Vicente vs Geraldez

Synopsis: Hi Cement Corp. acquired a Placer

Lease Contract (mining claims). Vicente et, al
claimed that some parts of the mining claims.
Instead of pursuing a case pursuant to the
determination of the rightful owners of the
disputed portions, the parties decided to have a
Compromise Agreement wherein the latter party
agrees to sell their respective portions to the
corporation. TC however still rendered judgment
and ordered execution of the agreement. Later,
TC found that the counsel for the Corporation
entered into the agreement without the written
authority of his client and the latter did not ratify
the same (lack of authority from the Board of
Directors). Orders therefore made by the court
have been issued in excess of jurisdiction and
grave abuse of discretion. HI Cemenet did not
submit to the Court any written authority from
their client to enter into a compromise.
Doctrine: Special powers of attorney are
necessary, among other cases, in the following:
to compromise and to renounce the right to
appeal from a judgment. As a general rule an
officer or agent of the corporation has no power
to compromise or settle a claim by or against the
corporation, except to the extent that such power
is given to him either expressly or by reasonable
implication from the circumstances.
Insular Drug vs National Bank
Synopsis: A certain Foerster was a salesman of
Insular Drug Co. His job was to collect the checks
and deposit it to the Iloilo Branch of the Chartered
Bank of India, Australia and China to be deposited
to the account of Insular. Instead, Foerster
deposited it in his personal account, the checks
were indorsed and as a consequence of the
indorsements, they were subsequently withdrawn
by Foerster and his wife. The Insurance company
claims it never received the money, PNB raises
the defense that Foerster had implied authority to
indorse the checks made in the name of Insular.
SC says NO.
Doctrine: The right of an agent to indorse
commercial paper is a very responsible power
and will not be lightly inferred. A salesman with
authority to collect money belonging to his
principal does not have the implied authority to
indorse checks received in payment. Any person
taking checks made payable to a corporation,
which can act only by agent does so at his peril,
and must same by the consequences if the agent
who indorses the same is without authority.
Austria vs CA

Synopsis: Guillermo consigned a pendant with

diamonds (P 4 500) to Maria Abad. The item was
to be sold on commission basis or to be returned
on demand. On the night of 1 February 1961,
Maria was robbed while walking home alone; the
consigned item was among those stolen. Because
Maria could not return the diamond or pay its
amount, Guillermo filed a case before CFI Manila.
The CFI ruled in Guillermos favor. On appeal, the
CA reversed the CFI decision. Hence, this appeal
to the SC. The SC held that Maria is exempt from
liability on account of fortuitous event.
Doctrine: The consignee is exempt from liability
arising from the loss of consigned goods if such
loss was due to fortuitous event.
PNB vs Manila Surety
Synopsis: (ATACO) constituted PNB as its assignee
and attorney-in-fact to receive and collect from
the Bureau of Public Works the amount to pay for
the asphalt delivered to it under a trust receipt
guaranteed by Manila Surety. ATACO delivered to
BPW asphalt worth P431,466.52. Of this amount,
PNB was able to regularly collect a total of
P106,382.01. However, due to unexplained
reasons, PNB was not able to collect until the
investigators found out that more money were
payable to ATACO from BPW. The latter allowed
another creditor to collect funds due to ATACO
under the same purchase order, to a total of
P311,230.41. Thus, PNB sued both ATACO and
Manila Surety to recover the balance of
P158,563.18, plus interests and damages. CA
ruled that PNB was negligent in having stopped
collecting from BPW before ATACOs debt is fully
collected, thereby allowing funds to be taken by
other creditors to the prejudice of the surety. PNB
asserts that the power of attorney executed in it
is favor from ATACO was merely an additional
security; that it was the duty of the surety to see
to it that the obligor fulfills his obligation; and
that PNB has no obligation to the surety to collect
any sum from ATACO. Court ruled that PNB is
negligent as an agent-creditor of ATACO in
collecting sums due to it.
Doctrine: YES. The CA did not hold PNB
responsible for its negligence in failing to collect
from ATACO for its debt to PNB, but for ITS
NEGLECT IN COLLECTING SUMS DUE TO ATACO
FROM BPW. An agent is required to act with the
care and diligence of a good father of a family
and becomes liable for the damages, which the
principal may suffer through its non-performance.
PNBs power to collect was expressly made
irrevocable so that BPW could very well refuse to
make payments to ATACO itself, and reject any
demands by the surety.
Domingo vs Domingo

Synopsis: Petitioner Vicente (V) Domingo granted

Gregorio (G) Domingo, a real estate broker, the
exclusive agency to sell his lot with a 5%
commission on the total price if the property is
sold by Vicente or by anyone else during the 30day duration of the agency or by Vicente within 3
months form the termination of the agency. G
authorized Purisima to look for a buyer, promising
the latter of the 5%. P intoduced Oscar de Leon
to G as prospective buyer. Apart from Gs
commission Oscar gave the former an additional
P1,000 as a gift for succeeding in persuading
Vicente to sell the lot at a much lower rate which
was not disclosed by G to V. Oscar told G that
hes giving up the negotiation. G went to V to
remind her that it is stated in the agency
agreement that V will still pay him 5%
commission despite the cancellation of
negotiations. V then tore the document to pieces
but G had a duplicate. G then discovered that V
sold the property to the same buyer (O) so he
demanded her 5% commission. V alleged that G
is not entitled to commission for selling the
property to a different buyer (Os wife). CA
reversed saying that sale to Os wife is practically
sale to O. Supreme Court held that failure of G to
disclose to V the gift or propina constitutes fraud
as to forfeit his commission.
Doctrine:
1891 and 1909 above provisions demand the
utmost good faith, fidelity, honesty, candor, and
fairness on the part of the agent (real estate
broker) to his principal, the vendor. Hence, 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 the
principal, is guilty of a breach of his loyalty.
The agent thus forfeits his right to collect
commission from the principal, even if the
principal does not suffer any injury by reason of
such breach of fidelity, or that he obtained better
results from it.
Severino vs Severino
Synopsis: Fabiola is the natural daughter and sole
heir of Melecio. Fabiola wants to compel the
defendant Guillermo to convey to her four parcels
of land originally owned by Melencio. Guillermo,
Melencios brother, worked on the land as
administrator for and on behalf of the said
Melecio. After Melecio's death, the defendant
Guillermo continued to occupy the land.
Doctrine: Defendant is agent of Melecio;
defendant is estopped from owning/asserting
adverse title to the subject of agency
Green valley poultry vs IAC

Synopsis: Pet. is the non-exclusive distributor of

products of E.R. Squibb. They agreed that:
Payment for Purchases of Squibb Products will be
due 60 days from date of invoice or the nearest
business day thereto. No payment will be
accepted in the form of post-dated checks.
Payment by check must be on current dating.
Pet. sold on credit without E.R. Squibbs authority,
so the latter filed a suit to collect.
Pet. claimed that the contract with Squibb was a
mere agency to sell, while Squibb countered that
the contract was one of sale, so that Pet. should
have paid for the goods received upon the
expiration of the 60-day credit period. TC and CA
both held that there was a sale contract between
them, although SC didnt think it was important
bec Pet. would be liable in any case. If it were a
contract of agency, then Pet. had violated Art.
1905.
Doctrine: Art. 1905
The commission agent cannot, without the
express or implied consent of the principal, sell
on credit. Should he do so, the principal may
demand from him payment in cash, but the
commission agent shall be entitled to any interest
or benefit, which may result from such sale.
Municipal Council of Iloilo vs Evangelista
Synopsis: (Principal: Tan Ong; Agent: Tan Boon
Tiong) Basically, in a prior case, the CFI rendered
a decision wherein the Municipality of Iloilo was to
pay Tan Ong P42,966.44. This amount was for the
value of the land taken by the municipality for
purposes of street widening. It became final and
executory. Certain people wanted a slice of the
pie. Atty. Evangelista, who represented Tan Ong in
the expropriation case, sought with the
concurrence of his client 15% of the award.
Another claimant stepped forward, Atty. Antero
Soriano. Atty. Soriano represented Tan Ong in
other cases. Soriano claimed that the award
(P42,966.44) was assigned to him by Tan Boon
Tiong for professional services rendered by the
former in favor of Tan Ong in other cases. Soriano
then assigned his rights to Mauricio Cruz and Co.,
Inc. The CFI disposed of the claims as follows:
15% to Evangelista as payment for his services
and the rest to Mauricio Cruz and Co., Inc. The
treasurer of Iloilo then paid P6,000 to Evangelista
and another P6,000 to Soriano. The balance of
P30,966.44 was thus due to Mauricio Cruz and
Co., Inc. (again, Sorianos assignee). Tan Ong
appealed of course, saying the assignment in
favor of Soriano by Tan Boon Tiong, her attorneyin-fact was void (she just wanted to get the cash
back). SC holds (Doctrine 1), thus the assignment
of credit to Soriano.

Doctrine: (1) That an agent of attorney-in -fact

empowered to pay the debts of the principal, and
to employ lawyers to defend the latter's interests,
is impliedly empowered to pay the lawyer's fees
for services rendered in the interests of said
principal, and may satisfy them by an assignment
of a judgment rendered in favor of said principal;
(2) that when a person appoints two attorneys-infact independently, the consent of the one will
not be required to validate the acts of the other
unless that appears positively to have been the
principal's intention
Del Rosario vs La Badenia
Synopsis: La Badenia began a selling campaign
for its products. Celestino Aragon was appointed
the general agent of the company to some of the
provinces in Luzon. As general agent, he
established a depot at Legaspi with Teofila del
Rosario de Costa, who was nominally in charge of
the depot, and her husband Bernardino Costa,
who appeared to have been the actual manager.
From the arrangement between Aragon and the
Spouses Costa, the business in Legaspi seemed
to have been in the charge of the spouses over
which Aragon, as general agent, kept close
supervision. In the final settlement of accounts,
Aragon acknowledged that the Spouses had, in
their favor, a balance of P1,795.25, However, La
Badenia refused to pay the balance, saying that
they had been improperly allowed a credit which
represented unpaid accounts due the business in
Legaspi for some items sold by it. The lower court
ruled that the Spouses Costa were not agents,
considering that the goods sold to the delinquent
debtors, whose unpaid accounts form the basis of
the claim, had already been paid by the said
spouses. The SC reversed, saying that the
spouses were, in fact, agents, and thus should be
paid the balance owed to it by La Badenia.
Doctrine: An agent may lawfully appoint a
substitute if the principal has not prohibited him
from doing such. The principal shall be bound by
the acts of the sub-agent if it is shown that the

agent who appointed such subagent did not act in

excess of his authority in doing so.
International Films vs Lyric Film
Synopsis:
International Films appointed this guy Bernard
Gabelman as its agent in the Philippines through
a power of attorney. International Films, through
Gabelman, leased the film Monte Carlo
Madness to The Lyric Film Exchange to be shown
in different places. One of the conditions of the
contract was that The Lyric Film Exchange would
answer for the loss of the film in question for
whatever cause. The chief of the firm department
of the Lyrics Film, telephoned the said agent
(Gabelman) informing that the showing of said
film had already finished and asked at the same
time, where he wished to have the film returned
to him. Gabelman went to Albos and asked
whether he could deposit the film in question in
the vault of the defendant as the plaintiff did not
have a safety vault yet. Albo declined the offer
but Gabelman insisted. Thereafter, the bodega of
Lyric Film Exchange was burned, including the
film, which was NOT insured.
SC held that Lyric Film cannot be held liable
because Lyric Film Exchange, as subagent of the
International Films in the exhibition of the film
"Monte Carlo Madness", was not obliged to insure
it against fire, not having received any express
mandate to that effect, and it is not liable for the
accidental destruction thereof by fire. The fact
that the film was not insured against fire does not
constitute fraud or negligence on the part of Lyric
because as sub-agent, it received no instruction
to that effect from its principal and the insurance
does not form a part of the obligation.
Doctrine: A mere submandatary or sub-agent is
NOT obliged to fulfill more than the contents of
the mandate, and is also NOT required to answer
for damages caused to the principal (Art. 1718
NCC).