INSULAR DRUG CO., INC., v. THE PHILIPPINE NATIONAL BANK G.R. No.

L-
38816, November 3, 1933 Malcoml, J.:
Doctrine:
“
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.”

Facts:
132 checks made out in the name of the Insular Drug Co., Inc., covering a
total of
₱
18,285.92 were brought to the
branch office of the Philippine National Bank (PNB) in Iloilo by Foerster, a
salesman of the drug company, Foerster’s wife, and Foerster’s clerk. The
checks were in that bank placed in the personal account of Foerster. After
the indorsement on
the checks was written by the Manager of PNB, the amounts stated were
subsequently withdrawn by U.E., Foerster, and Carmen E. de Foerster.
However, upon the discovery of the anomalies by the Manila office of the
drug company through its investigation of the transaction made by Foerster,
the latter committed suicide. There is no evidence showing that the bank
knew that Foerster was misappropriating the funds of his principal.
Issue:
Whether or not the bank incurred the liability to pay Insular Drug Co., Inc.,
Ruling:
Yes.
Jurisprudence states that, “in case the indorsement is forged or
unauthorized, the bank, in paying the check, become
s
liable to the payee for the value thereof.” Furthermore, “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.
”
Hence, in the case at bar, when the bank credited those checks to the
personal account of Foerster and permitted the latter and his wife to make
withdrawals without there being made authority from the drug company to
do so, the made itself responsible to the drug company for the amounts
represented by the checks. The bank could relieve itself from responsibility
by pleading and proving that after the money was withdrawn from the bank,
it passed to the drug company which thus suffered loss, but the bank has
not done so. Therefore, the drawee bank will have to stand the loss
occasioned by the negligence of its agents.

Week 5
Austria v. Court of Appeals 31 SCRA 527, G.R. No. L-29640 (June
10, 1971)
FACTS:

On January 30, 1961, Maria G. Abad acknowledged that she received from
Guillermo Austria one (1) pendant with diamonds to be sold on a commission
basis or to be returned on demand. However, on February 1, 1961, while
walking home to her residence, Abad was said to have been accosted by two
men, one of whom hit her on the face, while the other snatched her purse
containing jewelry and cash, and ran away.

Since Abad failed to return the jewelry or pay for its value notwithstanding
demands, Austria brought in the Court of First Instance of Manila an action
against her and her husband for recovery of the pendant or of its value, and
damages. On their answer, the defendant spouses set up the defense that the
alleged robbery had extinguished their obligation.

The trial court rendered judgment in favor for the plaintiff which is Austria. It
held that defendant failed to prove the fact of robbery, or, if indeed it was
committed, the defendant was guilty of negligence. The defendants appealed
to the Court of Appeals and secured a reversal of judgment. It declared
respondents not responsible for the loss of the jewelry on account of fortuitous
event, and relieved them from liability for damages to the owner. Hence, this
case contending that for robbery to fall under the category of fortuitous event
and relieve the obligor form his obligation under a contract, there ought to be
prior judgment on the guilt of the persons responsible therefor.

ISSUE:
Whether in a contract of agency (consignment of goods for sale) it is necessary
that there be prior conviction for robbery before the loss of the article shall
exempt the consignee from liability for such loss.

RULING:

NO, the law provides that except in case expressly specified by law, or when
it is otherwise declared by stipulation, or when the nature of the obligation
require the assumption of risk, no person shall be responsible for those events
which could not be foreseen, or which, though foreseen, were inevitable.

It must be noted that to avail of the exemption granted in the law, it is not
necessary that the persons responsible for the occurrence should be punished;
it would only be sufficient to establish that the enforceable event, the robbery
in this case did take place without any concurrent fault on the debtor`s part,
and this can be done by preponderant evidence.

It must also be noted that a court finding that a robbery has happened
would not necessarily mean that those accused in the criminal action should
be found guilty of the crime; nor would be a ruling that those actually
accused did not commit the robbery be inconsistent with a finding that a
robbery did take place. The evidence to establish these facts would not
necessarily be the same.

PNB v Manila Surety & Fidelity Co. Inc. | Reyes

FACTS:
The PNB opened a letter of credit and advanced $120,000.00 to Edington Oil
Refinery for 8,000 tons of hot asphalt, of which 2,000 tons worth P279,000.00
were delivered to Adams & Taguba Corp. (ATACO) under a trust receipt
guaranteed by Manila Surety & Fidelity Co. To pay for the asphalt ATACO
constituted PNB its assignee and attorney-in-fact to receive and collect
payments from the Bureau of Public Works.
ATACO delivered asphalt worth P431,466.52 to the Bureau of Public Works,
PNB regularly collected the payments amounting to P106,382.01, until they
ceased to collect payments. Then in 1962 PNB found that there were more
payables to ATACO from the Bureau of Public Works. PNB sued ATACO and
the Surety, to recover the balance of P158,563.18 when their demands for
payment were refused.
The trial court ordered ATACO and the Surety to pay PNB the sum of
P174,462.34, and the total amount payable by the Surety shall not exceed
P75,000.00. PNB recoursed to the Court of Appeals, which rendered an
adverse decision and modified the judgement of the court of origin as to the
Surety’s liability. Motions for reconsideration were also denied.
ISSUE:
Whether or not it is the duty of the surety and not that of the creditor, to see
to it that the obligor fulfils his obligation, and that the creditor owed the surety
no duty of active diligence to collect any sum from the principal debtor.
RULING:
The appealed decision is AFFIRMED.
HELD:
The Court of Appeals did not hold the bank answerable for negligence in failing
to collect from the principal debtor but for its negligence in collecting the sum
due to the debtor from the Bureau of Public Works, contrary to its duty as
holder of an exclusive and irrevocable power of attorney to make such
collections, since an agent is required to act with care of a good father of a
family and becomes liable for the damages which the principal may suffer
through his non performance.
Even if the assignment with power of attorney from the principal debtor were
considered as more additional security, by allowing the assigned funds to be
exhausted without notifying the surety, the Bank deprived the former of any
possibility of recoursing against that security. The Bank exonerated the surety,
pursuant to Art. 2080 0f the Civil Code.

DOMINGO v. DOMINGO
G.R. No. L-30573; October 29, 1971
Ponente: J. Makasiar

FACTS:

On June 2, 1956, Vicente M. Domingo granted Gregorio Domingo, a real

estate broker, the exclusive agency to sell his lot No. 883 of Piedad Estate
with an area of about 88,477 square meters at the rate of P2.00 per square
meter (or for P176,954.00) with a commission of 5% on the total price, if
the property is sold by Vicente or by anyone else during the 30-day duration
of the agency or if the property is sold by Vicente within three months from
the termination of the agency to a purchaser to whom it was submitted by
Gregorio during the continuance of the agency with notice to Vicente. The
said agency contract was in triplicate, one copy was given to Vicente, while
the original and another copy were retained by Gregorio.

On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to

look for a buyer, promising him one-half of the 5% commission. Thereafter,
Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective
buyer.

Oscar de Leon submitted a written offer which was very much lower than the
price of P2.00 per square meter. Vicente directed Gregorio to tell Oscar de
Leon to raise his offer. After several conferences between Gregorio and
Oscar de Leon, the latter raised his offer to P109,000.00 on June 20 and
Vicente agreed.

Upon demand of Vicente, Oscar de Leon issued to him a check in the amount
of P1,000.00 as earnest money, after which Vicente advanced to Gregorio
the sum of P300.00. Oscar de Leon confirmed his former offer to pay for the
property at P1.20 per square meter in another letter. Subsequently, Vicente
asked for an additional amount of P1,000.00 as earnest money, which Oscar
de Leon promised to deliver to him.

Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the
sum of 1,000.00 for succeeding in persuading Vicente to sell his lot at P1.20
per square meter or a total in round figure of P109,000.00. This gift of
P1,000.00 was not disclosed by Gregorio to Vicente. Neither did Oscar pay
Vicente the additional amount of P1,000.00 by way of earnest money.

When the deed of sale was not executed on August 1, 1956 as stipulated nor
on August 16, 1956 as extended by Vicente, Oscar told Gregorio that he did
not receive his money from his brother in the United States, for which
reason he was giving up the negotiation including the amount of P 1,000
given as earnest money to Vicente and the P 1,000 given to Gregorio as
propina or gift.
When Oscar did not see him after several weeks, Gregorio sensed something
fishy. So, he went to Vicente and read a portion to the effect that Vicente
was still committed to pay him 5% commission. Vicente grabbed the original
of the document and tore it to pieces.

From his meeting with Vicente, Gregorio proceeded to the office of the
Register of Deeds of Quezon City, where he discovered a deed of sale
executed on September 17, 1956 by Amparo Diaz.

Upon thus learning that Vicente sold his property to the same buyer, Oscar
de Leon and his wife, he demanded in writing payment of his commission on
the sale price of P109,000.00.

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

ISSUE:
Whether Gregorio was entitled to receive the 5% commission

HELD:

No, Gregorio is not entitled to receive the 5% commission.

The Supreme Court held that 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.

Hence, by taking such profit or bonus or gift or propina from the vendee, the
agent thereby assumes a position wholly inconsistent with that of being an
agent for his principal, 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.
 G.R. No. 18058 January 16, 1923

Fabiola Severino
vs.

Guillermo Severino
Facts:
Defendant Guillermo Severino, after the death of his brother (Melecio
Severino), was the latter’s administrator and as such, continued to occupy
the land owned by Melecio. Eventually, cadastral proceedings were instituted
for the registration of the land titles. Guillermo claimed such land and since
no opposition was presented, the court decreed the title in his favor.

Melecio’s daughter and sole heir, plaintiff Fabiola Severino, compelled

Guillermo to convey to her the land. It bears noting that Fabiola was a minor
during the time of the cadastral proceedings.

Issue:
Whether or not Guillermo can be compelled to convey the land to Fabiola,
even if there is already a title in Guillermo’s name.

Held:
Yes. The relations of an agent to his principal are fiduciary. Guillermo’s
position as agent is analogous to that of a trustee and he cannot
consistently, with the principles of good faith, be allowed to create in himself
an interest in opposition to that of his principal or cestui que trust. Whatever
a trustee does for the advantage of the trust estate inures to the benefit of
the cestui que trust.

SC cited the following jurisprudence:

A receiver, trustee, attorney, agent, or any other person

occupying fiduciary relations respecting property or persons, is
utterly disabled from acquiring for his own benefit the property
committed to his custody for management. This rule is entirely
independent of the fact whether any fraud has intervened. No
fraud in fact need be shown, and no excuse will be heard from
the trustee. It is to avoid the necessity of any such inquiry
that the rule takes so general a form. The rule stands on the
 moral obligation to refrain from placing one’s self in positions
which ordinarily excite conflicts between self-interest and
integrity. It seeks to remove the temptation that might arise
out of such a relation to serve one’s self-interest at the
expense of one’s integrity and duty to another, by making it
impossible to profit by yielding to temptation. It applies
universally to all who come within its principle.
SC reiterated that an agent, who has entered and surveyed a
portion of that land for himself and obtained a patent for it in
his own name, becomes a trustee for his principal. He cannot
hold the land under an entry for himself otherwise than as
trustee for his principal.
The substance of these authorities is that, wherever a person
obtains the legal title to land by any artifice or concealment, or
by making use of facilities intended for the benefit of another,
a court of equity will impress upon the land so held by him a
trust in favor of the party who is justly entitled to them, and
will order the trust executed by decreeing their conveyance to
the party in whose favor the trust was created.
There have been a number of cases before this court in which
a title to real property was acquired by a person in his own
name, while acting under a fiduciary capacity, and who
afterwards sought to take advantage of the confidence
reposed in him by claiming the ownership of the property for
himself. This court has invariably held such evidence
competent as between the fiduciary and the cestui que trust.
What judgment ought to be entered in this case? The court
simply absolved the defendant from the complaint. The proper
procedure in such a case, so long as the rights of innocent
third persons have not intervened, is to compel a conveyance
to the rightful owner.
The Land Registration Act cannot cut off, through an issuance of title,
equitable rights or remedies. Torrens titles carries a strong presumption in
favor of their regularity or validity, and in order to maintain an action such
as the present, the proof as to the fiduciary relation of the parties and of the
breach of trust must be clear and convincing. Such proof is not lacking in
this case. But once the relation and the breach of trust on the part of the
fiduciary is thus established, there is no reason, neither practical nor legal,
why he should not be compelled to make such reparation as may lie within
his power for the injury caused by his wrong, and as long as the land stands
registered in the name of the party who is guilty of the breach of trust and
no rights of innocent third parties are adversely affected, there can be no
reason why such reparation should not, in the proper case, take the form of
a conveyance or transfer of the title to the cestui que trust. No reasons of
public policy demand that a person guilty of fraud or breach of trust be
permitted to use his certificate of title as a shield against the consequences
of his own wrong.

GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner vs.

THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB & SONS
PHILIPPINE CORPORATION,respondents.

FACTS:
On November 3, 1969, Squibb and Green Valley entered into a letter
agreement the text of which reads: E.R. Squibb & Sons Philippine
Corporation is pleased to appoint Green Valley Poultry & Allied Products, Inc.
as a non-exclusive distributor for Squibb Veterinary Products, as
recommended by Dr. Leoncio D. Rebong, Jr. and Dr. J.G. Cruz, Animal
Health Division Sales Supervisor. A stipulation in the agreement specifies
that:

Payment for Purchases of Squibb Products will be due 60 days from date of
invoice or the nearest business day thereto. No payment win be accepted in
the form of post-dated checks. Payment by check must be on current dating.
It is mutually agreed that this non-exclusive distribution agreement can be
terminated by either Green Valley Poultry & Allied Products, Inc. or Squibb
Philippines on 30 days notice. For goods delivered to Green Valley but
unpaid, Squibb filed suit to collect. Green Valley claimed that the contract
with Squibb was a mere agency to sell; that it never purchased goods from
Squibb; that the goods received were on consignment only with the
obligation to turn over the proceeds, less its commission, or to return the
goods if not sold, and since it had sold the goods but had not been able to
collect from the purchasers thereof, the action was premature. Upon the
other hand, Squibb claimed that the contract was one of sale so that Green
Valley was obligated to pay for the goods received upon the expiration of the
60-day credit period. TC and CA upheld the claim of Squibb that the
agreement between the parties was a sales contract.

ISSUE: WON the contract is an agency to sell or a contract of sale.

HELD:
CONTRACT OF SALE. Green Valley is liable because it sold on credit without
authority from its principal. The Civil Code has a provision exactly in point. It
reads: 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 v Evangelista No. 32977, November 17,

1930 Villareal J
Plaintiff-appelle:THE MUNICIPAL COUNCIL OF ILOILO Defendants and
appellees : JOSE EVANGELISTA, ANTERO SORIANO
ET AL.,
Appellant: TAN ONG SZE VDA. DE TANTOCO
FACTS:
In March 1924, Tan Ong Vda. De Tantoco (Tantoco) won in Civil Case 3154
that she filed against the Municipality of Iloilo wherein she sought to recover
from the latter the value of strip of land that she owned which was taken by
the Municipality of Iloilo to widen a public street. The judgment entitled
Tantoco to recover P42,966.40 from the Municipality of Iloilo . The CA
affirmed the trial court’s decision and the case was remanded to the trial
court which rendered judgment as final and executory.
Adverse claimants then appeared: PNB, Antero Soriano, Mauricio Cruz &
Co, Jose Evangelista and Jose Arroyo. They all stated their claim over the
judgment money recovered by Tantoco.
(WHERE PROBLEM STARTED)
The court directed the Municipality of Iloilo to file an action of
interpleading against the adverse claimants PNB, Antero Soriano, Mauricio
Cruz & Co, Jose Evangelista and Jose Arroyo.
The trial court rendered judgment declaring valid and binding the deed of
assignment of the credit executed by Tantoco, through her attorney-in-fact
Tan Boon Tiong, in favour of Antero Soriano. Also, that the assignment of
Soriano during his lifetime in favour of defendant Mauricio Cruz & Co was
declared valid and binding. Tantoco was ordered to pay Mauricio Cruz & Co,
the balance of P30,966.40.
ISSUES:
1.Whether Tan Boon Tiong, as attorney-in-fact of the appellant; was
empowered by his principal to make an assignment of credits, rights, and
interests, in payment of debts for professional services rendered by lawyers.
2. Whether the failure of Tan Montano, the other attorney-in-fact of Tantoco,
to consent to the deed of assignment done by Tan Boon Tiong would
invalidate the said assignment.
RULINGS:
1. Yes. In paragraph VI of the power of attorney, Tan Boon Tiong is
authorized to employ and contract for the services of lawyers upon such
conditions as he may deem convenient, to take charge of any actions
necessary or expedient for the interests of his principal, and to defend suits
brought against her. This power necessarily implies the authority to pay for
the professional services thus engaged. In the present case, Tantoco had to
pay Atty. Soriano for services rendered in other cases, for her interests and
her other co-heirs. Since the judgment money that was recovered in Civil
case 3154 belongs to Tantoco, such credit can be used to pay Atty. Soriano
by way of assignment. Being authorized to take charge of any action
necessary for the interest of Tantoco, Tan Boon Tiong has
the power to assign Tantoco’s credits to Atty. Soriano.
2. No. When a person appoints two attorneys-in-fact 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. In the
present case, Tantoco gave each of her attorneys-in-fact separate letters of
attorney, which shows that it was not the principal's intention that the two
representatives should act jointly in order to make their acts valid. Thus, the
act of Tan Boon Tiong in assigning credits to Soriano without
Tan Montano’s consent remains
valid.
Doctrine:
When a person appoints two agents independently, the consent of 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 v. La Badenia (1916)

Ponente: Carson, J.
Plaintiffs-Appellants: Teofila del Rosario de Costa and Bernardo Costa
Defendant-Appellee: La Badenia

Under what topic: VII. Responsibility for acts of substitutes

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.

Facts:
 Spouses Del Rosario and Costa seek to recover from La Badenia
(Tobacco Co.) P1,795.25 for services rendered and expenses incurred
in the sale of its products in Legaspi, Albay.

 Celestino Aragon is the general agent of La Badenia and is the one in

charge of their campaign in Southern Luzon. He established a central
distributing agency or depot in Legaspi at the residence of Del Rosario
(using the lower portion of their house as a storage facility).

 Their relationship extended from Feb. 1, 1911- March 24, 1912. All
goods sent to Legaspi were charged by the head office (which was in
Manila) against the general agent Aragon. The books kept by Aragon
showed that the products were then charged against the plaintiffs. The
business at Legaspi appears to have been that of a distributing agency
 actively in charge of the plaintiffs under the supervision of the general
agent.

 March 24, 1912: Aragon had a settlement with the plaintiffs and
acknowledged over his signature that his books (his record books of the
business) showed a balance in favor of the plaintiffs amounting to
P1,795.25.

 La Badenia refused to pay Del Rosario/Costa the amount stating that

they were merely merchants who purchased the goods at fixed
wholesale prices and sold them on their own account and were never
employed as agents.

 Spouses countered by stating that they were in fact agents who received
commissions on the sales and that they were authorized to extend a
reasonable credit under the supervision of the general agent Aragon.

 Lower Court: Ruling was that the specific goods sold to delinquent
debtors whose unpaid accounts form basis of this litigation had already
been paid for by the plaintiffs and that this was conclusive evidence that
the plaintiffs were not acting as agents and that in effect the purpose of
the suit was to recover money already paid for the goods purchased and
sold by the plaintiffs.

Issue/s:
WON Teofila and Bernardo are agents of La Badenia and are entitled to the
balance of P1,795.25. YES.

Held-Ratio:

 The SC cannot agree with the findings of the lower court.

o First, it is undisputed that Aragon was the duly appointed general

agent of the area. It is not clear what the precise terms of the
arrangement made by Aragon with the plaintiffs were. The record
does not show what limitations, if any, were placed upon his
powers to act for the corporation. Aragon’s powers as a selling
agent appear to have been very broad, and there is no evidence
in the record to indicate that he acted beyond his powers in
conducting the business at Legaspi as he did. There can be no
doubt that plaintiffs had been authorized by him to extend credit
on behalf of the agency.
 o Secondly, The head office in Manila was fully informed of plaintiffs
relation with the general agent in extending the sales of its
products and they did not seem to make any distinction between
the business done by Aragon or the plaintiffs - evidenced by 2
letters (presented in evidence) from La Badenia addressed to the
plaintiffs clearly recognizing them as agents of the company
(Letter B states: “By the steamer Cebu we are sending, according
to the attached invoice, 3 boxes of small cigars for the agency in
your charge.”). The active management and participation of the
plaintiffs in the conduct of the business at Legaspi were fully
recognized in these letters wruttenn by the assistant manager of
La Badenia.

o Thirdly, looking at the books of Aragon shows that the plaintiffs

were given credit on various items, such as advertising expenses.
Aragon did not consider the plaintiffs as independent merchants
operating on their own account, but rather as agents cooperating
with him and working under his supervision.

 In view of the fact that plaintiffs are only seeking to enforce the payment
of a balance admitted by the general agent of the defendant corporation
to be rightly due them, SC fails to see how it can be reasonably urged
that plaintiffs are attempting to saddle these unpaid claims on the
defendant corporation.

Dispositive:
Judgment of the lower court reversed.

International Films (China), Ltd. v. The Lyric Film Exchange, Inc. No.
42465 (19 November 1936) Villa-Real J. kmd
SUBJECT MATTER:
The law on agency; Responsibility for acts of substitute
CASE SUMMARY:
International Film (lessor) and Lyric Film (lessee) entered into a lease
contract for the showing of the
film “Monte Carlo Madness.” Upon expiration of the contract, Gabelman, an
agent of International Film,
requested that the film be kept in Lyric
Film’s vault since International Film had no vault of its own. Gabelman
 assumed responsibility for the film. The vault burned down. The Court held
that Lyric Film was not liable to International Film for the destruction by fire
of the film.
DOCTRINES:
Subagent of the petitioner 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.
FACTS:
Bernard Gabelman was the agent of petitioner International Films by virtue
of a power of attorney. Petitioner, through its agent
Gabelman, leased the film “Monte Carlo Madness” to respondent Lyric Film
Exchange to be
shown in several cinemas (Cavite, Cauartel de Espana, University Theater,
Stotsenberg, Paz Theatre). One of the conditions of the contract was that
the respondent company would answer for the loss of the film in question
whatever the cause. After the last day of show of the
film in Paz Theatre, Petitioner’s agent, Gabelman, went to the Vicente Albo’s
office in Lyric
Film. Vicente Albo is the chief of film department of Lyric Film. Gabelman
asked Albo if he could deposit the film in the vault of the Lyric
Film, as the petitioner did not yet have a safety vault, as required by the
regulations of the fire department. Lyric Film’s O’Malley (Albo’s boss) refused
because the said film would not be covered by the insurance carried by the
Lyric Film. So Gabelman then requested Albo to permit him to deposit said
film in the vault of the Lyric Fil, under Gabelman’s own responsibility. As
there was a verbal contract between Gabelman and the Lyric Film, where by
the film would be shown elsewhere, O’Malley agreed, the film was deposited
in the vault of the respondent company under Gabelman’s responsibility.
Later on, Gabelman severed his connection with International Films and was
replaced by Lazarus Joseph. Upon turnover, Gabelman informed Joseph of
the deposit of the film “Monte Carlo Madness” in the vault of Lyric Film, and
that Joseph would act as a subagent of International Films with authority to
show the film “Monte Carlo Madness: in any theater where Lyric Film might
wish to show it. However, Lyric Film’s bodega was burned together with the
film “Monte Carlo Madness” which was not insured. Other films of Lyric Film
that were covered by an insurance policy and stored in the same Bodega
were also burned. Lyric Film was then able to collect the proceeds of the fire
insurance policy of its films.
ISSUE/S:
1.WON Lyric Film is responsible to International Films for the destruction by
fire of the film. (NO)
2. WON Lyric Film should pay the part corresponding to the film which was
deposited therein since Lyric Film was able to collect proceeds of the fire
insurance policy of its films. (NO)
HOLDING/RATIO:
1.Petitioner’s argument: Monte Carlo was not yet returned to International
Film because the period for the delivery thereof was extended in order that it
may be shown in Cebu.
Respondent’s argument: When it wanted to return the film to Gabelman
upon expiration of the contract, Gabelman requested Albo to keep the
said film in Lyric Film’s vault under Gabelman’s own responsibility,
stipulating that the Lyric Film might show the film in question in its theaters.
The preponderance of evidence shows that the verbal agreement between
Gabelman and Albo was that the said film would remain deposited in the
safety vault of Lyric Film under the responsibility of Gabelman and that the
Lyric Film could show it in its theaters, the International Films receiving 5%
of the receipt upto a certain amount, and 15% of the excess of said amount.
If the verbal contract between Gabelman and Albo was a subagency or a
submandate, Lyric Film is not civilly liable for the destruction by fire of the
film in question because as a mere submandatary or subagent, it was not
obliged to fulfill more than the contents of the mandate and to answer for
the damages caused to the principal by his failure to do so (Art. 1718, CC ).
The fact that the film was not insured against fire does not constitute fraud
or negligence on the part of Lyric Film because as a subagent, it received no
instruction to that effect from its principal and the insurance of the film does
not form a part of the obligation imposed upon it by law.
2. Evidence shows that the film “Monte Carlo Madness” under consideration
was not included in the insurance of the Lyric Film, as this was the reason
why O’Malley initially refused to receive said f
ilm for deposit and he consented thereto only when Gabelman insisted upon
his request assuming all responsibility. Furthermore, the respondent did not
collect from the insurance company an amount greater than that for which
its films were insured, despite the fact that the film in question was included
in its vault, and it would have collected the same amount even if said film
had not been deposited in its safety vault. Lyric Film had not been enriched
by the destruction by fire of the plaintiff company's film, it is not liable to the
latter. WHEREFORE, and although on a different ground, the appealed
judgment is affirmed, with the costs to the appellant.
So ordered.

Phil. National Bank vs. Agudelo y Gonzaga

When an agent negotiates a loan in his personal capacity and executes
a promissory note under his own signature, without express authority
fromhis principal, giving as security therefor real estate belonging to
theletter, also in his own name and not in the name and representation
of the said principal, the obligation do constructed by him is personal
and does not bind his aforesaid principal.
Facts
1. The defendant Mauro A. Garrucho’s sister, Amparo A. Garrucho, and aunt,
Paz Agudeloy Gonzaga, executed a Special Power of Attorney in his favour,
authorizing him tosell, alienate and mortgage in the manner and form he
might deem convenientseveral of their (his sister’s and aunt’s) real
properties, though no without mentionthat he may use these properties to
secure his own personal obligations.2. Mauro then used some of these
properties to secure his obligations with the plaintiff inthe amounts of P6,000
and P16,000.3. These obligations were later novated with Mauro issuing a
promissory note in favour of the bank for 21,000.4. In the meanwhile,
Amparo sold her property (which Mauro had mortgaged to theplaintiff) to
Paz.
Issue
Whether or not Paz is liable for the obligations of Mauro to the plaintiff as
her propertieswere used to secure said obligations.
Held
The court held that Paz is not liable.
Ratio
1. Nowhere in the mortgage deeds was it mentioned that Mauro obtained
the loans onbehalf of his aunt or sister which means that he was acting in
his personal capacity.2. In the same mortgage deeds, Mauro appointed the
plaintiff as attorney-in-factallowing it to enter into the subject properties in
violation of the legal principle of "delegata potestas delegare non potest" (a
delegated power cannot be delegated).3. The promissory note issued by
Mauro in the amount of P16,000 was done withoutexpress authority from his
sister or aunt.4. Mauro’s act of mortgaging the said properties to secure his
own personal obligationswere not provided for in the Special Powers of
Attorney granted to him, meaning hewas acting in excess of his authority.5.
The case at bar is not an exception under Article 1717 of the Civil Code as
MauroMauro A. Garrucho was not authorized to execute promissory notes
even in the nameof his principal Paz Agudelo y Gonzaga, nor to constitute a
mortgage on her realproperties to secure such promissory notes.
Philippine Products Company v Primateria SUMMARY: Primateria Zurich is
foreign corporation without a license to transact business in the Philippines.
PZ transacted with Philippine Products Company thru Baylin (agent of PZ) for
the buying of copra and the shipping of the copra to other countries was
done thru Baylin and Primateria Phils. as agents of PZ. PZ was held liable for
the amount but its agents were absolved. PPC argues that PZ’s agents are
liable to him because under 1897, an agent who acts as such is not
personally liable to the party with whom he contracts, unless he expressly
binds himself or exceeds the limits of his authority without giving such party
sufficient notice of his powers. SC held that PPC can’t recover from both PZ
as the principal and its agents. There is also no proof that, as agents , they
exceeded the limits of their authority. It should be PZ, the principal, who
should be the one to raise the point, but they never did. At any rate, the
article does not hold that in cases of excess of authority, both the agent and
the principal are liable to the other contracting party

FACTS:
Defendant Primateria Societe Anonyme Pour Le Commerce Exterieur
[PZ] is a foreign juridical entity from Zurich, Switzerland.
It was then engaged in "Transactions in international trade with
agricultural products, particularly in oils, fats and oil-seeds and related
products."
n1951-PZ, through defendant Alexander B. Baylin, entered into an
agreement with plaintiff
Philippine Products Companyn[PPC], whereby the latter undertook to buy
copra in the Philippines for the account of PZ, during "a tentative
experimental period of one month from date." The contract was renewed by
mutual agreement up to 1953.
PPC caused the shipment of copra to foreign countries, pursuant to
instructions from PZ, thru Primateria (Phil.) Inc [PP] acting by defendant
Alexander G. Baylin and Jose M. Crame, (officers of PP)
 Alexander G. Baylin and Primateria Philippines acted as the duly
authorized agents of Primateria Zurich in the Philippines
O Baylin acted indiscriminately in these transactions in the dual capacities
of agent of the Zurich firm and executive vice-president of PP, which
also acted as agent of PZ
. It
Primateria Zurich had no license to transact business in the
Philippines
the total amount due to PPC, was P33,009.71. PPC filed action to recover
the sum
Lower court held PZ liable to the plaintiff for the sums of P31,009.71, but
absolved PP, Alexander G. Baylin, and Jose M. Crame from any and all
liability.
PPC: Primateria Zurich is a foreign corporation within the meaning of
Sections 68 and 69 of the Corporation Law, and since it has transacted
business in the Philippines without the necessary license, as required by said
provisions, its agents here are personally liable for contracts made in its
behalf.
Issues + Ruling: Whether defendant Primateria Zurich may be
considered a foreign corporation within the meaning of Sections 68
and 69 of the Corporation Law
the Primateria Zurich was not duly proven to be a foreign
corporation; nor that a societe anonyme ("sociedad anomima") is a
corporation; and that failing such proof, the societe cannot be deemed to fall
within the prescription of Section 68 of the Corporation Law. We agree with
the said court's conclusion. In fact, our corporation law recognized the
difference between sociedades anonimas and corporations.
Whether its agents may be held personally liable on contracts made in
the name of the entity with third persons in the Philippines.
SC cannot see how PPC could recover from both the principal (Primateria
Zurich) and its agents. It has been given judgment against the principal for
the whole amount
It asked for such judgment, and did not appeal from it. It clearly stated
that its appeal concerned the other three defendants.
PPC: appellees as agents of Primateria Zurich are liable to it under Art.
1897 of the NCC
Art. 1897. The agent who acts as such is not personally liable to the party
with whom he contracts, unless he expressly binds himself or exceeds the
limits of his authority without giving such party sufficient notice of his
powers.

SC: no proof that, as agents, they exceeded the limits of their authority.
o
It should be PZ, the principal, who should be the one to raise the point, but
they never did
o
At any rate, the article does not hold that in cases of excess of authority,
both the agent and the principal are liable to the other contracting party.
whether the agent of a foreign corporation doing business, but not
licensed here is personally liable for contracts made by him in the
name of such corporation.

No necessity to dispense issue but SC still said that such foreign corporation
may be sued here And obviously, liability of the agent is necessarily
premised on the inability to sue the principal or non-liability of such
principal. In the absence of express legislation, of course.
Disposition: the appealed judgment is affirmed