EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v.

CUIZON
G.R. No. 167552; April 23, 2007
Ponente: J. Chico-Nazario
FACTS:
From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting to P91,338.00 pesos.
Subsequently, respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 with respondents making a
down payment of P50,000.00. When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to
respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995, respondent EDWIN and
Alberto de Jesus, general manager of petitioner, executed a Deed of Assignment of receivables in favor of petitioner. Impact
systems is owed by ERWIN Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo Power Company the amount of
P365,135.29. Alarmed by this development, petitioner made several demands upon respondents to pay their obligations. As a
result, respondents were able to make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a
final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations stood at P295,000.00 excluding
interests and attorney's fees. Because of respondents' failure to abide by said final demand letter, petitioner instituted a complaint
for sum of money, damages, with application for preliminary attachment against herein respondents

By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case. According
to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with petitioner and the latter
was very much aware of this fact.
ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems
Whether, sales manager of a sale proprietorship acting within the scope of his authority is liable with the principal in case the latter
breaches his obligation to another.
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that 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 latter's consent. Its purpose is to extend the personality of the principal or the party
for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that
is, the 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.

In this case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal
and EDWIN as agent.
1. No. An agent who acts as such, is not personally liable to the party with whom he contracts. (Art. 1897, NCC). As manager,
his position is unique in that it presupposes the grant of broad powers within which to conduct the business of the principal.
Well-settled is the rule that:
The powers of an agent are particularly broad in the case of one acting as a general agent or manager; such a
position presupposes a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and
discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and
management. In the absence of an agreement to the contrary, 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. x
x x.. (3 Am Jur. 2d, No. 91, p. 602).

The agent acted within the scope of his authority. Had he not done so, the business of the principal would have
been adversely affected and he would have violated his fiduciary relation with his principal.

The first part of 1897declares that the principal is liable in cases when the agent acted within the bounds of his authority.
Under this, the agent is completely absolved of any liability. The second part of the said provision 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. However, it must be pointed out that in case of excess of authority by the agent, li ke what
petitioner claims exists here, the law does not say that a third person can recover from both the principal and the agent.

Nature of agency.
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. The underlying principle of the contract of agency is to accomplish results by using
the services of others to do a great variety of things like selling, buying, manufacturing, and transporting. Its purpose is to
extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to
act. It is said that the basis of agency is representation, that is, the 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.
By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence qui facit alium
facit per se.

Elements of a contract of agency.
The elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; and
(4) the agent acts within the scope of his authority. (Yu Eng Cho v. Pan American World Airways, Inc., 385 Phil. 453 (2000)).
WILLIAM UY and RODEL ROXAS, petitioners, vs. COURT OF APPEALS, HON. ROBERT BALAO and NATIONAL HOUSING
AUTHORITY,respondents. [G.R. No. 120465. September 9, 1999]
D E C I S I O N
KAPUNAN, J .:
Petitioners William Uy and Rodel Roxas are agents authorized to sell eight parcels of land by the owners thereof. By virtue of such
authority, petitioners offered to sell the lands, located in Tuba, Tadiangan, Benguet to respondent National Housing Authority (NHA)
to be utilized and developed as a housing project.

On February 14, 1989, the NHA Board passed Resolution No. 1632 approving the acquisition of said lands, with an area of 31.8231
hectares, at the cost of P23.867 million, pursuant to which the parties executed a series of Deeds of Absolute Sale covering the
subject lands. Of the eight parcels of land, however, only five were paid for by the NHA because of the report
[1]
it received from the
Land Geosciences Bureau of the Department of Environment and Natural Resources (DENR) that the remaining area is located at
an active landslide area and therefore, not suitable for development into a housing project.

On 22 November 1991, the NHA issued Resolution No. 2352 cancelling the sale over the three parcels of land. The NHA, through
Resolution No. 2394, subsequently offered the amount of P1.225 million to the landowners as daos perjuicios.
On 9 March 1992, petitioners filed before the Regional Trial Court (RTC) of Quezon City a Complaint for Damages against
NHA and its General Manager Robert Balao.
After trial, the RTC rendered a decision declaring the cancellation of the contract to be justified. The trial court nevertheless
awarded damages to plaintiffs in the sum of P1.255 million, the same amount initially offered by NHA to petitioners as damages.
Upon appeal by petitioners, the Court of Appeals reversed the decision of the trial court and entered a new one dismissing the
complaint. It held that since there was sufficient justifiable basis in cancelling the sale, it saw no reason for the award of
damages. The Court of Appeals also noted that petitioners were mere attorneys-in-fact and, therefore, not the real parties-in-
interest in the action before the trial court.
xxx In paragraph 4 of the complaint, plaintiffs alleged themselves to be sellers agents for several owners of the 8 lots subject
matter of the case. Obviously, William Uy and Rodel Roxas in filing this case acted as attorneys-in-fact of the lot owners who are
the real parties in interest but who were omitted to be pleaded as party-plaintiffs in the case. This omission is fatal. Where the
action is brought by an attorney-in-fact of a land owner in his name, (as in our present action) and not in the name of his principal,
the action was properly dismissed (Ferrer vs. Villamor, 60 SCRA 406 [1974]; Marcelo vs. de Leon, 105 Phil. 1175) because the rule
is that every action must be prosecuted in the name of the real parties-in-interest (Section 2, Rule 3, Rules of Court).
When plaintiffs Uy and Roxas sought payment of damages in their favor in view of the partial rescission of Resolution No. 1632 and
the Deed of Absolute Sale covering TCT Nos. 10998, 10999 and 11292 (Prayer complaint, page 5, RTC records), it becomes
obviously indispensable that the lot owners be included, mentioned and named as party-plaintiffs, being the real party-in-
interest. Uy and Roxas, as attorneys-in-fact or apoderados, cannot by themselves lawfully commence this action, more so, when
the supposed special power of attorney, in their favor, was never presented as an evidence in this case. Besides, even if herein
plaintiffs Uy and Roxas were authorized by the lot owners to commence this action, the same must still be filed in the name of the
pricipal, (Filipino Industrial Corporation vs. San Diego, 23 SCRA 706 [1968]). As such indispensable party, their joinder in the action
is mandatory and the complaint may be dismissed if not so impleaded (NDC vs. CA, 211 SCRA 422 [1992]).
[2]

Their motion for reconsideration having been denied, petitioners seek relief from this Court contending that:
I. COMPLAINT FINDING THE RESPONDENT CA ERRED IN DECLARING THAT RESPONDENT NHA HAD ANY LEGAL BASIS
FOR RESCINDING THE SALE INVOLVING THE LAST THREE (3) PARCELS COVERED BY NHA RESOLUTION NO. 1632.
II. GRANTING ARGUENDO THAT THE RESPONDENT NHA HAD LEGAL BASIS TO RESCIND THE SUBJECT SALE, THE
RESPONDENT CA NONETHELESS ERRED IN DENYING HEREIN PETITIONERS CLAIM TO DAMAGES, CONTRARY TO THE
PROVISIONS OF ART. 1191 OF THE CIVIL CODE.
III. THE RESPONDENT CA ERRED IN DISMISSING THE SUBJECT COMPLAINT FINDING THAT THE PETITIONERS
FAILED TO JOIN AS INDISPENSABLE PARTY PLAINTIFF THE SELLING LOT-OWNERS.
[3]

We first resolve the issue raised in the third assignment of error.
Petitioners claim that they lodged the complaint not in behalf of their principles but in their own name as agents directly
damaged by the termination of the contract. The damages prayed for were intended not for the benefit of their principals but to
indemnify petitioners for the losses they themselves allegedly incurred as a result of such termination. These damages consist
mainly of unearned income and advances.
[4]
Petitioners, thus, attempt to distinguish the case at bar from those involving agents
or apoderados instituting actions in their own name but in behalf of their principals.
[5]
Petitioners in this case purportedly brought the
action for damages in their own name and in their own behalf.
We find this contention unmeritorious.
Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real
party-in-interest. The real party-in-interest is the party who stands to be benefited or injured by the judgment or the party entitled to
the avails of the suit. Interest, within the meaning of the rule, means material interest, an interest in the issue and to be affected by
the decree, as distinguished from mere interest in the question involved, or a mere incidental interest.
[6]
Cases construing the real
party-in-interest provision can be more easily understood if it is borne in mind that the true meaning of real party-in-interest may be
summarized as follows: An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to
be enforced.
[7]

Do petitioners, under substantive law, possess the right they seek to enforce? We rule in the negative.
The applicable substantive law in this case is Article 1311 of the Civil Code, which states:
Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation, or by provision of law. x x x.
If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a favor upon a third person. (Underscoring supplied.)
Petitioners are not parties to the contract of sale between their principals and NHA. They are mere agents of the owners of
the land subject of the sale. As agents, they only render some service or do something in representation or on behalf of their
principals.
[8]
The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. Since
a contract may be violated only by the parties thereto as against each other, the real parties-in-interest, either as plaintiff or
defendant, in an action upon that contract must, generally, either be parties to said contract.
[9]

Neither has there been any allegation, much less proof, that petitioners are the heirs of their principals.
Are petitioners assignees to the rights under the contracts of sale? In McMicking vs. Banco Espaol-Filipino,
[10]
we held that
the rule requiring every action to be prosecuted in the name of the real party-in-interest
x x x recognizes the assignments of rights of action and also recognizes that when one has a right of action assigned to him he is
then the real party in interest and may maintain an action upon such claim or right. The purpose of [this rule] is to require the plaintiff
to be the real party in interest, or, in other words, he must be the person to whom the proceeds of the action shall belong, and to
prevent actions by persons who have no interest in the result of the same. xxx
Thus, an agent, in his own behalf, may bring an action founded on a contract made for his principal, as an assignee of such
contract. We find the following declaration in Section 372 (1) of the Restatement of the Law on Agency (Second):
[11]

Section 372. Agent as Owner of Contract Right
(1) Unless otherwise agreed, an agent who has or who acquires an interest in a contract which he makes on behalf of his principal
can, although not a promisee, maintain such action thereon as might a transferee having a similar interest.
The Comment on subsection (1) states:
a. Agent a transferee. One who has made a contract on behalf of another may become an assignee of the contract and bring suit
against the other party to it, as any other transferee. The customs of business or the course of conduct between the principal and
the agent may indicate that an agent who ordinarily has merely a security interest is a transferee of the principals rights under the
contract and as such is permitted to bring suit. If the agent has settled with his principal with the understanding that he is to collect
the claim against the obligor by way of reimbursing himself for his advances and commissions, the agent is in the position of an
assignee who is the beneficial owner of the chose in action. He has an irrevocable power to sue in his principals name. x x x. And,
under the statutes which permit the real party in interest to sue, he can maintain an action in his own name. This power to sue is not
affected by a settlement between the principal and the obligor if the latter has notice of the agents interest. x x x. Even though the
agent has not settled with his principal, he may, by agreement with the principal, have a right to receive payment and out of the
proceeds to reimburse himself for advances and commissions before turning the balance over to the principal. In such a case,
although there is no formal assignment, the agent is in the position of a transferee of the whole claim for security; he has an
irrevocable power to sue in his principals name and, under statutes which permit the real party in interest to sue, he can maintain an
action in his own name.
Petitioners, however, have not shown that they are assignees of their principals to the subject contracts. While they alleged
that they made advances and that they suffered loss of commissions, they have not established any agreement granting them the
right to receive payment and out of the proceeds to reimburse [themselves] for advances and commissions before turning the
balance over to the principal[s].
Finally, it does not appear that petitioners are beneficiaries of a stipulation pour autrui under the second paragraph of
Article 1311 of the Civil Code. Indeed, there is no stipulation in any of the Deeds of Absolute Sale clearly and deliberately
conferring a favor to any third person.
That petitioners did not obtain their commissions or recoup their advances because of the non-performance of the contract did
not entitle them to file the action below against respondent NHA. Section 372 (2) of the Restatement of the Law on Agency
(Second) states:
(2) An agent does not have such an interest in a contract as to entitle him to maintain an action at law upon it in his own name
merely because he is entilted to a portion of the proceeds as compensation for making it or because he is liable for its breach.
The following Comment on the above subsection is illuminating:
The fact that an agent who makes a contract for his principal will gain or suffer loss by the performance or nonperformance of the
contract by the principal or by the other party thereto does not entitle him to maintain an action on his own behalf against the other
party for its breach. An agent entitled to receive a commission from his principal upon the performance of a contract which he has
made on his principals account does not, from this fact alone, have any claim against the other party for breach of the contract,
either in an action on the contract or otherwise. An agent who is not a promisee cannot maintain an action at law against a
purchaser merely because he is entitled to have his compensation or advances paid out of the purchase price before payment to the
principal. x x x.
Thus, in Hopkins vs. Ives,
[12]
the Supreme Court of Arkansas, citing Section 372 (2) above, denied the claim of a real estate
broker to recover his alleged commission against the purchaser in an agreement to purchase property.
In Goduco vs. Court of Appeals,
[13]
this Court held that:
x x x granting that appellant had the authority to sell the property, the same did not make the buyer liable for the commission she
claimed. At most, the owner of the property and the one who promised to give her a commission should be the one liable to pay the
same and to whom the claim should have been directed. xxx
As petitioners are not parties, heirs, assignees, or beneficiaries of a stipulation pour autrui under the contracts of sale, they do
not, under substantive law, possess the right they seek to enforce. Therefore, they are not the real parties-in-interest in this case.
Petitioners not being the real parties-in-interest, any decision rendered herein would be pointless since the same would not
bind the real parties-in-interest.
[14]

Nevertheless, to forestall further litigation on the substantive aspects of this case, we shall proceed to rule on the merits.
[15]

Petitioners submit that respondent NHA had no legal basis to rescind the sale of the subject three parcels of land. The
existence of such legal basis, notwithstanding, petitioners argue that they are still entitled to an award of damages.
Petitioners confuse the cancellation of the contract by the NHA as a rescission of the contract under Article 1191 of the Civil
Code. The right of rescission or, more accurately, resolution, of a party to an obligation under Article 1191 is predicated on a breach
of faith by the other party that violates the reciprocity between them.
[16]
The power to rescind, therefore, is given to the injured
party.
[17]
Article 1191 states:
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent
upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
In this case, the NHA did not rescind the contract. Indeed, it did not have the right to do so for the other parties to the
contract, the vendors, did not commit any breach, much less a substantial breach,
[18]
of their obligation. Their obligation was merely
to deliver the parcels of land to the NHA, an obligation that they fulfilled. The NHA did not suffer any injury by the performance
thereof.
The cancellation, therefore, was not a rescission under Article 1191. Rather, the cancellation was based on the negation of
the cause arising from the realization that the lands, which were the object of the sale, were not suitable for housing.
Cause is the essential reason which moves the contracting parties to enter into it.
[19]
In other words, the cause is the
immediate, direct and proximate reason which justifies the creation of an obligation through the will of the contracting
parties.
[20]
Cause, which is the essential reason for the contract, should be distinguished from motive, which is the particular reason
of a contracting party which does not affect the other party.
[21]

For example, in a contract of sale of a piece of land, such as in this case, the cause of the vendor (petitioners principals) in
entering into the contract is to obtain the price. For the vendee, NHA, it is the acquisition of the land.
[22]
The motive of the NHA, on
the other hand, is to use said lands for housing. This is apparent from the portion of the Deeds of Absolute Sale
[23]
stating:
WHEREAS, under the Executive Order No. 90 dated December 17, 1986, the VENDEE is mandated to focus and concentrate its
efforts and resources in providing housing assistance to the lowest thirty percent (30%) of urban income earners, thru slum
upgrading and development of sites and services projects;
WHEREAS, Letters of Instructions Nos. 555 and 557 [as] amended by Letter of Instruction No. 630, prescribed slum improvement
and upgrading, as well as the development of sites and services as the principal housing strategy for dealing with slum, squatter and
other blighted communities;
x x x
WHEREAS, the VENDEE, in pursuit of and in compliance with the above-stated purposes offers to buy and the VENDORS, in a
gesture of their willing to cooperate with the above policy and commitments, agree to sell the aforesaid property together with all the
existing improvements there or belonging to the VENDORS;
NOW, THEREFORE, for and in consideration of the foregoing premises and the terms and conditions hereinbelow stipulated, the
VENDORS hereby, sell, transfer, cede and convey unto the VENDEE, its assigns, or successors-in-interest, a parcel of land located
at Bo. Tadiangan, Tuba, Benguet containing a total area of FIFTY SIX THOUSAND EIGHT HUNDRED NINETEEN (56,819)
SQUARE METERS, more or less x x x.
Ordinarily, a partys motives for entering into the contract do not affect the contract. However, when the motive predetermines
the cause, the motive may be regarded as the cause. In Liguez vs. Court of Appeals,
[24]
this Court, speaking through Justice J.B.L.
Reyes, held:
xxx It is well to note, however, that Manresa himself (Vol. 8, pp. 641-642) while maintaining the distinction and upholding the
inoperativeness of the motives of the parties to determine the validity of the contract, expressly excepts from the rule those contracts
that are conditioned upon the attainment of the motives of either party.
The same view is held by the Supreme Court of Spain, in its decisions of February 4, 1941, and December 4, 1946, holding that the
motive may be regarded as causa when it predetermines the purpose of the contract.
In this case, it is clear, and petitioners do not dispute, that NHA would not have entered into the contract were the lands not
suitable for housing. In other words, the quality of the land was an implied condition for the NHA to enter into the contract. On the
part of the NHA, therefore, the motive was the cause for its being a party to the sale.
Were the lands indeed unsuitable for the housing as NHA claimed?
We deem the findings contained in the report of the Land Geosciences Bureau dated 15 July 1991 sufficient basis for the
cancellation of the sale, thus:
In Tadiangan, Tuba, the housing site is situated in an area of moderate topography. There [are] more areas of less sloping ground
apparently habitable. The site is underlain by x x x thick slide deposits (4-45m) consisting of huge conglomerate boulders (see
Photo No. 2) mix[ed] with silty clay materials. These clay particles when saturated have some swelling characteristics which is
dangerous for any civil structures especially mass housing development.
[25]

Petitioners content that the report was merely preliminary, and not conclusive, as indicated in its title:
MEMORANDUM
TO: EDWIN G. DOMINGO
Chief, Lands Geology Division
FROM: ARISTOTLE A. RILLON
Geologist II
SUBJECT: Preliminary Assessment of Tadiangan Housing Project in Tuba, Benguet
[26]

Thus, page 2 of the report states in part:
x x x
Actually there is a need to conduct further geottechnical [sic] studies in the NHA property. Standard Penetration Test (SPT) must be
carried out to give an estimate of the degree of compaction (the relative density) of the slide deposit and also the bearing capacity of
the soil materials. Another thing to consider is the vulnerability of the area to landslides and other mass movements due to thick soil
cover. Preventive physical mitigation methods such as surface and subsurface drainage and regrading of the slope must be done in
the area.
[27]

We read the quoted portion, however, to mean only that further tests are required to determine the degree of compaction,
the bearing capacity of the soil materials, and vulnerability of the area to landslides, since the tests already conducted were
inadequate to ascertain such geological attributes. It is only in this sense that the assessment was preliminary.
Accordingly, we hold that the NHA was justified in cancelling the contract. The realization of the mistake as regards the
quality of the land resulted in the negation of the motive/cause thus rendering the contract inexistent.
[28]
Article 1318 of the Civil
Code states that:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (Underscoring supplied.)
Therefore, assuming that petitioners are parties, assignees or beneficiaries to the contract of sale, they would not be entitled
to any award of damages.
WHEREFORE, the instant petition is hereby DENIED.
SO ORDERED.
G.R. No. 136433 December 6, 2006
ANTONIO B. BALTAZAR, petitioner,
vs.
HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E. ILAO, JR. and ERNESTO R.
SALENGA, respondents.


D E C I S I O N


VELASCO, JR., J .:
The Case
Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for Review on Certiorari,
1
under Rule 45 pursuant to
Section 27 of RA 6770,
2
seeks to reverse and set aside the November 26, 1997 Order
3
of the Office of the Special Prosecutor
(OSP) in OMB-1-94-3425 duly approved by then Ombudsman Aniano Desierto on August 21, 1998, which recommended the
dismissal of the Information
4
in Criminal Case No. 23661 filed before the Sandiganbayan against respondents Pampanga Provincial
Adjudicator Toribio E. Ilao, Jr., Chief Legal Officer Eulogio M. Mariano and Legal Officer Jose D. Jimenez, Jr. (both of the DAR
Legal Division in San Fernando, Pampanga), and Ernesto R. Salenga. The petition likewise seeks to set aside the October 30, 1998
Memorandum
5
of the OSP duly approved by the Ombudsman on November 27, 1998 which denied petitioner's Motion for
Reconsideration.
6
Previously, the filing of the Information against said respondents was authorized by the May 10, 1996
Resolution
7
and October 3, 1996 Order
8
of the Ombudsman which found probable cause that they granted unwarranted benefits,
advantage, and preference to respondent Salenga in violation of Section 3 (e) of RA 3019.
9

The Facts
Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado
leased the fishpond for PhP 230,000.00 to Eduardo Lapid for a three (3)-year period, that is, from August 7, 1990 to August 7,
1993.
10
Lessee Eduardo Lapid in turn sub-leased the fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) months
of the original lease, that is, from January 10, 1993 to August 7, 1993.
11
Respondent Ernesto Salenga was hired by Eduardo Lapid
as fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent Salenga.
Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis Lagman, sent his January 28, 1993 demand
letter
12
to Rafael Lopez and Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the harvest.
On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing the latter that for the last two (2) months
of the sub-lease, he had given the rights over the fishpond to Mario Palad and Ambit Perez for PhP 20,000.00.
13
This prompted
respondent Salenga to file a Complaint
14
before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San
Fernando, Pampanga docketed as DARAB Case No. 552-P93 entitled Ernesto R. Salenga v. Rafael L. Lopez and Lourdes L.
Lapid for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of Harvest. The Complaint was signed
by respondent Jose D. Jimenez, Jr., Legal Officer of the Department of Agrarian Reform (DAR) Region III Office in San Fernando,
Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M. Mariano was the Chief Legal Officer of DAR
Region III. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB, Pampanga.
On May 10, 1993, respondent Salenga amended his complaint.
15
The amendments included a prayer for the issuance of a
temporary restraining order (TRO) and preliminary injunction. However, before the prayer for the issuance of a TRO could be acted
upon, on June 16, 1993, respondent Salenga filed a Motion to Maintain Status Quo and to Issue Restraining Order
16
which was set
for hearing on June 22, 1993. In the hearing, however, only respondent Salenga with his counsel appeared despite notice to the
other parties. Consequently, the ex-partepresentation of respondent Salengas evidence in support of the prayer for the issuance of
a restraining order was allowed, since the motion was unopposed, and on July 21, 1993, respondent Ilao, Jr. issued a TRO.
17

Thereafter, respondent Salenga asked for supervision of the harvest, which the board sheriff did. Accordingly, defendants Lopez
and Lapid received their respective shares while respondent Salenga was given his share under protest. In the subsequent hearing
for the issuance of a preliminary injunction, again, only respondent Salenga appeared and presented his evidence for the issuance
of the writ.
Pending resolution of the case, Faustino Mercado, as Attorney-in-Fact of the fishpond owner Paciencia Regala, filed a motion to
intervene which was granted by respondent Ilao, Jr. through the November 15, 1993 Order. After the trial, respondent Ilao, Jr.
rendered a Decision on May 29, 1995 dismissing the Complaint for lack of merit; but losing plaintiff, respondent Salenga, appealed
the decision before the DARAB Appellate Board.
Complaint Before the Ombudsman
On November 24, 1994, pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio Baltazar, an
alleged nephew of Faustino Mercado, through a Complaint-Affidavit
18
against private respondents before the Office of the
Ombudsman which was docketed as OMB-1-94-3425 entitled Antonio B. Baltazar v. Eulogio Mariano, Jose Jimenez, Jr., Toribio
Ilao, Jr. and Ernesto Salenga for violation of RA 3019. Petitioner charged private respondents of conspiracy through the issuance of
the TRO in allowing respondent Salenga to retain possession of the fishpond, operate it, harvest the produce, and keep the sales
under the safekeeping of other private respondents. Moreover, petitioner maintains that respondent Ilao, Jr. had no jurisdiction to
hear and act on DARAB Case No. 552-P93 filed by respondent Salenga as there was no tenancy relation between respondent
Salenga and Rafael L. Lopez, and thus, the complaint was dismissible on its face.
Through the December 14, 1994 Order,
19
the Ombudsman required private respondents to file their counter-affidavits, affidavits of
their witnesses, and other controverting evidence. While the other respondents submitted their counter-affidavits, respondent Ilao,
Jr. instead filed his February 9, 1995 motion to dismiss, February 21, 1995 Reply, and March 24, 1995 Rejoinder.
Ombudsmans Determination of Probable Cause
On May 10, 1996, the Ombudsman issued a Resolution
20
finding cause to bring respondents to court, denying the motion to dismiss
of respondent Ilao, Jr., and recommending the filing of an Information for violation of Section 3 (e) of RA 3019. Subsequently,
respondent Ilao, Jr. filed his September 16, 1996 Motion for Reconsideration and/or Re-investigation
21
which was denied through
the October 3, 1996 Order.
22
Consequently, the March 17, 1997 Information
23
was filed against all the private respondents before
the Sandiganbayan which was docketed as Criminal Case No. 23661.
Before the graft court, respondent Ilao, Jr. filed his May 19, 1997 Motion for Reconsideration and/or Re-investigation which was
granted through the August 29, 1997 Order.
24
On September 8, 1997, respondent Ilao, Jr. subsequently filed his Counter-
Affidavit
25
with attachments while petitioner did not file any reply-affidavit despite notice to him. The OSP of the Ombudsman
conducted the re-investigation; and the result of the re-investigation was embodied in the assailed November 26, 1997
Order
26
which recommended the dismissal of the complaint in OMB-1-94-3425 against all private respondents. Upon review, the
Ombudsman approved the OSPs recommendation on August 21, 1998.
Petitioners Motion for Reconsideration
27
was likewise denied by the OSP through the October 30, 1998 Memorandum
28
which was
approved by the Ombudsman on November 27, 1998. Consequently, the trial prosecutor moved orally before the Sandiganbayan
for the dismissal of Criminal Case No. 23661 which was granted through the December 11, 1998 Order.
29

Thus, the instant petition is before us.
The Issues
Petitioner raises two assignments of errors, to wit:
THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A MISPLACED COUNTER-AFFIDAVIT FILED
AFTER THE TERMINATION OF THE PRELIMINARY INVESTIGATION AND/OR THE CASE WAS ALREADY FILED
BEFORE THE SANDIGANBAYAN.
ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN LIKEWISE ERRED IN REVERSING HIS OWN
RESOLUTION WHERE IT WAS RESOLVED THAT ACCUSED AS PROVINCIAL AGRARIAN ADJUDICATOR HAS NO
JURISDICTION OVER A COMPLAINT WHERE THERE EXIST [sic] NO TENANCY RELATIONSHIP CONSIDERING [sic]
COMPLAINANT IS NOT A TENANT BUT A "BANTE-ENCARGADO" OR WATCHMAN-OVERSEER HIRED FOR A
SALARY OF P3,000.00 PER MONTH AS ALLEGED IN HIS OWN COMPLAINT.
30

Before delving into the errors raised by petitioner, we first address the preliminary procedural issue of the authority and locus
standi of petitioner to pursue the instant petition.
Preliminary Issue: Legal Standing
Locus standi is defined as "a right of appearance in a court of justice x x x on a given question."
31
In private suits, standing is
governed by the "real-parties-in interest" rule found in Section 2, Rule 3 of the 1997 Rules of Civil Procedure which provides that
"every action must be prosecuted or defended in the name of the real party in interest." Accordingly, the "real-party-in interest" is
"the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit."
32
Succinctly
put, the plaintiffs standing is based on their own right to the relief sought.
The records show that petitioner is a non-lawyer appearing for himself and conducting litigation in person. Petitioner instituted the
instant case before the Ombudsman in his own name. In so far as the Complaint-Affidavit filed before the Office of the Ombudsman
is concerned, there is no question on his authority and legal standing. Indeed, the Office of the Ombudsman is mandated to
"investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or
agency, when such act or omission appears to be illegal, unjust, improper or inefficient (emphasis supplied)."
33
The Ombudsman
can act on anonymous complaints and motu proprio inquire into alleged improper official acts or omissions from whatever source,
e.g., a newspaper.
34
Thus, any complainant may be entertained by the Ombudsman for the latter to initiate an inquiry and
investigation for alleged irregularities.
However, filing the petition in person before this Court is another matter. The Rules allow a non-lawyer to conduct litigation in person
and appear for oneself only when he is a party to a legal controversy. Section 34 of Rule 138 pertinently provides, thus:
SEC. 34. By whom litigation conducted. In the court of a justice of the peace a party may conduct his litigation in person,
with the aid of an agent or friend appointed by him for that purpose, or with the aid of an attorney. In any other court,
a party may conduct his litigation personally or by aid of an attorney, and hisappearance must be either personal or by a
duly authorized member of the bar (emphases supplied).
Petitioner has no legal standing
Is petitioner a party or a real party in interest to have the locus standi to pursue the instant petition? We answer in the negative.
While petitioner may be the complainant in OMB-1-94-3425, he is not a real party in interest. Section 2, Rule 3 of the 1997 Rules of
Civil Procedure stipulates, thus:
SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must
be prosecuted or defended in the name of the real party in interest.
The same concept is applied in criminal and administrative cases.
In the case at bar which involves a criminal proceeding stemming from a civil (agrarian) case, it is clear that petitioner is not a real
party in interest. Except being the complainant, the records show that petitioner is a stranger to the agrarian case. It must be
recalled that the undisputed owner of the fishpond is Paciencia Regala, who intervened in DARAB Case No. 552-P93 through her
Attorney-in-Fact Faustino Mercado in order to protect her interest. The motion for intervention filed by Faustino Mercado, as agent of
Paciencia Regala, was granted by respondent Provincial Adjudicator Ilao, Jr. through the November 15, 1993 Order in DARAB Case
No. 552-P93.
Agency cannot be further delegated
Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented a Special Power of
Attorney
35
(SPA) from Faustino Mercado. However, such SPA is unavailing for petitioner. For one, petitioners principal, Faustino
Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate
to another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-
delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency.
36
For another, a re-
delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the
instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of Faustino Mercado.
Moreover, while the Civil Code under Article 1892
37
allows the agent to appoint a substitute, such is not the situation in the instant
case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is clear in
the aforecited Article that what is allowed is a substitute and not a delegation of the agency.
Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a real party in interest in the criminal
proceedings conducted by the Ombudsman as elevated to the Sandiganbayan. He is not a party who will be benefited or injured by
the results of both cases.
Petitioner: a stranger and not an injured private complainant
Petitioner only surfaced in November 1994 as complainant before the Ombudsman. Aside from that, not being an agent of the
parties in the agrarian case, he has no locus standi to pursue this petition. He cannot be likened to an injured private complainant in
a criminal complaint who has direct interest in the outcome of the criminal case.
More so, we note that the petition is not pursued as a public suit with petitioner asserting a "public right" in assailing an allegedly
illegal official action, and doing so as a representative of the general public. He is pursuing the instant case as an agent of an
ineffective agency.
Petitioner has not shown entitlement to judicial protection
Even if we consider the instant petition as a public suit, where we may consider petitioner suing as a "stranger," or in the category of
a "citizen," or "taxpayer," still petitioner has not adequately shown that he is entitled to seek judicial protection. In other words,
petitioner has not made out a sufficient interest in the vindication of the public order and the securing of relief as a "citizen" or
"taxpayer"; more so when there is no showing that he was injured by the dismissal of the criminal complaint before the
Sandiganbayan.
Based on the foregoing discussion, petitioner indubitably does not have locus standi to pursue this action and the instant petition
must be forthwith dismissed on that score. Even granting arguendo that he has locus standi, nonetheless, petitioner fails to show
grave abuse of discretion of respondent Ombudsman to warrant a reversal of the assailed November 26, 1997 Order and the
October 30, 1998 Memorandum.
First Issue: Submission of Counter-Affidavit
The Sandiganbayan, not the Ombudsman, ordered re-investigation
On the substantive aspect, in the first assignment of error, petitioner imputes grave abuse of discretion on public respondent
Ombudsman for allowing respondent Ilao, Jr. to submit his Counter-Affidavit when the preliminary investigation was already
concluded and an Information filed with the Sandiganbayan which assumed jurisdiction over the criminal case. This contention is
utterly erroneous.
The facts clearly show that it was not the Ombudsman through the OSP who allowed respondent Ilao, Jr. to submit his Counter-
Affidavit. It was the Sandiganbayan who granted the prayed for re-investigation and ordered the OSP to conduct the re-investigation
through its August 29, 1997 Order, as follows:
Considering the manifestation of Prosecutor Cicero Jurado, Jr. that accused Toribio E. Ilao, Jr. was not able to file his
counter-affidavit in the preliminary investigation, there appears to be some basis for granting the motion of said accused
for reinvestigation.
WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit, with documentary evidence attached, if any, with
the Office of the Special Prosecutor within then (10) days from today. Theprosecution is ordered to conduct a
reinvestigation within a period of thirty (30) days.
38
(Emphases supplied.)
As it is, public respondent Ombudsman through the OSP did not exercise any discretion in allowing respondent Ilao, Jr. to submit
his Counter-Affidavit. The OSP simply followed the graft courts directive to conduct the re-investigation after the Counter-Affidavit of
respondent Ilao, Jr. was filed. Indeed, petitioner did not contest nor question the August 29, 1997 Order of the graft court. Moreover,
petitioner did not file any reply-affidavit in the re-investigation despite notice.
Re-investigation upon sound discretion of graft court
Furthermore, neither can we fault the graft court in granting the prayed for re-investigation as it can readily be seen from the
antecedent facts that respondent Ilao, Jr. was not given the opportunity to file his Counter-Affidavit. Respondent Ilao, Jr. filed a
motion to dismiss with the Ombudsman but such was not resolved before the Resolutionfinding cause to bring respondents to
trialwas issued. In fact, respondent Ilao, Jr.s motion to dismiss was resolved only through the May 10, 1996 Resolution which
recommended the filing of an Information. Respondent Ilao, Jr.s Motion for Reconsideration and/or Re-investigation was denied and
the Information was filed with the graft court.
Verily, courts are given wide latitude to accord the accused ample opportunity to present controverting evidence even before trial as
demanded by due process. Thus, we held in Villaflor v. Vivar that "[a] component part of due process in criminal justice, preliminary
investigation is a statutory and substantive right accorded to the accused before trial. To deny their claim to a preliminary
investigation would be to deprive them of the full measure of their right to due process."
39

Second Issue: Agrarian Dispute
Anent the second assignment of error, petitioner contends that DARAB Case No. 552-P93 is not an agrarian dispute and therefore
outside the jurisdiction of the DARAB. He maintains that respondent Salenga is not an agricultural tenant but a mere watchman of
the fishpond owned by Paciencia Regala. Moreover, petitioner further argues that Rafael Lopez and Lourdes Lapid, the respondents
in the DARAB case, are not the owners of the fishpond.
Nature of the case determined by allegations in the complaint
This argument is likewise bereft of merit. Indeed, as aptly pointed out by respondents and as borne out by the antecedent facts,
respondent Ilao, Jr. could not have acted otherwise. It is a settled rule that jurisdiction over the subject matter is determined by the
allegations of the complaint.
40
The nature of an action is determined by the material averments in the complaint and the character of
the relief sought,
41
not by the defenses asserted in the answer or motion to dismiss.
42
Given that respondent Salengas complaint
and its attachment clearly spells out the jurisdictional allegations that he is an agricultural tenant in possession of the fishpond and is
about to be ejected from it, clearly, respondent Ilao, Jr. could not be faulted in assuming jurisdiction as said allegations characterize
an agricultural dispute. Besides, whatever defense asserted in an answer or motion to dismiss is not to be considered in resolving
the issue on jurisdiction as it cannot be made dependent upon the allegations of the defendant.
Issuance of TRO upon the sound discretion of hearing officer
As regards the issuance of the TRO, considering the proper assumption of jurisdiction by respondent Ilao, Jr., it can be readily
culled from the antecedent facts that his issuance of the TRO was a proper exercise of discretion. Firstly, the averments with
evidence as to the existence of the need for the issuance of the restraining order were manifest in respondent Salengas Motion to
Maintain Status Quo and to Issue Restraining Order,
43
the attached Police Investigation Report,
44
and Medical
Certificate.
45
Secondly, only respondent Salenga attended the June 22, 1993 hearing despite notice to parties. Hence, Salengas
motion was not only unopposed but his evidence adduced ex-parte also adequately supported the issuance of the restraining order.
Premises considered, respondent Ilao, Jr. has correctly assumed jurisdiction and properly exercised his discretion in issuing the
TROas respondent Ilao, Jr. aptly maintained that giving due course to the complaint and issuing the TRO do not reflect the final
determination of the merits of the case. Indeed, after hearing the case, respondent Ilao, Jr. rendered a Decision on May 29, 1995
dismissing DARAB Case No. 552-P93 for lack of merit.
Court will not review prosecutors determination of probable cause
Finally, we will not delve into the merits of the Ombudsmans reversal of its initial finding of probable cause or cause to bring
respondents to trial. Firstly, petitioner has not shown that the Ombudsman committed grave abuse of discretion in rendering such
reversal. Secondly, it is clear from the records that the initial finding embodied in the May 10, 1996 Resolution was arrived at before
the filing of respondent Ilao, Jr.s Counter-Affidavit. Thirdly, it is the responsibility of the public prosecutor, in this case the
Ombudsman, to uphold the law, to prosecute the guilty, and to protect the innocent. Lastly, the function of determining the existence
of probable cause is proper for the Ombudsman in this case and we will not tread on the realm of this executive function to examine
and assess evidence supplied by the parties, which is supposed to be exercised at the start of criminal proceedings. In Perez v.
Hagonoy Rural Bank, Inc.,
46
as cited in Longos Rural Waterworks and Sanitation Association, Inc. v. Hon. Desierto,
47
we had
occasion to rule that we cannot pass upon the sufficiency or insufficiency of evidence to determine the existence of probable
cause.
48

WHEREFORE, the instant petition is DENIED for lack of merit, and the November 26, 1997 Order and the October 30, 1998
Memorandum of the Office of the Special Prosecutor in Criminal Case No. 23661 (OMB-1-94-3425) are hereby AFFIRMED IN
TOTO, with costs against petitioner.
SO ORDERED.
EDWARD C. ONG, petitioner, vs. THE COURT OF APPEALS AND THE PEOPLE OF THE PHILIPPINES, respondents., G.R.
No. 119858. April 29, 2003
Case Digest
Facts:
Assistant City Prosecutor Dina P. Teves of the City of Manila charged petitioner and Benito Ong with two counts of estafa under
separate Informations dated 11 October 1991.
In Criminal Case No. 92-101989, the Information indicts petitioner and Benito Ong of the crime of estafa committed as follows:
That on or about July 23, 1990, in the City of Manila, Philippines, the said accused, representing ARMAGRI International
Corporation, conspiring and confederating together did then and there willfully, unlawfully and feloniously defraud the SOLIDBANK
Corporation represented by its Accountant, DEMETRIO LAZARO, a corporation duly organized and existing under the laws of the
Philippines located at Juan Luna Street, Binondo, this City, in the following manner, to wit: the said accused received in trust from
said SOLIDBANK Corporation the following, to wit: 10,000 bags of urea valued at P2,050,000.00 specified in a Trust Receipt
Agreement and covered by a Letter of Credit No. DOM GD 90-009 in favor of the Fertiphil Corporation.
In Criminal Case No. 92-101990, the Information likewise charges petitioner of the crime of estafa committed as follows:
That on or about July 6, 1990, in the City of Manila, Philippines, the said accused, representing ARMAGRI International Corporation,
defraud the SOLIDBANK Corporation represented by its Accountant, DEMETRIO LAZARO. The said accused received in trust from
said SOLIDBANK Corporation the following goods, to wit: 125 pcs. Rear diff. assy RNZO 49 50 pcs. Front & Rear diff assy. Isuzu
Elof, 85 units 1-Beam assy. Isuzu Spz all valued at P2,532,500.00 specified in a Trust Receipt Agreement and covered by a
Domestic Letter of Credit No. DOM GD 90-006 in favor of the Metropole Industrial Sales with address at P.O. Box AC 219, Quezon
City.
Issue: WON PETITIONER WAS NECESSARILY THE ONE RESPONSIBLE FOR THE OFFENSE, BY THE MERE
CIRCUMSTANCE THAT PETITIONER ACTED AS AGENT AND SIGNED FOR THE ENTRUSTEE CORPORATION.

Held: Section 13 of the Trust Receipts Law which provides: x x x. If the violation is committed by a corporation, partnership,
association or other juridical entities, the penalty provided for in this Decree shall be imposed upon the directors, officers, employees
or other officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from the offense. We
hold that petitioner is a person responsible for violation of the Trust Receipts Law.
The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the proceeds of the sale of the goods, or (2) return
the goods covered by the trust receipts if the goods are not sold.[18] The mere failure to account or return gives rise to the crime
which is malum prohibitum.[19] There is no requirement to prove intent to defraud.[20]

The Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on a corporation. Hence, if the
entrustee is a corporation, the law makes the officers or employees or other persons responsible for the offense liable to suffer the
penalty of imprisonment. The reason is obvious: corporations, partnerships, associations and other juridical entities cannot be put to
jail. Hence, the criminal liability falls on the human agent responsible for the violation of the Trust Receipts Law.
TUAZON VS HEIRS OF RAMOS
The Facts

The facts are narrated by the CA as follows:

[Respondents] alleged that between the period of May 2, 1988 and June 5, 1988, spouses Leonilo
and Maria Tuazon purchased a total of 8,326 cavans of rice from [the deceased Bartolome] Ramos
[predecessor-in-interest of respondents]. That of this [quantity,] x x x only 4,437 cavans [have been paid for so
far], leaving unpaid 3,889 cavans valued at P1,211,919.00. In payment therefor, the spouses Tuazon issued x
x x [several] Traders Royal Bank checks.

x x x x x x x x x

[B]ut when these [checks] were encashed, all of the checks bounced due to insufficiency of
funds. [Respondents] advanced that before issuing said checks[,] spouses Tuazon already knew that they had
no available fund to support the checks, and they failed to provide for the payment of these despite repeated
demands made on them.

[Respondents] averred that because spouses Tuazon anticipated that they would be sued, they
conspired with the other [defendants] to defraud them as creditors by executing x x x fictitious sales of their
properties. They executed x x x simulated sale[s] [of three lots] in favor of the x x x spouses Buenaventura x x
x[,] as well as their residential lot and the house thereon[,] all located at Nueva Ecija, and another simulated
deed of sale dated July 12, 1988 of a Stake Toyota registered with the Land Transportation Office of
Cabanatuan City on September 7, 1988. [Co-petitioner] Melecio Tuazon, a son of spouses Tuazon, registered
a fictitious Deed of Sale on July 19, 1988 x x x over a residential lot located at Nueva Ecija. Another simulated
sale of a Toyota Willys was executed on January 25, 1988 in favor of their other son, [co-petitioner] Alejandro
Tuazon x x x. As a result of the said sales, the titles of these properties issued in the names of spouses Tuazon
were cancelled and new ones were issued in favor of the [co-]defendants spouses Buenaventura, Alejandro
Tuazon and Melecio Tuazon. Resultantly, by the said ante-dated and simulated sales and the corresponding
transfers there was no more property left registered in the names of spouses Tuazon answerable to creditors, to
the damage and prejudice of [respondents].

For their part, defendants denied having purchased x x x rice from [Bartolome] Ramos. They
alleged that it was Magdalena Ramos, wife of said deceased, who owned and traded the merchandise and
Maria Tuazon was merely her agent. They argued that it was Evangeline Santos who was the buyer of the rice
and issued the checks to Maria Tuazon as payments therefor. In good faith[,] the checks were received [by
petitioner] from Evangeline Santos and turned over to Ramos without knowing that these were not funded. And
it is for this reason that [petitioners] have been insisting on the inclusion of Evangeline Santos as an
indispensable party, and her non-inclusion was a fatal error. Refuting that the sale of several properties were
fictitious or simulated, spouses Tuazon contended that these were sold because they were then meeting
financial difficulties but the disposals were made for value and in good faith and done before the filing of the
instant suit. To dispute the contention of plaintiffs that they were the buyers of the rice, they argued that there
was no sales invoice, official receipts or like evidence to prove this. They assert that they were merely agents
and should not be held answerable.
[5]




The corresponding civil and criminal cases were filed by respondents against Spouses Tuazon. Those cases were later
consolidated and amended to include Spouses Anastacio and Mary Buenaventura, with Alejandro Tuazon and Melecio Tuazon as
additional defendants. Having passed away before the pretrial, Bartolome Ramos was substituted by his heirs, herein respondents.

Contending that Evangeline Santos was an indispensable party in the case, petitioners moved to file a third-party complaint
against her. Allegedly, she was primarily liable to respondents, because she was the one who had purchased the merchandise from
their predecessor, as evidenced by the fact that the checks had been drawn in her name. The RTC, however, denied petitioners
Motion.

Since the trial court acquitted petitioners in all three of the consolidated criminal cases, they appealed only its decision finding
them civilly liable to respondents.

Ruling of the Court of Appeals

Sustaining the RTC, the CA held that petitioners had failed to prove the existence of an agency between respondents and
Spouses Tuazon. The appellate court disbelieved petitioners contention that Evangeline Santos should have been impleaded as
an indispensable party. Inasmuch as all the checks had been indorsed by Maria Tuazon, who thereby became liable to subsequent
holders for the amounts stated in those checks, there was no need to implead Santos.

Hence, this Petition.

Issues

Petitioners raise the following issues for our consideration:

1. Whether or not the Honorable Court of Appeals erred in ruling that petitioners are not agents of the
respondents.

2. Whether or not the Honorable Court of Appeals erred in rendering judgment against the
petitioners despite x x x the failure of the respondents to include in their action Evangeline Santos, an
indispensable party to the suit.
[7]


First Issue:
Agency



Well-entrenched is the rule that the Supreme Courts role in a petition under Rule 45 is limited to reviewing errors of law
allegedly committed by the Court of Appeals. Factual findings of the trial court, especially when affirmed by the CA, are conclusive
on the parties and this Court.
[8]
Petitioners have not given us sufficient reasons to deviate from this rule.

In a contract of agency, one binds oneself to render some service or to do something in representation or on behalf of
another, with the latters consent or authority.
[9]
The following are the elements of agency: (1) the parties consent, express or
implied, to establish the relationship; (2) the object,which is the execution of a juridical act in relation to a third person; (3)
the representation, by which the one who acts as an agent does so, not for oneself, but as a representative; (4) the limitation that
the agent acts within the scope of his or her authority.
[10]
As the basis of agency is representation, there must be, on the part of the
principal, an actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner,
there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is
generally no agency.
[11]


This Court finds no reversible error in the findings of the courts a quo that petitioners were the rice buyers themselves;
they were not mere agents of respondents in their rice dealership. The question of whether a contract is one of sale or of agency
depends on the intention of the parties.
[12]


The declarations of agents alone are generally insufficient to establish the fact or extent of their authority.
[13]
The law
makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it.
[14]
In the
present case, petitioners raise the fact of agency as an affirmative defense, yet fail to prove its existence.

The Court notes that petitioners, on their own behalf, sued Evangeline Santos for collection of the amounts represented
by the bounced checks, in a separate civil case that they sought to be consolidated with the current one. If, as they claim, they were
mere agents of respondents, petitioners should have brought the suit against Santos for and on behalf of their alleged princi pal, in
accordance with Section 2 of Rule 3 of the Rules on Civil Procedure.
[15]
Their filing a suit against her in their own names negates
their claim that they acted as mere agents in selling the rice obtained from Bartolome Ramos.

Second Issue:
Indispensable Party

Petitioners argue that the lower courts erred in not allowing Evangeline Santos to be impleaded as an indispensable
party. They insist that respondents Complaint against them is based on the bouncing checks she issued; hence, they point to her
as the person primarily liable for the obligation.

We hold that respondents cause of action is clearly founded on petitioners failure to pay the purchase price of the rice. The
trial court held that Petitioner Maria Tuazon had indorsed the questioned checks in favor of respondents, in accordance with
Sections 31 and 63 of the Negotiable Instruments Law.
[16]
That Santos was the drawer of the checks is thus immaterial to the
respondents cause of action.

As indorser, Petitioner Maria Tuazon warranted that upon due presentment, the checks were to be accepted or paid, or both,
according to their tenor; and that in case they were dishonored, she would pay the corresponding amount.
[17]
After an instrument is
dishonored by nonpayment, indorsers cease to be merely secondarily liable; they become principal debtors whose liability becomes
identical to that of the original obligor. The holder of a negotiable instrument need not even proceed against the maker before suing
the indorser.
[18]
Clearly, Evangeline Santos -- as the drawer of the checks -- is not an indispensable party in an action against Maria
Tuazon, the indorser of the checks.

Indispensable parties are defined as parties in interest without whom no final determination can be had.
[19]
The instant case
was originally one for the collection of the purchase price of the rice bought by Maria Tuazon from respondents predecessor. In this
case, it is clear that there is no privity of contract between respondents and Santos. Hence, a final determination of the rights and
interest of the parties may be made without any need to implead her.

URBAN BANK VS PENA; GR NO 145801; 0CT 19, 2011
FACTS:
Pea, a lawyer, was formerly a stockholder, director and corporate secretary of Isabel Sugar Company, Inc. (ISCI). ISCI owned a
parcel of land. ISCI leased the land. Without its consent and in violation of the lease contract, the lessee subleased the land to
several tenants, who in turn put up nightclubs inside the compound. Before the expiration of the lease contract, ISCI informed the
lessee and his tenants that the lease would no longer be renewed because the land will be sold.
ISCI and Urban Bank executed a Contract to Sell, and they agreed that the final installment released by the bank upon ISCIs
delivery of full and actual possession of the land, free from any tenants.
ISCI then instructed Pea, to act as its agent and handle the eviction of the tenants. The lessee left, but the unauthorized sub-
tenants refused to leave. Pea had the gates of the property closed and he also posted security guardsservices for which he
advanced payments. Despite the closure of the gates and the posting of the guards, the sub-tenants would force open the gates,
and proceed to carry on with their businesses.
Pea then filed a complaint with the RTC, which issued a TRO. At the time the complaint was filed, a new title to the had already
been issued in the name of Urban Bank.
When information reached the judge that the had already been transferred by ISCI to Urban Bank, the trial court recalled the TRO
and issued a break-open order for the property. Pea immediately contacted ISCIs presidentand told him that because of the
break-open order of the RTC, he (Pea) would be recalling the security guards he had posted to secure the property. The President
asked him to suspend the withdrawal of the posted guards, so that ISCI could get in touch first with Urban Bank.
Pea also called Urban Banks President. The President allegedly assured him that the bank was going to retain his services, and
that the he should not give up possession of the subject land.
Thereafter, Pea, in representation of Urban Bank, filed a separate complaint with the RTC-Makati City, to enjoin the tenants from
entering the Pasay property. Acting on Urban Banks preliminary prayer, the RTC-Makati City issued a TRO.
While the 2
nd
complaint was pending, Pea made efforts to settle the issue of possession of the with the sub-tenants. During the
negotiations, he was exposed to several civil and crimal cases and received several threats against his life. The sub-tenants
eventually agreed to stay off the property for a total consideration of PhP1.5M. Pea advanced the payment for the full and final
settlement of their claims against Urban Bank. Pea formally informed Urban Bank that it could already take possession of the
Pasay property. There was however no mention of the compensation due and owed to him for the services he had rendered. The
bank subsequently took actual possession of the property and installed its own guards at the premises.
Pea thereafter made several attempts to contact Urban Bank, but the bank officers would not take any of his calls. Pea formally
demanded from Urban Bank the payment of the 10% compensation and attorneys fees allegedly promised to him during his
telephone conversation with Urban Banks President for securing and maintaining peaceful possession of the property.
Urban Bank and individual bank officers and directors argued that it was ISCI, the original owners of the Pasay property, that had
engaged the services of Pea in securing the premises; and, consequently, they could not be held liable for the expenses Pea had
incurred.
ISSUE: W/N Pena is entitled to payment for the services he rendered as agent of Urban Bank.
HELD: Yes.
RATIO:
Pea should be paid for services rendered under the agency relationship that existed between him and Urban Bank based on the
civil law principle against unjust enrichment, and not on the basis of the purported oral contract. Whether or not an agency has been
created is determined by the fact that one is representing and acting for another. The law makes no presumption of agency;
proving its existence, nature and extent is incumbent upon the person alleging it.
(NOTE: This case is also under I.3.c of our outline so Im including this): Agency is presumed to be for compensation. Unless
the contrary intent is shown, a person who acts as an agent does so with the expectation of payment according to the agreement
and to the services rendered or results effected.

In this case theres no evidence that Urban Bank agreed to pay Pea a specific amount or percentage of amount for his services, so
the court applies the principle against unjust enrichment and on the basis of quantum meruit. The agency of Pea comprised of
services ordinarily performed by a lawyer who is tasked with the job of ensuring clean possession by the owner of a property. The
court measured the amount Pena is entitled to for the services he rendered (as opposed to the 10% compensation demanded by
Pena).
G.R. No. 149353 June 26, 2006
JOCELYN B. DOLES, Petitioner,
vs.
MA. AURA TINA ANGELES, Respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J .:
This refers to the Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the Decision
1
dated April 30, 2001
of the Court of Appeals (CA) in C.A.-G.R. CV No. 66985, which reversed the Decision dated July 29, 1998 of the Regional Trial
Court (RTC), Branch 21, City of Manila; and the CA Resolution
2
dated August 6, 2001 which denied petitioners Motion for
Reconsideration.
The antecedents of the case follow:
On April 1, 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a complaint for Specific Performance with Damages
against Jocelyn B. Doles (petitioner), docketed as Civil Case No. 97-82716. Respondent alleged that petitioner was indebted to the
former in the concept of a personal loan amounting to P405,430.00 representing the principal amount and interest; that on October
5, 1996, by virtue of a "Deed of Absolute Sale",
3
petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the
improvements thereon, with an area of 42 square meters, covered by Transfer Certificate of Title No. 382532,
4
and located at a
subdivision project known as Camella Townhomes Sorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent;
that this property was mortgaged to National Home Mortgage Finance Corporation (NHMFC) to secure petitioners loan in the sum
of P337,050.00 with that entity; that as a condition for the foregoing sale, respondent shall assume the undue balance of the
mortgage and pay the monthly amortization of P4,748.11 for the remainder of the 25 years which began on September 3, 1994; that
the property was at that time being occupied by a tenant paying a monthly rent of P3,000.00; that upon verification with the NHMFC,
respondent learned that petitioner had incurred arrearages amounting to P26,744.09, inclusive of penalties and interest; that upon
informing the petitioner of her arrears, petitioner denied that she incurred them and refused to pay the same; that despite repeated
demand, petitioner refused to cooperate with respondent to execute the necessary documents and other formalities required by the
NHMFC to effect the transfer of the title over the property; that petitioner collected rent over the property for the month of January
1997 and refused to remit the proceeds to respondent; and that respondent suffered damages as a result and was forced to litigate.
Petitioner, then defendant, while admitting some allegations in the Complaint, denied that she borrowed money from respondent,
and averred that from June to September 1995, she referred her friends to respondent whom she knew to be engaged in the
business of lending money in exchange for personal checks through her capitalist Arsenio Pua. She alleged that her friends,
namely, Zenaida Romulo, Theresa Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money from
respondent and issued personal checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her
efforts to assist respondent to collect from the borrowers, she could no longer locate them; that, because of this, respondent
became furious and threatened petitioner that if the accounts were not settled, a criminal case will be filed against her; that she was
forced to issue eight checks amounting to P350,000 to answer for the bounced checks of the borrowers she referred; that prior to
the issuance of the checks she informed respondent that they were not sufficiently funded but the latter nonetheless deposited the
checks and for which reason they were subsequently dishonored; that respondent then threatened to initiate a criminal case against
her for violation of Batas Pambansa Blg. 22; that she was forced by respondent to execute an "Absolute Deed of Sale" over her
property in Bacoor, Cavite, to avoid criminal prosecution; that the said deed had no valid consideration; that she did not appear
before a notary public; that the Community Tax Certificate number on the deed was not hers and for which respondent may be
prosecuted for falsification and perjury; and that she suffered damages and lost rental as a result.
The RTC identified the issues as follows: first, whether the Deed of Absolute Sale is valid; second; if valid, whether petitioner is
obliged to sign and execute the necessary documents to effect the transfer of her rights over the property to the respondent; and
third, whether petitioner is liable for damages.
On July 29, 1998, the RTC rendered a decision the dispositive portion of which states:
WHEREFORE, premises considered, the Court hereby orders the dismissal of the complaint for insufficiency of evidence. With
costs against plaintiff.
SO ORDERED.
The RTC held that the sale was void for lack of cause or consideration:
5

Plaintiff Angeles admission that the borrowers are the friends of defendant Doles and further admission that the checks issued by
these borrowers in payment of the loan obligation negates [sic] the cause or consideration of the contract of sale executed by and
between plaintiff and defendant. Moreover, the property is not solely owned by defendant as appearing in Entry No. 9055 of
Transfer Certificate of Title No. 382532 (Annex A, Complaint), thus:
"Entry No. 9055. Special Power of Attorney in favor of Jocelyn Doles covering the share of Teodorico Doles on the parcel of land
described in this certificate of title by virtue of the special power of attorney to mortgage, executed before the notary public, etc."
The rule under the Civil Code is that contracts without a cause or consideration produce no effect whatsoever. (Art. 1352, Civil
Code).
Respondent appealed to the CA. In her appeal brief, respondent interposed her sole assignment of error:
THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF [sic] THE DEED OF SALE BETWEEN
THE PARTIES HAS NO CONSIDERATION OR INSUFFICIENCY OF EVIDENCE.
6

On April 30, 2001, the CA promulgated its Decision, the dispositive portion of which reads:
WHEREFORE, IN VIEW OF THE FOREGOING, this appeal is hereby GRANTED. The Decision of the lower court dated July 29,
1998 is REVERSED and SET ASIDE. A new one is entered ordering defendant-appellee to execute all necessary documents to
effect transfer of subject property to plaintiff-appellant with the arrearages of the formers loan with the NHMFC, at the latters
expense. No costs.
SO ORDERED.
The CA concluded that petitioner was the borrower and, in turn, would "re-lend" the amount borrowed from the respondent to her
friends. Hence, the Deed of Absolute Sale was supported by a valid consideration, which is the sum of money petitioner owed
respondent amounting to P405,430.00, representing both principal and interest.
The CA took into account the following circumstances in their entirety: the supposed friends of petitioner never presented
themselves to respondent and that all transactions were made by and between petitioner and respondent;
7
that the money borrowed
was deposited with the bank account of the petitioner, while payments made for the loan were deposited by the latter to
respondents bank account;
8
that petitioner herself admitted in open court that she was "re-lending" the money loaned from
respondent to other individuals for profit;
9
and that the documentary evidence shows that the actual borrowers, the friends of
petitioner, consider her as their creditor and not the respondent.
10

Furthermore, the CA held that the alleged threat or intimidation by respondent did not vitiate consent, since the same is considered
just or legal if made to enforce ones claim through competent authority under Article 1335
11
of the Civil Code;
12
that with respect to
the arrearages of petitioner on her monthly amortization with the NHMFC in the sum of P26,744.09, the same shall be deemed part
of the balance of petitioners loan with the NHMFC which respondent agreed to assume; and that the amount of P3,000.00
representing the rental for January 1997 supposedly collected by petitioner, as well as the claim for damages and attorneys fees, is
denied for insufficiency of evidence.
13

On May 29, 2001, petitioner filed her Motion for Reconsideration with the CA, arguing that respondent categorically admitted in open
court that she acted only as agent or representative of Arsenio Pua, the principal financier and, hence, she had no legal capacity to
sue petitioner; and that the CA failed to consider the fact that petitioners father, who co-owned the subject property, was not
impleaded as a defendant nor was he indebted to the respondent and, hence, she cannot be made to sign the documents to effect
the transfer of ownership over the entire property.
On August 6, 2001, the CA issued its Resolution denying the motion on the ground that the foregoing matters had already been
passed upon.
On August 13, 2001, petitioner received a copy of the CA Resolution. On August 28, 2001, petitioner filed the present Petition and
raised the following issues:
I.
WHETHER OR NOT THE PETITIONER CAN BE CONSIDERED AS A DEBTOR OF THE RESPONDENT.
II.
WHETHER OR NOT AN AGENT WHO WAS NOT AUTHORIZED BY THE PRINCIPAL TO COLLECT DEBT IN HIS
BEHALF COULD DIRECTLY COLLECT PAYMENT FROM THE DEBTOR.
III.
WHETHER OR NOT THE CONTRACT OF SALE WAS EXECUTED FOR A CAUSE.
14

Although, as a rule, it is not the business of this Court to review the findings of fact made by the lower courts, jurisprudence has
recognized several exceptions, at least three of which are present in the instant case, namely: when the judgment is based on a
misapprehension of facts; when the findings of facts of the courts a quo are conflicting; and when the CA manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, could justify a different conclusion.
15
To arrive at a
proper judgment, therefore, the Court finds it necessary to re-examine the evidence presented by the contending parties during the
trial of the case.
The Petition is meritorious.
The principal issue is whether the Deed of Absolute Sale is supported by a valid consideration.
1. Petitioner argues that since she is merely the agent or representative of the alleged debtors, then she is not a party to the loan;
and that the Deed of Sale executed between her and the respondent in their own names, which was predicated on that pre-existing
debt, is void for lack of consideration.
Indeed, the Deed of Absolute Sale purports to be supported by a consideration in the form of a price certain in money
16
and that this
sum indisputably pertains to the debt in issue. This Court has consistently held that a contract of sale is null and void and produces
no effect whatsoever where the same is without cause or consideration.
17
The question that has to be resolved for the moment is
whether this debt can be considered as a valid cause or consideration for the sale.
To restate, the CA cited four instances in the record to support its holding that petitioner "re-lends" the amount borrowed from
respondent to her friends: first, the friends of petitioner never presented themselves to respondent and that all transactions were
made by and between petitioner and respondent;
18
second; the money passed through the bank accounts of petitioner and
respondent;
19
third, petitioner herself admitted that she was "re-lending" the money loaned to other individuals for profit;
20
and fourth,
the documentary evidence shows that the actual borrowers, the friends of petitioner, consider her as their creditor and not the
respondent.
21

On the first, third, and fourth points, the CA cites the testimony of the petitioner, then defendant, during her cross-examination:
22

Atty. Diza:
q. You also mentioned that you were not the one indebted to the plaintiff?
witness:
a. Yes, sir.
Atty. Diza:
q. And you mentioned the persons[,] namely, Elizabeth Tomelden, Teresa Moraquin, Maria Luisa Inocencio, Zenaida
Romulo, they are your friends?
witness:
a. Inocencio and Moraquin are my friends while [as to] Jacob and Tomelden[,] they were just referred.
Atty. Diza:
q. And you have transact[ed] with the plaintiff?
witness:
a. Yes, sir.
Atty. Diza:
q. What is that transaction?
witness:
a. To refer those persons to Aura and to refer again to Arsenio Pua, sir.
Atty. Diza:
q. Did the plaintiff personally see the transactions with your friends?
witness:
a. No, sir.
Atty. Diza:
q. Your friends and the plaintiff did not meet personally?
witness:
a. Yes, sir.
Atty. Diza:
q. You are intermediaries?
witness:
a. We are both intermediaries. As evidenced by the checks of the debtors they were deposited to the name of Arsenio
Pua because the money came from Arsenio Pua.
x x x x
Atty. Diza:
q. Did the plaintiff knew [sic] that you will lend the money to your friends specifically the one you mentioned [a] while ago?
witness:
a. Yes, she knows the money will go to those persons.
Atty. Diza:
q. You are re-lending the money?
witness:
a. Yes, sir.
Atty. Diza:
q. What profit do you have, do you have commission?
witness:
a. Yes, sir.
Atty. Diza:
q. How much?
witness:
a. Two percent to Tomelden, one percent to Jacob and then Inocencio and my friends none, sir.
Based on the foregoing, the CA concluded that petitioner is the real borrower, while the respondent, the real lender.
But as correctly noted by the RTC, respondent, then plaintiff, made the following admission during her cross
examination:
23

Atty. Villacorta:
q. Who is this Arsenio Pua?
witness:
a. Principal financier, sir.
Atty. Villacorta:
q. So the money came from Arsenio Pua?
witness:
a. Yes, because I am only representing him, sir.
Other portions of the testimony of respondent must likewise be considered:
24

Atty. Villacorta:
q. So it is not actually your money but the money of Arsenio Pua?
witness:
a. Yes, sir.
Court:
q. It is not your money?
witness:
a. Yes, Your Honor.
Atty. Villacorta:
q. Is it not a fact Ms. Witness that the defendant borrowed from you to accommodate somebody, are you aware of that?
witness:
a. I am aware of that.
Atty. Villacorta:
q. More or less she [accommodated] several friends of the defendant?
witness:
a. Yes, sir, I am aware of that.
x x x x
Atty. Villacorta:
q. And these friends of the defendant borrowed money from you with the assurance of the defendant?
witness:
a. They go direct to Jocelyn because I dont know them.
x x x x
Atty. Villacorta:
q. And is it not also a fact Madam witness that everytime that the defendant borrowed money from you her friends who
[are] in need of money issued check[s] to you? There were checks issued to you?
witness:
a. Yes, there were checks issued.
Atty. Villacorta:
q. By the friends of the defendant, am I correct?
witness:
a. Yes, sir.
Atty. Villacorta:
q. And because of your assistance, the friends of the defendant who are in need of money were able to obtain loan to [sic]
Arsenio Pua through your assistance?
witness:
a. Yes, sir.
Atty. Villacorta:
q. So that occasion lasted for more than a year?
witness:
a. Yes, sir.
Atty. Villacorta:
q. And some of the checks that were issued by the friends of the defendant bounced, am I correct?
witness:
a. Yes, sir.
Atty. Villacorta:
q. And because of that Arsenio Pua got mad with you?
witness:
a. Yes, sir.
Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua, her disclosed principal. She is also
estopped to deny that petitioner acted as agent for the alleged debtors, the friends whom she (petitioner) referred.
This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation.
25
The question of whether
an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or
circumstantial evidence. The question is ultimately one of intention.
26
Agency may even be implied from the words and conduct of
the parties and the circumstances of the particular case.
27
Though the fact or extent of authority of the agents may not, as a general
rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to
deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is
engaged.
28

In this case, petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of
petitioner.
The CA is incorrect when it considered the fact that the "supposed friends of [petitioner], the actual borrowers, did not present
themselves to [respondent]" as evidence that negates the agency relationshipit is sufficient that petitioner disclosed to respondent
that the former was acting in behalf of her principals, her friends whom she referred to respondent. For an agency to arise, it is not
necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates, and
to a great degree, impersonal dealings where the principal need not personally know or meet the third person with whom her agent
transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent.
29

In the case at bar, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else,
and so both of them are estopped to deny the same. It is evident from the record that petitioner merely refers actual borrowers and
then collects and disburses the amounts of the loan upon which she received a commission; and that respondent transacts on
behalf of her "principal financier", a certain Arsenio Pua. If their respective principals do not actually and personally know each
other, such ignorance does not affect their juridical standing as agents, especially since the very purpose of agency is to extend the
personality of the principal through the facility of the agent.
With respect to the admission of petitioner that she is "re-lending" the money loaned from respondent to other individuals for profit, it
must be stressed that the manner in which the parties designate the relationship is not controlling. If an act done by one person in
behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he or she is not so
called.
30
The question is to be determined by the fact that one represents and is acting for another, and if relations exist which will
constitute an agency, it will be an agency whether the parties understood the exact nature of the relation or not.
31

That both parties acted as mere agents is shown by the undisputed fact that the friends of petitioner issued checks in payment of
the loan in the name of Pua. If it is true that petitioner was "re-lending", then the checks should have been drawn in her name and
not directly paid to Pua.
With respect to the second point, particularly, the finding of the CA that the disbursements and payments for the loan were made
through the bank accounts of petitioner and respondent,
suffice it to say that in the normal course of commercial dealings and for reasons of convenience and practical utility it can be
reasonably expected that the facilities of the agent, such as a bank account, may be employed, and that a sub-agent be appointed,
such as the bank itself, to carry out the task, especially where there is no stipulation to the contrary.
32

In view of the two agency relationships, petitioner and respondent are not privy to the contract of loan between their principals.
Since the sale is predicated on that loan, then the sale is void for lack of consideration.
2. A further scrutiny of the record shows, however, that the sale might have been backed up by another consideration that is
separate and distinct from the debt: respondent averred in her complaint and testified that the parties had agreed that as a condition
for the conveyance of the property the respondent shall assume the balance of the mortgage loan which petitioner allegedly owed to
the NHMFC.
33
This Court in the recent past has declared that an assumption of a mortgage debt may constitute a valid
consideration for a sale.
34

Although the record shows that petitioner admitted at the time of trial that she owned the property described in the TCT,
35
the Court
must stress that the Transfer Certificate of Title No. 382532
36
on its face shows that the owner of the property which admittedly
forms the subject matter of the Deed of Absolute Sale refers neither to the petitioner nor to her father, Teodorico Doles, the alleged
co-owner. Rather, it states that the property is registered in the name of "Household Development Corporation." Although there is an
entry to the effect that the petitioner had been granted a special power of attorney "covering the shares of Teodorico Doles on the
parcel of land described in this certificate,"
37
it cannot be inferred from this bare notation, nor from any other evidence on the record,
that the petitioner or her father held any direct interest on the property in question so as to validly constitute a mortgage
thereon
38
and, with more reason, to effect the delivery of the object of the sale at the consummation stage.
39
What is worse, there is
a notation that the TCT itself has been "cancelled."
40

In view of these anomalies, the Court cannot entertain the
possibility that respondent agreed to assume the balance of the mortgage loan which petitioner allegedly owed to the NHMFC,
especially since the record is bereft of any factual finding that petitioner was, in the first place, endowed with any ownership rights to
validly mortgage and convey the property. As the complainant who initiated the case, respondent bears the burden of proving the
basis of her complaint. Having failed to discharge such burden, the Court has no choice but to declare the sale void for lack of
cause. And since the sale is void, the Court finds it unnecessary to dwell on the issue of whether duress or intimidation had been
foisted upon petitioner upon the execution of the sale.
Moreover, even assuming the mortgage validly exists, the Court notes respondents allegation that the mortgage with the NHMFC
was for 25 years which began September 3, 1994. Respondent filed her Complaint for Specific Performance in 1997. Since the 25
years had not lapsed, the prayer of respondent to compel petitioner to execute necessary documents to effect the transfer of title is
premature.
WHEREFORE, the petition is granted. The Decision and Resolution of the Court of Appeals are REVERSED andSET ASIDE. The
complaint of respondent in Civil Case No. 97-82716 is DISMISSED.
SO ORDERED.
G.R. Nos. L-22951 and L-22952 January 31, 1967
ALLIED FREE WORKERS' UNION (PLUM), petitioner,
vs.
COMPAIA MARITIMA, Manager JOSE C. TEVES, and COURT OF INDUSTRIAL RELATIONS, respondents.
-----------------------------
G.R. No. L-22971 January 31, 1967
COMPAIA MARITIMA and Manager JOSE C. TEVES, petitioners,
vs.
ALLIED FREEWORKERS' (PLUM) and COURT OF INDUSTRIAL RELATIONS, respondents.
L-22951 and 22952:
Vicente A. Rafael and Associates for petitioner.
Rafael Dinglasan for respondents.
Mariano B. Tuason for respondent Court of Industrial Relations.
L-22971:
Rafael Dinglasan for petitioner.
Vicente A. Rafael and Associates for respondents.
Mariano B. Tuason for respondent Court of Industrial Relations.
BENGZON, J.P., J .:
The three cases before this Court are the respective appeals separately taken by the parties hereto from an order
1
of the Court of
Industrial Relations en banc affirming its trial judge's decision, rendered on November 4, 1963, in CIR Case 175-MC and CIR Case
426-ULP. Thus L-22971 is the appeal of MARITIMA
2
in CIR Case 175-MC; L-22952 is AFWU's appeal in the same case; and L-
22951 refers to AFWU's3 appeal in CIR Case 426-ULP. Since these cases were jointly tried and decided in the court a quo and they
involve the same fundamental issue the presence or absence of employer-employee relationship they are jointly considered
herein.
MARITIMA is a local corporation engaged in the shipping business. Teves is its branch manager in the port of Iligan City.
And AFWU is duly registered legitimate labor organization with 225 members.
On August 11, 1952, MARITIMA, through Teves, entered into a CONTRACT
4
with AFWU the terms of which We reproduce:
ARRASTRE AND STEVEDORING CONTRACT
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT made and executed this 11th day of August, 1952, in the City of Iligan, Philippines, by and
between the COMPAIA MARITIMA Iligan Branch, represented by its Branch Manager in Iligan City, and the
ALLIED FREE WORKERS' UNION, a duly authorized labor union, represented by its President:
WITNESSETH.
1. That the Compaia MARITIMA hereby engage the services of the Allied Free Workers' Union to do and
perform all the work of stevedoring and arrastre services of all its vessels or boats calling in the port of Iligan
City, beginning August 12, 1952.
2. That the Compaia MARITIMA shall not be liable for the payment of the services rendered by the Allied Free
Workers' Union, for the loading, unloading and deliveries of cargoes as same is payable by the owners and
consignees of cargoes, as it has been the practice in the port of Iligan City.
3. That the Allied Free Workers' Union shall be responsible for the damages that may be caused to the cargoes
in the course of their handling.
4. That this CONTRACT is good and valid for a period of one (1) month from August 12, 1952, but same may
be renewed by agreement of the parties; however Compaia MARITIMAreserves the right to revoke
this CONTRACT even before the expiration of the term, if and when the Allied Free Workers' Unionfails to
render good service.
IN WITNESS WHEREOF, we hereunto sign this presents in the City of Iligan, Philippines, this 11th day of
August, 1952.
(SGD) SALVADOR T. LLUCH
President
Allied Free Workers' Union
Iligan City
(SGD) JOSE C. TEVES
Branch Manager
Compaia Maritima
Iligan City
SIGNED IN THE PRESENCE OF:
1. (SGD) JOSE CUETO
2. (SGD) SERGIO OBACH.
During the first month of the existence of the CONTRACT , AFWU rendered satisfactory service. So, MARITIMA, through Teves,
verbally renewed the same. This harmonious relations between MARITIMA and AFWU lasted up to the latter part of 1953 when the
former complained to the latter of unsatisfactory and inefficient service by the laborers doing the arrastre and stevedoring work. This
deteriorating situation was admitted as a fact by AFWU'spresident. To remedy the situation since MARITIMA's business was being
adversely affected Teves was forced to hire extra laborers from among "stand-by" workers not affiliated to any union to help in
the stevedoring and arrastre work. The wages of these extra laborers were paid by MARITIMA through separate vouchers and not
byAFWU. Moreover, said wages were not charged to the consignees or owners of the cargoes.
On July 23, 1954, AFWU presented to MARITIMA a written proposal
5
for a collective bargaining agreement.
This demand embodied certain terms and conditions of employment different from the provisions of theCONTRACT . No reply was
made by MARITIMA.
On August 6, 1954, AFWU instituted proceedings in the Industrial Court
6
praying that it be certified as the sole and exclusive
bargaining agent in the bargaining unit composed of all the laborers doing the arrastre and stevedoring work in connection
with MARITIMA's vessels in Iligan City. MARITIMA answered, alleging lack of employer-employee relationship between the parties.
On August 24, 1954, MARITIMA informed AFWU of the termination of the CONTRACT because of the inefficient service rendered
by the latter which had adversely affected its business. The termination was to take effect as of September 1, 1954. MARITIMA then
contracted with the Iligan Stevedoring Union for the arrastre and stevedoring work. The latter agreed to perform the work subject to
the same terms and conditions of the CONTRACT . The new agreement was to be carried out on September 1, 1954.
On August 26, 1954, upon the instance of AFWU, MARITIMA found itself charged before the Industrial Court
7
of unfair labor
practices under Sec. 4(a), (1), (3), (4) and (6) of Rep. Act No. 875. MARITIMA answered, again denying the employer-employee
relationship between the parties.
On September 1, 1954, members of AFWU, together with those of the Mindanao Workers Alliance a sister union formed a
picket line at the wharf of Iligan City, thus preventing the Iligan Stevedoring Union from carrying out the arrastre and stevedoring
work it contracted for.
8
This picket lasted for nine days.
On September 9, 1954, MARITIMA filed an action
9
to rescind the CONTRACT , enjoin AFWU members from doing arrastre and
stevedoring work in connection with its, vessels, and for recovery of damages against AFWUand its officers. Incidentally, this civil
case has been the subject of three proceedings already which have reached this Court. The first
10
involved a preliminary injunction
issued therein on September 9, 1954, by the trial court prohibiting AFWU from interfering in any manner with the loading and
unloading of cargoes from MARITIMA'svessels. This injunction was lifted that very evening upon the filing of a counter bond
by AFWU. Subsequently, a motion to dissolve said counterbond was filed by MARITIMA but the hearing on this incident was
enjoined by Us on March 15, 1955, upon the institution of the petition for prohibition and injunction in said L-
8876.
11
Meanwhile,AFWU members-laborers were able to continue the arrastre and stevedoring work in connection
with MARITIMA'svessels.
On December 5, 1960, the CFI decision in the civil case was promulgated. It ordered the rescission of theCONTRACT and
permanently enjoined AFWU members from performing work in connection with MARITIMA'svessels. AFWU then filed its notice of
appeal, appeal bond and record on appeal.
12
The subsequent incidents thereto gave rise to the two other proceedings which have
previously reached Us here.
On January 6, 1961, upon motion of MARITIMA ,an order of execution pending appeal and a writ of injunction against AFWU was
issued by the trial court in the civil case. This enabled MARITIMA to engage the services of the Mindanao Arrastre Service to do the
arrastre and stevedoring work on January 8, 1961. However, AFWU filed a petition for certiorari, injunction and prohibition
13
here
and on January 18, 1961, was able to secure a writ of preliminary injunction ordering the maintenance of the status quo prior to
January 6, 1961. Thus, after January 18, 1961, AFWU laborers were again back doing the same work as before.
The third incident that reached US
14
involved an order of the same trial court in the same civil case, dated January 11, 1961, which
amended some clerical errors in the original decision of December 5, 1960. Upon motion of MARITIMA, the trial court, on March 24,
1962, issued an order for the execution of the decision of January 11, 1961, since AFWU did not appeal therefrom, and on March
31, 1962, a writ of execution ousting the 225 AFWUmembers-laborers from their work in connection with the loading and unloading
of cargoes was issued and a levy on execution upon the properties of AFWU was effected. Accordingly, on April 1,
1962, MARITIMA was again able to engage the services of the Mindanao Arrastre Service.
On April 16, 1962, upon the institution of the petition for certiorari, injunction, prohibition and mandamus, a preliminary injunction
was issued by Us against the orders of March 24 and 31, 1962. But then, on May 16, 1962, upon motion of MARITIMA this
preliminary injunction was lifted by Us insofar as it related to the execution of the order ousting the AFWU laborers from the
stevedoring and arrastre work in connection with the MARITIMAvessels.
15
Such then was the status of things.
On November 4, 1963, after almost 10 years of hearing the two cases jointly, the Industrial Court finally rendered its decision. The
dispositive part provided:
IN VIEW OF ALL THE FOREGOING CIRCUMSTANCES, the complaint of the union for unfair labor practices against the
Compaia MARITIMA and/or its agent Jose C. Teves and the Iligan Stevedoring Union and/or Sergio Obach is hereby
dismissed for lack of substantial evidence and merit.
In pursuance of the provisions of Section 12 of Republic Act 875 and the Rules of this court on certification election, the
Honorable, the Secretary of Labor or any of his authorized representative is hereby requested to conduct certification
election among all the workers and/or stevedores working in the wharf of Iligan City who are performing stevedoring and
arrastre service aboard Compaia MARITIMA vessels docking at Iligan City port in order to determine their representative
for collective bargaining with the employer, whether their desire to be represented by the petitioner Allied Free Workers
Union or neither [sic]; and upon termination of the said election, the result thereof shall forthwith be submitted to this court
for further consideration. The union present payroll may be utilized in determining the qualified voters, with the exclusion
of all supervisors.
SO ORDERED.
As already indicated, the fundamental issue involved in these cases before Us consists in whether there is an employer-employee
relationship between MARITIMA, on the one hand, and AFWU and/or its members-laborers who do the actual stevedoring and
arrastre work on the other hand.
THE UNFAIR LABOR PRACTICE CASE
(L-22951
*
[CIR Case 426-ULP])
Petitioner AFWU's proposition is that the court a quo erred (1) in concluding that MARITIMA had not refused to bargain collectively
with it, as the majority union; (2) in not finding that MARITIMA had committed acts of discrimination, interferences and coercions
upon its members-laborers, and (3) in concluding that the CONTRACTmay not be interferred with even if contrary to law or public
policy.
It is true that MARITIMA admits that it did not answer AFWU's proposal for a collective bargaining agreement. From this it does not
necessarily follow that it is guilty of unfair labor practice. Under the law
16
the duty to bargain collectively arises only between the
"employer" and its "employees". Where neither party is an "employer" nor an "employee" of the other, no such duty would exist.
Needless to add, where there is no duty to bargain collectively the refusal to bargain violates no right. So, the question is: Under
the CONTRACT , was MARITIMA the "employer" and AFWU and/or its members the "employees" with respect to one another?
The court a quo held that under the CONTRACT , AFWU was an independent contractor of MARITIMA. This conclusion was based
on the following findings of fact, which We can no longer disturb, stated in the CIR decision:
7. ... The petitioner union operated as a labor contractor under the so-called "cabo" system; and as such it has a complete
set of officers and office personnel (Exhs. "F" and "F-1") and its organizational structure includes the following: General
President, with the following under him one vice-president, legal counsel, general treasurer, general manager and the
board of directors. Under the general manager is the secretary, the auditor, and the office staff composing of the general
foreman, general checker, general timekeeper, and the respective subordinates like assistant foreman, capataz, assistant
general checker, field checker, office timekeeper, and field timekeeper all appointed by the general manager of the union
and are paid in accordance with the union payroll exclusively prepared by the union in the office. (See t.s.n. pp. 32-36,
June 9, 1960; pp. 78-80, February 16, 1961; pp. 26-28, August 9, 1960). The payrolls where laborers are listed and paid
were prepared by the union itself without the intervention or control of the respondent company and/or its agent at Iligan
City. The respondent never had any knowledge of the individual names of laborers and/or workers listed in the union
payroll or in their roster of membership.
8. The union engaged the services of their members in undertaking the work of arrastre and stevedoringeither to haul
shippers' goods from their warehouses in Iligan City to the MARITIMA boat or from the boat to the different
consignees. The charges for such service were known by the union and collected by them through their bill collector. This
is shown by the preparation of the union forms known as "conduci" or delivery receipts. These "conduci" or receipts
contain informations as to the number and/or volume of cargoes handled by the union, the invoice number, the name of
the vessel and the number of bills of lading covering the cargoes to be delivered. Those delivery receipts are different and
separate from the bills of lading and delivery receipts issued by the company to the consignees or shippers. Cargoes
carried from the warehouses to the boat or from the boat to the consignees were always accompanied by the union
checker who hand-carry the "conduci". Once goods are delivered to their destination the union through its bill collectors
prepare the bills of collection and the charges thereon are collected by the union bill collectors who are employees of the
union and not of the respondent. The respondent had no intervention whatsoever in the collection of those charges as the
same are clearly indicated and described in the labor CONTRACT , Exhibit "A". There were, however, instances when the
respondents were requested to help the union in the collection of charges for services rendered by members of the union
when fertilizers and gasoline drums were loaded aboard the Compaia MARITIMA boats. This was necessary in order to
facilitate the collection of freight and handling charges from the government for auditing purposes. When cargoes are to
be loaded, the shipper usually notifies the petitioner union when to load their cargoes aboard CompaiaMARITIMA boats
calling in the port of Iligan City; and when a boat docks in said port, the union undertakes to haul the said shipper's goods
to the boat. In doing this work, the union employs their own trucks or other vehicles or conveyance from shipper's
warehouse to the boat or vice-versa. The respondent has no truck of any kind for the service of hauling cargoes because
such service is included in the CONTRACT executed between the parties. (See Exh. "A").
9. The union members who were hired by the union to perform arrastre and stevedoring work on respondents' vessels at
Iligan port were being supervised and controlled by the general foreman of the petitioner union or by any union assistant
or capataz responsible for the execution of the labor CONTRACTwhen performing arrastre and/or stevedoring work
aboard vessels of the Compaia MARITIMA docking at Iligan City. The foreman assigned their laborers to perform the
required work aboard vessels of the respondent. For instance, when a boat arrives, the general foreman requests the
cargo report from the chief mate of the vessel in order to determine where the cargoes are located in the hold of the boat
and to know the destination of these cargoes. All the laborers and/or workers hired for said work are union members and
are only responsible to their immediate chief who are officers and/or employees of the union. The respondent firm have
their own separate representatives like checkers who extend aid to the union officers and members in checking the
different cargoes unloaded or loaded aboard vessels of the Compaia MARITIMA. There were no instances where offices
and employees of the respondent Compaia MARITIMA and/or its agent had interferred in the giving of instructions to the
laborers performing the arrastre and/or stevedoring work either aboard vessels or at the wharf of Iligan City. As contractor,
the union does not receive instructions as to what to do, how to do, and works without specific instructions. They have no
fixed hours of work required by the MARITIMA.
10. While cargoes were in transit either from the warehouse to the boat or from the boat to the different consignees, any
losses or damages caused with the said cargoes were charged to the account of the union; and the union likewise
imposed the penalty or fine to any employee who caused or committed the damages to cargoes in transit. Other
disciplinary measures imposed on laborers performing the said work were exercised by the general foreman of the union
who has blanket authority from the union general manager to exercise disciplinary control over their members who were
assigned to perform the work in a group of laborers assigned by the union to perform loading or unloading cargoes when
a Compaia MARITIMA boat docked at Iligan City. The respondents have not at any time interferred in the imposition of
disciplinary action upon the laborers who are members of the union. In one instance, under this situation, the president of
the union himself dismissed one inefficient laborer found to have been performing inefficient service at the time (t.s.n. pp.
17-18, February 15, 1961).
x x x x x x x x x
13. Erring laborers and/or workers who are affiliates of the union were directly responsible to the union and never to the
respondent. Respondent cannot, therefore, discipline and/or dismiss these erring workers of the union. (Emphasis
supplied)
And in absolving MARITIMA of the unfair labor charge on this point, the court a quo concluded:
From the foregoing circumstances and findings, the Court is of the opinion that no substantial evidence has been
presented to sustain the charge of unfair labor practice acts as alleged to have been committed by herein
respondent. The Court finds no interference in the union activities, if any, of the members of the Allied Free Workers
Union as these persons engaged in the stevedoring and arrastre service were employed by the Allied Free Workers Union
as independent contractor subject to the terms and conditions of their then existing labor CONTRACT Exhibit "A". To
construe the CONTRACT otherwise would tend to disregard the rights and privileges of the parties intended by them in
their CONTRACT . (Exhibit "A"). This Court believes that it may not interfere in the implementation of the said
labor CONTRACT in the absence of abuse by one party to the prejudice of the other. ...
Further, the Court finds that the petitioner, aside from its labor CONTRACT (See Exhibit "A") with the respondent
Compaia MARITIMA also has other labor contracts with other shipping firms on the stevedoring and arrastre work; and
that this CONTRACT obligated the petitioner as an independent labor contractor to undertake the arrastre and
stevedoring service on Compaia MARITIMA boats docking at Iligan City Port. The petitioner is an
independent contractor as defined in the CONTRACT Exhibit "A" and in the evidence submitted by the parties. "An
independent contractor is one who, in rendering services, exercises an independent employment or occupation and
represents the will of his employer only as to the results of his work and not as to the means whereby it is accomplished;
one who exercising an independent employment, contracts to do a piece of work according to his own methods, without
being subject to the control of his employer except as to the result of his work; and who engaged to perform a certain
service for another, according to his own manner and methods, free from the control and direction of his employer in all
matters connected with the performance of the service except as to the result of the work." (see 56 C.J.S. pp. 41-43; Cruz,
et al. vs. Manila Hotel et al., G.R. No. L-9110, April 30, 1957). These factors were present in the relation of the parties as
described in their CONTRACT Exhibit "A".
x x x x x x x x x
In Viaa vs. Al Lagadan et al., G.R. No. L-8967, May 31, 1956, the Supreme Court states the rule as follows.
'In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employees; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct although the latter is the most
important element (35 Am. Jur. 445). Assuming that the share received by the deceased could partake of the
nature of wages on which we need not and do not express our view and that the second element,
therefore, exists in the case at bar, the record does not contain any specific data regarding the third and fourth
elements.'
The clear implication of the decision of the Supreme Court is that if the defendant has no power of control which,
according to the Supreme Court, is the "most important element" there is no employer-employee relationship.
(Emphasis supplied)
The conclusion thus reached by the court a quo is in full accord with the facts and the applicable jurisprudence. We totally agree
with the court a quo that AFWU was an independent contractor. And an independent contractor is not an "employee".
17

Neither is there any direct employment relationship between MARITIMA and the laborers. The latter have no separate individual
contracts with MARITIMA. In fact, the court a quo found that it was AFWU that hired them. Their only possible connection
with MARITIMA is through AFWU which contracted with the latter. Hence, they could not possibly be in a better class
than AFWU which dealt with MARITIMA.
18

In this connection, it is interesting to note that the facts as found by the court a quo strongly indicate that it isAFWU itself who is the
"employer" of those laborers. The facts very succinctly show that it was AFWU, through its officers, which (1) selected and hired the
laborers, (2) paid their wages, (3) exercised control and supervision over them, and (4) had the power to discipline and dismiss
them. These are the very elements constituting an employer-employee relationship.
19

Of course there is no legal impediment for a union to be an "employer".
20
Under the particular facts of this case,
however, AFWU appears to be more of a distinct and completely autonomous business group or association. Its organizational
structure and operational system is no different from other commercial entities on the same line. It even has its own bill collectors
and trucking facilities. And that it really is engaged in business is shown by the fact that it had arrastre and stevedoring
contracts with other shipping firms in Iligan City.
Now, in its all-out endeavor to make an "employer" out of MARITIMA, AFWU citing an impressive array of jurisprudence, even goes
to the extent of insisting that it be considered a mere "agent" of MARITIMA. Suffice it to say on this point that an agent can not
represent two conflicting interests that are diametrically opposed. And that the cases sought to be relied upon did not involve
representatives of opposing interests.
Anent the second point raised: AFWU claims that the court a quo found that acts of interferences and discriminations were
committed by MARITIMA against the former's members simply for their union affiliation.
21
However, nowhere in the 32-page
decision of the court a quo can any such finding be found. On the contrary, said court made the following finding:
18. There is no showing that this new union, the Iligan Stevedoring Union, was organized with the help of the branch
manager Jose C. Teves. The organizer of the union like Messrs. Sergio Obach, Labayos and Atty. Obach and their
colleagues have never sought the intervention, help or aid of the respondent Compaia MARITIMA or its branch manager
Teves in the formation and/or organization of the said Iligan Stevedoring Union. It appears that these people have had
previous knowledge and experience in handling stevedoring and in the arrastre service prior to the employment of the
Allied Free Workers Union in the Iligan port. The charge of union interference and domination finds no support from the
evidence. (Emphasis supplied)
More worthy of consideration is the suggestion that the termination of the CONTRACT was in bad faith. First of all, contrary
to AFWU's sweeping statement, the court a quo did not find that the termination of the CONTRACT was "in retaliation
to AFWU's demand for collective bargaining. On the contrary, the court a quo held that MARITIMA'sauthority to terminate
the CONTRACT was rightfully exercised:
21. The evidence does not show substantially any act of interference in the union membership or activities of the
petitioner union. The rescission of their CONTRACT is not a union interference contemplated in the law.
x x x x x x x x x
x x x Further, the Court is satisfied that there is no act or acts of discrimination as claimed by herein petitioner to have
been committed by the respondent firm or its branch manager Teves. Evidence is clear that Teves, in representation of
the principal, the respondent Compaia MARITIMA, has also acted, in good faith in implementing the provisions of their
existent CONTRACT (Exhibit "A"), and when he advised the union of the rescission of the said CONTRACT effective
August 31, 1954, he did so in the concept that the employer firm may so terminate their contract pursuant to paragraph 4
of Exhibit "A" which at the time was the law controlling between them. ... (Emphasis supplied)
We are equally satisfied that the real reason for the termination of the CONTRACT was AFWU's inefficient service. The court a
quo drew its conclusion from the following findings:
11. During the first month of the existence of the labor CONTRACT Exhibit 'A', the petitioner union rendered satisfactory
service. Under this situation, the Compaia MARITIMA's representative at Iligan City was authorized to renew verbally
with the extension of the CONTRACT Exhibit "A" from month to month basis after the first month of its expiration. This
situation of harmony lasted up to the latter part of 1953 when the Compaia MARITIMA and its branch manager agent
complained to the union of the unsatisfactory service of the union laborers hired to load and unload cargoes aboard
Compaia MARITIMA boats. This deteriorating situation was admitted as a fact by the union president (See Exhs. "3", "3-
A" and "3-B"; See also t.s.n. pp. 65-66, August 9, 1960).
12. There was a showing that the laborers employed by the union were inefficient in performing their jobs, and the
business of the respondent company in Iligan City suffered adversely during the year 1954; and this was due to the fact
that respondents' vessels were forced to leave cargoes behind in order not to disrupt the schedule of departures. The
Union laborers were slow in loading and/or unloading freight from which the respondent Compaia MARITIMA secured its
income and/or profits. At times, cargoes were left behind because of the union's failure to load them before vessel's
departure. In order to solve this inefficiency of the complaining union, the branch manager of the
Compaia MARITIMA was forced to hire extra laborers from among 'stand-by' workers not affiliated to any union for the
purpose of helping in the stevedoring and arrastre work on their vessels because, at that time, the union was not
performing and/or rendering efficient service in the loading and unloading of cargoes. ...
x x x x x x x x x
14. Because of the deterioration of the Service rendered to the respondent, the branch manager of the respondent
Compaia MARITIMA informed the union of its intention to rescind the CONTRACT Exhibit "A" because the company had
been suffering losses for such inefficient service. (See Exhibit "N").
Respondent Teves reported to the MARITIMA's head office on the financial losses of the company in its operations. (See
Exhibits 'Y', 'Y-1' to 'X-5').
15. On August 24, 1954, branch manager Jose C. Teves of the Iligan City MARITIMA Branch, wrote the petitioner union
informing them of the termination of their CONTRACT , Exhibit "A". (See Exhibit "N"). This step was taken after the
company found the union lagging behind their work under the CONTRACT , so much so that MARITIMA boats have to
leave on schedule without loading cargoes already contacted to be transported. (Emphasis supplied)
Perhaps, AFWU might say that this right to terminate appearing in paragraph 4 of the CONTRACT is contrary to law, morals, good
customs, public order, or public policy.
22
However, it has not adduced any argument to demonstrate such point. Moreover, there is
authority to the effect that the insertion in a CONTRACT for personal services of a resolutory condition permitting the cancellation of
the CONTRACT by one of the contracting parties is valid.
23
Neither would the termination constitute "union-busting". Oceanic Air
Products vs. CIR,
24
cited byAFWU is not in point. That case presupposes an employer-employee relationship between the parties
disputants a basis absolutely wanting in this case.
AFWU's third point is again that MARITIMA's act of terminating the CONTRACT constituted union interference. As stated, the
court a quo found as a fact that there is no sufficient evidence of union interference. And no reason or argument has been advanced
to show that the fact of said termination alone constituted union interference.
THE CERTIFICATION ELECTION CASE
(L-22952
**
& L-22971 [CIR Case No. 175-MC]).
In the certification ejection case, the court a quo directed the holding of a certification election among the laborers then doing
arrastre and stevedoring work. Both MARITIMA and AFWU have appealed from that ruling. The latter maintains that the lower
court should have directly certified it as the majority union, entitled to represent all the workers in the arrastre and stevedoring work
unit, whereas MARITIMA contends that said court could not even have correctly ordered a certification election considering that
there was an absence of employer-employee relationship between it and said laborers.
There is no question that certification election could not have been proper during the existence of the CONTRACTin view of the
court a quo's finding that there was no employment relationship thereunder between the parties. But after the termination of
the CONTRACT on August 31, 1954, what was the nature of the relationship betweenMARITIMA and the laborers-members
of AFWU?
From the finding that after the rescission of the CONTRACT , MARITIMA continued to avail of the services ofAFWU the court a
quo concluded that there came about an implied employer-employee relationship between the parties. This conclusion cannot be
sustained.
First of all, it is contradicted by the established facts. In its findings of fact, the court a quo observed that after the rescission,
the AFWU laborers continued working in accordance with the "cabo" system, which was the prevailing custom in the place. Said the
court:
20. After the rescission of the CONTRACT Exhibit "A" on August 31, 1954, the Allied Free Workers Union and its
members were working or performing the work of arrastre and stevedoring service aboard 'vessels of the Compaia
MARITIMA docking at Iligan City port under the 'cabo system' then prevailing in that teritory; and the customs and
conditions then prevailing were observed by the parties without resorting to the conditions of the former labor
contract Exhibit "A". (Emphasis supplied)
Under the "Cabo" system, the union was an independent contractor. This is shown by the court a quo's own finding that prior to
the CONTRACT between MARITIMA and AFWU, the former had an oral arrastre and stevedoring agreement with another union.
This agreement was also based on the "cabo" system. As found by the court a quo:
4. That prior to the execution of Exhibit "A", the arrastre and stevedoring work was performed by the Iligan Wharf Laborers
Union headed by one Raymundo Labayos under a verbal agreement similar to the nature and contents of Exhibit "A"; and
this work continued from 1949 to 1952.
5. Under the oral CONTRACT , the Iligan Laborers Union acting as an independent labor contractor engaged [in] the
services of its members as laborers to perform the contract work of arrastre and stevedoring service aboard vessels of the
Compaia MARITIMA calling and docking at Iligan City; and for the services therein rendered the union charged shippers
and/or consignees in accordance with the consignment or place, and the proceeds thereof shall be shared by the union
members in accordance with the union's internal rules and regulations. This system of work is locally known as the 'cabo
system'. The laborers who are members of the union and hired for the arrastre and stevedoring work were paid on union
payrolls and the Compaia MARITIMA has had nothing to do with the preparation of the same.
6. Because of unsatisfactory service rendered by the Iligan Wharf Labor Union headed by Labayos, the
Compaia MARITIMA through its agent in Iligan City cancelled their oral contractor and entered into a new contractor,
Exhibit "A" with the Allied Free Workers Union (PLUM) now petitioner in this case. The terms and conditions of the same
continued and was similar to the oral contractor entered into with the union headed by Labayos. ...
7. The cancellation of the oral contract with the Iligan Wharf Labor Union headed by Labayos was due to the inefficient
service rendered by the said union. The labor contract entered into by the petitioner herein (Exh. "A") was negotiated
through the intervention of Messrs. Salvador Lluch, Mariano Ll Badelles, Laurentino Ll. Badelles, Nicanor T. Halivas and
Raymundo Labayos. The contract was prepared by their legal panel and after several negotiations, respondent Teves
reluctantly signed the said written contract with the union with the assurance however that the same arrange previously
had with the former union regarding the performance and execution of the arrastre and stevedoring contract be followed in
accordance with the custom of such kind of work at Iligan City. The petitioner union, operated as a labor contractor under
the so-called "cabor" system; ... (Emphasis supplied)
From the above findings, it is evident that, insofar as the working arrangement was concerned, there was no real difference between
the CONTRACT and the prior oral agreement. Both were based on the "cabo" system. Under both, (1) the union was an
independent contractor which engaged the services of its members as laborers; (2) the charges against the consignees and owners
of cargoes were made directly by the union; and (3) the laborers were paid on union payrolls and MARITIMA had nothing to do with
the preparation of the same. These are the principal characteristics of the "cabo" system on which the parties based their
relationship after the termination of the CONTRACT.
Hence, since the parties observed the "cabo" system after the rescission of the CONTRACT, and since the characteristics of said
system show that the contracting union was an independent contractor, it is reasonable to assume that AFWU continued being an
independent contractor of MARITIMA. And, being an independent contractor, it could not qualify as an "employee". With more
reason would be true with respect to the laborers.
Moreover, there is no evidence at all regarding the characteristics of the working arrangement between AFWUand MARITIMA after
the termination of the CONTRACT. All we have to go on is the court a quo's finding that the "cabo" system was observed a
system that negatives employment relationship. The four elements generally regarded as indicating the employer-employee
relationship or at the very least, the element of "control" must be shown to sustain the conclusion that there came about such
relationship. The lack of such a showing in the case at bar is fatal to AFWU's contention.
Lastly, to uphold the court a quo's conclusion would be tantamount to the imposition of an employer-employee relationship against
the will of MARITIMA. This cannot be done, since it would violate MARITIMA's exclusive prerogative to determine whether it should
enter into an employment CONTRACT or not, i.e, whether it should hire others or not.
25
In Pampanga Bus Co. vs. Pambusco
Employees' Union,
26
We said:
x x x The general right to make a contract in relation to one's business is an essential part of the liberty of the citizens
protected by the due process clause of the constitution. The right of a laborer to sell his labor to such person as he may
choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The
employer and the employee have thus an equality of right guaranteed by the constitution. 'If the employer can compel the
employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work
against the employer's will, this is oppression (Emphasis supplied) .
Therefore, even if the AFWU laborers continued to perform arrastre and stevedoring work after August 31, 1954, it cannot be
correctly concluded as did the court a quo that an employer-employee relationship even impliedly at that arose when
before there never had been any. Indeed, it would appeal unreasonable and unjust to force such a relationship
upon MARITIMA when it had clearly and continuously manifested its intention not to have any more business relationship
whatsoever with AFWU because of its inefficient service. It was only to comply with injunctions and other judicial mandates
that MARITIMA continued to abide by the status quo, extending in fact and in effect the operation of the MARITIMA contract.
The only remaining question now is whether, in the particular context of what We have said, the lower court's ruling ordering a
certification election can be sustained. As already stated, the duty to bargain collectively exists only between the "employer" and its
"employees". However, the actual negotiations which may possibly culminate in a concrete collective bargaining contract are
carried on between the "employer" itself and the officialrepresentative of the "employees"
27
in most cases, the majority labor
union. Since the only function of a certification election is to determine, with judicial sanction, who this official representative or
spokesman of the "employees" will be,
28
the order for certification election in question cannot be sustained. There being no
employer-employee relationship between the parties disputants, there is neither a "duty to bargain collectively" to speak of. And
there being no such duty, to hold certification elections would be pointless. There is no reason to select a representative to negotiate
when there can be no negotiations in the first place. We therefore hold that where as in this case there is no duty to bargain
collectively, it is not proper to hold certification elections in connection therewith.
The court a quo's objective in imposing the employer-employee relationship may have been to do away with the "cabo" system
which, although not illegal, is in its operation regarded as disadvantageous to the laborers and stevedores. The rule however
remains that the end cannot justify the means. For an action to be sanctioned by the courts, the purpose must not only be good but
the means undertaken must also be lawful.
A true and sincere concern for the welfare of AFWU members-laborers would call for reforms within AFWU itself, if the evil of the so-
called "cabo" system is to be eliminated. As We suggested in Bermiso vs. Hijos de Escao,
29
the remedy against the "cabo" system
need not be sought in the courts but in the laborers themselves who should organize into a closely-knit union "which would secure
the privileges that the members desire thru the election of officers among themselves who would not exploit them."
Wherefore, the appealed decision of the Court of Industrial Relations is hereby affirmed insofar as it dismissed the charge of unfair
labor practice in CIR Case 426-ULP, but reversed and set aside insofar as it ordered the holding of a certification election in CIR
Case No. 175-MC, and the petition for certification in said case should be, as it is hereby, dismissed. No costs. So ordered.
A.C. No. 959 July 30, 1971
PEDRO OPAREL, SR., complainant,
vs.
ATTY. DOMINADOR ABARIA, respondent.
R E S O L UT I O N
FERNANDO, J .:
This administrative proceeding was started by Pedro Oparel, Sr., who identified himself as a pauper in his complaint filed with this
Court on August 27, 1970 against respondent Dominador Abaria, a member of the Philippine Bar. The charge was that respondent,
whose services were retained to assist complainant recover damages from his employer for injuries suffered, acted dishonestly.
Apparently, a settlement was reached, complainant having been made to sign a receipt in the sum of P500.00 for his claim, out of
which was deducted P55.00 as attorney's fees, when the truth, according to the complaint, was that respondent did receive the
much larger amount of P5,000.00. In a resolution of September 14, 1970, the respondent was required to file an answer within ten
days from notice. It was duly filed on October 19, 1970 with a vehement denial on the part of the respondent, alleging that the
complaint was "irresponsible, baseless and [should] not merit even the scantiest consideration" of this Court. He further alleged that
while complainant was asking only for P200.00, he was able to secure a settlement from the employer in the sum of P500.00,
admitting that he was given as fees the aforesaid AMOUNT of P55.00. He accounted for the alleged sum of P5,000.00 by stating
that P3,500 was spent by the employer for plaintiff's operation and medical bills, another P1,000.00 given to complainant's family
during his confinement in the hospital, and then the P500.00 received in cash by way of additional settlement. He prayed that the
complaint be dismissed.
This Court, in a resolution of October 23, 1970, referred the matter to the Solicitor General for investigation, report and
recommendation. Such report and recommendation was submitted on June 2, 1971. It was therein stated that the city fiscal of
Bacolod City, who was designated to act as investigator, as the parties were residents of the place, submitted on March 2, 1971 a
report recommending dismissal due to the desistance of complainant. It appeared that when the case was called for investigation on
February 17, 1971, the complainant manifested that he was no longer interested in pushing through his complaint against
respondent. In his affidavit of desistance, he admitted that the administrative charge arose out of a misunderstanding between him
and respondent. He likewise admitted that there was no deception practiced on him by respondent when he was made to sign the
affidavit of September 20, 1966 wherein it appeared that the amount received by him was P500.00, no mention being made therein
of the other P4,500.00 which, as noted in the answer of respondent, consisted of P3,500.00 for expenses incurred for complainant's
operation and medical bills and P1,000.00 given to his family for support while he was staying in the hospital. The Solicitor General
agreed with such a recommendation and prayed that the case be dismissed.
While it would appear that under the circumstances no case lies against respondent Dominador Abaria, it is not amiss to impress on
members of the Bar that the utmost care be taken to minimize occasions for any misunderstanding between them and their clients.
The relationship being one of confidence, there is ever present the need for the latter being adequately and fully informed of the
mode and manner in which their interest is defended. They should not be left in the dark. They are entitled to the fullest disclosure of
why certain steps are taken and why certain matters are either included or excluded from the documents they are made to sign. It is
only thus that their faith in counsel may remain unimpaired.
Where, as did happen here, the client happens to be poor and unlettered, seeking to enforce what he considers his just demands
against an employer, it is even more imperative that matters be explained to him with all precision and clarity. More than that, no
effort should be spared for him to get fully what he is entitled to under the law. The same zeal should characterize a lawyer's efforts
as when he is defending the rights of property. As it is, there is even the fear that a lawyer works harder when he appears for men of
substance. To show how unfounded is such a suspicion, he must exert his utmost, whoever be his client.
More specifically, in a case like the present, he should not invite loss of trust by inadvertence or even by a failure to use the simplest
and most understandable language in communicating matters. For he may lend himself to the suspicion that he is lacking in candor
and may be taking undue advantage of his client for his own profit and advantage in any dealing with the adverse party. At any rate,
with complainant having been satisfied with the explanation of respondent, he could not be justly charged of being recreant to his
trust for personal gain. The dismissal of this case is therefore warranted.
WHEREFORE, the administrative case filed by Pedro Oparel, Sr. against respondent Dominador Abaria is dismissed.
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS COMMISSION et al.
480 SCRA 146 (2006)

FACTS: Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace International Management Services
(Sunace) under a 12-month contract. Such employment was made with the assistance of Taiwanese broker Edmund Wang. After
the expiration of the contract, Montehermozo continued her employment with her Taiwanese employer for another 2 years.

When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her Taiwanese employer before
the National Labor Relations Commission (NLRC). She alleges that she was underpaid and was jailed for three months in Taiwan.
She further alleges that the 2-year extension of her employment contract was with the consent and knowledge of Sunace. Sunace,
on the other hand, denied all the allegations.

The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor Relations Commission and
Court of Appeals affirmed the labor arbiters decision. Hence, the filing of this appeal.

ISSUE: Whether or not the 2-year extension of Montehermozos employment was made with the knowledge and consent of Sunace

HELD: There is an implied revocation of an agency relationship when after the termination of the original employment contract, the
foreign principal directly negotiated with the employee and entered into a new and separate employment contract.

Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker Wang, not with the
foreign employer.

The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to Sunace, that Sunace continually
communicated with the foreign "principal" (sic) and therefore was aware of and had consented to the execution of the extension of
the contract is misplaced. The message does not provide evidence that Sunace was privy to the new contract executed after the
expiration on February 1, 1998 of the original contract. That Sunace and the Taiwanese broker communicated regarding
Montehermozos allegedly withheld savings does not necessarily mean that Sunace ratified the extension of the contract.

As can be seen from that letter communication, it was just an information given to Sunace that Montehermozo had taken already her
savings from her foreign employer and that no deduction was made on her salary. It contains nothing about the extension or
Sunaces consent thereto.

Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent to enlighten Sunace who
had been directed, by Summons issued on February 15, 2000, to appear on February 28, 2000 for a mandatory conference
following Montehermozos filing of the complaint on February 14, 2000.

Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace] cannot profess ignorance of such an
extension as obviously, the act of its principal extending [Montehermozos] employment contract necessarily bound it, it too is a
misapplication, a misapplication of the theory of imputed knowledge.

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer, not the other way
around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment contract extension,
it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily liable for any of Montehermozos claims
arising from the 2-year employment extension. As the New Civil Code provides, Contracts take effect only between the parties, their
assigns, and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law. Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment contract, the foreign principal directly
negotiated with Montehermozo and entered into a new and separate employment contract in Taiwan. Article 1924 of the New Civil
Code states that the agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with
third persons.
Victorias Milling Co., Inc. vs. CA and Consolidated Sugar Corp., [G.R. # 117356]

Facts: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc. In the course of
their dealings, petitioner issued several Shipping List/Delivery Receipts to STM as proof of purchases. Among these was SLDR No.
1214M, which gave rise to the instant case. SLDR No. 1214M covers 25,000 bags of sugar. The transaction it covered was a "direct
sale."

Thereafter, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M. That same day,
CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by the SLDR. However, after 2,000 bags
had been released, petitioner refused to allow further withdrawals of sugar. CSC thus inquired when it would be allowed to withdraw
the remaining 23,000 bags. In its reply, petitioner said that it could not allow any further withdrawals of sugar because STM had
already withdrawn all the sugar covered by the cleared checks. Petitioner also noted that CSC had represented itself to be STM's
agent as it had withdrawn the 2,000 bags "for and in behalf" of STM.

As a result, CSC filed a complaint for specific performance. Petitioner's primary defense a quo was that it was an unpaid sel ler for
the 23,000 bags. Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks, it coul d no
longer authorize further delivery of sugar to CSC. Petitioner also contended that it had no privity of contract with CSC. Furthermore,
the SLDRs prescribed delivery of the sugar to the party specified therein and did not authorize the transfer of said party's rights and
interests.

The Trial Court rendered its judgment favoring the private respondent CSC. The appellate court affirmed said decision but modified
the costs against petitioner.

Issue: Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon
SLDR No. 1214M as an assignee.

Held: No. It is clear from Article 1868 that the basis of agency is representation. One factor which most clearly distinguishes agency
from other legal concepts is control; one person - the agent - agrees to act under the control or direction of another - the principal

That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency. Ultimately,
what is decisive is the intention of the parties. That no agency was meant to be established by the CSC and STM is clearly shown
by CSC's communication to petitioner that SLDR No. 1214M had been "sold and endorsed" to it. The use of the words "sold and
endorsed" means that STM and CSC intended a contract of sale, and not an agency. Hence, on this score, no error was committed
by the respondent appellate court when it held that CSC was not STM's agent and could independently sue petitioner.
G.R. No. L-8169 January 29, 1957
THE SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner,
vs.
FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY COMMERCIAL CASUALTY INSURANCE CO., SALVADOR
SISON, PORFIRIO DE LA FUENTE and THE COURT OF APPEALS (First Division),respondents.
Ross, Selph, Carrascoso & Janda for petitioner.
J. A. Wolfson and Manuel Y. Macias for respondents.
PADILLA, J .:
Appeal by certiorari under Rule 46 to review a judgment of the Court of Appeals which reversed that of the Court of First Instance of
Manila and sentenced ". . . the defendants-appellees to pay, jointly and severally, the plaintiffs-appellants the sum of P1,651.38,
with legal interest from December 6, 1947 (Gutierrez vs. Gutierrez, 56 Phil., 177, 180), and the costs in both instances."
The Court of Appeals found the following:
Inasmuch as both the Plaintiffs-Appellants and the Defendant-Appellee, the Shell Company of the Philippine Islands, Ltd.
accept the statement of facts made by the trial court in its decision and appearing on pages 23 to 37 of the Record on
Appeal, we quote hereunder such statement:
This is an action for recovery of sum of money, based on alleged negligence of the defendants.
It is a fact that a Plymounth car owned by Salvador R. Sison was brought, on September 3, 1947 to the Shell Gasoline
and Service Station, located at the corner of Marques de Comillas and Isaac Peral Streets, Manila, for washing, greasing
and spraying. The operator of the station, having agreed to do service upon payment of P8.00, the car was placed on a
hydraulic lifter under the direction of the personnel of the station.
What happened to the car is recounted by Perlito Sison, as follows:
Q. Will you please describe how they proceeded to do the work?
A. Yes, sir. The first thing that was done, as I saw, was to drive the car over the lifter. Then by the aid of the two
grease men they raised up my car up to six feet high, and then washing was done. After washing, the next step
was greasing. Before greasing was finished, there is a part near the shelf of the right fender, right front fender,
of my car to be greased, but the the grease men cannot reached that part, so the next thing to be done was to
loosen the lifter just a few feet lower. Then upon releasing the valve to make the car lower, a little bit lower . . .
Q. Who released the valve?
A. The greasemen, for the escape of the air. As the escape of the air is too strong for my ear I faced backward.
I faced toward Isaac Peral Street, and covered my ear. After the escaped of the air has been finished, the air
coming out from the valve, I turned to face the car and I saw the car swaying at that time, and just for a few
second the car fell., (t.s.n. pp. 22-23.)
The case was immediately reported to the Manila Adjustor Company, the adjustor of the firemen's Insurance Company and the
Commercial Casualty Insurance Company, as the car was insured with these insurance companies. After having been inspected by
one Mr. Baylon, representative of the Manila Adjustor Company, the damaged car was taken to the shops of the Philippine Motors,
Incorporated, for repair upon order of the Firemen's Insurance Company and the Commercial Casualty Company, with the consent
of Salvador R. Sison. The car was restored to running condition after repairs amounting to P1,651.38, and was delivered to
Salvador R. Sison, who, in turn made assignments of his rights to recover damages in favor of the Firemen's Insurance Company
and the Commercial Casualty Insurance Company.
On the other hand, the fall of the car from the hydraulic lifter has been explained by Alfonso M. Adriano, a greaseman in
the Shell Gasoline and Service Station, as follows:
Q. Were you able to lift the car on the hydraulic lifter on the occasion, September 3, 1947?
A. Yes, sir.
Q. To what height did you raise more or less?
A. More or less five feet, sir.
Q. After lifting that car that height, what did you do with the car?
A. I also washed it, sir.
Q. And after washing?
A. I greased it.
Q. On that occasion, have you been able to finish greasing and washing the car?
A. There is one point which I could not reach.
Q. And what did you do then?
A. I lowered the lifter in order to reach that point.
Q. After lowering it a little, what did you do then?
A. I pushed and pressed the valve in its gradual pressure.
Q. Were you able to reach the portion which you were not able to reach while it was lower?
A. No more, sir.
Q. Why?
A. Because when I was lowering the lifter I saw that the car was swinging and it fell.
THE COURT. Why did the car swing and fall?
WITNESS: 'That is what I do not know, sir'. (t.s.n., p.67.)
The position of Defendant Porfirio de la Fuente is stated in his counter-statement of facts which is hereunder also reproduced:
In the afternoon of September 3, 1947, an automobile belonging to the plaintiff Salvador Sison was brought by his son,
Perlito Sison, to the gasoline and service station at the corner of Marques de Comillas and Isaac Peral Streets, City of
Manila, Philippines, owned by the defendant The Shell Company of the Philippine Islands, Limited, but operated by the
defendant Porfirio de la Fuente, for the purpose of having said car washed and greased for a consideration of P8.00
(t.s.n., pp. 19-20.) Said car was insured against loss or damage by Firemen's Insurance Company of Newark, New
Jersey, and Commercial Casualty Insurance Company jointly for the sum of P10,000 (Exhibits "A', "B", and "D").
The job of washing and greasing was undertaken by defendant Porfirio de la Fuente through his two employees, Alfonso
M. Adriano, as greaseman and one surnamed de los Reyes, a helper and washer (t.s.n., pp. 65-67). To perform the job
the car was carefully and centrally placed on the platform of the lifter in the gasoline and service station aforementioned
before raising up said platform to a height of about 5 feet and then the servicing job was started. After more than one hour
of washing and greasing, the job was about to be completed except for an ungreased portion underneath the vehicle
which could not be reached by the greasemen. So, the lifter was lowered a little by Alfonso M. Adriano and while doing so,
the car for unknown reason accidentally fell and suffered damage to the value of P1, 651.38 (t.s.n., pp. 65-67).
The insurance companies after paying the sum of P1,651.38 for the damage and charging the balance of P100.00 to
Salvador Sison in accordance with the terms of the insurance contract, have filed this action together with said Salvador
Sison for the recovery of the total amount of the damage from the defendants on the ground of negligence (Record on
Appeal, pp. 1-6).
The defendant Porfirio de la Fuente denied negligence in the operation of the lifter in his separate answer and contended
further that the accidental fall of the car was caused by unforseen event (Record on Appeal, pp. 17-19).
The owner of the car forthwith notified the insurers who ordered their adjustor, the Manila Adjustor Company, to investigate the
incident and after such investigation the damaged car, upon order of the insures and with the consent of the owner, was brought to
the shop of the Philippine Motors, Inc. The car was restored to running condition after thereon which amounted to P1,651.38 and
returned to the owner who assigned his right to collect the aforesaid amount to the Firemen's Insurance Company and the
Commercial Casualty Insurance Company.
On 6 December 1947 the insures and the owner of the car brought an action in the Court of First Instance of Manila against the
Shell Company of the Philippines, Ltd. and Porfirio de la Fuente to recover from them, jointly and severally, the sum of P1,651.38,
interest thereon at the legal rate from the filing of the complaint until fully paid, the costs. After trial the Court dismissed the
complaint. The plaintiffs appealed. The Court of Appeals reversed the judgment and sentenced the defendant to pay the amount
sought to be recovered, legal interest and costs, as stated at the beginning of this opinion.
In arriving at the conclusion that on 3 September 1947 when the car was brought to the station for servicing Profirio de la Fuente,
the operator of the gasoline and service station, was an agent of the Shell Company of the Philippines, Ltd., the Court of Appeals
found that
. . . De la Fuente owned his position to the Shell Company which could remove him terminate his services at any time
from the said Company, and he undertook to sell the Shell Company's products exculusively at the said Station. For this
purpose, De la Fuente was placed in possession of the gasoline and service station under consideration, and was
provided with all the equipments needed to operate it, by the said Company, such as the tools and articles listed on
Exhibit 2 which the hydraulic lifter (hoist) and accessories, from which Sison's automobile fell on the date in question
(Exhibit 1 and 2). These equipments were delivered to De la Fuente on a so-called loan basis. The Shell Company took
charge of its care and maintenance and rendered to the public or its customers at that station for the proper functioning of
the equipment. Witness Antonio Tiongson, who was sales superintendent of the Shell Company, and witness Augusto
Sawyer, foreman of the same Company, supervised the operators and conducted periodic inspection of the Company's
gasoline and service station, the service station in question inclusive. Explaining his duties and responsibilities and the
reason for the loan, Tiongson said: "mainly of the supervision of sales or (of) our dealers and rountinary inspection of the
equipment loaned by the Company" (t.s.n., 107); "we merely inquire about how the equipments are, whether they have
complaints, and whether if said equipments are in proper order . . .", (t.s.n., 110); station equipments are "loaned for the
exclusive use of the dealer on condition that all supplies to be sold by said dealer should be exclusively Shell, so as a
concession we loan equipments for their use . . .," "for the proper functioning of the equipments, we answer and see to it
that the equipments are in good running order usable condition . . .," "with respect to the public." (t.s.n., 111-112). De la
Fuente, as operator, was given special prices by the Company for the gasoline products sold therein. Exhibit 1 Shell,
which was a receipt by Antonio Tiongson and signed by the De la Fuente, acknowledging the delivery of equipments of
the gasoline and service station in question was subsequently replaced by Exhibit 2 Shell, an official from of the
inventory of the equipment which De la Fuente signed above the words: "Agent's signature" And the service station in
question had been marked "SHELL", and all advertisements therein bore the same sign. . . .
. . . De la Fuente was the operator of the station "by grace" of the Defendant Company which could and did remove him
as it pleased; that all the equipments needed to operate the station was owned by the Defendant Company which took
charge of their proper care and maintenance, despite the fact that they were loaned to him; that the Defendant company
did not leave the fixing of price for gasoline to De la Fuente; on the other hand, the Defendant company had complete
control thereof; and that Tiongson, the sales representative of the Defendant Company, had supervision over De la
Fuente in the operation of the station, and in the sale of Defendant Company's products therein. . . .
Taking into consideration the fact that the operator owed his position to the company and the latter could remove him or terminate
his services at will; that the service station belonged to the company and bore its tradename and the operator sold only the products
of the company; that the equipment used by the operator belonged to the company and were just loaned to the operator and the
company took charge of their repair and maintenance; that an employee of the company supervised the operator and conducted
periodic inspection of the company's gasoline and service station; that the price of the products sold by the operator was fixed by
the company and not by the operator; and that the receipt signed by the operator indicated that he was a mere agent, the finding of
the Court of Appeals that the operator was an agent of the company and not an independent contractor should not be disturbed.
To determine the nature of a contract courts do not have or are not bound to rely upon the name or title given it by the contracting
parties, should there be a controversy as to what they really had intended to enter into, but the way the contracting parties do or
perform their respective obligation stipulated or agreed upon may be shown and inquired into, and should such performance conflict
with the name or title given the contract by the parties, the former must prevail over the latter.
It was admitted by the operator of the gasoline and service station that "the car was carefully and centrally placed on the platform of
the lifter . . ." and the Court of Appeals found that
. . . the fall of Appellant Sison's car from the hydraulic lift and the damage caused therefor, were the result of the jerking
and swaying of the lift when the valve was released, and that the jerking was due to some accident and unforeseen
shortcoming of the mechanism itself, which caused its faulty or defective operation or functioning,
. . . the servicing job on Appellant Sison's automobile was accepted by De la Fuente in the normal and ordinary conduct of
his business as operator of his co-appellee's service station, and that the jerking and swaying of the hydraulic lift which
caused the fall of the subject car were due to its defective condition, resulting in its faulty operation. . . .
As the act of the agent or his employees acting within the scope of his authority is the act of the principal, the breach of the
undertaking by the agent is one for which the principal is answerable. Moreover, the company undertook to "answer and see to it
that the equipments are in good running order and usable condition;" and the Court of Appeals found that the Company's mechanic
failed to make a thorough check up of the hydraulic lifter and the check up made by its mechanic was "merely routine" by raising
"the lifter once or twice and after observing that the operator was satisfactory, he (the mechanic) left the place." The latter was
negligent and the company must answer for the negligent act of its mechanic which was the cause of the fall of the car from the
hydraulic lifter.
The judgment under review is affirmed, with costs against the petitioner.
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA
NOGUERA, respondents-appellees.

SARMIENTO , J .:
The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari. The facts are beyond dispute:
xxx xxx xxx
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into on Oct. 19,
1960 by and between Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc.,
represented by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as appellants, the
Tourist World Service, Inc. leased the premises belonging to the party of the first part at Mabini St., Manila for
the former-s use as a branch office. In the said contract the party of the third part held herself solidarily liable
with the party of the part for the prompt payment of the monthly rental agreed on. When the branch office was
opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any
airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have been informed that
Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was
anyhow losing, the Tourist World Service considered closing down its office. This was firmed up by two
resolutions of the board of directors of Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the
first abolishing the office of the manager and vice-president of the Tourist World Service, Inc., Ermita Branch,
and the second,authorizing the corporate secretary to receive the properties of the Tourist World Service then
located at the said branch office. It further appears that on Jan. 3, 1962, the contract with the appellees for the
use of the Branch Office premises was terminated and while the effectivity thereof was Jan. 31, 1962, the
appellees no longer used it. As a matter of fact appellants used it since Nov. 1961. Because of this, and to
comply with the mandate of the Tourist World Service, the corporate secretary Gabino Canilao went over to the
branch office, and, finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the
premises on June 4, 1962 to protect the interests of the Tourist World Service. When neither the appellant Lina
Sevilla nor any of her employees could enter the locked premises, a complaint wall filed by the herein
appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. Both
appellees answered with counterclaims. For apparent lack of interest of the parties therein, the trial court
ordered the dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which the
court a quo, in an order dated June 8, 1963, granted permitting her to present evidence in support of her
counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues were
joined, the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were
jointly heard following which the court a quo ordered both cases dismiss for lack of merit, on the basis of which
was elevated the instant appeal on the following assignment of errors:
I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF PLAINTIFF-APPELLANT MRS.
LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS. LINA 0. SEVILA'S ARRANGEMENT
(WITH APPELLEE TOURIST WORLD SERVICE, INC.) WAS ONE MERELY OF EMPLOYER-EMPLOYEE
RELATION AND IN FAILING TO HOLD THAT THE SAID ARRANGEMENT WAS ONE OF JOINT BUSINESS
VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA IS
ESTOPPED FROM DENYING THAT SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE TOURIST
WORLD SERVICE, INC. EVEN AS AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES HAD NO RIGHT TO EVICT
APPELLANT MRS. LINA O. SEVILLA FROM THE A. MABINI OFFICE BY TAKING THE LAW INTO THEIR
OWN HANDS.
V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL APPELLEE NOGUERA'S
RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S FORCIBLE DISPOSSESSION OF THE A. MABINI
PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT MRS. LINA O. SEVILLA
SIGNED MERELY AS GUARANTOR FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the branch office on
Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was actionable or not; and
3. Whether or not the lessee to the office premises belonging to the appellee Noguera was appellees TWS or
TWS and the appellant.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered into by and between her
and appellee TWS with offices at the Ermita branch office and that she was not an employee of the TWS to the
end that her relationship with TWS was one of a joint business venture appellant made declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of an eminent eye, ear and
nose specialist as well as a imediately columnist had been in the travel business prior to
the establishment of the joint business venture with appellee Tourist World Service, Inc.
and appellee Eliseo Canilao, her compadre, she being the godmother of one of his
children, with her own clientele, coming mostly from her own social circle (pp. 3-6 tsn.
February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19 October 1960 (Exh.
'A') covering the premises at A. Mabini St., she expressly warranting and holding [sic]
herself 'solidarily' liable with appellee Tourist World Service, Inc. for the prompt payment of
the monthly rentals thereof to other appellee Mrs. Noguera (pp. 14-15, tsn. Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary from appellee Tourist World Service,
Inc., which had its own, separate office located at the Trade & Commerce Building; nor was
she an employee thereof, having no participation in nor connection with said business at
the Trade & Commerce Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her own passengers, her own bookings
her own business (and not for any of the business of appellee Tourist World Service, Inc.)
obtained from the airline companies. She shared the 7% commissions given by the airline
companies giving appellee Tourist World Service, Lic. 3% thereof aid retaining 4% for
herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining the A. Mabini St.
office, paying for the salary of an office secretary, Miss Obieta, and other sundry expenses,
aside from desicion the office furniture and supplying some of fice furnishings (pp. 15,18
tsn. April 6,1965), appellee Tourist World Service, Inc. shouldering the rental and other
expenses in consideration for the 3% split in the co procured by appellant Mrs. Sevilla (p.
35 tsn Feb. 16,1965).
6. It was the understanding between them that appellant Mrs. Sevilla would be given the
title of branch manager for appearance's sake only (p. 31 tsn. Id.), appellee Eliseo Canilao
admit that it was just a title for dignity (p. 36 tsn. June 18, 1965- testimony of appellee
Eliseo Canilao pp. 38-39 tsn April 61965-testimony of corporate secretary Gabino Canilao
(pp- 2-5, Appellants' Reply Brief)
Upon the other hand, appellee TWS contend that the appellant was an employee of the appellee Tourist World
Service, Inc. and as such was designated manager.
1

xxx xxx xxx
The trial court
2
held for the private respondent on the premise that the private respondent, Tourist World Service, Inc., being the true
lessee, it was within its prerogative to terminate the lease and padlock the premises.
3
It likewise found the petitioner, Lina Sevilla, to
be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts of her employer.
4
The respondent
Court of Appeal
5
rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically, they state:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT
"THE PADLOCKING OF THE PREMISES BY TOURIST WORLD SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT
OF THE APPELLANT LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA OR ANY OF HER EMPLOYEES AND
WITHOUT INFORMING COUNSEL FOR THE APPELLANT (SEVILIA), WHO IMMEDIATELY BEFORE THE PADLOCKING
INCIDENT, WAS IN CONFERENCE WITH THE CORPORATE SECRETARY OF TOURIST WORLD SERVICE (ADMITTEDLY THE
PERSON WHO PADLOCKED THE SAID OFFICE), IN THEIR ATTEMP AMICABLY SETTLE THE CONTROVERSY BETWEEN
THE APPELLANT (SEVILLA) AND THE TOURIST WORLD SERVICE ... (DID NOT) ENTITLE THE LATTER TO THE RELIEF OF
DAMAGES" (ANNEX "A" PP. 7,8 AND ANNEX "B" P. 2) DECISION AGAINST DUE PROCESS WHICH ADHERES TO THE RULE
OF LAW.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING
APPELLANT SEVILLA RELIEF BECAUSE SHE HAD "OFFERED TO WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS
AND COUNTERCLAIMS LODGED BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A" P. 8)
III
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING-IN
FACT NOT PASSING AND RESOLVING-APPELLANT SEVILLAS CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20 AND 21
OF THE CIVIL CODE ON RELATIONS.
IV
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING
APPEAL APPELLANT SEVILLA RELIEF YET NOT RESOLVING HER CLAIM THAT SHE WAS IN JOINT VENTURE WITH
TOURIST WORLD SERVICE INC. OR AT LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE
TERMINATED OR REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC.
6

As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist World Service,
Inc. The respondent Court of see fit to rule on the question, the crucial issue, in its opinion being "whether or not the padlocking of
the premises by the Tourist World Service, Inc. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to
the relief of damages prayed for and whether or not the evidence for the said appellant supports the contention that the appellee
Tourist World Service, Inc. unilaterally and without the consent of the appellant disconnected the telephone lines of the Ermita
branch office of the appellee Tourist World Service, Inc.
7
Tourist World Service, Inc., insists, on the other hand, that Lina SEVILLA
was a mere employee, being "branch manager" of its Ermita "branch" office and that inferentially, she had no say on the lease
executed with the private respondent, Segundina Noguera. The petitioners contend, however, that relation between the between
parties was one of joint venture, but concede that "whatever might have been the true relationship between Sevilla and Tourist
World Service," the Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands,
8
in reference
to the padlocking now questioned.
The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World Service, Inc., maintains, that the
relation between the parties was in the character of employer and employee, the courts would have been without jurisdiction to try
the case, labor disputes being the exclusive domain of the Court of Industrial Relations, later, the Bureau Of Labor Relations,
pursuant to statutes then in force.
9

In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general, we have
relied on the so-called right of control test, "where the person for whom the services are performed reserves a right to control
not only the end to be achieved but also the means to be used in reaching such end."
10
Subsequently, however, we have
considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship.
11

The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World Service,
Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place, under the contract of
lease covering the Tourist Worlds Ermita office, she had bound herself in solidumas and for rental payments, an arrangement that
would be like claims of a master-servant relationship. True the respondent Court would later minimize her participation in the lease
as one of mere guaranty,
12
that does not make her an employee of Tourist World, since in any case, a true employee cannot be
made to part with his own money in pursuance of his employer's business, or otherwise, assume any liability thereof. In that event,
the parties must be bound by some other relation, but certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same was run by the herein
appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of Mrs. Lina
Sevilla.
13
Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World Service, Inc. "as to the
means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from airline
bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she earned
compensation in fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we said,
employment is determined by the right-of-control test and certain economic parameters. But titles are weak indicators.
In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting Lina Sevilla's own, that is,
that the parties had embarked on a joint venture or otherwise, a partnership. And apparently, Sevilla herself did not recognize the
existence of such a relation. In her letter of November 28, 1961, she expressly 'concedes your [Tourist World Service, Inc.'s] right to
stop the operation of your branch office
14
in effect, accepting Tourist World Service, Inc.'s control over the manner in which the
business was run. A joint venture, including a partnership, presupposes generally a of standing between the joint co-venturers or
partners, in which each party has an equal proprietary interest in the capital or property contributed
15
and where each party
exercises equal rights in the conduct of the business.
16
furthermore, the parties did not hold themselves out as partners, and the
building itself was embellished with the electric sign "Tourist World Service, Inc.
17
in lieu of a distinct partnership name.
It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, Tourist World
Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency. It is the essence of this contract that the agent
renders services "in representation or on behalf of another.
18
In the case at bar, Sevilla solicited airline fares, but she did so for and
on behalf of her principal, Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of November 28, 1961, pre-assumed her principal's authority as
owner of the business undertaking. We are convinced, considering the circumstances and from the respondent Court's recital of
facts, that the ties had contemplated a principal agent relationship, rather than a joint managament or a partnership..
But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the parties,
cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for mutual interest,
of the agent and the principal.
19
It appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had acquired an
interest in the business entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof, holding herself
solidarily liable for the payment of rentals. She continued the business, using her own name, after Tourist World had stopped further
operations. Her interest, obviously, is not to the commissions she earned as a result of her business transactions, but one that
extends to the very subject matter of the power of management delegated to her. It is an agency that, as we said, cannot be
revoked at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to
damages.
As we have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection and padlocking
incidents. Anent the disconnection issue, it is the holding of the Court of Appeals that there is 'no evidence showing that the Tourist
World Service, Inc. disconnected the telephone lines at the branch office.
20
Yet, what cannot be denied is the fact that Tourist World
Service, Inc. did not take pains to have them reconnected. Assuming, therefore, that it had no hand in the disconnection now
complained of, it had clearly condoned it, and as owner of the telephone lines, it must shoulder responsibility therefor.
The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For the fact that Tourist World
Service, Inc. was the lessee named in the lease con-tract did not accord it any authority to terminate that contract without notice to
its actual occupant, and to padlock the premises in such fashion. As this Court has ruled, the petitioner, Lina Sevilla, had acquired a
personal stake in the business itself, and necessarily, in the equipment pertaining thereto. Furthermore, Sevilla was not a stranger to
that contract having been explicitly named therein as a third party in charge of rental payments (solidarily with Tourist World, Inc.).
She could not be ousted from possession as summarily as one would eject an interloper.
The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to put the petitioner, Lina Sevilla,
in a bad light following disclosures that she had worked for a rival firm. To be sure, the respondent court speaks of alleged business
losses to justify the closure '21 but there is no clear showing that Tourist World Ermita Branch had in fact sustained such reverses,
let alone, the fact that Sevilla had moonlit for another company. What the evidence discloses, on the other hand, is that following
such an information (that Sevilla was working for another company), Tourist World's board of directors adopted two resolutions
abolishing the office of 'manager" and authorizing the corporate secretary, the respondent Eliseo Canilao, to effect the takeover of
its branch office properties. On January 3, 1962, the private respondents ended the lease over the branch office premises,
incidentally, without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked, personally by the respondent
Canilao, on the pretext that it was necessary to Protect the interests of the Tourist World Service. "
22
It is strange indeed that Tourist
World Service, Inc. did not find such a need when it cancelled the lease five months earlier. While Tourist World Service, Inc. would
not pretend that it sought to locate Sevilla to inform her of the closure, but surely, it was aware that after office hours, she could not
have been anywhere near the premises. Capping these series of "offensives," it cut the office's telephone lines, paralyzing
completely its business operations, and in the process, depriving Sevilla articipation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it had perceived to be disloyalty on
her part. It is offensive, in any event, to elementary norms of justice and fair play.
We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent, Tourist World Service, Inc.,
should be sentenced to pay damages. Under the Civil Code, moral damages may be awarded for "breaches of contract where the
defendant acted ... in bad faith.
23

We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to Lina Sevilla from its brazen
conduct subsequent to the cancellation of the power of attorney granted to her on the authority of Article 21 of the Civil Code, in
relation to Article 2219 (10) thereof
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.
24

ART. 2219. Moral damages
25
may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the same damages in a solidary
capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has been shown that she had connived
with Tourist World Service, Inc. in the disconnection and padlocking incidents. She cannot therefore be held liable as a cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as exemplary damages,
25
and P5,000.00 as
nominal
26
and/or temperate
27
damages, to be just, fair, and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued on July 31, 1975, by the respondent
Court of Appeals is hereby REVERSED and SET ASIDE. The private respondent, Tourist World Service, Inc., and Eliseo Canilao,
are ORDERED jointly and severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral damages, the
sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for nominal and/or temperate damages.
Costs against said private respondents.
SO ORDERED.
G.R. No. 102784 February 28, 1996
ROSA LIM, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
D E C I S I O N
HERMOSISIMA, JR., J .:
This is a petition to review the Decision of the Court of Appeals in CA-G.R. CR No. 10290, entitled "People v. Rosa Lim,"
promulgated on August 30, 1991.
On January 26, 1989, an Information for Estafa was filed against petitioner Rosa Lim before Branch 92 of the Regional Trial Court of
Quezon City.
1
The Information reads:
That on or about the 8th day of October 1987, in Quezon City, Philippines and within the jurisdiction of this Honorable
Court, the said accused with intent to gain, with unfaithfulness and/or abuse of confidence, did, then and there, wilfully,
unlawfully and feloniously defraud one VICTORIA SUAREZ, in the following manner, to wit: on the date and place
aforementioned said accused got and received in trust from said complainant one (1) ring 3.35 solo worth P169,000.00,
Philippine Currency, with the obligation to sell the same on commission basis and to turn over the proceeds of the sale to
said complainant or to return said jewelry if unsold, but the said accused once in possession thereof and far from
complying with her obligation despite repeated demands therefor, misapplied, misappropriated and converted the same to
her own personal use and benefit, to the damage and prejudice of the said offended party in the amount aforementioned
and in such other amount as may be awarded under the provisions of the Civil Code.
CONTRARY TO LAW.
2

After arraignment and trial on the merits, the trial court rendered judgment, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Finding accused Rosa Lim GUILTY beyond reasonable doubt of the offense of estafa as defined and penalized under
Article 315, paragraph 1(b) of the Revised Penal Code;
2. Sentencing her to suffer the Indeterminate penalty of FOUR (4) YEARS and TWO (2) MONTHS of prision
correccional as minimum, to TEN (10) YEARS of prision mayor as maximum;
3. Ordering her to return to the offended party Mrs. Victoria Suarez the ring or its value in the amount of P169,000 without
subsidiary imprisonment in case insolvency; and
4. To pay costs.
3

On appeal, the Court of Appeals affirmed the judgment of conviction with the modification that the penalty imposed shall be six (6)
years, eight (8) months and twenty-one (21) days to twenty (20) years in accordance with Article 315, paragraph 1 of the Revised
Penal Code.
4

Petitioner filed a motion for reconsideration before the appellate court on September 20, 1991, but the motion was denied in a
Resolution dated November 11, 1991.
In her final bid to exonerate herself, petitioner filed the instant petition for review alleging the following grounds:
I
THE RESPONDENT COURT VIOLATED THE CONSTITUTION, THE RULES OF COURT AND THE DECISION OF
THIS HONORABLE COURT IN NOT PASSING UPON THE FIRST AND THIRD ASSIGNED ERRORS IN PETITIONER'S
BRIEF;
II
THE RESPONDENT COURT FAILED TO APPLY THE PRINCIPLE THAT THE PAROL EVIDENCE RULE WAS WAIVED
WHEN THE PRIVATE PROSECUTOR CROSS-EXAMINED THE PETITIONER AND AURELIA NADERA AND WHEN
COMPLAINANT WAS CROSS-EXAMINED BY THE COUNSEL FOR THE PETITIONER AS TO THE TRUE NATURE OF
THE AGREEMENT BETWEEN THE PARTIES WHEREIN IT WAS DISCLOSED THAT THE TRUE AGREEMENT OF
THE PARTIES WAS A SALE OF JEWELRIES AND NOT WHAT WAS EMBODIED IN THE RECEIPT MARKED AS
EXHIBIT "A" WHICH WAS RELIED UPON BY THE RESPONDENT COURT IN AFFIRMING THE JUDGMENT OF
CONVICTION AGAINST HEREIN PETITIONER; and
III
THE RESPONDENT COURT FAILED TO APPLY IN THIS CASE THE PRINCIPLE ENUNCIATED BY THIS
HONORABLE COURT TO THE EFFECT THAT "ACCUSATION" IS NOT, ACCORDING TO THE FUNDAMENTAL LAW,
SYNONYMOUS WITH GUILT: THE PROSECUTION MUST OVERTHROW THE PRESUMPTION OF INNOCENCE
WITH PROOF OF GUILT BEYOND REASONABLE DOUBT. TO MEET THIS STANDARD, THERE IS NEED FOR THE
MOST CAREFUL SCRUTINY OF THE TESTIMONY OF THE STATE, BOTH ORAL AND DOCUMENTARY,
INDEPENDENTLY OF WHATEVER DEFENSE IS OFFERED BY THE ACCUSED. ONLY IF THE JUDGE BELOW AND
THE APPELLATE TRIBUNAL COULD ARRIVE AT A CONCLUSION THAT THE CRIME HAD BEEN COMMITTED
PRECISELY BY THE PERSON ON TRIAL UNDER SUCH AN EXACTING TEST SHOULD SENTENCE THUS
REQUIRED THAT EVERY INNOCENCE BE DULY TAKEN INTO ACCOUNT. THE PROOF AGAINST HIM MUST
SURVIVE THE TEST OF REASON; THE STRONGEST SUSPICION MUST NOT BE PERMITTED TO SWAY
JUDGMENT. (People v. Austria, 195 SCRA 700)
5

Herein the pertinent facts as alleged by the prosecution.
On or about October 8, 1987, petitioner Rosa Lim who had come from Cebu received from private respondent Victoria Suarez the
following two pieces of jewelry; one (1) 3.35 carat diamond ring worth P169,000.00 and one (1) bracelet worth P170,000.00, to be
sold on commission basis. The agreement was reflected in a receipt marked as Exhibit "A"
6
for the prosecution. The transaction took
place at the Sir Williams Apartelle in Timog Avenue, Quezon City, where Rosa Lim was temporarily billeted.
On December 15, 1987, petitioner returned the bracelet to Vicky Suarez, but failed to return the diamond ring or to turn over the
proceeds thereof if sold. As a result, private complainant, aside from making verbal demands, wrote a demand letter
7
to petitioner
asking for the return of said ring or the proceeds of the sale thereof. In response, petitioner, thru counsel, wrote a letter
8
to private
respondent's counsel alleging that Rosa Lim had returned both ring and bracelet to Vicky Suarez sometime in September, 1987, for
which reason, petitioner had no longer any liability to Mrs. Suarez insofar as the pieces of jewelry were concerned. Irked, Vicky
Suarez filed a complaint for estafa under Article 315, par l(b) of the Revised Penal Code for which the petitioner herein stands
convicted.
Petitioner has a different version.
Rosa Lim admitted in court that she arrived in Manila from Cebu sometime in October 1987, together with one Aurelia Nadera, who
introduced petitioner to private respondent, and that they were lodged at the Williams Apartelle in Timog, Quezon City. Petitioner
denied that the transaction was for her to sell the two pieces of jewelry on commission basis. She told Mrs. Suarez that she would
consider buying the pieces of jewelry far her own use and that she would inform the private complainant of such decision before she
goes back to Cebu. Thereafter, the petitioner took the pieces of jewelry and told Mrs. Suarez to prepare the "necessary paper for me
to sign because I was not yet prepare (d) to buy it."
9
After the document was prepared, petitioner signed it. To prove that she did not
agree to the terms of the receipt regarding the sale on commission basis, petitioner insists that she signed the aforesaid document
on the upper portion thereof and not at the bottom where a space is provided for the signature of the person(s) receiving the
jewelry.
10

On October 12, 1987 before departing for Cebu, petitioner called up Mrs. Suarez by telephone in order to inform her that she was no
longer interested in the ring and bracelet. Mrs. Suarez replied that she was busy at the time and so, she instructed the petitioner to
give the pieces of jewelry to Aurelia Nadera who would in turn give them back to the private complainant. The petitioner did as she
was told and gave the two pieces of jewelry to Nadera as evidenced by a handwritten receipt, dated October 12, 1987.
11

Two issues need to be resolved: First, what was the real transaction between Rosa Lim and Vicky Suarez a contract of agency to
sell on commission basis as set out in the receipt or a sale on credit; and, second, was the subject diamond ring returned to Mrs.
Suarez through Aurelia Nadera?
Petitioner maintains that she cannot be liable for estafa since she never received the jewelries in trust or on commission basis from
Vicky Suarez. The real agreement between her and the private respondent was a sale on credit with Mrs. Suarez as the owner-
seller and petitioner as the buyer, as indicated by the bet that petitioner did not sign on the blank space provided for the signature of
the person receiving the jewelry but at the upper portion thereof immediately below the description of the items taken.
12

The contention is far from meritorious.
The receipt marked as Exhibit "A" which establishes a contract of agency to sell on commission basis between Vicky Suarez and
Rosa Lim is herein reproduced in order to come to a proper perspective:
THIS IS TO CERTIFY, that I received from Vicky Suarez PINATUTUNAYAN KO na aking tinanggap kay ___________
the following jewelries:
ang mga alahas na sumusunod:
Description
Mga Uri
Price
Halaga
l ring 3.35 dolo P 169,000.00
1 bracelet 9;170,000.00
total
Kabuuan
P 339,000.00
in good condition, to be sold in CASH ONLY within . . . days from date of signing this receipt na nasa mabuting kalagayan
upang ipagbili ng KALIWAAN (ALCONTADO) lamang sa loob ng . . . araw mula ng ating pagkalagdaan:
if I could not sell, I shall return all the jewelry within the period mentioned above; if I would be able to sell, I shall
immediately deliver and account the whole proceeds of sale thereof to the owner of the jewelries at his/her
residence; my compensation or commission shall be the over-price on the value of each jewelry quoted above. I
am prohibited to sell any jewelry on credit or by installment; deposit, give for safekeeping: lend, pledge or give
as security or guaranty under any circumstance or manner, any jewelry to other person or persons.
kung hindi ko maipagbili ay isasauli ko ang lahat ng alahas sa loob ng taning na panahong nakatala sa itaas;
kung maipagbili ko naman ay dagli kong isusulit at ibibigay ang buong pinagbilhan sa may-ari ng mga alahas sa
kanyang bahay tahanan; ang aking gantimpala ay ang mapapahigit na halaga sa nakatakdang halaga sa itaas
ng bawat alahas HINDI ko ipinahihintulutang ipa-u-u-tang o ibibigay na hulugan ang alin mang alahas, ilalagak,
ipagkakatiwala; ipahihiram; isasangla o ipananagot kahit sa anong paraan ang alin mang alahas sa ibang mga
tao o tao.
I sign my name this . . . day of . . . 19 . . . at Manila, NILALAGDAAN ko ang kasunduang ito ngayong ika _____ ng dito sa
Maynila.
___________________
Signature of Persons who
received jewelries (Lagda
ng Tumanggap ng mga
Alahas)
Address: . . . . . . . . . . . .
Rosa Lim's signature indeed appears on the upper portion of the receipt immediately below the description of the items taken: We
find that this fact does not have the effect of altering the terms of the transaction from a contract of agency to sell on commission
basis to a contract of sale. Neither does it indicate absence or vitiation of consent thereto on the part of Rosa Lim which would make
the contract void or voidable. The moment she affixed her signature thereon, petitioner became bound by all the terms stipulated in
the receipt. She, thus, opened herself to all the legal obligations that may arise from their breach. This is clear from Article 1356 of
the New Civil Code which provides:
Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for
their validity are present. . . .
However, there are some provisions of the law which require certain formalities for particular contracts. The first is when the form is
required for the validity of the contract; the second is when it is required to make the contract effective as against third parties such
as those mentioned in Articles 1357 and 1358; and the third is when the form is required for the purpose of proving the existence of
the contract, such as those provided in the Statute of Frauds in article 1403.
13
A contract of agency to sell on commission basis
does not belong to any of these three categories, hence it is valid and enforceable in whatever form it may be entered into.
Furthermore, there is only one type of legal instrument where the law strictly prescribes the location of the signature of the parties
thereto. This is in the case of notarial wills found in Article 805 of the Civil Code, to wit:
Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself . . . .
The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign,
as aforesaid, each and every page thereof, except the last, on the left margin. . . .
In the case before us, the parties did not execute a notarial will but a simple contract of agency to sell on commission basis, thus
making the position of petitioner's signature thereto immaterial.
Petitioner insists, however, that the diamond ring had been returned to Vicky Suarez through Aurelia Nadera, thus relieving her of
any liability. Rosa Lim testified to this effect on direct examination by her counsel:
Q: And when she left the jewelries with you, what did you do thereafter?
A: On October 12, I was bound for Cebu. So I called up Vicky through telephone and informed her that I am no longer
interested in the bracelet and ring and that I will just return it.
Q: And what was the reply of Vicky Suarez?
A: She told me that she could not come to the apartelle since she was very busy. So, she asked me if Aurelia was
there and when I informed her that Aurelia was there, she instructed me to give the pieces of jewelry to Aurelia who in turn
will give it back to Vicky.
Q: And you gave the two (2) pieces of jewelry to Aurelia Nadera?
A: Yes, Your Honor.
14

This was supported by Aurelia Nadera in her direct examination by petitioner's counsel:
Q: Do you know if Rosa Lim in fact returned the jewelries?
A: She gave the jewelries to me.
Q: Why did Rosa Lim give the jewelries to you?
A: Rosa Lim called up Vicky Suarez the following morning and told Vicky Suarez that she was going home to Cebu
and asked if she could give the jewelries to me.
Q: And when did Rosa Lim give to you the jewelries?
A: Before she left for Cebu.
15

On rebuttal, these testimonies were belied by Vicky Suarez herself:
Q: It has been testified to here also by both Aurelia Nadera and Rosa Lim that you gave authorization to Rosa Lim to
turn over the two (2) pieces of jewelries mentioned in Exhibit "A" to Aurelia Nadera, what can you say about that?
A: That is not true sir, because at that time Aurelia Nadera is highly indebted to me in the amount of P140,000.00, so if
I gave it to Nadera, I will be exposing myself to a high risk.
16<

The issue as to the return of the ring boils down to one of credibility. Weight of evidence is not determined mathematically by the
numerical superiority of the witnesses testifying to a given fact. It depends upon its practical effect in inducing belief on the part of
the judge trying the case.
17
In the case at bench, both the trial court and the Court of Appeals gave weight to the testimony of Vicky
Suarez that she did not authorize Rosa Lim to return the pieces of jewelry to Nadera. The respondent court, in affirming the trial
court, said:
. . . This claim (that the ring had been returned to Suarez thru Nadera) is disconcerting. It contravenes the very terms of
Exhibit A. The instruction by the complaining witness to appellant to deliver the ring to Aurelia Nadera is vehemently
denied by the complaining witness, who declared that she did not authorize and/or instruct appellant to do so. And thus,
by delivering the ring to Aurelia without the express authority and consent of the complaining witness, appellant assumed
the right to dispose of the jewelry as if it were hers, thereby committing conversion, a clear breach of trust, punishable
under Article 315, par. 1(b), Revised Penal Code.
We shall not disturb this finding of the respondent court. It is well settled that we should not interfere with the judgment of the trial
court in determining the credibility of witnesses, unless there appears in the record some fact or circumstance of weight and
influence which has been overlooked or the significance of which has been misinterpreted. The reason is that the trial court is in a
better position to determine questions involving credibility having heard the witnesses and having observed their deportment and
manner of testifying during the trial.
18

Article 315, par. 1(b) of the Revised Penal Code provides:
Art. 315. Swindling (estafa). Any person who shall defraud another by any of the means mentioned hereinbelow shall be
punished by:
xxx xxx xxx
(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received
by the offender in trust or on commission, or for administration, or under any other obligation involving the duty to make
delivery of or to return the same, even though such obligation be totally or partially guaranteed by a bond; or by denying
having received such money, goods, or other property.
xxx xxx xxx
The elements of estafa with abuse of confidence under this subdivision are as follows. (1) That money, goods, or other personal
property be received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty
to make delivery of, or to return, the same; (2) That there be misappropriation or conversion of such money or property by the
offender or denial on his part of such receipt; (3) That such misappropriation or conversion or denial is to the prejudice of another;
and (4) That there is a demand made by the offended party to the offender (Note: The 4th element is not necessary when there is
evidence of misappropriation of the goods by the defendant)
19

All the elements of estafa under Article 315, Paragraph 1(b) of the Revised Penal Code, are present in the case at bench. First, the
receipt marked as Exhibit "A" proves that petitioner Rosa Lim received the pieces of jewelry in trust from Vicky Suarez to be sold on
commission basis. Second, petitioner misappropriated or converted the jewelry to her own use; and, third, such misappropriation
obviously caused damage and prejudice to the private respondent.
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. L-27134 February 28, 1986
COMPANIA MARITIMA, plaintiff-appellant,
vs.
JOSE C. LIMSON, defendant-appellant.
Jose W. Diokno and Sergio Guadiz for plaintiff-appellant.
Jose Gutierrez and Agustin Ferrer for defendant-appellant.
PATAJO, J .:
This an appeal from a decision of the Court of First Instance of Manila
1
holding plaintiff Compania Maritima liable to defendant in
the amount of P441,339.01 representing the difference between the claim of plaintiff for unpaid passage and freight charges for
shipments of hogs and cattle on plaintiff's vessels for the period from October 1957 to February 1961 and the claim of defendant for
the purchase price of foodstuffs sold by defendant to plaintiff, payments on account of freight not accounted for by plaintiff and
rebate to which defendant was entitled on the aforesaid freight charges.
On October 8, 1962, plaintiff Compania Maritima filed a complaint against defendant Jose C. Limson for collection of the sum of
P44,701.54 representing the balance of defendant's unpaid accounts for passage and freight on shipments of hogs, cattle and
carabaos abroad plaintiff's vessel from various ports of Visayas and Mindanao for the period from October 1957 to February 1961.
Attached to said complaint was the statement of account supporting plaintiff's claim for unpaid passage and freight. Defendant filed
a motion for bill of particulars asking that plaintiff attach to the complaint the bins of lading referred to in said statement of account in
order to enable defendant to answer plaintiff's complaint. Plaintiff opposed said motion. The Court however ordered plaintiff to attach
photostat copies of the bills of lading upon which the statement of account was based. Plaintiff's motion for reconsideration of said
order was denied by the Court but upon motion of plaintiff said order was modified to allow plaintiff to attach duplicate originals of
the bills of lading instead of photostat copies thereof.
On July 16, 1963, defendant filed his answer to the complaint denying any liability to plaintiff. Defendant alleged that he had already
fully paid for all the shipments he made and that a number of the bills of lading submitted by plaintiff as basis of its claim are not
properly chargeable to defendant since he was not the shipper nor had he authorized said shipments which were made by parties
other than those for whom defendant is liable or who had been duly authorized by defendant to make said shipments. Defendant
further set up a counterclaim for the refund of the rebate to which he was entitled to pursuant to an agreement that he had with
plaintiff for shipments made by him from Davao, Cotabato, Dadiangas, Iligan and Masbate and for cost of foodstuffs sold or
delivered to plaintiff in the total amount of P411,477.45.
Since the case involved primarily questions of accounting, upon motion of plaintiff, without the opposition of defendant, the Court
appointed a commissioner to examine the accounts involved before the Court proceed with the hearing of the case. Anselmo T. del
Rosario, a certified public accountant, was thus appointed by the Court.
On October 29, 1963, Mr. del Rosario submitted his report to the Court. The salient points in said report showed that with respect to
the claim of defendant against plaintiff, the same was in the total amount of P676,416.05 broken down as follows:
For purchases of foodstuffs................ P433,237.75
Freight adjustments.............................. 8,170.45
Cash payments made by defendant... P235,007.85
P676,416.05
On the other hand, the claim of the plaintiff totalled P545,394.24 based on 1,521 bills of lading examined by him of which 267 were
signed by defendant totaling P67,061.66; 3 bills signed by representative of defendant totaling Pl,148.10; 91 bills signed by a certain
"Perry" with Jose Limson, the defendant, as shipper and consignee totaling P61,981.00; 149 bills signed by said "Perry" for others
as shippers and consignee totaling P46,869.60; 16 bills signed by others totaling P5,180.70; 662 bills unsigned totaling P260,170.23
and 333 bills missing totaling P102,982.46. According to the Commissioner defendant can be held liable only for the 267 bills signed
by him and the 3 bills signed by his representative in the total amount of P68,209.79.
The bills examined by the Commissioner had been classified and regrouped by him into (1) original bills of lading signed by
defendant or his agent; (2) original bills of lading without signature of defendant or his agent; and (3) charges with no original bills of
lading, to wit:
(1) Original bills of lading duly signed by
defendant or his agent.................... P68,209.76
(2) Original bills of lading without
the signature of defendant............ 310,317.21
(3) No original bills of lading............... 166,867.28
Said Commissioner recommended that only the amount of P68,209.76 supported by original bills of lading signed by defendant or
his agent is properly chargeable to defendant.
After hearing the lower Court rendered judgment based principally on the report of the Commissioner. The Court, however, held that
defendant was liable for the bills of lading without originals involving a total of P166,867.26 but liable on the bills of lading which had
not been signed by him or his authorized representative. The Court sustained defendant's claim that "Perry" was not his authorized
representative. Thus the lower Court rendered judgment sentencing plaintiff to pay defendant the sum of P441,339.01 with interest
thereon at the legal rate from the date of the filing of the counterclaim plus P5,000.00 as attorney's fees. The amount of
P441,339.01 is computed as follows:
Amount to defendant:
Freight adjustments.............. P 8,170.45
Cash payments.................... 235,007.85
Foodstuffs and supplies delivered 433,237.75
Total............. P676,416.05
Deduct amount to plaintiff on
bills of lading signed by
defendant or his authorized
representative.................... 68,209.76
Bills of lading without originals
but supported by other copies of said bills of lading........ 166,867.28
Total.................. 235,077.04
Balance due defendant...............P441,339.01
From said decision both plaintiff and defendant appealed to this Court, plaintiff assigning six assignment of errors, to wit:
I
The Trial Court erred in finding that the report of the Commissioner is fully supported by the documentary
evidence presented in this case.
II
The Trial Court erred in concurring with the Commissioner that without the supporting original documents, the
customer's subsidiary ledger cards are not sufficient and reliable.
III
The Trial Court erred in holding that the Commissioner is right in disallowing bills of lading not signed either by
defendant or his authorized representatives, instead of holding that the corresponding freight charges for said
bills of lading were probably debited in defendant's charge account.
IV
The Trial Court erred in finding that the fact that no periodic statements of account furnished, Limson was kept
in the dark as to the true status of his account with plaintiff.
V
The Trial Court erred in finding that there is a balance of P441,339.01 due the defendant, said sum with interest
thereon from the date of the filing of the counterclaim plus P5,000.00 as attorney's fees and costs.
VI
The Trial Court erred in dismissing the complaint and in not sentencing the defendant to pay the plaintiff the
sum of P44,701.54 representing the unpaid balance of defendant's charge account with plaintiff plus legal
interest thereon from the filing of the complaint, and the sum of P2,000.00 and Pl,000.00 as attomey's fees and
expenses of litigating respectively incurred by the plaintiff.
while defendant assigned one sole assignment of error:
I
The Trial Court erred in declaring appellant Limson liable in the amount of P166,867.28 for freighters and in
deducting the same from his claim against Maritima."
We find that the Court a quo erred in rejecting the bins of lading signed by "Perry" where defendant appeared shipper or consignee,
those signed by "Perry" where persons other than defendant-appellant as shipper and the bills of lading unsigned by defendant.
With regards to the 91 controverted bills of lading signed by "Perry" with Limson as shipper or consignee in the total amount of
P61,981.50, witness Cabling testified that the signatures therein are those of Cipriano Magtibay alias "Perry" who took delivery of
the cargoes stated therein after signing the delivery receipts. He testified thus:
These are all the signatures of Perry. I know it to be his because oftentimes he goes there to get the deliver y
orders and he signed as "Perry" in my presence. His real name is Cipriano Magtibay. I allowed delivery of the
Cargoes to him because he was the regular representative of Mr. Limson." (t.s.n., pp. 12-13, Nov. 19, 1964)
On the other hand, Nolasco Cruz Ilagan, delivery order clerk of Compania Maritima, testified to this wise:
In issuing these delivery orders, I get the data from the manifests or from the bills of lading. I know the
defendant Limson in this case. He is now in the Court room. I knew him since the middle of 1956 up to 1961
when I was assigned in the Terminal Office of Maritima. I came to know him because Mr. Cabling introduced to
us that he is a regular shipper of hogs, cattles, carabaos coming from the southern ports. As a clerk, I prepared
the delivery orders for these cargoes to be delivered to Mr. Limson or his authorized representatives. I will
mention some of his representatives: For hog the authorized representative is Cipriano Magtibay or Perry; and
for cattles, carabaos and cows, is Eye, Mario, Mr. Marcelino Tinoco and others whom I don't remember the
names. When these representatives of Mr. Limson take delivery of the shipments, I let them sign the delivery
orders. I prepared the delivery orders as soon as Mr. Limson himself or his authorized representative go to our
office and present the bills of lading. In case where there is no original bill of lading, delivery order is effected
also only when authorized by Mr. Cabling, basing on the manifests. The boat gives us the manifest as soon as it
arrives. (t.s.n. 255-256, Mar. 10/65 & 256-260, Mar. 10/65. Even though the name of the shipper is not Mr.
Limson or the consignee is not Mr. Limson, I prepared delivery orders by authorization of Mr. Cabling. (pp. 260-
261 Id). The authorized representative to receive for hogs was Mr. Cipriano Magtibay alias "Perry". He signs the
delivery orders by the name of "Perry". (p. 261 Id.)
We were also the ones who put on the delivery orders the statement "account Limson". We put that to indicate
the cargo is chargeable to Mr. Limson, so that the accounting department would know that the shipment is
chargeable to Mr. Limson." (pp. 263-265 Id.)
I am familiar with the signature of Perry, In these two bunches of delivery orders, I find that the signature
appearing therein is that of Perry, the authorized representative of Limson. These delivery orders were signed
by Perry in my presence. I know that Mr. Perry or Magtibay is the authorized representative of Mr. Limson
because he was introduced to us by Limson himself that he is the one authorized by him to get his cargoes. He
was authorized only to sign delivery orders for hogs. I also knew that Tinoco, Eye, Mario and other were also
authorized by Limson to receive shipment for him (pp. 265-270 Id). These other persons who were authorized
representatives to receive big cattles signed delivery orders in my presence. The delivery orders were
requested by Eye, Mario, and Tinoco, the authorized representatives. I know personally that these men are the
authorized representatives for Limson. (pp. 270-275, Id.) (Plaintiff's brief, pp. 35-37).
Regarding the 16 controverted bills of lading signed by persons other than "Perry" with freight charges totalling P5,180.70, Ilagan
testified that the representatives that signed the delivery receipts and took delivery of the cargoes thereof were Limson's agents.
Ilagan testified thus:
As clerk, I prepared the delivery orders for those cargoes to be delivered to Mr. Limson or his authorized
representatives. For hogs the authorized representative was Cipriano Magtibay; and for cattle, carabaos and
cows the authorized representatives were Eye, Mario, Tinoco and others who I cannot recall the names. (t.s.n.
pp. 260-261, Nov. 1/65).
These other persons who were authorized representatives to receive cattle signed delivery receipts in my
presence. The delivery orders were requested by Eye, Mario and Tinoco, the authorized representatives. I know
personally that these men are the authorized representative for Limson. (pp,27-275, Id.). (Emphasis supplied).
With respect to the 662 unsigned bills of lading with freight charges totaling P260,170.23, delivery receipts were issued upon
delivery of the shipments. Cabling and Ilagan who were presented the plaintiff as witnesses testified that the ordinary procedure at
plaintiff's terminal office was to require the surrender of the original bill of lading, but when the bill of lading cannot be surrendered
because it had not arrived or received by the consignee or assignee, the delivery of the cargo was authorized just the same, and the
delivery receipt was prepared based on the ship's cargo manifests or ship's copy of the bill of lading. This accommodation was
specially given Limson, because defendant was a regular shipper and ship chandler of plaintiff, and was a compadre of Cabling.
Besides, said hogs and cattle had to be unloaded and released from the pier for they cannot be kept there long, after having been
on board for several days because they might die. (t.s.n. pp. 320323, March 10, 1965).
Regarding the 149 controverted bills of lading in the name of other persons as shippers or consignees and signed by Perry in the
total amount of P46,869.60, it was established that said bills of lading were for cattle and hogs-purchased by the defendant from his
"viajeros" in Manila which were delivered to and received by defendant, and for which he had to pay the freight charges, where in
turn, he deducted from the purchase price the corresponding cost of freight; or were for cattle or hogs that belonged to Marcelino
Tinoco from whom defendant had made arrangements for paying the purchase price of said Tinoco's cargo partly with the freight
costs for which defendant agreed to be debited in his charge account with Maritima. These facts were admitted by the defendant
himself when he testified on direct and cross-examination, supra. This was also confirmed by the testimony of Cabling. And now,
corroborating the above facts as testified, Pagkalinawan, another witness for the plaintiff, testified thus:
I know Mr. Limson, He is also a meat dealer. As ship's chandler he supplies foodstuffs, meat, to Maritima ships.
I came to know Mr. Limson when Mr. Tinoco introduced me to him. Mr. Limson was getting meat from Mr.
Tinoco at that time. It was cow and carabao meat. These cow and carabao meat which Mr. Limson used to get
from Tinoco came from the Visayas to Manila. They were brought by the Maritima ships and those were the
cows and carabaos that I took delivery at that time. I do not pay the freight for the delivery of these cows and
carabaos. I was allowed by the Compania Maritima to take delivery of these cows and carabaos of Mr. Tinoco
without paying the freight because the freights win be charged to Mr. Limson. These freight charges that I did
not pay for the shipment of cows and carabaos of Mr. Tinoco were charged against Mr. Limson. These freight
charges that were charged against Mr. Limson in his account in the Maritima were credited as payment of Mr.
Limson to the meat that he gets from Mr. Tinoco. (t.s.n. pp. 6-14, April 20, 1966). I am not the only one who
received the cows and carabaos of Mr. Tinoco at the Maritima. There were many more, Mario Valencia, Remy
and one whom I know only as Ben Negro. (t.s.n. pp. 14-15, April 30, 1966). Sometimes Marcelino Tinoco
himself takes the cargo, I used to accompany him, and I am the one signing the delivery permit. Sometimes he
does too. He does not pay the freight because it is charged against the account of Mr. Limson. (t.s.n. pp. 15-20,
April 20, 1966). I have occasions taking delivery of the cows and carabaos of Mr. Tinoco even if there was no
original bill of lading and the freight of which were charged against Mr. Limson. The office makes true copies of
the bills of lading for the originals which could not be produced. Just the same I could take delivery of the said
cows and carabaos. (t.s.n. pp. 20-21, Id).
In all occasions that I withdrew the cows and carabaos of Mr. Tinoco for which I signed the delivery receipts
there were corresponding original bills of lading or copies of the bills of lading which were made even if the
original bills could not be produced (t.s.n. pp. 2-3, May 6, 1966). Mr. Limson signed these bills of lading that I
have presented to him. Those that were not, I was the one who signed it, When the unloading takes place at
nights I just call him up by telephone. (t.s.n., p. 3, Id).
For the shipments of Mr. Marcelino Tinoco, I was the one who gets the delivery order. But if I am not around,
my companions get them. However, if he is there at the pier, he himself receives his shipments. (t.s.n. pp. 9-
11, Id.) All shipments of Mr. Tinoco are vales of Mr. Limson. If I do not have the bills of lading, that were signed
by Mr. Limson, I can still get the delivery in this manner. If the shipments takes place at night and I could not get
the signature of Mr. Limson, I simply call him up thru the telephone who in turn directs me to call on Mr. Cabling
and Mr. Cabling used to tell me to sign the bills of lading because he and Mr. Limson had already an
arrangement. " (t.s.n. pp. 17-18, Id.)
Plaintiff also presented Exhibits B-276 to 1018 in the total amount of P81,462.92, bills of lading not in the name of defendant
Limson, but which Limson himself signed, thereby proving that defendant took delivery of shipments in the names of others, shipper
or consignee, and which the corresponding charges were debited to his account.
The simpler way to determine how much is the total claim of plaintiff against defendant is to compute the amount of the freight on
the face of the bills of lading supporting the statement of account attached to the complaint and deducting therefrom the rebates to
which defendant is entitled to under the special arrangement made between defendant and Mr. F.J. Garay of Compania Maritima
dated March 27, 1957. According to the statement of account submitted by plaintiff and attached to the complaint, the total of freight
charges due from defendant is P698,159.14 (Annex "A" Complaint).
This is the amount due based on what is charged in the bills of lading. It did not reflect the rebates because said bills of lading were
prepared in the field offices of plaintiff where the special arrangement entitling defendant to rebate had not been transmitted.
According to the report of the Commissioner, the total rebate to which defendant will be entitled to is P127,418.89 (Supplementary
Report dated January 27, 1964, Exhibit 7-B). According to said Commissioner, he arrived at such amount in the following manner:
I selected the freightage from Davao comprised of 340 shipments from October 15, 1957, up to February 11,
1961. 340 shipments, and I used P4.50 as the freightage from Davao to Manila. Now I used the P5.00 as you
requested, and that is the difference.
In other words, the Commissioner summed up the total number of hogs involved in the 340 shipments from Davao which must be
some 50,692 hogs. The difference was arrived at, thus-
50,692 hogs multiplied by P5.00 per head = P253,460.00
less: 50,692 hogs multiplied by P4.50 per head = P228,114.00 P25,346.00
The difference, (P25,346.00) subtracted from the original computation of P152,764.89 resulted to the reduced rebate of
P127,418.89 (Supplementary Report, supra).
However, instead of merely verifying the accuracy of the above-stated computation, the special rates, supra,
accorded Limson was individually applied in computing the freightage due from Limson's shipments, as
itemized in the "Spread of Charges made to Limson's account" (Commissioner's report, Exh. " 7 "), and arrived
at the following:

Total freight charges (special
rates used for shipments from
ports as provided for in the
Agreement)............................................ P517,842.30
Total freight charges (Limson's
shipments (rates used as com-
puted in port of origin) from
ports other than those stated
in the Agreement...................................... 69,025.66
Total charges to Limson's
Account............................................... P586,867.96
In other words, the total freight over-charges which may be due Limson is (P698,159.14 less P586,867.96) P111,291.18 and not
P127,418.91 as reported by the Commissioner.
To be added to said rebate of P111,291.18 are the cash payment made by defendant of P235,007.85, freight adjustment of
Pl,138.45 and cost of foodstuffs purchased by plaintiff from defendant of P411,982.35 (from the total of P433,237.75 representing
the amount of said purchase deduct P21,255.40 which had been billed twice), all of which would total P759,419.83. Deducting from
said amount, the total of freight charges in favor of plaintiff as per the statement of account attached as Annex "A" to the complaint
of P698,159.14 would give a balance of P61,260.69 in favor of defendant.
It may be noted that in his answer to the complaint defendant stated that the total of his claim against plaintiff for the cost of
foodstuffs delivered is P411,477.45 (par. 22, Answer of Defendant, page 68, Record on Appeal).
Now, turning to defendant's sole assignment of error, namely, that the Trial Court erred in declaring defendant liable in the amount
of P166,867.20 representing the amount covered by bills of lading where the originals had been presented.
With respect to defendant's sole assignment of errors, namely, that Court a quo erred in declaring defendant liable in the amount of
P166,867.28 which represents charges for freight where the originals of the bills of lading were not submitted, We find merit in the
contention of plaintiff that the respondent Court correctly held defendant liable for said amount because the same actually
represented freight charges based on the carbon originals of the ship's copy of the bills of lading where Limson appeared as
consignee in the amount of P84,529.42 and those based on the ship's cargo manifests, where defendant appeared as consignee in
the amount of P81,874.10. Respondent Court admitted in evidence said copies of the bills of lading which were not considered by
the Commissioner because they are not actually the original copy of the bill of lading. The Commissioner accepted only the originals
of the bills of lading because he did not consider even duplicate originals duly signed as originals. The ship's copies of the bills of
lading and the cargo manifests were substantiated by other supporting documents which were found after the report of the
Commissioner from among the records salvaged from the San Nicolas bodega fire or which were found among the records kept on
plaintiff's terminal office. Said documents were presented in lieu of corresponding original of the consignee's copy of bill of lading
which could not be submitted to the Commissioner nor presented as plaintiff's evidence to the Court because they were lost or
destroyed during the remodelling of plaintiff's office building or during the fire at plaintiff's bodega at San Nicolas where they were
brought for safekeeping. All said documents were presented as evidence to prove that all the freight charges for the shipments
evidence thereby were duly earned by plaintiff and were properly debited in defendant's charge account. Apparently, the
Commissioner rejected plaintiff's claims which were not actually supported by the original of the bills of lading notwithstanding the
fact that duplicate original of the said documents and other secondary evidence such as the ship cargo manifests have been
presented as evidence. As stated above, witnesses Cabling and Ilagan testified that the practice was that when the originals of the
bins of lading could not be surrendered because they have not yet been received by the consignee, the delivery of the cargo was
nevertheless authorized and a delivery receipt was prepared on the basis of the ship's cargo manifests or the ship's copy of the bills
of lading. This only shows that the ship's cargo manifests or the ship's copy of the bills of lading can be accepted as evidence of
shipments made by defendant since he was allowed to accept delivery of said shipments even without presented his copy of the bill
of lading.
By way of recapitulation, the total of freight charges due plaintiff based on the freight charges appearing on the
face of the bills of lading supporting the statement of account attached to the complaint is P698,159.14. Deduct
from said
amount the following:

(1) Rebate................................................................... P111,291.18
(2) Cash payments made by defendant................. 235,007.85
(3) Freight adjustment.............................................. 1,138.45
(4) Cost of foodstuffs purchased from defendant..411,982.35 Total.......................... P759,419.83
would show a balance in favor of defendant of P61,260.69.
Presented otherwise, the total freight charges due plaintiff after deducting the rebate to which defendant is entitled to is
P586,867.96. (.698,159.14 minus P111,291.18).
Against said freight charges of P586,867.96 defendant should be credited:
(1) Cash payment............................... P235,007.85
(2) Freight adjustment........................ 1,138.45
(3) Cost of foodstuffs........................ P411,982.35
Total............................. P648,128.65

giving a balance in favor of defendant of P61,260.69.
WHEREFORE, the decision of the Court a quo is hereby MODIFIED and judgment rendered against plaintiff on defendant's
counterclaim for the amount of P61,260.69. In an other respects, the appealed decision is hereby AFFIRMED. No pronouncement
as to cost.
SO ORDERED.
LAUREANO ANGELES VS PHILIPPINE NATIONAL RAILWAYS (PNR) AND RODOLFO FLORES; GR NO 150128; AUGUST 31,
2006
D E C I S I O N

GARCIA, J .:

Under consideration is this petition for review under Rule 45 of the Rules of Court assailing and seeking to set aside the
following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 54062, to wit:


1. Decision
[2]
dated June 4, 2001, affirming an earlier decision of the Regional Trial Court
(RTC) of Quezon City, Branch 79, which dismissed the complaint for specific performance and
damages thereat commenced by the petitioner against the herein respondents; and
2. Resolution
[3]
dated September 17, 2001, denying the petitioner's motion for reconsideration.

The facts:

On May 5, 1980, the respondent Philippine National Railways (PNR) informed a certain Gaudencio
Romualdez (Romualdez, hereinafter) that it has accepted the latters offer to buy, on an AS IS, WHERE IS
basis, the PNRs scrap/unserviceable rails located in Del Carmen and Lubao, Pampanga at P1,300.00 and P2,100.00 per metric
ton, respectively, for the total amount of P96,600.00. After paying the stated purchase price, Romualdez addressed a letter to Atty.
Cipriano Dizon, PNRs Acting Purchasing Agent. Bearing date May 26, 1980, the letter reads:

Dear Atty. Dizon:

This is to inform you as President of San Juanico Enterprises, that I have authorized the bearer, LIZETTE
R. WIJANCO of No. 1606 Aragon St., Sta. Cruz, Manila, to be my lawful representative in the withdrawal of the
scrap/unserviceable rails awarded to me.

For this reason, I have given her the ORIGINAL COPY of the AWARD, dated May 5, 1980 and O.R. No.
8706855 dated May 20, 1980 which will indicate my waiver of rights, interests and participation in favor of
LIZETTE R. WIJANCO.

Thank you for your cooperation.

Very truly yours,

(Sgd.) Gaudencio Romualdez

The Lizette R. Wijanco mentioned in the letter was Lizette Wijanco- Angeles, petitioner's now deceased wife. That very same
day May 26, 1980 Lizette requested the PNR to transfer the location of withdrawal for the reason that the scrap/unserviceable
rails located in Del Carmen and Lubao, Pampanga were not ready for hauling. The PNR granted said request and
allowed Lizette to withdraw scrap/unserviceable rails in Murcia, Capas and San Miguel, Tarlac instead. However, the PNR
subsequently suspended the withdrawal in view of what it considered as documentary discrepancies coupled by reported pilferages
of over P500,000.00 worth of PNRscrap properties in Tarlac.

Consequently, the spouses Angeles demanded the refund of the amount of P96,000.00. The PNR, however, refused to
pay, alleging that as per delivery receipt duly signed by Lizette, 54.658 metric tons of unserviceable
rails had already been withdrawn which, at P2,100.00 per metric ton, were worth P114,781.80, an amount that exceeds the claim for
refund.

On August 10, 1988, the spouses Angeles filed suit against the PNR and its corporate secretary,
Rodolfo Flores, among others, for specific performance and damages before the
Regional Trial Court of Quezon City. In it, they prayed that PNR be directed to deliver 46 metric tons of
scrap/unserviceable rails and to pay them damages and attorney's fees.

Issues having been joined following the filing by PNR, et al., of their answer, trial ensued. Meanwhile, Lizette W. Angeles
passed away and was substituted by her heirs, among whom is her husband, herein petitioner Laureno T. Angeles.

On April 16, 1996, the trial court, on the postulate that the spouses Angeles are not the real parties-in-interest, rendered
judgment dismissing their complaint for lack of cause of action. As held by the court, Lizette was merely a representative of
Romualdez in the withdrawal of scrap or unserviceable rails awarded to him and not an assignee to the latter's rights with respect to
the award.

Aggrieved, the petitioner interposed an appeal with the CA, which, as stated at the threshold hereof, in its decision of June 4,
2001, dismissed the appeal and affirmed that of the trial court. The affirmatory decision was reiterated by the CA in its resolution
of September 17, 2001, denying the petitioners motion forreconsideration.

Hence, the petitioners present recourse on the submission that the CA erred in affirming the trial court's holding that petitioner
and his spouse, as plaintiffs a quo,had no cause of action as they were not the real parties-in-interest in this case.

We DENY the petition.

At the crux of the issue is the matter of how the aforequoted May 26, 1980 letter of Romualdez to Atty. Dizon of
the PNR should be taken: was it meant to designate, or has it the effect of designating, Lizette W. Angeles as a mere agent or as an
assignee of his (Romualdez's) interest in the scrap rails awarded to San Juanico Enterprises? The CAs conclusion, affirmatory of
that of the trial court, is that Lizette was not an assignee, but merely an agent whose authority was limited to the withdrawal of the
scrap rails, hence, without personality to sue.

Where agency exists, the third party's (in this case, PNR's) liability on a contract is to the principal and not to the agent and
the relationship of the third party to the principal is the same as that in a contract in which there is no agent. Normally, the agent has
neither rights nor liabilities as against the third party. He cannot thus sue or be sued on the contract. Since a contract may be
violated only by the parties thereto as against each other, the real party-in-interest, either as plaintiff or defendant in an action upon
that contract must, generally, be a contracting party.

The legal situation is, however, different where an agent is constituted as an assignee. In such a case, the agent may, in his
own behalf, sue on a contract made for his principal, as an assignee of such contract. The rule requiring every action to be
prosecuted in the name of the real party-in-interest recognizes the assignment of rights of action and also recognizes
that when one has a right assigned to him, he is then the real party-in-interest and may maintain an action upon such claim or
right.
[4]


Upon scrutiny of the subject Romualdez's letter to Atty. Cipriano Dizon dated May 26, 1980, it is at once apparent that Lizette
was to act just as a representative of Romualdez in the withdrawal of rails, and not an assignee. For perspective, we reproduce
the contents of said letter:

This is to inform you as President of San Juanico Enterprises, that I have authorized the bearer, LIZETTE
R. WIJANCO x x x to be my lawful representative in the withdrawal of the scrap/unserviceable rails
awarded to me.

For this reason, I have given her the ORIGINAL COPY of the AWARD, dated May 5, 1980 and O.R.
No. 8706855 dated May 20, 1980 which will indicate my waiver of rights, interests and participation in favor of
LIZETTE R. WIJANCO. (Emphasis added)

If Lizette was without legal standing to sue and appear in this case, there is more reason to hold that her petitioner husband,
either as her conjugal partner or her heir,is also without such standing.

Petitioner makes much of the fact that the terms agent or attorney-in-fact were not used in the Romualdez letter
aforestated. It bears to stress, however, that thewords principal and agent, are not the only terms used to designate the parties in
an agency relation. The agent may also be called an attorney, proxy, delegate or, as here, representative.

It cannot be over emphasized that Romualdez's use of the active verb authorized, instead of assigned, indicated an intent
on his part to keep and retain his interest in the subject matter. Stated a bit differently, he intended to limit Lizettes role in the scrap
transaction to being the representative of his interest therein.

Petitioner submits that the second paragraph of the Romualdez letter, stating - I have given [Lizette] the original copy of the
award x x x which will indicate my waiver of rights, interests and participation in favor of Lizette R. Wijanco -
clarifies that Lizette was intended to be an assignee, and not a mere agent.

We are not persuaded. As it were, the petitioner conveniently omitted an important phrase preceding the paragraph
which would have put the whole matter in context. The phrase is For this reason, and the antecedent thereof is his (Romualdez)
having appointed Lizette as his representative in the matter of the withdrawal of the scrap items. In fine, the key
phrase clearly conveys the idea that Lizette was given the original copy of the contract award to enable her to withdraw the rails
asRomualdezs authorized representative.

Article 1374 of the Civil Code provides that the various stipulations of a contract shall be read and interpreted together,
attributing to the doubtful ones that sense which may result from all of them taken jointly. In fine, the real intention of the parties is
primarily to be determined from the language used and gathered from the whole instrument. When put into the context of the letter
as a whole, it is abundantly clear that the rights which Romualdez waived or ceded in favor of Lizette were those in furtherance of
the agency relation that he had established for the withdrawal of the rails.

At any rate, any doubt as to the intent of Romualdez generated by the way his letter was couched could be clarified by the acts
of the main players themselves.Article 1371 of the Civil Code provides that to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered. In other words, in case of doubt, resort may be made to the
situation, surroundings, and relations of the parties.

The fact of agency was, as the trial court aptly observed,
[5]
confirmed in subsequent letters from the Angeles spouses in
which they themselves refer to Lizette as authorized representative of San Juanico Enterprises. Mention may also be made
that the withdrawal receipt which Lizette had signed indicated that she was doing so in a representative capacity. One professing to
act as agent for another is estopped to deny his agency both as against his asserted principal and third persons interested in the
transaction which he engaged in.

Whether or not an agency has been created is a question to be determined by the fact that one represents and is acting for
another. The appellate court, and before it, the trial court, had peremptorily determined that Lizette, with respect to the withdrawal of
the scrap in question, was acting for Romualdez. And with the view we take of this case, there were substantial pieces of evidence
adduced to support this determination. The desired reversal urged by the petitioner cannot, accordingly, be granted. For, factual
findings of the trial court, adopted and confirmed by the CA, are, as a rule, final and conclusive and may not be disturbed on
appeal.
[6]
So it must be here.

Petitioner maintains that the Romualdez letter in question was not in the form of a special power of attorney,
implying that the latter had not intended to merely authorize his wife, Lizette, to perform an act for him (Romualdez). The
contention is specious. In the absence of statute, no form or method of execution is required for a valid power of attorney; it may be
in any form clearly showing on its face the agents authority.
[7]


A power of attorney is only but an instrument in writing by which a person, as principal, appoints another as his agent and
confers upon him the authority to perform certain specified acts on behalf of the principal. The written authorization itself is the
power of attorney, and this is clearly indicated by the fact that it has also been called a letter of attorney. Its primary purpose is not
to define the authority of the agent as between himself and his principal but to evidence the authority of the agent to third parties
with whom the agent deals.
[8]
The letter under consideration is sufficient to constitute a power of attorney. Except as may be required
by statute, a power of attorney is valid although no notary public intervened in its execution.
[9]


A power of attorney must be strictly construed and pursued. The instrument will be held to grant only those powers which are
specified therein, and the agent may neither go beyond nor deviate from the power of attorney.
[10]
Contextually, all that Lizette was
authorized to do was to withdraw the unserviceable/scrap railings.Allowing her authority to sue therefor, especially in her own name,
would be to read something not intended, let alone written in the Romualdez letter.

Finally, the petitioner's claim that Lizette paid the amount of P96,000.00 to the PNR appears to be a mere afterthought; it
ought to be dismissed outright under the estoppel principle. In earlier proceedings, petitioner himself admitted in his complaint that it
was Romualdez who paid this amount.

WHEREFORE, the petition is DENIED and the assailed decision of the CA is AFFIRMED.

Costs against the petitioner.

SO ORDERED.
LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, and JULIAN MERCADO, JR., represented by their Attorney-In-Fact,
ALFREDO M. PEREZ, Petitioners, vs. ALLIED BANKING CORPORATION, Respondent.
G.R. No. 171460 July 24, 2007

Facts: Perla executed a Special Power of Attorney (SPA) in favor of her husband, Julian D. Mercado (Julian) over several
pieces of real property registered under her name, authorizing the latter to perform the following acts: 1. To act in my behalf, to sell,
alienate, mortgage, lease and deal otherwise over the different parcels of land described hereinafter x x x 2. To sign for and i n my
behalf any act of strict dominion or ownership any sale, disposition, mortgage, lease or any other transactions including quit-claims,
waiver and relinquishment of rights x x x 3. To exercise any or all acts of strict dominion or ownership over the above-mentioned
properties, rights and interest therein.

On the strength of the aforesaid SPA, Julian obtained a loan from the respondent. Still using the subject property as
security, Julian obtained an additional loan from the respondent.
It appears, however, that there was no property identified in the SPA and registered with the Registry of Deeds. What was identified
in the SPA instead was the property different from the one used as security for loan.

Julian defaulted on the payment of his loan obligations. Thus, respondent initiated extra-judicial foreclosure proceedings
over the subject property which was subsequently sold at public auction wherein the respondent was declared as the highest bidder.
Petitioners initiated an action for the annulment of REM constituted over the subject property on the ground that the same was not
covered by the SPA and that the said SPA, at the time the loan obligations were contracted, no longer had force and effect since it
was previously revoked by Perla. In the absence of authority to do so, the REM constituted by Julian over the subject property was
null and void; thus, petitioners likewise prayed that the subsequent extra-judicial foreclosure proceedings and the auction sale of the
subject property be also nullified.

Issues: (1) Whether or not there was a valid mortgage constituted over subject property.
(2) Whether or not there was a valid revovation of SPA.
(3) Construction of powers of attorney.

Rulings: (1) In the case at bar, it was Julian who obtained the loan obligations from respondent which he secured with the
mortgage of the subject property. The property mortgaged was owned by his wife, Perla, considered a third party to the loan
obligations between Julian and respondent. It was, thus, a situation recognized by the last paragraph of Article 2085 of the Civil
Code that third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own
property. There is no question therefore that Julian was vested with the power to mortgage the pieces of property identified in the
SPA, however, the subject property was not among those enumerated therein. Julian was not conferred by Perla with the authority
to mortgage the subject property under the terms of the SPA, the real estate mortgages Julian executed over the said property are
therefore unenforceable.

(2) The said SPA was revoked by virtue of a public instrument executed by Perla. To address respondents assertion that
the said revocation was unenforceable against it as a third party to the SPA and as one who relied on the same in good faith, the
rule is that an agency is extinguished, among others, by its revocation (Article 1999, New Civil Code of the Philippines). The
principal may revoke the agency at will, and compel the agent to return the document evidencing the agency. Such revocation may
be express or implied (Article 1920, supra).

(3) Rule of strict construction- where the terms of the contract are clear as to leave no room for interpretation, resort to
circumstantial evidence to ascertain the true intent of the parties, is not countenanced. The law is that if the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. The clear
terms of the contract should never be the subject matter of interpretation. Equally relevant is the rule that a power of attorney must
be strictly construed and pursued. The instrument will be held to grant only those powers which are specified therein, and the
agent may neither go beyond nor deviate from the power of attorney. Where powers and duties are specified and defined in an
instrument, all such powers and duties are limited and are confined to those which are specified and defined, and all other powers
and duties are excluded.

Qualification of the rule- this is but in accord with the disinclination of courts to enlarge the authority granted beyond the
powers expressly given and those which incidentally flow or derive therefrom as being usual and reasonably necessary and proper
for the performance of such express powers.

COSMIC LUMBER CORPORATION V CA
FACTS
* Cosmic Corporation, through its General Manager executed a Special Power of Attorney appointing Paz G. Villamil-
Estrada as attorney-in-fact to initiate, institute and file any court action for the ejectment of third persons and/or squatters of the
entire lot 9127 and 443 for the said squatters to remove their houses and vacate the premises in order that the corporation may take
material possession of the entire lot
* Paz G. Villamil Estrada, by virtue of her power of attorney, instituted an action for the ejectment of private respondent
Isidro Perez and recover the possession of a portion of lot 443 before the RTC
* Estrada entered into a Compromise Agreement with Perez, the terms and conditions such as:
In order for Perez to buy the said lot he is presently occupying, he has to pay to plaintiff through Estada the sum of
P26,640 computed at P80/square meter and that Cosmic Lumber recognizes ownership and possession of Perez by virtue of this
compromise agreement over said portion of 333 sqm of lot 443 and whatever expenses of subdivision, registration and other
incidental expenses shall be shouldered by Perez
* although the agreement was approved by the trial court and the decision became final and executory it was not
executed within the 5 year period from date of its finality allegedly due to the failure of Cosmic Lumber to produce the owners
duplicate copy of title needed to segregate from lot 443 the portion sold by the attorney-in-fact, Paz Estrada to Perez under the
compromise agreement

ISSUE: W/N there is a contract of agency between Cosmic Lumber, principal and Paz Estrada, agent thus binding the principal over
the compromise agreement made by the agent to a third person, Perez in selling the portion of the said property
RULING: No
The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to
institute any action in court to eject all persons found on lots number 9127 and 443 so that Cosmic Lumber could take material
possession thereof and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise
agreement but only insofar as this was protective of the rights and interests of Cosmic Lumber in the property
Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property
nor a portion thereof
Neither can a conferment of the power to sell be validly inferred from the specific authority to enter into a compromise
agreement because of the explicit limitation fixed by the grantor that the compromise entered into shall only be so far as it shall
protect the rights and interest of the corporation in the aforementioned lots.
In the context of special investiture of powers to Villamil-Estrada, alienation by sale of an immovable certainly cannot be
deemed protective of the right of Cosmic Lumber to physically possess the same, more so when the land was being sold for a price
of P80/sqm , very much less than its assessed value of P250/sqm and considering further that plaintiff never received the proceeds
of the sale
When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing;
otherwise, the sale should be void. Thus, the authority of an agent to execute a contract for the sale of real estate must be conferred
in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute
For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of
the agent in clear and unmistakable language
It is therefore clear that by selling to Perez a portion of Cosmic Lumbers land through a compromise agreement, Villamil-
Estrada acted without or in obvious authority. The sale ipso jure is consequently void and so is the compromise agreement. This
being the case, the judgment based thereon is necessarily void
When an agent is engaged in the perpetration of a fraud upon his principal for his own exclusive benefit, he is not really
acting for the principal but is really acting for himself, entirely outside the scope of his agency
G.R. No. 163720 December 16, 2004
GENEVIEVE LIM, petitioner,
vs.
FLORENCIO SABAN, respondents.


D E C I S I O N


TINGA, J .:
Before the Court is a Petition for Review on Certiorari assailing the Decision
1
dated October 27, 2003 of the Court of Appeals,
Seventh Division, in CA-G.R. V No. 60392.
2

The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter lot in Cebu City (the "lot"), entered into anAgreement and
Authority to Negotiate and Sell (Agency Agreement) with respondent Florencio Saban (Saban) on February 8, 1994. Under the
Agency Agreement, Ybaez authorized Saban to look for a buyer of the lot for Two Hundred Thousand Pesos (P200,000.00) and to
mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the
sale, as well as Sabans commission for the sale.
3

Through Sabans efforts, Ybaez and his wife were able to sell the lot to the petitioner Genevieve Lim (Lim) and the spouses
Benjamin and Lourdes Lim (the Spouses Lim) on March 10, 1994. The price of the lot as indicated in the Deed of Absolute Sale is
Two Hundred Thousand Pesos (P200,000.00).
4
It appears, however, that the vendees agreed to purchase the lot at the price of Six
Hundred Thousand Pesos (P600,000.00), inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to
Saban the amounts of One Hundred Thirteen Thousand Two Hundred Fifty Seven Pesos (P113,257.00) for payment of taxes due
on the transaction as well as Fifty Thousand Pesos (P50,000.00) as brokers commission.
5
Lim also issued in the name of Saban
four postdated checks in the aggregate amount of Two Hundred Thirty Six Thousand Seven Hundred Forty Three Pesos
(P236,743.00). These checks were Bank of the Philippine Islands (BPI) Check No. 1112645 dated June 12, 1994 for P25,000.00;
BPI Check No. 1112647 dated June 19, 1994 for P18,743.00; BPI Check No. 1112646 dated June 26, 1994 for P25,000.00; and
Equitable PCI Bank Check No. 021491B dated June 20, 1994 for P168,000.00.
Subsequently, Ybaez sent a letter dated June 10, 1994 addressed to Lim. In the letter Ybaez asked Lim to cancel all the checks
issued by her in Sabans favor and to "extend another partial payment" for the lot in his (Ybaezs) favor.
6

After the four checks in his favor were dishonored upon presentment, Saban filed a Complaint for collection of sum of money and
damages against Ybaez and Lim with the Regional Trial Court (RTC) of Cebu City on August 3, 1994.
7
The case was assigned to
Branch 20 of the RTC.
In his Complaint, Saban alleged that Lim and the Spouses Lim agreed to purchase the lot for P600,000.00, i.e.,with a mark-up of
Four Hundred Thousand Pesos (P400,000.00) from the price set by Ybaez. Of the total purchase price
of P600,000.00, P200,000.00 went to Ybaez, P50,000.00 allegedly went to Lims agent, andP113,257.00 was given to Saban to
cover taxes and other expenses incidental to the sale. Lim also issued four (4) postdated checks
8
in favor of Saban for the
remaining P236,743.00.
9

Saban alleged that Ybaez told Lim that he (Saban) was not entitled to any commission for the sale since he concealed the actual
selling price of the lot from Ybaez and because he was not a licensed real estate broker. Ybaez was able to convince Lim to
cancel all four checks.
Saban further averred that Ybaez and Lim connived to deprive him of his sales commission by withholding payment of the first
three checks. He also claimed that Lim failed to make good the fourth check which was dishonored because the account against
which it was drawn was closed.
In his Answer, Ybaez claimed that Saban was not entitled to any commission because he concealed the actual selling price from
him and because he was not a licensed real estate broker.
Lim, for her part, argued that she was not privy to the agreement between Ybaez and Saban, and that she issued stop payment
orders for the three checks because Ybaez requested her to pay the purchase price directly to him, instead of coursing it through
Saban. She also alleged that she agreed with Ybaez that the purchase price of the lot was only P200,000.00.
Ybaez died during the pendency of the case before the RTC. Upon motion of his counsel, the trial court dismissed the case only
against him without any objection from the other parties.
10

On May 14, 1997, the RTC rendered its Decision
11
dismissing Sabans complaint, declaring the four (4) checks issued by Lim as
stale and non-negotiable, and absolving Lim from any liability towards Saban.
Saban appealed the trial courts Decision to the Court of Appeals.
On October 27, 2003, the appellate court promulgated its Decision
12
reversing the trial courts ruling. It held that Saban was entitled
to his commission amounting to P236,743.00.
13

The Court of Appeals ruled that Ybaezs revocation of his contract of agency with Saban was invalid because the agency was
coupled with an interest and Ybaez effected the revocation in bad faith in order to deprive Saban of his commission and to keep
the profits for himself.
14

The appellate court found that Ybaez and Lim connived to deprive Saban of his commission. It declared that Lim is liable to pay
Saban the amount of the purchase price of the lot corresponding to his commission because she issued the four checks knowing
that the total amount thereof corresponded to Sabans commission for the sale, as the agent of Ybaez. The appellate court further
ruled that, in issuing the checks in payment of Sabans commission, Lim acted as an accommodation party. She signed the checks
as drawer, without receiving value therefor, for the purpose of lending her name to a third person. As such, she is liable to pay
Saban as the holder for value of the checks.
15

Lim filed a Motion for Reconsideration of the appellate courts Decision, but her Motion was denied by the Court of Appeals in
a Resolution dated May 6, 2004.
16

Not satisfied with the decision of the Court of Appeals, Lim filed the present petition.
Lim argues that the appellate court ignored the fact that after paying her agent and remitting to Saban the amounts due for taxes
and transfer of title, she paid the balance of the purchase price directly to Ybaez.
17

She further contends that she is not liable for Ybaezs debt to Saban under the Agency Agreement as she is not privy thereto, and
that Saban has no one but himself to blame for consenting to the dismissal of the case against Ybaez and not moving for his
substitution by his heirs.
18

Lim also assails the findings of the appellate court that she issued the checks as an accommodation party for Ybaez and that she
connived with the latter to deprive Saban of his commission.
19

Lim prays that should she be found liable to pay Saban the amount of his commission, she should only be held liable to the extent of
one-third (1/3) of the amount, since she had two co-vendees (the Spouses Lim) who should share such liability.
20

In his Comment, Saban maintains that Lim agreed to purchase the lot for P600,000.00, which consisted of theP200,000.00 which
would be paid to Ybaez, the P50,000.00 due to her broker, the P113,257.00 earmarked for taxes and other expenses incidental to
the sale and Sabans commission as broker for Ybaez. According to Saban, Lim assumed the obligation to pay him his
commission. He insists that Lim and Ybaez connived to unjustly deprive him of his commission from the negotiation of the sale.
21

The issues for the Courts resolution are whether Saban is entitled to receive his commission from the sale; and, assuming that
Saban is entitled thereto, whether it is Lim who is liable to pay Saban his sales commission.
The Court gives due course to the petition, but agrees with the result reached by the Court of Appeals.
The Court affirms the appellate courts finding that the agency was not revoked since Ybaez requested that Lim make stop
payment orders for the checks payable to Saban only after the consummation of the sale on March 10, 1994. At that time, Saban
had already performed his obligation as Ybaezs agent when, through his (Sabans) efforts, Ybaez executed the Deed of Absolute
Sale of the lot with Lim and the Spouses Lim.
To deprive Saban of his commission subsequent to the sale which was consummated through his efforts would be a breach of his
contract of agency with Ybaez which expressly states that Saban would be entitled to any excess in the purchase price after
deducting the P200,000.00 due to Ybaez and the transfer taxes and other incidental expenses of the sale.
22

In Macondray & Co. v. Sellner,
23
the Court recognized the right of a broker to his commission for finding a suitable buyer for the
sellers property even though the seller himself consummated the sale with the buyer.
24
The Court held that it would be in the height
of injustice to permit the principal to terminate the contract of agency to the prejudice of the broker when he had already reaped the
benefits of the brokers efforts.
In Infante v. Cunanan, et al.,
25
the Court upheld the right of the brokers to their commissions although the seller revoked their
authority to act in his behalf after they had found a buyer for his properties and negotiated the sale directly with the buyer whom he
met through the brokers efforts. The Court ruled that the sellers withdrawal in bad faith of the brokers authority cannot unjustly
deprive the brokers of their commissions as the sellers duly constituted agents.
The pronouncements of the Court in the aforecited cases are applicable to the present case, especially considering that Saban had
completely performed his obligations under his contract of agency with Ybaez by finding a suitable buyer to preparing the Deed of
Absolute Sale between Ybaez and Lim and her co-vendees. Moreover, the contract of agency very clearly states that Saban is
entitled to the excess of the mark-up of the price of the lot after deducting Ybaezs share of P200,000.00 and the taxes and other
incidental expenses of the sale.
However, the Court does not agree with the appellate courts pronouncement that Sabans agency was one coupled with an interest.
Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of
fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his
removal from the management is unjustifiable. Stated differently, an agency is deemed as one coupled with an interest where it is
established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it
cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an
interest, the agents interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the
power because it entitles him to compensation. When an agents interest is confined to earning his agreed compensation, the
agency is not one coupled with an interest, since an agents interest in obtaining his compensation as such agent is an ordinary
incident of the agency relationship.
26

Sabans entitlement to his commission having been settled, the Court must now determine whether Lim is the proper party against
whom Saban should address his claim.
Sabans right to receive compensation for negotiating as broker for Ybaez arises from the Agency Agreement between them. Lim
is not a party to the contract. However, the record reveals that she had knowledge of the fact that Ybaez set the price of the lot
at P200,000.00 and that the P600,000.00the price agreed upon by her and Sabanwas more than the amount set by Ybaez
because it included the amount for payment of taxes and for Sabans commission as broker for Ybaez.
According to the trial court, Lim made the following payments for the lot: P113,257.00 for taxes, P50,000.00 for her broker,
and P400.000.00 directly to Ybaez, or a total of Five Hundred Sixty Three Thousand Two Hundred Fifty Seven Pesos
(P563,257.00).
27
Lim, on the other hand, claims that on March 10, 1994, the date of execution of the Deed of Absolute Sale, she
paid directly to Ybaez the amount of One Hundred Thousand Pesos (P100,000.00) only, and gave to Saban P113,257.00 for
payment of taxes and P50,000.00 as his commission,
28
and One Hundred Thirty Thousand Pesos (P130,000.00) on June 28,
1994,
29
or a total of Three Hundred Ninety Three Thousand Two Hundred Fifty Seven Pesos (P393,257.00). Ybaez, for his part,
acknowledged that Lim and her co-vendees paid him P400,000.00 which he said was the full amount for the sale of the lot.
30
It thus
appears that he received P100,000.00 on March 10, 1994, acknowledged receipt (through Saban) of the P113,257.00 earmarked
for taxes and P50,000.00 for commission, and received the balance of P130,000.00 on June 28, 1994. Thus, a total of P230,000.00
went directly to Ybaez. Apparently, although the amount actually paid by Lim wasP393,257.00, Ybaez rounded off the amount
to P400,000.00 and waived the difference.
Lims act of issuing the four checks amounting to P236,743.00 in Sabans favor belies her claim that she and her co-vendees did not
agree to purchase the lot at P600,000.00. If she did not agree thereto, there would be no reason for her to issue those checks which
is the balance of P600,000.00 less the amounts of P200,000.00 (due to Ybaez), P50,000.00 (commission), and the P113,257.00
(taxes). The only logical conclusion is that Lim changed her mind about agreeing to purchase the lot at P600,000.00 after talking to
Ybaez and ultimately realizing that Sabans commission is even more than what Ybaez received as his share of the purchase
price as vendor. Obviously, this change of mind resulted to the prejudice of Saban whose efforts led to the completion of the sale
between the latter, and Lim and her co-vendees. This the Court cannot countenance.
The ruling of the Court in Infante v. Cunanan, et al., cited earlier, is enlightening for the facts therein are similar to the circumstances
of the present case. In that case, Consejo Infante asked Jose Cunanan and Juan Mijares to find a buyer for her two lots and the
house built thereon for Thirty Thousand Pesos (P30,000.00) . She promised to pay them five percent (5%) of the purchase price
plus whatever overprice they may obtain for the property. Cunanan and Mijares offered the properties to Pio Noche who in turn
expressed willingness to purchase the properties. Cunanan and Mijares thereafter introduced Noche to Infante. However, the latter
told Cunanan and Mijares that she was no longer interested in selling the property and asked them to sign a document stating that
their written authority to act as her agents for the sale of the properties was already cancelled. Subsequently, Infante sold the
properties directly to Noche for Thirty One Thousand Pesos (P31,000.00). The Court upheld the right of Cunanan and Mijares to
their commission, explaining that
[Infante] had changed her mind even if respondent had found a buyer who was willing to close the deal, is a matter that
would not give rise to a legal consequence if [Cunanan and Mijares] agreed to call off the transaction in deference to the
request of [Infante]. But the situation varies 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. This act is unfair as would amount to bad faith. This act cannot
be sanctioned without according the party prejudiced the reward which is due him. This is the situation in which [Cunanan
and Mijares] were placed by [Infante]. [Infante] took advantage of the services rendered by [Cunanan and Mijares], but
believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of
cancellation.This act of subversion cannot be sanctioned and cannot serve as basis for [Infante] to escape payment of
the commission agreed upon.
31

The appellate court therefore had sufficient basis for concluding that Ybaez and Lim connived to deprive Saban of his commission
by dealing with each other directly and reducing the purchase price of the lot and leaving nothing to compensate Saban for his
efforts.
Considering the circumstances surrounding the case, and the undisputed fact that Lim had not yet paid the balance of P200,000.00
of the purchase price of P600,000.00, it is just and proper for her to pay Saban the balance of P200,000.00.
Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an excess of P30,000.00 from his asking price
of P200,000.00, Saban may claim such excess from Ybaezs estate, if that remedy is still available,
32
in view of the trial courts
dismissal of Sabans complaint as against Ybaez, with Sabans express consent, due to the latters demise on November 11,
1994.
33

The appellate court however erred in ruling that Lim is liable on the checks because she issued them as an accommodation party.
Section 29 of the Negotiable Instruments Law defines an accommodation party as a person "who has signed the negotiable
instrument as maker, drawer, acceptor or indorser, without receiving value therefor, for the purpose of lending his name to some
other person." The accommodation party is liable on the instrument to a holder for value even though the holder at the time of taking
the instrument knew him or her to be merely an accommodation party. The accommodation party may of course seek
reimbursement from the party accommodated.
34

As gleaned from the text of Section 29 of the Negotiable Instruments Law, the accommodation party is one who meets all these
three requisites, viz: (1) he signed the instrument as maker, drawer, acceptor, or indorser; (2) he did not receive value for the
signature; and (3) he signed for the purpose of lending his name to some other person. In the case at bar, while Lim signed as
drawer of the checks she did not satisfy the two other remaining requisites.
The absence of the second requisite becomes pellucid when it is noted at the outset that Lim issued the checks in question on
account of her transaction, along with the other purchasers, with Ybaez which was a sale and, therefore, a reciprocal contract.
Specifically, she drew the checks in payment of the balance of the purchase price of the lot subject of the transaction. And she had
to pay the agreed purchase price in consideration for the sale of the lot to her and her co-vendees. In other words, the amounts
covered by the checks form part of the cause or consideration from Ybaezs end, as vendor, while the lot represented the cause or
consideration on the side of Lim, as vendee.
35
Ergo, Lim received value for her signature on the checks.
Neither is there any indication that Lim issued the checks for the purpose of enabling Ybaez, or any other person for that matter, to
obtain credit or to raise money, thereby totally debunking the presence of the third requisite of an accommodation party.
WHEREFORE, in view of the foregoing, the petition is DISMISSED.
SO ORDERED.
DOMINGO vs. DOMINGO
GR No. L-30573 | Oct. 29, 1971| Makasiar | Petition for Review of CA Decision1
Petitioners: Vicente Domingo represented by his heirs
Respondents: Gregorio Domingo [Vicente Domingos agent & broker]
Intervenor: Teofilo Purisima [Gregorio Domingos sub-agent]

Quick Summary:
Facts: Gregorio Domingo, Vicente Domingos broker and agent, received P1,000 from Oscar de Leon as gift or propina. Oscar gave
him said amount after Gregorio succeeded in persuading Vicente to accept his offer to buy the lot for P1.20 instead of P2.
Held: 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. 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.

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.
According to the document, 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.
This contract is in triplicate with the original and another copy being retained by Gregorio. The last copy was given to
Vicente.
Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without notifying Vicente. Gregorio promised Teofilo
of the 5% commission.
Teofilo introduced Oscar de Leon to Gregorio as a porspective buyer.
Oscar submitted a written offer which was very much lower than the P2 per sq. m. price.
Vicente directed Gregorio to tell Oscar to raise his offer.
After several conferences between Gregorio and Oscar, 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.
Oscar will vacate on or about September 15, 1956 his house and lot at Denver St., QC, which is part of the purchase
price
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 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.


1 Just a guess. My photox of the case does not have the 1
st
2 pages.
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:
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.
Rationale: prevent the possibility of any wrong not to remedy or repair an actual damage
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.

Decisive Provisions
Article 18912 and 19093 CC
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.

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 di d
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.

Dispositive: CA decision reversed.
G.R. No. 102737. August 21, 1996

FRANCISCO A. VELOSO, Petitioner, v. CA, AGLALOMA B. ESCARIO, assisted by her husband GREGORIO L. ESCARIO, the
REGISTER OF DEEDS -MANILA, Respondent.

DOCTRINE: The special power of attorney can be included in the general power when it is specified therein the act or transaction
for which the special power is required.


2 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.

3 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.
"Whether the instrument be denominated as "general power of attorney" or "special power of attorney," what matters is the extent of
the power or powers contemplated upon the agent or attorney in fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the power to sell is specific, it not being merely implied, much less
couched in general terms, there can not be any doubt that the attorney in fact may execute a valid sale. An instrument may be
captioned as "special power of attorney" but if the powers granted are couched in general terms without mentioning any specific
power to sell or mortgage or to do other specific acts of strict dominion, then in that case only acts of administration may be deemed
conferred."

FACTS: TORRES, JR., J.:

Petitioner Francisco Veloso owns a parcel of land in Tondo, Manila covered by a TCT issued by the Registry of Deeds-Manila.
He acquired the subject property before he got married from Philippine Building Corporation. Hence, the property did not
belong to the conjugal partnership.

The said title was subsequently canceled and a new one was issued in the name of Aglaloma B. Escario.

Subsequently, petitioner filed an action for annulment of documents, reconveyance of property with damages and preliminary
injunction alleging that he was the absolute owner of the subject property and he never authorized anybody to sell it. He
alleged that when his wife left for abroad, he found out that his copy was missing.

The transfer of property was supported by a General Power of Attorney and Deed of Absolute Sale, executed by Irma
Veloso, wife of the petitioner.

Petitioner denied executing the power of attorney and alleged that his signature was falsified. He also denied having known the
supposed witnesses in the execution of the power of attorney. Thus, he contended that the sale of the property, and the
subsequent transfer were null and void.

Defendant Aglaloma Escario alleged that she was a buyer in good faith and denied any knowledge of the alleged irregularity.
She allegedly relied on the general power of attorney which was sufficient in form and substance and was duly notarized.

Witness for the plaintiff Atty. Julian G. Tubig denied any participation in the execution of the general power of attorney, and
attested that he did not sign.

RTC ruled in favor of Escaro as the lawful owner of the property as she was deemed an innocent purchaser for value. The trial
court ruled that there was no need for a special power of attorney when the special power was already mentioned in the
general one.

CA affirmed in toto the findings of the trial court.

ISSUE: Was the General Power of Attorney valid?

HELD: The assailed power of attorney was valid and regular on its face. It was notarized and as such, it carries the evidentiary
weight conferred upon it with respect to its due execution. While it is true that it was denominated as a general power of attorney, a
perusal thereof revealed that it stated an authority to sell.

"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments ."

Thus, there was no need to execute a separate and special power of attorney since the general power of attorney had expressly
authorized the agent or attorney in fact the power to sell the subject property.

The general power of attorney was accepted by the Register of Deeds when the title to the subject property was canceled and
transferred in the name of private Respondent.

RE FALSIFIED SIGNATURE:

SC found that the basis presented by the petitioner was inadequate to sustain his allegation of forgery. Mere variance of the
signatures cannot be considered as conclusive proof that the same were forged. Forgery cannot be presumed.

RE INNOCENT PURCHASER FOR VALUE:

SC agrees with the conclusion of the lower court that private respondent was an innocent purchaser for value. Respondent
Aglaloma relied on the power of attorney presented by petitioners wife, Irma. Being the wife of the owner and having with her the
title of the property, there was no reason for the private respondent not to believe in her authority. Moreover, the power of attorney
was notarized and as such, carried with it the presumption of its due execution.

A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in
such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or
interest of some other person in the property. The questioned power of attorney and deed of sale, were notarized and therefore,
presumed to be valid and duly executed.

Atty. Tubig denied having notarized the said documents and alleged that his signature had also been falsified. Just like the
petitioner, witness Atty. Tubig merely pointed out that his signature was different from that in the power of attorney and deed of sale.

Even granting for the sake of argument, that the petitioners signature was falsified and consequently, the power of attorney and the
deed of sale were null and void, such fact would not revoke the title subsequently issued in favor of private respondent.

The right of an innocent purchaser for value must be respected and protected, even if the seller obtained his title through
fraud. The REMEDY of the person prejudiced is to bring an action for damages against those who caused or employed the fraud,
and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the
Assurance Fund.

RE ESTOPPEL:

The trial court did not err in applying equitable estoppel in this case. The principle of equitable estoppel states that where one or two
innocent persons must suffer a loss, he who by his conduct made the loss possible must bear it. From the evidence adduced, it
should be the petitioner who should bear the loss.

The fact remains that the Certificate of Title, as well as other documents necessary for the transfer of title were in the possession of
Irma, consequently leaving no doubt or any suspicion on the part of the defendant as to her authority. Under Section 55 of Act 496,
Irmas possession and production of the TCT to defendant operated as conclusive authority from the plaintiff to the Register of
Deeds to enter a new certificate.

ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.