broker. Doronilla failed to pay. TRIAL COURT ordered Doronilla to pay COURT OF APPEALS reversed the decision of the trial court o The authority of Philrex expired on June 2 (15 days after May 18), hence the inquiry would only be whether up to that time, a written offer was made by Doronilla in behalf of SSS. The stipulation is clear on this point. There should be a written offer by the prospective buyer. If no such written offer is made until the last day of the authorization, the option and authority shall expire and become null and void.
Issue: WON Philrex is entitled to receive commission NO Held
The offer of Doronilla to sell the parcel of land to SSS was formally accepted only on June 20, 1968 after the exclusive authority had expired. According to the testimony of Prats, he arranged with Mr. Gilberto Teodoro, SSS Administrator, a meeting with Doronilla. Teodoro specifically requested Prats not to be present at the meeting as he wanted to deal with Doronilla alone. It is manifest that the SSS officials never wanted to be in any way guided by the mediation or intervention of Philrex relative to the purchase of the property. On May 6, he made an offer to the SSS to sell the property at P6.00 per square meter, to which he received no answer. This cold indifference of the SSS must have prompted him to look for other buyers. For him to claim that it was he who aroused the interest of the SSS is to ignore the fact that as early as June 1967, the SSS had directly dealt with Prats. It can truly be said then that the interest of SSS to acquire the property had been sufficiently aroused for there to be any need for appellee to stimulate it further. There should be a written offer by the prospective buyer. If no such written offer is made until the last day of the authorization, the option and authority shall expire and become null and void. Yet, no such written offer was made. In equity however, the Court noted that Prats had diligently taken steps to bring back together Doronilla and the SSS. o Prats had several dinner and luch meetings with Doronilla regarding the progress of the negotiations with the SSS. The court has noted on the other hand that Doronilla finally sold the property to SSS at 3.25 per square meter when he alone was dealing with the latter long before Prats came into the picture but that on the other hand Prats efforts somehow were instrumental in bringing them together again and finally consummating the
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transaction, although such finalization was after the expiration of Prats extended exclusive authority. Under the circumstances, the Court grants in equity the sum of 100,000.00 by way of compensation for his efforts and assistance in the transaction.
Notwithstanding the realization of the sale, Saligumba never received any commission (P20,554.50). Manotok refused to pay Saligumba as it does not recognize the latter's role as agent in the transaction.
Manotok Brothers Inc. v. CA (1993, Campos, Jr., J.) PETS: Manotok Brothers, Inc. RESPS: CA, RTC Judge, Salvador Saligumba FACTS: Manotok, Inc. owns the parcel of land and building formerly leased by the City of Manila and used by the Claro M. Recto High School. Thru a letter (July 1966), Manotok authorized Saligumba to negotiate with the City of Manila the sale of the aforementioned property for not less than P425K. Manotok also agreed to pay Saligumba a 5% commission in the event the sale is finally consummated and paid. Subsequently, Manotok executed 2 letters (Mar. 1967, and June 1967), extending the Saligumbas authority for 120 days (per letter of extension). Finally, through another letter (Nov. 16, 1967), Manotok authorized Saligumba to finalize and consummate the sale of the property to the City of Manila for not less than P410K Came with another extension of 180 days. The Municipal Board of said city eventually passed Ordinance No. 6603, appropriating P410,816 for the purchase of the property which Saligumba was authorized to sell. However, said ordinance was signed by the Mayor only on May 17, 1968 (183 days after the last letter of authorization). Jan. 1969: Parties signed the deed of sale. The initial payment (P200K) having been made, the purchase price was fully satisfied with a second payment (Apr. 1969) by a check for P210,816.
AT THE CFI: Saligumba filed a complaint against Manotok. Saligumba: It was because of his efforts that the Municipal Board passed the ordinance which appropriated the sum for the payment of the property subject of the sale, narrated as follows: o He met with Rufino Manotok (president of Manotok, Inc.), Atty. Dominador Bisbal (then PTA president) and Fructuoso Ancheta (principal of the school), where the latter party asked Saligumba to negotiate the sale of the school lot and building to the City. Saligumba then went to Councilor Mariano Magsalin (author of the ordinance) to present the project. He also went to the Assessor's Office for appraisal of the value of the property. o While these events transpired and his letters of authority expired, Rufino Manotok always renewed the former's authorization until the last letter was given (to remain in force until May 14, 1968). After securing the report of the appraisal committee, he went to the Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila. The Superintendent approved the report, so Saligumba went back to the Mayor's Office, which thereafter indorsed the same to the Municipal Board for appropriation. o Subsequently, the ordinance was passed by the Municipal Board. Manotok received the full payment of the purchase price, but Saligumba did not receive a single centavo as commission. o Ancheta and Atty. Bisbal both testified acknowledging Saligumbas authority regarding the transaction. Manotok, Inc.: Denied Saligumbas claim: (1) Saligumba would be entitled to a commission only if the sale was consummated and the price paid within the period given in the respective letters of authority; and (2) Saligumba was NOT the person responsible for the negotiation and
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consummation of the sale, but Filomeno Huelgas (a former PTA president of the Claro M. Recto High School. o Huelgas: After being inducted as PTA president (Aug. 1967) he followed up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17, 1968. He came to know Rufino Manotok only in Aug. 1968, at which meeting the latter told him that he would be given a gratification (P20K) if the sale was expedited. o Rufino Manotok: Confirmed that he knew Huelgas and that there was an agreement between the 2 of them regarding the "gratification". ON REBUTTAL: Atty. Bisbal Huelgas was present in the PTA meetings from 1965-1967 but he never offered to help in the acquisition of said property. Moreover, Huelgas was aware of the fact that it was Saligumba who was negotiating the sale of the subject property. CFI: Sentenced Manotok, Inc. and/or Rufino Manotok to pay Saligumba P20,540 by way of his commission fees with legal interest thereon from the date of the filing of the complaint until payment. (P4K as attorney's fees).
Jan. 9, 1990: Saligumba filed a Motion to Execute the said judgment before the court of origin. o Upon discovery of said development, Manotok verified with the court of origin the circumstances by which Saligumba obtained knowledge of the Courts resolution. o Sensing a fraudulent scheme, Manotok then instituted this instant Petition for Relief Amended to include, in the alternative, its petition to re-file its earlier Petition for Certiorari.
ISSUE: W/N Saligumba is entitled to the 5% agent's commission. PET: As a broker, Saligumba's job is to bring together the parties to a transaction. If the broker does not succeed in bringing the minds of the purchaser and the vendor to an agreement with respect to the sale, he is not entitled to a commission. RESP: Maintains that it was because of his efforts that a purchase actually materialized between the parties. HELD/RATIO: YES, Saligumba is entitled to the 5% commission. It would seem that he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired. o By this alone, one might be misled to believe that this case squarely falls within the ambit of the established principle that a broker or agent is not entitled to any commission until he has successfully done the job given to him. Going deeper into the case would reveal that it is within the coverage of the exception rather than of the general rule as provided in Prats v. CA (where the Court ruled in favor of the claimant-agent despite the expiration of his authority, when a sale was finally consummated) o Prats v. CA: While the factual findings established that the claimant-agent here was not the efficient procuring
AT THE CA: Affirmed the said ruling. AT THE SC: Issued a Minute Resolution ordering Saligumba to comment on Manotoks petition for review on certiorari. The resolution was returned unserved The Court issued another Resolution requiring Manotok to locate Saligumba and to inform the Court of Saligumbas present address within 10 days from notice. o Manotok was unsuccessful, so it opted to manifest that Saligumba's last address was the same as that address to which the Court's resolution was forwarded. SC: Issued a Resolution dismissing Manotok's case The issues raised in the case at bar cannot be joined, thus the case became final and executory by the entry of judgment.
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cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority), still petitioner was awarded compensation for his services (rule of equity). HERE: Saligumba is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve. o In an earlier case, the Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission. o HERE: Without discounting the fact that when the Ordinance was signed by the Mayor on May 17, 1968, Saligumba's authority had already expired The ordinance was approved on April 26, 1968 when Saligumba's authorization was still in force. o Moreover, the approval by the Mayor came only 3 days after the expiration of Saligumba's authority. o From the records, the only party given a written authority by petitioner to negotiate the sale from July 5, 1966 - May 14, 1968 was Saligumba. Danon v. Brimo does not apply squarely to the instant petition. Claimant-agent in said case fully comprehended the possibility that he may not realize the agent's commission as he was informed that another agent was also negotiating the sale and thus, compensation will pertain to the one who finds a purchaser and eventually effects the sale. o HERE: Saligumba pursued with his goal of seeing that the parties reach an agreement, on the belief that he alone was transacting the business with the City Government as this was what petitioner made it to appear. o While it may be true that Huelgas followed up the matter with Councilor Magsalin (author of the ordinance) and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed (when the buyer has already agreed to the purchase and
to the price for which said property is to be paid). Without the efforts of Saligumba then, Mayor Villegas would have nothing to approve in the first place. It was actually Saligumba's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated.
DISPOSITIVE: CA decision is AFFIRMED.
2. To appoint a substitute Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. (1721) Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. (1722a) 3. Retain objects of the Agency Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.
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Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made. (1728) Art. 1913. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. (1729) Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730) B. Obligations Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. (1718) Art. 1885. In case a person declines an agency, he is bound to observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent or take charge of the goods. (n) Art. 1886. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so except when the principal is insolvent. (n) Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.
In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. (1719) Art. 1888. An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal. (n) Art. 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own. (n) Art. 1890. If the agent has been empowered to borrow money, he may himself be the lender at the current rate of interest. If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal. (n) Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal. Every stipulation exempting the agent from the obligation to render an account shall be void. (1720a) DOMINGO v. DOMINGO supra ROSA VILLA MONNA, plaintiff-appellee, vs. GUILLERMO GARCIA BOSQUE, ET AL., defendants. GUILLERMO GARCIA BOSQUE, F. H. GOULETTE, and R. G. FRANCE, appellants. (1926, Street) FACTS: 1. The plaintiff, Rosa Villa y Monna, viuda de E. Bota, was the owner of a printing establishment and bookstore located at 89
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Escolta, Manila, and known as La Flor de Cataluna, Viuda de E. Bota 2. On Sept. 17, 1919, Monna (plaintiff) a resident of Barcelona, Spain, acting through Manuel Pirretas, as attorney in fact, sold the establishment to the defendants Guillermo Garcia Bosque and Jose Pomar Ruiz, residents of the City of Manila, for the stipulated sum of P55,000, payable as follows (P15,000) on November 1, next ensuing upon the execution of the contract, being the date when the purchasers were to take possession; (P10,000) at one year from the same date (P15,000) at two years; and the remaining (P15,000) at the end of three years. By the contract of sale the deferred installments bear interest at the rate of 7 per centum per annum. 3. R. G. France and F.H. Goulette obligated themselves as solidary sureties with the principals Bosque and Ruiz, to answer for any balance, including interest, which should remain due and unpaid after the dates stipulated for payment of said installments, expressly renouncing the benefit of exhaustion of the property of the principals 4. The first installment of P15,000 was paid conformably to agreement. 5. In 1920, Pirretas went on a prolonged visit to Spain and and in contemplation of his departure he executed a document (Exhibit B), dated January 22, 1920, purporting to be a partial substitution of agency, whereby he transferred to "the mercantile entity Figueras Hermanos" the powers that had been previously conferred on Pirretas by the plaintiff "in order that ,they may be able to effect the collection of such sums of money as may be due to the plaintiff by reason of the sale of the bookstore and printing establishment already mentioned, issuing for such purpose the receipts, vouchers, letters of payment, and other necessary documents for whatever they shall have received and collected of the character indicated ." 6. purchasers were unable to pay when the 2 nd installment and accrued interest became due 7. after certain negotiations between said purchasers and one Alfredo Rocha, representative of Figueras Hermanos, acting as
attorney in fact for the plaintiff, an agreement was reached, whereby Figueras Hermanos accepted the payment of P5,800 on November 10, 1920, and received for the balance five promissory notes payable, respectively, on Dec 1, 1920, Jan 1, 1921, February 1, 1921, March 1, 1921, and April 1, 1921 8. These notes were not paid promptly at maturity but the balance due upon them was finally paid in full by Bosque on December 24, 1921 9. About this time the owners of the business La Flor de Catalua, converted it into a limited partnership under the style of Guillermo Garcia Bosque, S. en C.;" and presently a corporation was formed to take over the business under the name "Bota Printing Company, Inc." partnership conveyed all its assets to this corporation for consideration of P15,000 10. Meanwhile, 7 notes representing the unpaid balance of the second installment and interest were failing due without being paid. Because of this and the dilatoriness of debtor, M. T. Figueras entered into an agreement (Exhibit 1) where it is recited that Guillermo Garcia Bosque. S. en C., is indebted to Rosa Villa, viuda de E. Bota, in the amount of P32,000 for which R. G. France and F. H. Goulette are bound as joint and several sureties, and that the partnership mentioned had transferred all its assets to the Bota Printing Company, Inc., of which one George Andrews was a principal stockholder. It is then stipulated that France and Goulette shall be relieved from all liability on their contract as sureties and that in lieu thereof the creditor, Doa Rosa Villa y Monna, accepts the Bota Printing Company, Inc., as debtor to the extent of P20,000, which indebtedness was expressly assumed by it, and George Andrews as debtor to the extent of P12,000, which he undertook to pay at the rate of P200 per month thereafter 11. Monna instituted action in CFI Manila to recover from the Bosque and Rui, and from the defendants R. G. France and F. H. Goulette, as solidary sureties for said principals, the sum of P20,509.71, with interest, as a balance alleged to be due to the plaintiff upon the purchase price of the establishment
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ISSUE(s): WON plaintiff is bound by the said agreement NO! Exhibit 1 is not binding on the plaintiff. Bosque: agreement as constitutes a novation such as to relieve him from personal liability Sureties: agreement released them All defendants: plaintiff has ratified the agreement by accepting part payment of the amount due thereunder with full knowledge of its terms Plaintiff: Figueras had no authority to execute the contract containing the release and that the same had never been ratified by her HELD/RATIO: It is obvious upon the face of the act of substitution that the sole purpose was to authorize Figueras Hermanos to collect the balance due to the plaintiff upon the price of La Flor de Catalua, the sale of which had already been affected by Pirretas "). There is nothing here that can be construed to authorize Figueras Hermanos to discharge any of the debtors without payment or to novate the contract by which their obligation was created. On the contrary the terms of the substitution shows the limited extent of the power Under the Exhibit B the substituted authority should be exercised by the mercantile entity Figueras Hermanos or the person duly authorized to represent the same In the actual execution of Exhibit 1 (agreement in issue), M. T. Figueras intervenes as purpoted attorney in fact without anything whatever to show that he is in fact the legal representative of Figueras Hermanos or that he is there acting in such capacity. The act of substitution conferred no authority whatever on M. T. Figueras as an individual. Figueras had no authority to execute the contract of release and novation in the manner attempted; and apart from this it is shown that in releasing the sureties Figueras acted contrary to instructions
For instance, in a reply letter from Pirretas, he expressed the conformity of Doa Rosa in any adjustment of the claim that Figueras should see fit to make, based upon payment of P20,000 in cash, the balance in installments, payable in the shortest practicable periods, it being understood, however, that the guaranty of Messrs. France and Goulette should remain intact. From this it is obvious that Figueras had no actual authority whatever to release the sureties or to make a novation of the contract without their additional guaranty. The proposition of the defendants to the effect that the plaintiff has ratified Exhibit 1 by retaining the sum of P14,000, paid by the Bota Printing Co., Inc., as above stated, is untenable. By the assumption of the debts of its predecessor the Bota Printing Co., Inc., had become a primary debtor to the plaintiff; and she therefore had a right to accept the payments made by the latter and to apply the same to the satisfaction of the third installment of the original indebtedness. Nearly all of this money was so paid prior to the execution of Exhibit 1 and although the sum of P200 was paid a few days later, we are of the opinion that the plaintiff was entitled to accept and retain the whole, applying it in the manner above stated. In other words the plaintiff may lawfully retain that money notwithstanding her refusal to be bound by Exhibit 1 DISPOSITIVE: As a result of our examination of the case we find no error in the record prejudicial to any of the appellants, and the judgment appealed from will be affirmed, So ordered, with costs against the appellants PHILIPPINE NATIONAL BANK, vs. MANILA SURETY and FIDELITY CO., INC. and THE COURT OF APPEALS (July 30, 1965) Ponente: REYES, J.B.L.
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The Philippine National Bank petitions for the review and reversal of the decision rendered by the Court of Appeals (Second Division), in its case CA-G.R. No. 24232-R, dismissing the Bank's complaint against respondent Manila Surety & Fidelity Co., Inc., and modifying the judgment of the Court of First Instance of Manila in its Civil Case No. 11263. The Philippine National Bank opened a letter of credit and advanced $120,000.00 to Edgington Oil Refinery for 8,000 tons of hot asphalt. Of this amount, 2,000 tons worth P279,000.00 were released and delivered to Adams & Taguba Corporation (ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. up to the amount of P75,000.00. To pay for the asphalt, ATACO constituted the Bank (its assignee and attorney-in-fact) to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor under Purchase Order No. 71947. conditions of assignment: 1. irrevocable until the said credit accomodation is fully liquidated. 2. The PHILIPPINE NATIONAL BANK is hereby appointed as our Attorney-in-Fact for us and in our name, place and stead, to collect and to receive the payments to be made by virtue of the aforesaid Purchase Order, with full power and authority to execute and deliver on our behalf, receipt for all payments made to it; to endorse for deposit or encashment checks, money order and treasury warrants which said Bank may receive, and to apply said payments to the settlement of said credit accommodation.
power of attorney shall also remain irrevocable until total indebtedness to the said Bank have been fully liquidated. ATACO delivered to the Bureau of Public Works, and the latter accepted, asphalt to the total value of P431,466.52. Of this amount the Bank regularly collected, from April 21, 1948 to November 18, 1948, P106,382.01. Thereafter, for unexplained reasons, the Bank ceased to collect, until in 1952 its investigators found that more moneys were payable to ATACO from the Public Works office, because Public Works office had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of P311,230.41. Its demands on the principal debtor and the Surety having been refused, the Bank sued both in the Court of First Instance of Manila to recover the balance of P158,563.18 plus interests and costs. the trial court rendered a decision in favor of PNB (ATACO and Manila Surety to pay P174,462.34) Manila Surety & Fidelity Co., Inc. duly perfected its appeal. The Central Bank of the Philippines did not appeal, while defendant ATACO failed to perfect its appeal. The Bank recoursed to the Court of Appeals, which rendered an adverse decision and modified the judgment of the trial court as to the surety's liability. MR is denied hence appeal. CA: Bank isnegligent in having stopped collecting from the Bureau of Public Works the moneys falling due in favor of the principal debtor, ATACO, from and after November 18, 1948, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of
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the surety, and held that the Bank's negligence resulted in exoneration of respondent Manila Surety & Fidelity Company. ISSUE WON the power of attorney obtained from ATACO was merely in additional security to its favor, and that it was the duty of the surety, and not that of the creditor, owed to see to it that the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any sum from the principal debtor (Banks Argument) HELD SC states that such argument misses the point REASONING The Court of Appeals did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). Certainly, the Bank could not expect that the Bank would diligently perform its duty under its power of attorney, but because they could not have collected from the Bureau even if they had attempted to do so. It must not be forgotten that the Bank's power to collect was expressly made irrevocable, so that the Bureau of Public Works could very well refuse to make payments to the principal debtor itself, and a fortiori reject any demands by the surety. Even if the assignment with power of attorney from the principal debtor were considered as mere additional security still, by allowing the assigned funds to be exhausted without notifying the surety, the Bank deprived Manila Surety of any possibility of recoursing against that security. The Bank thereby
exonerated the surety, pursuant to Article 2080 of the Civil Code: ART. 2080. The guarantors, even though they be solidary, are released from their obligation whenever by come act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. (Emphasis supplied.) DISPOSITIVE WHEREFORE, the appealed decision is affirmed, with costs against appellant Philippine National Bank. CONSOLACION L. RAMOS, vs. BENIGNO A. CAOIBES(JUGO, J.: 1954) Parties: Appelle (W) Administratrix: Consolacion Ramos Appellant (L) Atty.-in-fact:BenignoCaoibes (Note: they didnt have counsels in this case, they represented themselves!) FACTS AUG 16, 1948 - Concepcion Ramos Dipusoy executed before a notary public 2 documents an SPA and an affidavit. SPA SUMMARY: Concepcion appointed Caoibes to collect any amount due from the Philippine War Damage Commission re: claim for her properties in Batangas lost in the war as if it were Concepcion herself claiming such. That I, Concepcion Ramos Dipusoy, of legal age, single, Filipino citizen and resident of Balayan, Batangas, have made, constituted and appointed, and by these presents do make, constitute and appoint Mr. Benigno A. Caoibes, also of legal age, married, Filipino citizen and at present residing at 1047 Antipolo Street, Sampaloc, Manila, my true and lawful attorney-in-fact, for me and in my name, place and stead, to collect any amount due me from the
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Philippine War Damage Commission, regarding my claim filed for my properties that were lost during the last war in Balayan, Batangas, to cash checks, warrants and to sign receipts, vouchers, documents which shall be necessary to the said purpose. That I am giving and granting unto my said attorney-infact Benigno A. Caoibes, full and absolute power and authority to do and perform all any every act or thing whatsoever to be done necessary in and about the premises, as fully to all intents and purposes as I might or could myself do if I were personally present, and hereby confirming and ratifying all that my said attorney-in-fact shall lawfully do or cause to be done and by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila, Philippines. (Miss) CONCEPCION RAMOS DIPUSOY This SPA was duly notarized in Manila before Artemio Abaya and further an AFFIDAVIT was executed to the effect that: That in case payment of any amount or amounts collected from the Philippine War Damage Commission, my nephew and at the same time attorney-in-fact, shall give my sister TeopistaVda. deBasa one-half (), of the corresponding amount and the other half () shall be given to my nephew and niece Mr. and Mrs. Benigno A. Caoibes. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila. (Sgd.) CONCEPCION RAMOS DIPUSOY WITNESSES WHO SIGNED SPA and Affidavit Consolacion Ramos and Socorro Ramos Concepcion died testate on August 19, 1948 will admitted to probate on October 4, 1948, in which she ordered that the credits due to her be distributed among the children of the deceased Antonino Ramos, namely, Consolacion, Ramon, Socorro and Cirila.
Aug 31, 1948 The Philippine war damage Commission issued check = P501.62, payable Concepcion This check was returned to the Commission and substituted by a check for the same amount BUT payable to Benigno A. Caoibes who presented SPA and the affidavit which he cashed for himself. The administratrix, Consolacion discovered the collection made by Caoibes when she saw the note "previous payment" which appeared in the account sent to her by the Commission on October 13, 1950. Consolacion filed a motion asking that Caoibes be ordered to deposit the sum of P501.62 with the clerk of court. Caoibes answered the motion admitted having received in cash P501.62 and that he was willing to deliver to the clerk the sum of P250.81. He contended that, by virtue of the SPA and the affidavit that he had the right to retain, for himself, half of the sum of P501.62. CFI DECISION Caoibes was ordered to turn over the amount of P250.81 to the Clerk of this Court. It is ordered that the said Atty. Caoibes deposit the said amount to be at the disposal of the administratrix and the other parties in this intestate proceedings. MR filed by Consolacion was denied hence this case
ISSUE: WON Caoibes by virtue of the SPA and the affidavit had a right to keep half of the amount that the Philippine war damage commission awarded his principal Concepcion? HELD: NO Ratio: The court considers both SPA and the affidavit to determine WON Caoibes has a right. THE SPA Caoibes, as agent, had the obligation to deliver the amount collected by virtue of said power to his principal, Concepcion, or, after her death, to the administratrix of her estate, Consolacion.
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There is absolutely no cession of rights made in favor of Caoibes in the SPA, and under Article 1711 of the old Civil Code (which was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless the agent is a professional agent. There is no proof that Caoibes was such. o Furthermore, according to OCC Article 1732 an agency is terminated, among other causes, by the death of the principal or of the agent. When Caoibes made use of the power of attorney, his principal, Concepcion was already dead. The affidavit the alleged document of donation, SC notes that it is not a donation of real but of personal property and is governed by OCC article 632: Donations of personal property may be made verbally or in writing. Verbal donation requires the simultaneous delivery of the gift. In the absence of this requisite the donation shall produce no effect, unless made in writing and accepted in the same form. o SC notes that donation was made in writing but NO acceptance in same form! NOT VALID! o AlsoCANNOT be considered a donation upon valuable consideration, for no services nor any valuable consideration had passed from the donees to the donor. The mere fact that Caoibes collected the claim from the War Damage Commission is not such a service as to require compensation. Caoibes did not even prepare the claim. o SC said CFI judgment is wrong because Consolacion as admin NEVER consented to the reduction of the claim. DECISION REVERSED.Caoibes is ordered to deposit with the Clerk of Court of Batangas P501.62 to be at the disposal of the administratrix. o Gutierrez Hermanos v. Oria Hermanos & Co.(November 12, 1918, Torres, J.) Parties:Gutierrez Hermanos OriaHermanos& Co. (defendant-appellant) (plaintiff-appellee),
Facts: August 12, 1909: Counsel for the commercial firm of Gutierrez Hermanos, of the city of Manila, filed a complaint in the CFI, seeking to recover from the firm of OriaHermanos& Co., the payment of the sum P147,204.28 besides interest, alleging among other things that it had commercial relations with the OriaHermanos which gave rise to their books of a mutual current account where there remained a balance in the said sum against OriaHermanos and that Gutierrez Hermanos had sent an abstract of the current account showing the balance. OriaHermanosalleged, in turn, that Gutierrez Hermanos was a commission agent which bound itself to buy and sell certain merchandise for Oria, and that Gutierrez Hermanos entered fraudulent prices of goods in its accountsand for this reason it is prayed that it be ordered to render an account of its transactions as commission agent. CFI (April 24, 1912): Ordered Gutierrez Hermanos to render an account supported by vouchers of the amounts charged against Oria as regards the internal revenue taxes, the price and weight of the sacks of rice, and the value of the boxes of kerosene oil acquired by the plaintiff in the name and for the account of the defendant company, and condemning the defendant company to pay the plaintiff the amount prayed for in the complaint after deducting therefrom whatever amount or amounts would result in favor of the defendant company from the accounts to be rendered by the plaintiff. SC (March 30, 1915): Plaintiff was ordered to render to the defendant an account supported by vouchers of the price and other expenses incurred in the shipment of rice and also the price of all the kerosene oil acquired by the plaintiff for the defendant (supported by invoices) and lastly, to account for the amounts paid as ad valorem duties on the rice, salt, kerosene oil, and other goods the duties on which were charged against the defendant.
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CFI (on remand):Plaintiff company presented to the court a written statement of the accounts and notified the plaintiff to present to the court the vouchers supporting said accounts. D. M. Fleming was appointed as referee by virtue of a written agreement between the parties. Pursuant to his duties, the referee made a report (some invoices for rice were not proved and not supported by vouchers and that in the invoices for kerosene oil comprising 592 cans, there were overcharges amounting to P78.63 as discounts not granted, and in one particular case, there was a recharge of the price.)The court ordered the referee to file an amended report(refer to case for contents), which the lower court approved. Pursuant to this second report, the court adjudicated to the plaintiff the sum claimed in the complaint less the sum of P36,744.49 (total sum which should be allowed in favor of OriaHermanos y Ca according to report), or the net balance of P110,459.79. An order of attachment was decreed. SC: Appeal by Oria.
Held: NO.The first report is correct. As commission agent of the OriaHermanos, Gutierrez Hermanoshad no right to retain for itself the discounts obtained. Ratio: Proof of invoices:The first report of the referee cannot be the proper basis.The referee in his first report says that 76 invoices of rice and 73 invoices of kerosene oil were not supported by vouchers, and that the charges made by way of internal revenue taxes could not be estimated, unless all the invoices of rice were proved.In his second report, estimating the average error which might have been committed in the invoices not satisfactorily proved, proceeded to fix at his own discretion the mistake proportionally to the figures as stated in the invoices.Although the defendant company cannot be held liable for the value of the invoices not duly proved by the plaintiff, nevertheless, if the records show that the defendant company had received the goods consigned to it under invoices and the only defect was that excessive prices were charged and certain amounts were unduly debited, it would not be just, that for said failure on the part of the plaintiff to prove all of the invoices, the defendant company would deny liability to pay for the goods received by it, after deducting from the price the excess and the quantities for which it was not liable. Picos of rice: The referee has not proceeded in his estimates through whimsical and arbitrary methods in reducing the picos of Saigon rice to correspond with the picos of Manila, with the corresponding reduction for waste and leakage.The referee fixed the difference between the pico of Saigon and that of Manila at 5 per cent of Saigon, including waste and leakage, in accordance with the book of weights and measures of international commerce by Macmillan & Co., wherein it appears that a pico in the Straits Settlements weighs 60.478 kilos, and the Saigon pico is considered equal to that of the Straits Settlements.Witness Tomas Oriastated that the pico of Manila weighs 63.25 kilos and that of
Gutierrez Hermanos argument: OriaHermanos is liable to Gutierrez Hermanos for P147,204.28 which is the balance standing against the defendant company in their books of mutual current account. OriaHermanos argument: Gutierrez Hermanos was a commission agent which bound itself to buy and sell certain merchandise for Oria, and that Gutierrez Hermanos entered fraudulent prices of goods in its accounts. (Amount claimed should be lower) Issue: W/N the second report by the referee is correct as to the liability of OriaHermanos (with regard to the kerosene oil invoices).
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Saigon, 63 kilos (difference of 3.15). According to the referee 1/2 per cent is the reduction effected by reason of waste and leakage and estimated for each sack which weighs more than a pico, a reduction of 3.50%is reasonable. Commission:Amounts include internal revenue taxes unduly charged. In the invoices, the plaintiff company never took its commission on said taxes, but took it on the value of the invoice, without including the internal revenue charges. Compound interest:The record furnishes sufficient data whereby the compound interests, which resulted from the unlawful charges entered against the defendant, could have been adjusted in a correct and reasonable manner, for such interests can be determined as shown in the current accountof OriaHermanos& Co. opened in the books of the plaintiff during the second semester of 1908 ([amounts x number of days during earning interest]/100 = interest). Invoices of kerosene oil (relevant): Mistake in the invoices amounts to P78.63. He adjudged 15 centavos a box to cover the shortage in addition to the discounts which should be allowed to the defendants.Gutierrez Hermanos, in buying the kerosene oil, specified in 5 invoices sometimes obtained a discount of 2 1/2 per cent and at other time a discount of 1 per cent, and that the purchase price was less than that stated in the invoices. The first decision which held that the plaintiff, as commission agent of the defendant, had no right to retain for itself the discounts obtained is correct and so plaintiff should reimburse to the defendant the discounts and the interest thereon. The amount to be paid back is to be determined notonly by the number of boxes of kerosene oil invoiced, but by both the increase in prices (depends on number of boxes)and also of the discounts (total price of invoice). All other conclusions by referee are just and reasonable.Gutierrez Hermanosshould pay to OriaHermanos& Co., the sum of P37,063.57. Thus Oria is
only entitled to a reduction of the sum of P37,063.57 from the amount of P147,204.28 adjudged in favorof the plaintiff firm in the previous decision of this court, and for this reason the defendant OriaHermanos& Co. is found liable to pay Gutierrez Hermanos the remaining balance of P110,140.71 and the interest. Dispositive: After deducting the sum of P37,063.57 from the amount specified in the previous decision of this court, OriaHermanos& Co. should pay to Gutierrez Hermanos the sum of P110,140.71 and 8% interest thereon from June 30, 1909. United States v. Reyes (1917, Malcolm) PARTIES: Plaintiff: United States Defendant: Domingo Reyes (agent) Offended Party/Principal: RB Blackman FACTS: R. B. Blackman is a surveyor in the Province of Pangasinan. Domingo Reyes, the accused, also lives in that province. Blackman employed Reyes to collect certain amounts due from twelve individuals for Blackman's work in connection with the survey of their lands. The total amount to be collected by Reyes was P860. He only succeeded in collecting P540. He delivered to Blackman P368. He retained the balance, or P172. The difficult point concerns the exact terms of the contract. It was merely an oral agreement between Blackman and Reyes. Blackman claims that he agreed to pay Reyes a commission of 10 per cent. Reyes claims that he was to receive a commission of 20 per cent. - To return to the figures again, it will be noticed that if the statements of Blackman are accepted, Reyes was entitled to 10 per cent of the collected amount of P540 (or P530), or P54, making P172 misappropriated, or, if we deduct his commission,
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P118. On the other hand, if the statements of Reyes are accepted, then 20 per cent of the total amount to be collected, P860, is exactly P172, the amount claimed to have been misappropriated. Trial Court Estafa filed by Blackman against Reyes. Reyes found guilty of estaga and obliged to indemnify RB Blackman in the sum of118 with subsidiary imprisonment in case of insolvency ISSUE(s): WON Reyes,as agent of Blackman, can be held liable for estafa HELD/RATIO: Reyes is liable for estafa There are a number of reasons which impelled the Court to the conclusion that the defendant and appellant is guilty as charged. In the first place, in view of the discrepancy in the evidence the Court is not disposed to set up its judgment as superior to that of the trial court. In the second place, conceding that Reyes was to receive 20 per cent, this, unless some contrary and express stipulation was included, would not entitle him in advance to 20 per cent of the amount actually collected. In the third place, the right to receive a commission of either 10 or 20 per cent did not make to hold out any sum he chose. In the fourth place, under the oral contract Reyes was an agent who was bound to pay to the principal all that he had received by virtue of the agency. And, lastly, since for all practical purposes, the agency was terminated, the agent was under the obligation to turn over to the principal the amount collected, minus his commission on that amount. All the requisites of estafa as punished by article 535, paragraph 5, of the Penal Code, and as construed by the commentators, are here present. The assignment of error relative to the nonproduction by the fiscal of the transcription of the preliminary investigation is not particularly important as
secondary evidence was admitted and the substantial rights of the accused were not affected. DISPOSITIVE: The judgment of the trial court being in accord with the facts and the law is hereby affirmed with the costs. So ordered. DBP v CA (1994, Quiason, J.) Plaintiff/Appellant/Agent: Development Bank of the Philippines Defendant/Appellee: CA, Estate of the Late Juan B. Dans, represented by Candida G. Dans and the DBP Mortgage Redemption Insurance Pool Principal: DBP MRI Pool Facts: May 1987, Juan Dans, and wife Candida, son and daughter-in-law, applied for a 500K loan with DBP Basilan. Dans, principal mortgagor, was then 76 y/o, and was advised by DBP to obtain mortgage redemption insurance (MRI) with the DBP MRI Pool. 4 Aug 87, reduced loan of 300K was approved. It was released on 11 Aug. From this amount DBP deducted P1476 as payment for the MRI premium. 15 Aug Dans accomplished and submitted the MRI Application for Insurance and the Health Statement for DBP MRI Pool 20 Aug, MRI premium of Dans, less DBP service fee of 10%, was credited by bank to the savings account f the BDP MRI Pool. Latter was advised of such 3 Sept, Dans died of cardiac arrest. 23 Sept, DBP MRI Pool notified DBP that Dans was not eligible for coverage, as he was over 60 y/o at time of application 21 Oct, DBP apprised Candida of the disapproval. It offered to refund the premium, but Candida refused to accept, demanding payment of the face value of the
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MRI, OR an amount equivalent to the loan. She also refused to accept DBPs offer of 30K ex gratia settlement. RTC: 10 Feb 89, respondend Estate, through Candida, filed a complaint against DBP and the Pool for collection of sum of money with damages, alleging that Dans was insured by the Pool when DBP, with full knowledge of Dans age at the time of application, required him to apply for MRI, and later collected the insurance premium. o o DBP asserted a cross-claim against the Pool. Decision rendered was in favor of Estate and against DBP. Pool was absolved from liability, as there was no privity of contract between it and Dans. DBP declared in estoppel for having led Dans into applying for MRI and actually collecting the premium nd the service fee, despite knowledge of the age ineligibility. Thus it ordered DBO to return and reimburse 139,500 plus interest, as amortization payment paid under protest; consider the mortgage loan of 300K to have been settled, satisfied, or set-off by virtue of the insurance coverage of the late Dans; pay attorneys fees, costs of litigation, and other expenses.
(1) In dealing with Dans, DBP was wearing two legal hats: the first as a lender, and the second as an insurance agent. As an insurance agent, DBP made Dans go through the motions of applying for said insurance, thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. But DBP had full knowledge that Dan's application was never going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned. (2) CC1987, "the agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers." Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age, DBP exceeded the scope of its authority when it accepted Dan's application for MRI by collecting the insurance premium, and deducting its agent's commission and service fee. (3) The liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent's powers. There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI. If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the nondisclosure thereof by the agent, then the latter is liable for damages to him. The rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting, or in affirming, or
CA affirmed.
Issue: (1) WON DBP is liable.
Held/Ratio: YES, DBP is liable.
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concealing the authority under which he assumes to act. Thus the provisions of CC 19-21 come into play. (4) However, BDPs liability cannot be for the entire value of the insurance policy. To assume that were it not for DBP's concealment of the limits of its authority, Dans would have secured an MRI from another insurance company, and therefore would have been fully insured by the time he died, is highly speculative. Considering his advanced age, there is no absolute certainty that Dans could obtain an insurance coverage from another company. It must also be noted that Dans died almost immediately, i.e., on the nineteenth day after applying for the MRI, and on the twenty-third day from the date of release of his loan. (5) Thus, damages: no actual damages as they are too remote to be accurate; moral damages of 50K, considering that DBP offered to pay 30K ex gratia settlement, and its non-disclosure of the limits of its authority amounted to a deception to its client. Note: There was no perfected contract of insurance between Dans and the Pool; the latter cannot be held liable on a contract that doesnt exist. When the former applied, he filled up and personally signed a Health Statement for DBP MRI Pool, where the provisions required that MRI coverage shall take effect (1) when the application shall be approved by the insurance pool; and (2) when the full premium is paid during the continued good health of the applicant. These two conditions must concur. Also, the power to approve MRI applications is lodged with the DBP MRI Pool. But it did not approve Dans application. There is also no showing that it accepted the sum of P1,476.00, which DBP credited to its account with full knowledge that it was payment for Dan's premium. Judgment affirmed with modification, and petitioner DBP is ORDERED: (1) to REIMBURSE respondent Estate of Juan B. Dans the amount of P1,476.00 with legal interest from the date of the
filing of the complaint until fully paid; and (2) to PAY said 50K as moral damages and 10K as attorney's fees. ALBERT v. UNIVERSITY PUBLISHING CO., INC. (1965, Bengzon, J.P., J.) Plaintiff-appellant: Mariano Albert Defendant-appelleee: University Publishing Co., Inc. FACTS September 24, 1949 - Mariano A. Albert sued University Publishing Co., Inc. Plaintiff alleged inter alia that defendant was a corporation duly organized and existing under the laws of the Philippines; that on July 19, 1948, defendant, through Jose M. Aruego, its President, entered into a contract with plaintifif; that defendant had thereby agreed to pay plaintiff P30,000.00 for the exclusive right to publish his revised Commentaries on the Revised Penal Code and for his share in previous sales of the book's first edition; that defendant had undertaken to pay in eight quarterly installments of P3,750.00 starting July 15, 1948; that per contract failure to pay one installment would render the rest due; and that defendant had failed to pay the second installment. Defendant admitted plaintiff's allegation of defendant's corporate existence; admitted the execution and terms of the contract dated July 19, 1948; but alleged that it was plaintiff who breached their contract by failing to deliver his manuscript. Furthermore, defendant counterclaimed for damages. Plaintiff died before trial and Justo R. Albert, his estate's administrator, was substituted for him. The Court of First Instance of Manila, after trial, rendered judgment on April 26, 1954 in favor of the plaintiff and against the defendant, ordering the latter to pay the administrator Justo R. Albert the sum of P23,000.00 with legal interest from the date of the filing of the complaint until the whole amount shall have been fully paid, plus
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costs. The counterclaim of the defendant was also dismissed for lack of evidence. In Albert vs. University Publishing Co., Inc., L-9300, April 18, 1958, the Supreme Court found plaintiff entitled to damages (for breach of contract) but reduced the amount from P23,000.00 to P15,000.00. in Albert vs. University Publishing Co., Inc., L-15275, October 24, 1960, the SC held that the judgment for P15,000.00 which had become final and executory should be executed to its full amount, since in fixing it, payment already made had been considered. July 22, 1961, the court a quo ordered issuance of an execution writ against University Publishing Co., Inc. o Plaintiff, however, on August 10, 1961, petitioned for a writ of execution against Jose M. Aruego, as the real defendant, stating, "plaintiff's counsel and the Sheriff of Manila discovered that there is no such entity as University Publishing Co., Inc. " Plaintiff annexed to his petition a certification from the Securities and Exchange Commission dated July 31, 1961, attesting: "The records of this Commission do not show the registration of UNIVERSITY PUBLISHING CO., INC., either as a corporation or partnership." o "University Publishing Co., Inc." countered by filing, through counsel (Jose M. Aruego's own law firm), a "manifestation" stating that "Jose M. Aruego is not a party to this case," and that, therefore, plaintiff's petition should be denied. o It is not hard to decipher why "University Publishing Co., Inc.," through counsel, would not want Jose M. Aruego to be considered a party to the present case: should a separate action be now instituted against Jose M. Aruego, the plaintiff will have to reckon with the statute of limitations. The court a quo denied the petition by order of September 9, 1961; plaintiff appealed to the SC.
Whether the judgment may be executed against Jose M. Aruego, supposed President of University Publishing Co., Inc., as the real defendant. HELD YES The fact of non-registration of University Publishing Co., Inc. in the Securities and Exchange Commission has not been disputed. Defendant would only raise the point that "University Publishing Co., Inc.," and not Jose M. Aruego, is the party defendant; thereby assuming that "University Publishing Co., Inc." is an existing corporation with an independent juridical personality. Precisely, however, on account of the non-registration it cannot be considered a corporation, not even a corporation de facto. It has therefore no personality separate from Jose M. Aruego; it cannot be sued independently. The corporation-by-estoppel doctrine has not been invoked; at any rate, the same is inapplicable here. o Aruego represented a non-existent entity and induced not only the plaintiff but even the court to believe in such representation. He signed the contract as "President" of "University Publishing Co., Inc.," stating that this was "a corporation duly organized and existing under the laws of the Philippines," and obviously misled plaintiff into believing the same. o One who has induced another to act upon his willful misrepresentation that a corporation was duly organized and existing under the law, cannot thereafter set up against his victim the principle of corporation by estoppel. "University Publishing Co., Inc." purported to come to court, answering the complaint and litigating upon the merits. But as stated, "University Publishing Co., Inc." has no independent personality; it is just a name. Jose M. Aruego was, in reality, the one who answered and litigated, through his own law firm as counsel. He was in fact, if not, in name, the defendant.
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Even with regard to corporations duly organized and existing under the law, the Court has in many a case pierced the veil of corporate fiction to administer the ends of justice. o "A person acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges and obligations and becomes personally liable for contracts entered into or for other acts performed as such agent." (Salvatiera vs. Garlitos) o Had Jose M. Aruego been named as party defendant instead of, or together with, "University Publishing Co., Inc.," there would be no room for debate as to his personal liability. Since he was not so named, the matters of "day in court" and "due process" have arisen. Parties to a suit are "persons who have a right to control the proceedings, to make defense, to adduce and crossexamine witnesses, and to appeal from a decision" and Aruego was, in reality, the person who had and exercised these rights. Clearly, then, Aruego had his day in court as the real defendant; and due process of law has been substantially observed. The evidence is patently clear that Jose M. Aruego, acting as representative of a non-existent principal, was the real party to the contract sued upon; that he was the one who reaped the benefits resulting from it, so much so that partial payments of the consideration were made by him; that he violated its terms, thereby precipitating the suit in question; and that in the litigation he was the real defendant. Perforce, in line with the ends of justice, responsibility under the judgment falls on him. Should there be persons who under the law are liable to Aruego for reimbursement or contribution with respect to the payment he makes under the judgment in question, he may, of course, proceed against them through proper remedial measures.
proceedings for the purpose of carrying the judgment into effect against University Publishing Co., Inc. and/or Jose M. Aruego. Eugenio v. CA and Pepsi Cola Bottling Co. (1994, Regalado, J.) Facts: Pet. Nora Eugenio was a dealer of softdrink products of Resp. Pepsi though she only has one store w/c is in Marikina, she had a regular charge account in both QC plant (under the name Abigail Minimart) and in the Muntinlupa plant (under Nora Store). Noras husband Alfredo Eugenio used to be a route manager of Pepsi in QC plant Aug. 1, 1981 Pepsi sent an inter-office correspondence to Alfredo inviting him for an interview/interrogation regarding the alleged non-payment of debts to the company, inefficiency and loss of trust and confidence. In the first meeting: the amount owed was P94,651.40 after reconciliation of the account: P74,849.40 In his defense, Alfredo submitted to Atty. Rosario (head of Legal Dept) 4 trade provisional receipts (TPR) Daniel Azurin was ordered by Atty. Rosario to conduct investigation re: TPRs Jovencio Estrada (who allegedly issued the TPRs being a route manager) denied that he issued them TPR bound and given in booklets to the ccompany sales representatives, under proper acknowledgement by them and with a record of the distribution thereof. After every transaction, when a collection if made the customer is given by the sales rep. a copy of the TPR, the triplicate copy/customers copy, reflecting the completed transaction. All unused TPR as well as the ollections made are turned over by the sales rep to the appropriate company officer March 17, 1982 Complaint for sum of money was filed by Pepsi against Eugenio alleged that in several occasions in 1979 and 1980, Eugenio purchased and received on credit various Pepsi products from the QC plant and Muntinlupa plant Outstanding balance: QC- P20,437.40 and Muntinlupa P38,527.20
DISPOSITIVE The order appealed from is hereby set aside and the case remanded ordering the lower court to hold supplementary
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In defense, Eugenio presented 4 trade provisional receipts (TPR) allegedly issued and received by them from Pepsis route manager Jovencio Estrada (Malate Warehouse): shows that Eugenio paid a total of P80,000 made by Abigail Store if these payments were considered, Eugenios would not be indebted and instead Pepsi will be the one indebted to them for P3,546.02 TC: Decided in favor of PEPSI Pay Pepsi P74,849 + 12% p.a. + P20K attys fees CA: First remanded the case to TC because it failed to state the facts as basis of the decision TC again decided in favor of Pepsi on the remanded case but the amount was reduced to P64,188.60 + 6% interest p.a. and this was AFFIRMED. Hence this petition. Issue: W/N Eugenio is indebted to Pepsi Held: No Ratio: On the validity of the TPRs and Estradas denial Estrada never testified in court to deny that he issued the TPRs he only executed an affidavit. SC says this means that the evidence he provided is only hearsay (a witness an testify only to those facts which he knows of is personal knowleged). Here, it was only Azurin who testified re: the denial of Estrada Pepsi was fully aware that its case rested on the issue of w/n Estrada signed and issued the TPRs yet they did not present him to testify and only claimed that he cannot be found On the effect of TPRs on the obligation of debtor (i.e. Eugenio) IMPORTANT! TC found that the TPRs are merely provisional and for them to be official, they must be confirmed by Pepsi w/in 15 dyas by delivering the original copy of thereof stamped paid and signed by its cashier to the customers here, the originals were not presented by Eugenio SC: TPRs presented in evidence are disputably presumed as evidentiary of payments made on account of Eugenio presumption juris tantum in law that private transactions have
been fair and regular and that the ordinary course of business has been followed Assuming arguendo that Pepsis cahier did not receive the amounts in the TPR, Pepsi still failed to prove that Estrada, A DULY AUTHORIZED AGENT WITH RESPECT TO THE PETITIONERS EUGENIO, did not receive the amounts. Insofar as the Eugenios as Pepsis customers are concerned, for as long as they paid their obligations to the sales representative using Pepsis official receipt, that payment has already extinguished their obligation The substantive law is that payment shall be made to the person in whose favor the obligation has been constituted, or his successor-in-interest or any person authorized to receive it. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and his agent. Atty. Rosario admitted that it is the collectors responsibility to turn over the collections. Other factual issues: SC also found that Pepsi (as well as TC and CA) are incorrect in relying on the statement of overdue accounts. They should have relied on the daily statement of accounts. Daily statement of account which truly reflects the dayto-day movement of an account Statement of an overdue amount is only a summary of the account, simply reflecting the balance due thereon. There was also no sufficient proof presented on Pepsis theory that Alfredo, being a route manager, had easy access to blank TPRs those which he can use to make spurious proofs of payment. If the receipts were actually lost because Alfredo took them, it is significant that Pepsi did not act on it upon learning of such loss. Hence, this theory was found untenable by the SC. SC does not agree with TC that the fact that the TPRs were not presented the in the first meeting meant that the TPRs were a mere afterthought. Eugenios were able to explain that they failed to submit this earlier because they were with their
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daughter Nanette who eloped at that time and was only contacted 3 months later. The TPRs are correctly considered in the computation of their outstanding balance because in the 1t meeting, Atty. Rosario assured Alfredo that any receipt that he may submit later will e credited in his favor, hence the order of Atty. Rosario that Azurin investigate on the submitted TPRs. Thus, the amount on the reconciliation sheet was not yet final still subject to receipts that may be submitted. Dispositive: CA decision affirming TC is ANULLED AND SET ASIDE Pepsi should pay Eugenios their overpayment in the amount of P5,710.60 METROPOLITAN BANK vs. COURT OF APPEALS 23 Jan 1990 Regalado, J. Petitioner: Metropolitan Bank and Trust Company Respondent: Arturo Alafriz and Associates Facts From March 1974 to September 1983, Arturo Alafriz handled the civil cases of Metropolitan Bank in the Courts of First Instance. Metropolitan Bank is directed to pay its attorneys, Arturo Alafriz and Associates, the amount of P936,000.00 as attorneys fees on a quantum meruit basis. The civil cases were all for the declaration of nullity of certain deeds of sale, with damages. Just in case Maam asks, here are the facts of those civil cases: Celedonio Javier bought parcels of land from Alejandro. The former then mortgaged those parcels of land with Metropolitan Bank to secure a loan obligation of Felix Bautista and/or International Hotel Corporation. The obligors having defaulted, Metropolitan Bank foreclosed the mortgages after which certificates of sale were issued by the provincial sheriff in its favor as purchaser thereof. Subsequently, Alejandro, alleging deceit, fraud and
misrepresentation, brought suits against Javier and included Metropolitan Bank as defendant. It was during the pendency of these suits that these parcels of land were sold by Metropolitan Bank to its sister corporation, Service Leasing Corporation for the purported price of P600,000.00. On the same day, the properties were resold by the latter to Herby Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months later, Herby mortgaged the properties with Banco de Oro for P9,200,000.00. The lower court found that Alafriz did not have knowledge of these transfers and transactions. Alafriz filed a motion to fix its attorneys fees, based on quantum meruit. Petitioner: It had fully paid Alafriz. In addition, it avers that Alafriz has no enforceable attorneys charging lien in the civil cases before the court below because the dismissal of the complaints therein were not judgments for the payment of money or executions issued in pursuance of such judgments. Private respondent: The amount of P50,000 cannot be considered as full payment but merely as a cash advance. It further appears that Alafriz attempted to arrange a compromise with Metropolitan Bank in order to avoid suit but the negotiations were unsuccessful.
Issue: WON Alafriz is entitled to the enforcement of its charging lien for payment of its attorneys fees Held The court agrees with petitioner. Section 37, Rule 138 governs, which states that: He shall also have a lien to the same extent upon all judgments for the payment of money,
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and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements. Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorneys fees, requires as a condition sine qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his client. In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs in view of the frill satisfaction of their claims. The dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondents supposed charging lien is, under our rule, without any legal basis. Private respondent would nevertheless insist that the lien attaches to the proceeds of a judgment of whatever nature. The contention is without merit. The general rule is that an attorney has no lien on the land of his client, notwithstanding such attorney has, with respect to the land in question, successfully prosecuted a suit to establish the title of his client thereto, recovered title or possession in a suit
prosecuted by his client, or defended successfully such clients right and title against an unjust claim or unwarranted attack. The language of the law is clear. In our jurisdiction, the applicable rule provides that a charging lien attaches only to judgments for money and executions in pursuance of such judgments. While a client cannot defeat an attorneys right to his charging lien by dismissing the case, terminating the services of his counsel, and other such causes, this rule cannot find application here as the termination of the cases below was not at the instance of private respondents client but of the opposing party.
C. Liability Art. 1894. The responsibility of two or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated. (1723) Art. 1895. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment of agency, and for the fault or negligence of his fellows agents, except in the latter case when the fellow agents acted beyond the scope of their authority. (n) Art. 1896. The agent owes interest on the sums he has applied to his own use from the day on which he did so, and on those which he still owes after the extinguishment of the agency. (1724a) Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. (1725) Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the
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agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification. (n) Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware. (n) Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (n) Art. 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts. (n) Art. 1902. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. (n) Art. 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. (n) Art. 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. (n)
Art. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. (n) Art. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. (n) Art. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. (n) Art. 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. (n) Art. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. (1726) National Power Corp. v. National Merchandising Corp. (1982, Aquino) PARTIES: Petitioner National Power Corporation (NPC) / Respondent National Merchandising Corporation (Namerco) and Domestic Insurance Company of the Philippines FACTS: NPC and Namerco, as representative of International Commodities Corporation of New York, executed in Manila a Contract of Purchase by NPC from the New York
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firm of 4,000 long tons of crude sulfur for its Maria Cristina Fertilizer Plant in Iligan City. A performance bond was also executed by the Domestic Insurance Company in favor of NPC to guarantee the sellers obligations. It was stipulated in the contract that the seller would deliver the sulfur at Iligan City within 60 days from notice of the establishment in its favor of a letter of credit for $212,120. Failure to effect delivery would subject the seller and its surety to the payment of liquidated damages at the rate of 2/5 of 1% of the full contract price for the first 30 days ad 4/5 of 1% for every day thereafter until complete delivery is made. On Nov. 12, 1956, NPC advised Namercos president of the opening of the letter of credit in favor of the International Commodities Corporation. Notice of this was received by New York firm on Nov. 15, thus, the deadline for the delivery of sulfur was January 15, 1957. The New York supplier was unable to deliver the sulfur due to its inability to secure shipping space. There was a shutdown of NPCs fertilizer plant because there was no sulfur. NPC advised herein respondents that under Article 9 of the contract of sale, nonavailability of bottom or vessel was not a fortuitous event that would excuse nonperformance and that the NPC would resort to legal remedies to enforce its right. The Government Corporate Counsel rescinded the contract of sale due to the New York suppliers nonperformance of its obligations. He also demanded from Namerco the payment of P360,572 as liquidated damages. The liquidated damages were computed based on the 115-day period from Jan. 15, 1957, the deadline for the delivery and May 9, 1957, when Namerco was notified of the rescission of the contract. NPC sued the New York firm, Namerco and the Domestic Insurance Company for the recovery of the stipulated liquidated damages. Trial Court dismissed the case as to
the New York firm for lack of jurisdiction because it was not doing business in the Philippines. NPCs civil case against Namerco was elevated to the SC.
ISSUE/HELD: WON the Namerco, the sellers agent, exceeded its authority in negotiating the sale - YES WON the respondents can be held liable for liquidated damages YES RATIO: Namerco exceeded its authority in negotiating the sale An agent which does not disclose to a third person wishing to purchase crude sulfur from its principal, that the principal told it via cable that it should not sign the sales contract unless it wish to assume sole responsibility for the shipment, exceeds the limits of its authority in subsequently signing the contract. Namerco acted beyond the bounds of its authority because it violated its principals cabled instructions: (1) that the delivery of the sulfur should be C&F Manila, not C&F Iligan City; (2) that the sale be subject to the availability of a steamer and (3) that the seller should be allowed to withdraw right away the full amount of the letter of credit and not merely 80% thereof. Under Article 1897 of the Civil Code, the agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such party. Even before the contract of sale was signed, Namerco was already aware that its principal was having difficulties in booking space. One day before the contract of sale was signed, the New York supplier advised Namerco that it should not sign the contract unless it wished to assume sole responsibility for the shipment. Sycip, Namercos president, replied that he had no choice but to finalize the contract since NPC would forfeit Namercos bidders bond if the contract was not finalized. Three days later, the New York firm cabled
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Namerco that the firm did not consider itself bound by the contract of sale and that Namerco signed the contract on its own responsibility. The rule that a person dealing with an agent must inquire into the limits of the agents authority does not apply where, as in this case, the agent is being held directly responsible for taking chances in exceeding its authority. An agent who exceeded his authority is personally liable for damages. The rule in Article 1403 of the Civil Code that a contract entered into by an agent beyond his authority is unenforceable does not apply where the contract is being enforced as to damages against the agent itself for doing what it did without authority. Namerco liable for liquidated damages Namerco never disclosed to the NPC the cabled or written instructions of its principal. For that reason and because Namerco exceeded its authority by signing the contract despite the New York firms intention not to, it virtually acted in its own name and not as agent and it is therefore bound by the contract of sale which, however, is not enforceable against its principal. If Namerco is bound by the contract of sale, then it follows that it is bound by the stipulation for liquidated damages in that contract. Domestic Insurance Company liable for liquidated damages Although the bond was posted for the New York firm, it was Namerco that actually solicited the bond from the insurance company, and as Namerco is being held liable under the contract of sale as it virtually acted in its own name, it became the principal in the performance bond. In the last analysis, Domestic Insurance Company acted as surety for Namerco. DISPOSITIVE: Lower courts judgment is modified and defendants Namerco and Domestic Insurance Company are ordered to pay solidarily to NPC the sum of P45,100 as liquidated damages. No costs.
Perpetual Savings Bank v. Fajardo (Feliciano, 1993) Facts: Dec. 29, 1982: J.J. Mining issued a promissory note to Perpetual Savings Bank, which promissory note (750,000 payable in 1 lump sum on Jan. 29, 1984, 23% interest p.a., penalty interest 3% per month compounded monthly) was signed by respondents Jose Fajardo and Emmanuel Mundo, officers of JJ Mining. Upon maturity, nobody paid the promissory note. 31 July 1986: Perpetual bank filed a complaint with RTC Makati for the collection of the amounts due, impleading also Fajardo and Del Mundo as agents/ representatives of JJ Mining. Respondents filed a motion to dismiss on the ground that the complaint failed to state a cause of action against them. MTD was denied, motion for recon was denied. CA granted the motion and dismissed the case, said that Sec. 13, Rule 3 of the RoC isnt applicable. Issue/ Held: Does the complaint state a cause of action against Fajardo and Del Mundo? | YES. Ratio: Fajardo and Del Mundo were impleaded as agents/ representatives of JJ Mining who were signatories in the promissory note or alternatively, in their personal capacities. If they were properly authorized, and acted within the scope of their authority, then JJ Mining is the maker of the note which is directly liable to the bank, and not respondents who merely acted for JJ Mining in that transaction. This is because JJ Mining has a personality separate and distinct from the persons who have been duly authorized to represent the corporation in that particular transaction. If respondents purported to act for and in behalf of JJ
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Mining, and were either not authorized at all or somehow acted in excess of their authority as agents/ representatives of JJ Mining, then in principle, they would be personally liable instead of the corporation unless JJ Mining actually received all or part of the proceeds of the loan and benefited, and to that extent, had impliedly ratified the transaction. Fajardo and Del Mundo are being sued as tort-feasors who contracted the loan although they allegedly knew that the apparent principal obligor, J.J. Mining, would never be able to pay the loan upon maturity. The cause of action here is fraudulent inducement, concealment or misrepresentation exercised upon the bank which was misled into granting and releasing the loan. The second basis for suing Fajardo and Del Mundo in their personal and individual capacities is that they allegedly used the proceeds of the loan for their own personal benefit, rather than for the benefit of the corporation. A third possible basis for seeking to hold Fajardo and Del Mundo liable in their personal capacities is that they acted without or in excess of their authority as agents or representatives of the borrower corporation. This third basis, however, was not explicitly set out by the bank in its complaint. The complaint did not directly allege this. However, such an allegation may be said to have been implicitly made along with the allegation that respondents had knowingly induced petitioner to grant the loan though J.J. Mining had no capacity to pay, or with the allegation that respondents had converted the loan proceeds to their personal benefit. Test for determining W/N a complaint states a cause of action: W/N admitting hypothetically the truth of the allegations of fact made in the complaint, a judge may validly grant the relief demanded in the complaint. Sec. 13, Rule 3 of the RoC on alternative defendants is applicable. The bank had pleaded with sufficient clarity its claimed rights against alternative defendants: the
borrower corporation and Fajardo and Del Mundo. That the rights pleaded against the borrower corporation are prima facie inconsistent with the rights pleaded against respondents Fajardo and Del Mundo, is also clear: either the borrower corporation alone is liable; or respondents Fajardo and Del Mundo are alone liable in lieu of J.J. Mining; or respondents Fajardo and Del Mundo are solidarily liable with J.J. Mining. Dispositive: CA decision is reversed and set aside. The orders of the trial court are reinstated. Case is remanded to the trial court for further proceedings. EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v. EDWIN CUIZON and ERWIN CUIZON (April 23, 2007, CHICONAZARIO) FACTS: Petitioner Eurotech (a business of importation and distribution of various European industrial equipment for customers here in the Philippines) is supplier for Impact Systems Sales (a sole proprietorship owned by Respondent Erwin Cuizon). Respondent Edwin Cuizon is the sales manager of Impact Systems and was impleaded in the suit in that capacity. January to April 1995: petitioner sold to Impact Systems various products worth P91,338.00. Subsequently, respondents sought to buy from petitioner 1 unit of sludge pump worth P250,000.00 and made a down payment of P50,000.00. When the sludge pump arrived from the United Kingdom, petitioner refused to deliver it to respondents without latter first settling its previous accounts. June 28, 1995: respondent EDWIN and Alberto de Jesus (general manager of petitioner) executed a Deed of Assignment of receivables in favor of petitioner with the ff stipulations: 1.) outstanding That ASSIGNOR (has an receivables from Toledo Power
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Corporation of P365,000.00) as payment for the purchase of one unit of Selwood Spate 100D Sludge Pump; 2.) That said ASSIGNOR hereby ASSIGN, TRANSFER, and CONVEY to ASSIGNEE the said receivables from Toledo Power Corporation 3.) That ASSIGNEE accepts this assignment 30 June 1995: After the execution of the Deed of Assignment, petitioner delivered to the sludge pump evidenced by Invoice No. 12034 However unknown to petitioner, respondents even with the said Deed still collected from Toledo Power Company P365,135.29 evidenced by Check Voucher No. 0933 (made by Toledo) and an official dated 15 August 1995 issued by Impact Systems. Because of this, petitioner then made several demands upon respondents to pay their obligations. Respondents made partial payments to petitioner. 7 October 1996: petitioners counsel sent respondents a final demand letter stating as of 11 June 1996, respondents total obligations is P295,000.00 excluding interests and attorneys fees. Respondents failed to pay thus petitioner filed a complaint for sum of money, damages, with application for preliminary attachment against respondents in RTC of Cebu City. RTC: issued a writ of preliminary attachment Respondent EDWIN (in Answer) admitted veracity of the sale transactions between Impact Systems and petitioner between January and April 1995 but disputes the total amount of Impact Systems indebtedness which he claims to be only P220,000.00. He also asserts that he is not a real party in interest in this case since he is a mere agent of his principal, Impact Systems, and the transaction in question between petitioner and Impact Systems. As support, he cites petitioners complaint which
Identifies him as the Sales Manager of Impact Systems and was sued in such capacity. RTC declared ERWIN in default for failure to answer within the prescribed period upon motion of petitioner but denied motion for summary judgment. RTC: dropped respondent EDWIN as a party defendant in this case REASONING that Deed of Assignment shows that defendant Edwin acted in behalf of or represented Impact Systems Sales which is a single proprietorship entity with Erwin as its proprietor. Edwins entering into the Deed was ratified by Impact by its act of paying down payment 2 days after the Deed and that plaintiff knew Impact ratified Edwins act by accepting the down payment. THUS, Plaintiff not deceived by defendant Edwin nor did latter enter into the Deed in excess of his powers since Impact ratified his act. CA: affirmed finding no viable legal ground to reverse or modify RTC ruling; MR also denied. Petitioner ARGUES (invoking Art 1897 NCC The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers.): 1. CA didnt appreciate ERWINs act of collecting the receivables from Toledo even through there was already a Deed of Assignment signed by EDWIN on behalf of Impact Systems and that this act by ERWIN must be considered a repudiation of EDWINs power to sign the Deed and that EDWIN did not sufficiently notify petitioner of the extent of his powers as an agent thus should be made personally liable for the obligations of his principal. 2. Moreover, Edwin and Erwin induced petitioner to sell the sludge pump to Impact and sign the Deed and that they not only have a principal-agent relation but also blood
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relations as brothers whose successive actions indicate signs of conspiracy to defraud petitioner. EDWIN (in Comment) argues again that he is not a real party in interest since he was a mere agent of Impact Systems which is owned by ERWIN and that this status is known by petitioner as evidenced by the Complaint and in the Deed which clearly states that he was acting as a representative of Impact Systems in said transaction. ISSUE: WON CA erred when it ruled that Edwin as agent of Impact is not personally liable for the liability of his principal RULING: no merit in the petition Art 1868 In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latters consent o Underlying principle of the contract of agency: to accomplish results by using the services of others to do a great variety of things like selling, buying, manufacturing, and transporting o Purpose: to extend the personality of the principal (for whom another acts and derives authority from) to the agent o Basis of agency: representation MEANING agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal o THUS by legal fiction of the contract of agency the actual or real absence of the principal is converted into his legal or juridical presence qui facit per alium facit per se o Elements of contract of agency: CONSENT (express or implied of the parties to establish the relationship)
OBJECT (execution of a juridical act in relation to a third person) the agent acts as a representative and not for himself; the agent acts within the scope of his authority o HERE, existence agency relationship between respondents ERWIN as principal and EDWIN as agent CLEAR CAUSE OF DISPUTE: whether respondent EDWIN exceeded his authority when he signed the Deed of Assignment thus making him personally liable to pay the obligations to petitioner o Petitioner believes that respondent EDWIN acted beyond the authority granted by his principal SC: disagrees SINCE Article 1897: an agent, who acts as such, is not personally liable to the party with whom he contracts EXCEPT when: he expressly binds himself to the obligation or he exceeds his authority the agent can be held liable if he does not give the third party sufficient notice of his powers THUS, EDWIN does not fall within any of the exceptions contained in this provision SINCE the Deed clearly states that respondent EDWIN signed the same as the sales manager of Impact Systems position of manager is unique since it presupposes the grant of broad powers with which to conduct the business of the principal a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and
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discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and management Unless otherwise provided, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management APPLYING this, Edwin acted within his authority when he signed the Deed RECALL, Petitioner refused to deliver the sludge pump unless previous accounts were settled Impact Systems can be assumed to desperately need the pump for its business since after paying the down payment it continued to negotiate with petitioner which resulted in the Deed of Assignment and spent significant amount of time to negotiate acquisition of equipment Shows that EDWINs participation in the Deed was reasonably necessary or was required in order for him to protect the business of his principal his action would not have adversely affected his principal or violated his fiduciary relation with his principal petitioner is seeks to recover from both respondents ERWIN (principal) and EDWIN (agent) and invokes Article 1897 NCC as basis of its claim against respondent EDWIN
SC: first part of Article 1897 declares that the principal is liable in cases when the agent acted within the bounds of his authority thus agent is completely absolved of any liability second part of Art 1897 presents the situations when the agent himself becomes liable to a third party when he expressly binds himself or he exceeds the limits of his authority without giving notice of his powers to the third person BUT as to the case of excess of authority by the agent (as claimed here) the law does not say that a third person can recover from both the principal and the agent SINCE already previously declared that EDWIN acted within his authority as an agent THUS, he is not a real party in interest who should be impleaded in this case real party in interest: one who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit CONCLUSION: sustain his exclusion as a defendant in the suit before the court a quo o
DISPOSITIVE: premises considered, the present petition is DENIED and the Decision dated 10 August 2004 and Resolution dated 17 March 2005 of the Court of Appeals in CAG.R. SP No. 71397, affirming the Order dated 29 January 2002 of the Regional Trial Court, Branch 8, Cebu City, is AFFIRMED. IV. RIGHTS, PRINCIPAL A. Rights OBLIGATIONS, and LIABILITY OF THE
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GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC. vs. THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB & SONS PHILIPPINE CORPORATION (Abad Santos, 1984) Agent/Petitioner: GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC. (Green Valley) Principal/Respondent: E.R. SQUIBB & SONS PHILIPPINE CORPORATION (Squibb) Facts: On November 3, 1969, Squibb and Green Valley entered into a letter agreement the text which has the following pertinent stipulations: Squibb is pleased to appoint Green Valley as a nonexclusive distributor for Squibb Veterinary Products. In return, Green Valley will be entitled to discounts from Squibb. For deals and special offers: A 5% distributor commission is allowed when the distributor furnishes copies for each sale of a complete deal or special offer to a feedstore, drugstore or other type of account. Deals and Special Offers purchased for resale at regular price invoiced at net deal or special offer price. You will follow strictly our stipulations that the maximum discount you can give to your direct and turnover accounts will not go beyond 10%. Green Valley Poultry and Allied Products, Inc. will accept turn-over orders from Squibb representatives for delivery to customers in your area. If for credit or other valid reasons a turn-over order is not served, the Squibb representative will be notified within 48 hours and hold why the order will not be served. Payment for Purchases of Squibb Products will be due 60 days from date of invoice or the nearest business day thereto. This non-exclusive distribution agreement can be terminated by either Green Valley or Squibb on 30 days notice.
RTC: Squibb filed a collection suit against Green Valley for unpaid goods delivered to the latter. The RTC held that the agreement was a sales contract. It ordered Green Valley to pay Squibb. CA: Affirmed. Issue: Whether or not Green Valley was liable to Squibb (Yes) Green Valley: The contract with Squibb was a mere agency to sell. It never purchased goods from Squibb. The goods received were on consignment only with the obligation to turn over the proceeds , less its commission, or to return the goods if not sold , and since it had sold the goods but had not been able to collect from the purchasers thereof, the action was premature. Squibb: The contract was one of sale so that Green Valley was obligated to pay for the goods received upon the expiration of the 60-day credit period. Held: We do not have to categorize the contract. Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is indubitable. Adopting Green Valley's theory that the contract is an agency to sell, it is liable because it sold on credit without authority from its principal. The Civil Code has a provision exactly in point. It reads: o Art. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. Dispositive: Petition is dismissed. CA decision is affirmed. B. Obligations
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Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency. Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made. (1728) Art. 1913. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. (1729) Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730) Board of Liquidators v. Kalaw (1967, Sanchez, J.) PARTIES: Plaintiff: The Board of Liquidators representing The Government of the Republic of the Philippines Defendants: Heirs of Maximo Kalaw, Juan Bocar, Estate of the Deceased Casimiro Garcia, and Leonor Moll Petitioner: The Board of Liquidators representing The Government of the Republic of the Philippines Respondents: Heirs of Maximo Kalaw, Juan Bocar, Estate of the Deceased Casimiro Garcia, and Leonor Moll Principal (?): National Coconut Corporation Agent (?): Maximo Kalaw FACTS:
May 7, 1940The National Coconut Corporation (NACOCO) was chartered as a non-profit governmental organization by Commonwealth Act 518 avowedly for the protection, preservation and development of the coconut industry in the Philippines. o August 1, 1946NACOCO's charter was amended by Republic Act 5 to grant that corporation the express power "to buy, sell, barter, export, and in any other manner deal in, coconut, copra, and dessicated coconut, as well as their by-products, and to act as agent, broker or commission merchant of the producers, dealers or merchants" thereof. The charter amendment was enacted to stabilize copra prices, to serve coconut producers by securing advantageous prices for them, to cut down to a minimum, if not altogether eliminate, the margin of middlemen, mostly aliens. The general manager and board chairman was Maximo M. Kalaw while Juan Bocar and Casimiro Garcia were members of the Board. o December 22, 1947Leonor Moll became director. NACOCO, after the passage of Republic Act 5, embarked on copra trading activities. o Nine (9) contracts of sale involving different buyers were mentioned in the case. An unhappy chain of events conspired to deter NACOCO from fulfilling their contracts. o Four devastating typhoons visited the Philippines: the first in October, the second and third in November, and the fourth in December, 1947. o Coconut trees throughout the country suffered extensive damage. Copra production decreased. Prices spiralled. Warehouses were destroyed. Cash requirements doubled. Deprivation of export facilities increased the time necessary to accumulate shiploads of copra. Quick turnovers became impossible, financing a problem.
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January 30, 1948The Board met with Kalaw, Bocar, Garcia and Moll in attendance and unanimously approved the aforesaid contracts. As was to be expected, NACOCO but partially performed the contracts. The buyers threatened damage suits although some of the claims were settled. o All the settlements sum up to P1,343,274.52. February 1949NACOCO seeks to recover the above sum of P1,343,274.52 from general manager and board chairman Maximo M. Kalaw, and directors Juan Bocar, Casimiro Garcia and Leonor Moll. o It charges Kalaw with negligence under Article 1902 of the old Civil Code (now Article 2176, new Civil Code); and board members, including Kalaw, with bad faith and/or breach of trust for having approved the contracts. o TC: Dismissed! Plaintiff appealed direct to the Supreme Court. o Plaintiff levelled a major attack on the lower court's holding that Kalaw justifiedly entered into the controverted contracts without the prior approval of the corporation's directorate. Plaintiff leans heavily on NACOCO's corporate by-laws. Article IV (b), Chapter III thereof, recites, as amongst the duties of the general manager, the obligation: "(b) To perform or execute on behalf of the Corporation upon prior approval of the Board, all contracts necessary and essential to the proper accomplishment for which the Corporation was organized."
RELEVANT ISSUES/HELD: 1. WON Kalaw justifiably entered into the disputed contracts without the prior approval of the corporation's directorate. Yes! 2. WON the Boards ratification of the contracts in dispute on January 30, 1948 cleansed the contracts from all their alleged defects from the moment they were constituted. Yes!
RATIO: 1. A rule that has gained acceptance through the years is that a corporate officer "intrusted with the general management and control of its business, has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct of the ordinary business of the corporation. As such officer, "he may, without any special authority from the Board of Directors perform all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. o The peculiar nature of copra trading, at this point, deserves express articulation. Ordinary in this enterprise are copra sales for future delivery. The movement of the market requires that sales agreements be entered into, even though the goods are not yet in the hands of the seller. Known in business parlance as forward sales, it is concededly the practice of the trade. To NACOCO, forward sales were a necessity. Copra could not stay long in its hands; it would lose weight, its value decrease. Above all, NACOCO's limited funds necessitated a quick turnover. Copra contracts then had to be executed on short notice at times within twentyfour hours. To be appreciated then is the difficulty of calling a formal meeting of the board. o Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general practice, custom, and policy, the general manager may bind the company without formal authorization of the board of directors. o In varying language, existence of such authority is established, by proof of the course of business, the usage and practices of the company and by the knowledge which the board of directors has, or must be presumed to have, of acts and doings of its subordinates in and about the affairs of the corporation.
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So also, x x x authority to act for and bind a corporation may be presumed from acts of recognition in other instances where the power was in fact exercised. x x x Thus, when, in the usual course of business of a corporation, an officer has been allowed in his official capacity to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to manage its business. In the case at bar, the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra trading activities for and in NACOCO's behalf without prior board approval. If the bylaws were to be literally followed, the board should give its stamp of prior approval on all corporate contracts. But that board itself, by its acts and through acquiescence, practically laid aside the by-law requirement of prior approval. Long before the disputed contracts came into being, Kalaw contractedby himself alone as general managerfor forward sales of copra. For the fiscal year ending June 30, 1947, Kalaw signed some 60 such contracts for the sale of copra to diverse parties. During that period, from those copra sales, NACOCO reaped a gross profit of P3,631,181.48. So pleased was NACOCO's board of directors that, on December 5, 1946, in Kalaw's absence, it voted to grant him a special bonus "in recognition of the signal achievement rendered by him in putting the Corporation's business on a self-sufficient basis within a few months after assuming office, despite numerous handicaps and difficulties." These previous contract it should be stressed, were signed by Kalaw without prior authority from the board. Said contracts were known all along to the board members although nothing was said by them. The aforesaid contracts stand to prove one thing: Obviously, NACOCO board met the difficulties attendant to forward sales by leaving the adoption of
means to end, to the sound discretion of NACOCO's general manager Maximo M. Kalaw. 2. Indeed, our law pronounces that "[r]atification cleanses the contract from all its defects from the moment it was constituted." (Art. 1313, OCC/ Art. 1396, NCC) By corporate confirmation, the contracts executed by Kalaw are thus purged of whatever vice or defect they may have. o Authorities, great in number, are one in the idea that "ratification by a corporation of an unauthorized act or contract by its officers or others relates back to the time of the act or contract ratified, and is equivalent to original authority;" and that " [t]he corporation and the other party to the transaction are in precisely the same position as if the act or contract had been authorized at the time." o The language of one case is expressive: "The adoption or ratification of a contract by a corporation is nothing more or less than the making of an original contract. The theory of corporate ratification is predicated on the right of a corporation to contract , and any ratification or adoption is equivalent to a grant of prior authority . (Kridelbaugh v. Aldrehn Theatres Co.) DISPOSITIVE: Viewed in the light of the entire record, the judgment under review must be, as it is hereby, affirmed. PRUDENTIAL BANK v CA (1993; Cruz, J.) PARTIES: Plaintiff: Prudential Bank Respondent: Aurora F. Cruz FACTS: Private respondent Aurora F. Cruz, with her sister as codepositor, invested P200,000.00 in Central Bank bills
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with the Prudential Bank on June 23, 1986. The placement was for 63 days at 13.75% annual interest. For this purpose, the amount of P196,122.88 was withdrawn from the depositors' Savings Account No. 2546 and applied to the investment. The difference of P3,877.07 represented the pre-paid interest. The transaction was evidenced by a Confirmation of Sale delivered to Cruz two days later, together with a Debit Memo which were issued by Susan Quimbo, the employee of the bank to whom Cruz was referred and who was apparently in charge of such transactions. Upon maturity of the placement (August 25, 1986), Cruz returned to the bank to "roll-over" or renew her investment. Quimbo, who again attended to her, prepared a Credit Memo crediting the amount of P200,000.00 in Cruz's savings account passbook and prepared a Debit Memo for the amount of P196,122.88 to cover the reinvestment of P200,000.00 minus the prepaid interest of P3,877.02. Cruz was asked to sign a Withdrawal Slip for P196,122.98, representing the amount to be re-invested after deduction of the prepaid interest. Quimbo explained this was a new requirement of the bank. Cruz received another Confirmation of Sale and a copy of the Debit Memo. (October 27, 1986) Cruz returned to the bank and sought to withdraw her P200,000.00 but she was informed that the investment appeared to have been already withdrawn by her on August 25, 1986.
There was no copy on file of the Confirmation of Sale and the Debit Memo allegedly issued to her by Quimbo. Quimbo herself was not available for questioning as she had not been reporting for the past week. Cruz became hysterical and burst into tears. The branch manager, Roman Santos, assured her that he would look into the matter. Every day thereafter, Cruz went to the bank to inquire about her request to withdraw her investment but she received received no definite answer Finally, Cruz sent the bank a demand letter dated November 12, 1986 for the amount of P200,000.00 plus interest. (November 20, 1986) the bank's Vice President Lauro J. Jocson said that there appeared to be an anomaly and requested Cruz to defer court action as they hoped to settle the matter amicably. Cruz sent another letter reiterating her demand. The reply of the bank was unequivocal and negative stating that her request had to be denied because she had already withdrawn the amount she was claiming.
RTC: Brought by Cruz against Prudential Bank. Action was for breach of contract, demanding the return of her money with interest, plus damages and attorney's fees. BANK: denied liability and instituted a third-party complaint against Quimbo Cruz won. The counterclaim and the third-party complaint of the defendant/third-party plaintiff are dismissed.
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CA: affirmed decision in toto. ISSUE: 1) WON funds were already withdrawn. NO 2) WON Bank could be held liable for Quimbos actions. YES BANK: denies private repondents claim and points to the Withdrawal Slip, which it says Cruz has not denied having signed. It also contends that the Confirmation of Sale and the Debit Memo are fake and should not have been given credence by the lower courts. CRUZ: she has not yet collected her investment of P200,000.00 and has submitted in proof of their contention the Confirmation of Sale and the Debit Memo issued to her by Quimbo on the official forms of the bank. HELD: 1) Funds were not yet withdrawn. -issues are factual, the findings of the trial court on these issues have been affirmed by the respondent court and we see no reason to disturb them. - substantial basis for the conclusion that the private respondents signed the Withdrawal Slip only as part of the bank's new procedure of re-investment. She did not actually receive the amount indicated therein, which she was made to understand was being re-invested in her name. -The bank itself so assured her in the Confirmation of Sale and the Debit Memo later issued to her by Quimbo. - the bank has not explained the remarkable coincidence that the amount indicated in the withdrawal slip is exactly the same amount Cruz was re-investing after deducting therefrom the pre-paid interest.
-the bank also failed in impugning the authenticity of the Confirmation of Sale and the Debit Memo which were made on its official forms. - These documents had been issued in the office of the bank itself and by its own employees only (forms not available to general public) with whom she had previously dealt. -Even assuming that they were not signed by its authorized officials, as it claims, there was no obligation on the part of Cruz to verify their authority because she had the right to presume it. There was absolutely no reason why she should not have accepted their authority to act on behalf of their employer. 2) Bank is liable. Principal is liable for obligations contracted by the agent. 1 The agent's apparent representation yields to the principal's true representation and the contract is considered as entered into between the principal and the third person. That investment was acknowledged by its own employees (Quimbo), who had the apparent authority to do so and so could legally bind it by its acts vis--vis Cruz. Whatever might have happened to the investment whether it was lost or stolen by whoever was not the concern of the depositor. It was the concern of the bank. A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative
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Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers.
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capacity but not for acts outside the scope of their authority. (9 c.q.s. p. 417) A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom (10 Am Jur 2d, p. 114). Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021.) -As far as Cruz was concerned, she had the right to withdraw her P200,000.00 placement when it matured pursuant to the terms of her investment as acknowledged and reflected in the Confirmation of Sale. The failure of the bank to deliver the amount to her pursuant to the Confirmation of Sale constituted its breach of their contract, for which it should be held liable. -petitioner was less than eager to present Quimbo at the trial or even to establish her liability although it made the initial effort which it did not pursue to hold her answerable in the thirdparty complaint. Her absence from the proceedings feeds the suspicion of her possible misdeed, which the bank seems to have studiously ignored by its insistence that the missing money had been actually withdrawn by Cruz. By such insistence, the bank is absolving not only itself but also, in effect and by extension, the disappeared Quimbo who apparently has much to explain.
-there was bad faith. It was obvious that an irregularity had been committed by the bank's personnel, but instead of repairing the injury to Cruz by immediately restoring her money to her, it sought to gloss over the anomaly in its own operations. DISPOSITIVE: WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED, with costs against the petitioner. It is so ordered. CUISON v. COURT OF APPEALS (1993, Bidin, J.) PARTIES: PETITIONER Kue Cuison, doing business under the firm name and style "Kue Cuison Paper Supply" | RESPONDENTS Court of Appeals and Valiant Investment Associates FACTS: Petitioner Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond paper and scrap, with places of business at Baesa, Quezon City, and Sto. Cristo, Binondo, Manila. Private respondent Valiant Investment Associates is a partnership duly organized and existing under the laws of the Philippines with business address at Kalookan City. From December 4, 1979 to February 15, 1980, private respondent delivered various kinds of paper products amounting to P297,487.30 to a certain Lilian Tan of LT Trading. The deliveries were made by respondent pursuant to orders allegedly placed by Tiu Huy Tiac who was then employed in the Binondo office of petitioner. It was likewise pursuant to Tiac's instructions that the merchandise was delivered to Lilian Tan. Upon delivery, Lilian Tan paid for the merchandise by issuing several checks payable to cash at the specific request of Tiu Huy Tiac. In turn, Tiac issued nine (9) postdated checks to private respondent as payment for the paper products. Unfortunately, said checks were later dishonored by the drawee bank.
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Private respondent made several demands upon petitioner to pay for the merchandise in question, claiming that Tiu Huy Tiac was duly authorized by petitioner as the manager of his Binondo office, to enter into the questioned transactions with private respondent and Lilian Tan. Petitioner denied any involvement in the transaction entered into by Tiu Huy Tiac and refused to pay private respondent the amount corresponding to the selling price of the subject merchandise. Private respondent filed an action against petitioner for the collection of P297,487.30 representing the price of the merchandise. TC: Complaint DISMISSED for lack of merit. CA: TC Decision MODIFIED. Kue Cuison is ordered to pay Valiant Investment Associates P297,487.30 with 12% interest from the filing of the complaint until the amount is fully paid, plus 7% of the total amount due as attorney's fees, and to pay the costs. In all other respects, the decision appealed from is affirmed.
such person in good faith and in the honest belief that he is what he appears to be. By his own acts and admission, petitioner held out Tiu Huy Tiac to the public as the manager of his store. Petitioner explicitly introduced Tiu Huy Tiac to Bernardino Villanueva, respondent's manager, as his branch manager as testified to by Bernardino Villanueva. Lilian Tan, who has been doing business with petitioner for quite a while, also testified that she knew Tiu Huy Tiac to be the manager of petitioner's Sto. Cristo, Binondo branch. This general perception of Tiu Huy Tiac as the manager of petitioner's Sto. Cristo store is even made manifest by the fact that Tiu Huy Tiac is known in the community to be the "kinakapatid" (godbrother) of petitioner. Even petitioner admitted his close relationship with Tiu Huy Tiac when he said that they are "like brothers". Petitioner: 1. Villanueva's testimony is clearly self-serving inasmuch as the latter worked for private respondent as its manager. 2. Cites Villanueva's failure to produce the very first invoice of the transaction between petitioner and private respondent as another ground to discredit Villanueva's testimony. SC: The 1st argument is inadmissible on the lame excuse of his employment with private respondent utterly misconstrues the nature of "'self-serving evidence" and the specific ground for its exclusion. Co v. Court of Appeals et, al.: Self-serving evidence is evidence made by a party out of court at one time; it does not include a party's testimony as a witness in court . It is excluded on the same ground as any hearsay evidence, that is the lack of opportunity for cross-examination by the adverse party, and on the
ISSUE: W/N Tiu Huy Tiac possessed the required authority from petitioner sufficient to hold the latter liable for the disputed transaction. HELD/RATIO: YES. Tiu Huy Tiac possessed the required authority from Kue Cuison Paper Supply sufficient to hold the latter liable for the transaction. In petitions for review under Rule 45, this Court only passes upon questions of law. EXCEPTION: Where the findings of fact of the CA are at variance with the TC, in which case the Court reviews the evidence in order to arrive at the correct findings based on the records. This petition ought to have been denied outright for it raises a factual issue. One who clothes another with apparent authority as his agent and holds him out to the public as such cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with
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consideration that its admission would open the door to fraud and to fabrication of testimony. On the other hand, a party's testimony in court is sworn and affords the other party the opportunity for cross-examination. SC: The 2nd argument is also untenable. It was petitioner's counsel who withdrew the reservation to have Villanueva produce the document in court, thus prompting private respondent to rest its case that same day.
the more that petitioner was aware of the questioned commission was tantamount to an admission by silence under Rule 130 Section 23 of the Rules of Court. Since Tiu Huy Tiac was proved to be the manager of petitioner's store, the transaction in question as well as the concomitant obligation is valid and binding upon petitioner.
Petitioner: Assails the credibility of Lilian Tan by alleging that Tan was part of an intricate plot to defraud him. SC: Petitioner failed to substantiate or prove that the subject transaction was designed to defraud him. It was even the testimony of petitioner's daughter and assistant manager Imelda Kue Cuison which confirmed the credibility of Tan as a witness. Imelda testified that she knew for a fact that prior to the transaction in question, Tan regularly transacted business with her father. Petitioner also categorically admitted on the witness stand that Tiu Huy Tiac was the manager of his store in Sto. Cristo, Binondo. Such admission, standing alone, is sufficient to negate all the denials made by petitioner regarding the capacity of Tiu Huy Tiac to enter into the transaction in question. Furthermore, three (3) months after Tiu Huy Tiac left petitioner's employ, petitioner even sent communications to its customers notifying them that Tiu Huy Tiac is no longer connected with petitioner's business. Such undertaking spoke unmistakenly of Tiu Huy Tiac's valuable position as petitioner's manager. This act taken together with the declaration of petitioner in open court amount to admissions under Rule 130 Section 22 of the Rules of Court. Petitioner's unexplained delay in disowning the transactions entered into by Tiu Huy Tiac despite several attempts made by respondent to collect the amount from him, proved all
TAKE NOTE OF THE FOLLOWING: [MOST RELEVANT PART] By his representations, petitioner is now estopped from disclaiming liability for the transaction entered by Tiu Huy Tiac on his behalf. It matters not whether the representations are intentional or merely negligent so long as innocent, third persons relied upon such representations in good faith and for value. Tiu Huy Tiac, by petitioner's own representations and manifestations, became an agent of petitioner by estoppel. Petitioner is liable for the transaction entered into by Tiu Huy Tiac on his behalf. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to fact as though he had full powers. Manila Remnant Co. Inc. v. Court of Appeals: Article 1911 of NCC: "Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers." This article is intended to protect the rights of innocent persons. In such a situation, both the principal and the agent may be considered as joint tortfeasors whose liability is joint and solidary. Authority by estoppel has arisen in the instant case because by its negligence, the principal, Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not granted to it. That the principal might not have had actual knowledge of the agent's misdeed is of no moment.
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An admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon (Article 1431, Civil Code of the Philippines). A party cannot be allowed to go back on his own acts and representations to the prejudice of the other party who, in good faith, relied upon them. Although it may appear that Tiu Huy Tiac defrauded his principal (petitioner) in not turning over the proceeds of the transaction to the latter, such fact cannot in any way relieve nor exonerate petitioner of his liability to private respondent. As between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss.
Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases: (1) If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail himself of the benefits derived from the contract; (2) When the expenses were due to the fault of the agent; (3) When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal was not aware thereof; (4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum. (n) DIOLOSA v. CA (1984, Relova, J.) PETS (PRINCIPAL): Mariano Diolosa, Alegria VillanuevaDiolosa RESP: CA, Quirino Baterna (proprietor of Quin Baterna Realty) FACTS (largely based on the pre-trial order) Baterna is a licensed real estate broker. On June 20, 1968, an agency agreement (Exh. A) was entered into between him and the Diolosas, whereby the former was constituted as the exclusive sales agent of the latter, to dispose of, sell, cede, transfer and convey the lots included in the Villa Alegre Subdivision owned by the Diolosas, and pursuant to said agreement, Baterna acted for and in behalf of the Diolosas as their agent in the sale of the lots included in the said subdivision. Pertinent provisions of Exh. A: o The Diolosas are the lawful and absolute owners in fee simple of Villa Alegre Subdivision situated in the District of Mandurriao, Iloilo City, which parcel of land is more particularly described as follows: A parcel of land, Lot No. 2110-b-2-C, PSD 74002, TCT No. T_____ situated in
DISPOSITIVE: WHEREFORE, the instant petition in hereby DENIED for lack of merit. Costs against petitioner. C. Liability Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. (1731) Art. 1916. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice to the provisions of Article 1544. (n) Art. 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible. (n)
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the District of Mandurriao, Iloilo, Phils., containing 39,016 sqm, more or less, with improvements thereon. o The Diolosas, by virtue of these presents, to enhance the sale of the lots of the above-described subdivision, is engaging as their EXCLUSIVE SALES AGENT the Quin Baterna Realty, its successors, heirs and assigns to dispose of, sell, cede, transfer and convey the abovedescribed property in whatever manner and nature Baterna Realty, with the concurrence of the Diolosas, may deem wise and proper under the premises, whether it be in cash or installment basis, until all the subject property as subdivided is fully disposed of. Sept. 27, 1968: The Diolosas terminated the services of Baterna as their exclusive sales agent per a letter ( Exh. B) signed by Alegria Diolosa for the reason that the lots remained unsold were reserved for their grandchildren. Baterna instituted in the CFI Iloilo a case of recovery of unpaid commission against the Diolosas over some of the lots subject of the agency agreement that were not sold. DISMISSED. BATERNA: He had sold the lots comprised in several subdivisions (Greenfield Subd.; the Villa Beach Subd.; the Juntado Subd.; the St. Joseph Village; the Ledesma Subd.; the Brookside Subd.; the Villa Alegre Subd.; and Cecilia Subd.; all in Iloilo). o Under the terms of Exh. A, he had unrevocable authority to sell all the lots included in the Villa Alegre Subdivision and to act as exclusive sales agent of the Diolosas until all the lots shall have been disposed of. o The rescission of the contract under Exh. B contravenes the agreement of the parties. o As a licensed real estate broker, he has been seriously damaged by the action of the Diolosas in rescinding Exh. A for which he suffered moral damages (P50K), damages to his good will (P100K), for attorney's fees (P10K) to protect his rights and interests, plus exemplary damages to be fixed by the Court. Likewise, he should be entitled to a commission on the lots unsold because of the rescission of the contract.
DIOLOSAS: Baternas complaint was filed to make money out of the suit from them, to harrass and to molest them. o They were within their legal right to terminate the agency on the ground that they needed the undisposed lots for the use of the family. Baterna has no right in law to case for commission on lots that they have not sold. o Because of the unjustified and unfounded complaint, they suffered moral damages (P50K) and that for the public good, the court may order Baterna to pay them exemplary damages (P20K) plus attorney's fees (P10K). CA: REVERSED, ordered the Diolosas to pay Baterna Realty P10K as damages and P2K as attorney's fees. o Art. 1920 notwithstanding, the Diolosas could not terminate the agency agreement at will without paying damages. Exh. A expressly stipulates: * * * until all the subject property as subdivided is fully disposed of. o The testimony of Roberto Malundo that Baterna agreed to the intention of Mrs. Diolosa to reserve some lots for her own family use cannot prevail over the clear terms of the agency agreement. Moreover, Baterna denied that there was an agreement to reserve any of the lots for the family of the defendants. o There are 27 subdivision lots which remained unsold on the date the Diolosas rescinded the agency agreement. On that day they had only 6 grandchildren. That they wanted to reserve the 27 lots for the 6 grandchildren is not a legal reason for them to rescind the agency agreement. There would still be 21 lots available for sale. Besides it is undisputed that the Diolosas have other lands which could be reserved for their grandchildren. o
ISSUE/HELD: Whether the Diolosas could terminate the agency agreement (Exh. A) without paying damages to the Baterna. NO.
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RATIO Under Exh. A, the Diolosas allowed Baterna to dispose of, sell, cede, transfer and convey until all the subject property as subdivided is fully disposed of. The authority to sell is not extinguished until all the lots have been disposed of. When, therefore, the Diolosas revoked the contract with Baterna in Exh. B, they became liable to Baterna for damages for breach of contract. Since Exh. A is a valid contract, the same may be rescinded only on grounds specified in Arts. 1381 and 1382: o Art. 1381. The following contracts are rescissible: (1) Those which are entered in to by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other name collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. o Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. HERE: Not one of the grounds mentioned above is present which may be the subject of an action of rescission, much less can the Diolosas say that Baterna violated the terms of their agreement - such as failure to deliver to them (subdivision owners) the proceeds of the purchase price of the lots. DISPOSITIVE: Petition DISMISSED.
Valenzuela v CA (1990, Gutierrez, Jr.) PARTIES: Arturo Valenzuela, Plaintiff- Petitioners Bienvenido Aragon, Robert Parnell, Philippine General Insurance Company, Inc., Respondents-Defendants FACTS: Arturo Valenzuela was a general agent of Philippine American General Insurance Company, Inc (Philamgen) under a General Agency Agreement. Valenzuela was authorized to sell in behalf of Philamgen solicited marine insurance from Delta Motors, Inc. amounting to P4.4M entitling him to a 32% commission or P1.6M 1976-1978: premium payments of P1,946,886 were paid directly to Philamgen. Philamgen wanted a 50% share of Valenzuela's commission but Valenzuela refused. Because of his refusal, the officers of Philamgen reversed his commission due him, placed agency transactions on a cash and carry basis thus removing the 60-day credit for premiums due, threatened to cancel policies issued by his agency and leaked out the news that he has substantial accounts with Philamgen. December 27, 1978: His agency with Philamgen was terminated Valenzuela sought relief from the RTC RTC: favored Valenzuela with reinstatement, commission with interest, monthly compensatory damages, moral damages, attorney's fees and cost of suit CA modified by holding Philamgen and Valenzuela jointly and severally liable for the premium ISSUE(s): WON Philamgen liable to Valenzuela? HELD/RATIO: YES
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There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but for the interest of third persons or for the mutual interest of the principal and the agent. In these cases, it is evident that the agency ceases to be freely revocable by the sole will of the principal. It is evident from the records that the agency involving petitioner and private respondent is one "coupled with an interest," and, therefore, should not be freely revocable at the unilateral will of the latter. The private respondents by the simple expedient of terminating the General Agency Agreement appropriated the entire insurance business of Valenzuela. With the termination of the General Agency Agreement, Valenzuela would no longer be entitled to commission. Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums. Under these circumstances, it is clear that Valenzuela had an interest in the continuation of the agency. The pivotal factor rendering Philamgen and the other private respondents liable in damages is that the termination by them of the General Agency Agreement was tainted with bad faith. Hence, if a principal acts in bad faith and with abuse of right in terminating the agency, then he is liable in damages. This is in accordance with the precepts in Human Relations enshrined in our Civil Code that "every person must in the exercise of his rights and in the performance of his duties act with justice, give every one his due, and observe honesty and good faith: (Art. 19, Civil Code), and every person who, contrary to law, wilfully or negligently causes damages to another, shall indemnify the latter for the same (Art. 20). "Any person who wilfully causes loss or injury to another in a manner contrary to morals, good customs and public policy shall compensate the latter for the damages" (Art. 21). DISPOSITIVE: ACCORDINGLY, the petition is GRANTED. The impugned decision of January 29, 1988 and resolution of April 27, 1988 of respondent court are hereby SET ASIDE. The decision of the trial
court dated January 23, 1986 in Civil Case No. 121126 is REINSTATED with the MODIFICATIONS that the amount of FIVE HUNDRED TWENTY ONE THOUSAND NINE HUNDRED SIXTYFOUR AND 16/100 PESOS (P521,964.16) representing the petitioners Delta commission shall earn only legal interests without any adjustments under Article 1250 of the Civil Code and that the contractual relationship between Arturo P. Valenzuela and Philippine American General Insurance Company shall be deemed terminated upon the satisfaction of the judgment as modified.

Agency Digests - Compilation 5

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Issue: WON Philrex is entitled to receive commission NO Held

DISPOSITIVE: CA decision is AFFIRMED.

Issue: (1) WON DBP is liable.

Held/Ratio: YES, DBP is liable.

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