http://www.scribd.com/doc/35297861/Digest-Sales-Ateneo-de-Davao-Law- municipal council case Rallos v.

Felix Go Chan Facts: This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal, Concepcion Rallos, sold the latter's undivided share in a parcel of land to Felix Go Chan & Sons Realty Corporation pursuant to a power of attorney which the principal had executed in favor. The administrator of the estate of then went to court to have the sale declared unenforceable and to recover the disposed share. The trial court granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity of the sale and the complaint. Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of a parcel of land The sisters executed a SPECIAL POWER OF ATTORNEY in favor of their brother, Simeon Rallos, authorizing him to sell for and in their behalf the said lot March 3, 1955 Concepcion Rallos died September 12, 1955, Simeon sold the lot to Felix Go Chandeed registered in the Registry of Deeds and TCT was issued in the name of Felix Go Chan Ramon Rallos, administrator of the Intestate estate of Concepcion filed a complaint praying that the sale be declared UNENFORCEABLEand the share of Concepcion in the lot be reconveyed to her estate and that TCT in the name of Felix Go Chan be cancelled and a new one be issued in the name of the corporation and the Intestate estate of Concepcion TC: in favor of Ramon deed of sale declared null and void insofar as the share of Concepcion, and ordered Register of Deeds to issuenew TCT in the name of corporation and estate CA: in favor of Felix Go Chan sales is VALID ISSUE: what is the legal effect of an act performed by an agent AFTER the death of his principal? Is the sale valid? HELD: NO No one may contract in the name of another without being authorized by the latter, or un less he has by law a right to represent him. Acontract entered into in the name of another by one who has no authority or the legal representation or who has acted beyond his powers,shall be unenforceable, unless it is ratified,

expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.

o Out of the above given principles, sprung the creation and acceptance of the RELATIONSHIP OF AGENCY whereby one party,called the principal ( mandante ), authorizes another, called the agent ( mandatario ), to act for and in his behalf in transactions withthird persons. o The essential elements of agency are:(1)there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agents acts as a representative and not for himself, and(4)the agent acts within the scope of his authority o AGENCY-basically personal representative and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit se

. "He who acts through another acts himself" ORIENT AIR SERVICES vs. CA FACTS: American Airlines and Orient Air Services and Hotel Representatives entered into a General Sales Agency Agreement whereby American authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation (services:solicit and promote passenger traffic, servicing and supervising agents etc.) oIt was stipulated that neither Orient nor its sub-agents perform services for any other air carrier similar to those to be performed hereunder for American without the prior written consent of American oRemittances- ticket stock or exchange orders LESS commissions oAmerican will pay Orient sales agency commission and an overriding commission 3% of the tariff fares and charges for allsales of transportation over Americans service by Orient or its sub-agents oIn case of default (remittance) American may terminate the agreement; otherwise either party may terminate without cause bygiving 30 days notice American alleged that Orient failed to promptly remit the net proceeds of sales terminated the Agreement filed suit for accounting with preliminary attachment or garnishment, mandatory injunction and restraining order Orient denied allegations contending that after the application to the commission due it , plaintiff in fact still owed Orient a balance in unpaid overriding commissions TC: in favor of Orient termination was illegal and improper- ORDERED PLAINTIFF TO REINSTATE DEFENDANT AS ITSGENERAL SALES AGENT CA: affirmed TC with some modifications with respect to the monetary awards AMERICAN claims overriding commission should be based only on ticketed sales -to be entitled to the 3% overriding commission, the sale must be made by Orient Air and the sale must be done with the use of Americans ticket stocks

ORIENT: contractual stipulation of 3% overriding commission covers the total revenue of American not merely from the ticketed sales, invoking its designation as the EXCLUSIVE General sales agent of American. Issue: Whether the Court of Appeals erred in ordering the reinstatement of the defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement Held: Yes. By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds himself to rendersome service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in anyway, be compelled by law or by any court. The Agreement itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the portion of the ruling of the respondent appellate court reinstating Orient Air as general sales agent of American Air. Uy vs. CA G.R. No. 109557 November 29, 2000

Facts: Teodoro Jardeleza, petitioner, filed a petition in the matter of the guardianship of Dr. Ernesto Jardeleza, Sr., upon learning that one piece of real property belonging to the latter spouses was about to be sold. The petitioner averred therein that the present physical and mental incapacity of Dr. Ernesto Jardeleza Sr. prevent him from competently administering his properties, in order to prevent the loss and dissipation of the Jardelezas real and personal assets, there was a need for a court -appointed guardian to administer said properties.

Gilda Jardeleza, respondent, filed a petition regarding the declaration of incapacity of Dr. Ernesto Jardeleza Sr., assumption of sole powers of administration of conjugal properties and authorization to sell the property. She alleged that her husbands medical treatment and hospitalization expenses were piling up and that she need to sell one piece of real property and its improvements. She prayed for authorization from the court to sell said property.

RTC of Iloilo City rendered its decision, finding that it was convinced that Dr. Ernesto Jardeleza Sr. was truly incapacitated to participate in the administration of the conjugal properties. However, Teodoro filed his opposition to the proceedings being unaware and not knowing that a decision has already been rendered on the case. He also questioned the propriety of the sale of the lot and its improvements thereon supposedly to pay the accumulated financial obligations and hospitalization. Issue: Whether or not Gilda Jardeleza may assume sole powers of administration of the conjugal property. Ruling: The CA, which the SC affirmed, ruled that in the condition of Dr. Ernesto Jardeleza Sr., the procedural rules on summary proceedings in relation to Article 124 of the Family Code are not applicable. Because he was unable to take care of himself and manage the conjugal property due to illness that had rendered him comatose. In such case, the proper remedy is a judicial guardianship proceeding under Rule 93 of the 1964 Revised Rules of Court.

B. H. MACKE ET AL V JOSE CAMPS

FACTS: * B. H. Macke and W.H. Chandler, partners doing business under thee firm name of Macke, Chandler And Company, allege that during the months of February and March 1905, they sold to Jose Camps and delivered at his place of business, known as the :Washington Caf, various bills of goods amounting to P351.50; that Camps has only paid on account of said goods the sum of P174; that there is still due them on account of said goods the sum of P177.50 * Plaintiffs made demand for the payment from defendant and that the latter failed and refused to pay the said balance or any part of it

* Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be the agent of Jose Camps, he shipped the said goods to the defendant at the Washington Caf; that Flores (agent) later acknowledged the receipt of the said goods and made various payments thereon amounting in all to P174; that believes that Flores is still the agent of Camps; and that when he went to the Washington Caf for the purpose of collecting his bill he found Flores, in the absence of Camps, apparently in charge of the business and claiming to be the business manager of Camps, said business being that of a hotel with a bar and restaurant annexed. * A written contract was introduced as evidence, from which it appears that one Galmes, the former of Washington Caf subrented the building wherein the business was conducted, to Camps for 1 year for the purpose of carrying on that business, Camps obligating himself not to sublet or subrent the building or the business without the consent of the said Galmes. *This contract was signed by Camps and the name of Ricardo Flores as a witness and attached thereon is an inventory of the furniture and fittings which also is signed by Camps with the word sublessee below the name, and at the foot of this inventory the word received followed by the name Ricardo Flores with the words managing agent immediately following his name.

ISSUE: W/N Ricardol Flores was the agent of Camps

Ruling: Yes Evidence is sufficient to sustain a finding that Flores is the agent of Camps in the management of the bar of the Washington Caf with authority to bind Camps, his principal, for the payment of the goods The contract sufficiently establishes the fact that Camps was the owner of the business and of the bar, and the title of managing agent attached to the signature of Flores which appears on that contract, together with the fact that at the time the purchases were made, Flores was apparently in charge of the business performing the duties usually intrusted to a managing agent leave little room for doubt that he was there as the authorized agent of Camps. Agency by Estoppel --- One who clothes another with apparent authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third persons dealing with such person in good faith and in the honest belief that he is what he appears to be.

Estopple---- Whenever a party has, by his own declaration, act or omission, int entionally and deliberately led another to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out of such declaration, act, or omission be permitted to falsify; and unless the contrary appears, the authority of the agent must be presumed to include all the necessary and usual means of carrying his agency into effect. Prudential Bank vs. Court of Appeals FACTS: Private respondent Leticia Tupasi-Valenzuela opened an account in the Petitioner Prudential bank. On June 1, 1988, herein private respondent deposited P35,271.60 drawn against the Philippine Commercial International Bank (PCIB). Thereafter, private respondent issued Prudential Bank check in the amount of P11,500 post-dated June 20, 1988 in favor of one Belen Legaspi. Legaspi, who was in jewelry trade, endorsed the check to Philip Lhuiller, a businessman in the same field. When the check was deposited with the PCIB, it was dishonored for being drawn against insufficient funds. Private respondent asked why her check was dishonored where there was sufficient funds. The bank officer told her there was no need to review the passbook because the bank ledger was the best proof that she did not have sufficient funds. Then he abruptly faced his typewriter and started typing. Later, it was found out that the bank misposted private respondents check deposit to another account and delayed the posting of the same to the proper account. The bank admitted that it was at fault. But since it is not the first time that private respondent experienced this scenario, she commenced a suit for damages.

ISSUE: Can damages be awarded to private respondent on account of the banks negligence ?

HELD: Yes. The trial court found that the misposting is a clear proof of lack of supe rvision on the part of the defendant bank. The appellate court also found out that while it may be true that the banks negligence in dishonoring the properly funded check might not have been attended with malice and bad faith, as appellee submits, nevertheless, it is the result of lack of due care and caution expected of an employee of a firm engaged in so sensitive and accurately demanding task as banking.

In Simex International vs. CA, 183 SCRA 360,367 (1990), and BPI vs. IAC, 206 SCRA 408, this court had occasion to stress the fiduciary nature of the relationship between a bank and its depositors and the extent of diligence expected from the former in handling the accounts entrusted to its care.

In the case of PNB vs. CA, we held that a bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of a few hundred pesos or millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. While petitioners negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation. Litonjua v. Eternit Corporation Facts: Eternit Corporation (EC) is a manufacturer of roofing materials and pipe products in the Philippines and operates on eight parcels of lands in Mandaluyong City with a total of 47,233 sq.m., all covered by various Transfer Certificates under the name of Bank as trustee. 1986: ESACs management grew wary of the political situation of the Philippines (Marcos administration) and instructed Michael Adams, a member of ECs Board of Directors, to dispose of the eight parcels of lands. For this, he hired Lauro G. Marquez as realtor/broker. Jack Glanville, an Australian citizen and the General Manager and President of EC, showed Marquez the lands. Sept. 12, 1986: Marquez offered the lands to Eduardo Litonjua, Jr. of the Litonjua & Company,Inc. The offer, made through letter with Marquez claim of authority to sell the property, was for 27M with the terms of the sale subject to negotiation Feb. 12, 1987: Delsaux replied that their final offer, based on Belgian/Swiss decision, was for $1M plus P2.5M to cover all existing obligations prior to liquidation. The Litonjua brothers deposited $1M with Security Bank and executed an Escrow Agreement. Soon after President Corazon Aquino assumed office, Glanville told Marquez that the sale would not push through because of the stabilization of the political situation. The Litonjuas demanded payment for damages from EC but EC refused.

The Litonjuas filed with the RTC-Pasig a complaint for specific performance and damages against herein respondents.

The respondents argued that the Board and stockholders of EC never approved a resolution to sell the land or to authorize Marquez to do the same and that he Oct. 28 telex of Glanville was his own personal making and does not bind EC.

Petitioner on the other hand argued that Marquez was not an agent but merely a broker or gobetween so he did not need written authority and that an agency by estoppel was created when corporation clothed Marquez with apparent authority.

Issue: WHETHER OR NOT THERE WAS A CONTRACT OF AGENCY. Ruling: Petitioners failed to prove agency. Petitioners failed to prove that EC accepted their counter-offer through Glanville and Delsaux. When the case is for specific performance of a contract, agency must be proven through clear, certain and specific proof. However, these acts such as offering a property for sale and accepting a counter-offer may not be done without the authority of corporate by-laws or specific acts of the board of directors. Absent this authority, the rule is that the declaration of one director conferring such is not binding on the corporation. Any act of an agent of a corporation must be ratified by the Board of Directors, therefore it has to have written authority. Written authority is also necessary because in this case, real rights over immovable property are conveyed, with which agency is required to be in writing or else the sale is void. Facts also showed that the final offer made by Delsaux was only from the Belgian/Swiss component but not from the management or Board of Directors of ESAC, thus it is not binding upon EC because they were officers of ESAC but not EC. Though it is true that they owned majority of the stocks of EC, the Court held that even if it owned all of the stocks, it does not merge them into one corporation. Thus, they could not act to bind EC without a Board resolution from the Board of Directors of EC itself. A Board resolution is not a mere formality but is a condition sine qua non to the validity of the sale.

Angeles v. National Railways 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 Lizette Angeles requested the PNR to transfer the location of withdrawal for the reason that the scrap/unserviceable rails located in Del Carmen and Lubao, Pampanga. 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. 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. Petitioners sued PNR but the case was dismissed by RTC and subsequently affirmed by CA on the ground that the former are not the real parties-in-interest, thus, they have no cause of action. Issue: Won Lizette is a assignee or agent Ruling: 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. 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.

Further, the words 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.

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.

. JIMENEZ V RABOT

FACTS: * Gregorio Jimenez filed this action to recover from Rabot, a parcel of land situated in Alaminos, Pangasinan * The property in question, together with two other parcels in the same locality originally belonged to Jimenez, having been assigned to him as one of the heirs in the division of the estate of his father * It further appears that while Gregorio Jimenez was staying at Vigan, Ilocos Sur, his property in Alaminos was confided by him to the care of his elder sister Nicolasa Jimenez. * He wrote his sister a letter from Vigan in which he informed her that he was pressed for money and requested her to sell one of his parcels of land and send him the money in order that he might pay his debts. The letter contains no description of the land to be sold other than is indicated in the words one of my parcels of land. * Acting upon this letter, Nicolasa approached Rabot and the latter agreed to buy the property for the sum of P500. P250 was paid at once, with the understanding that a deed of conveyance would be executed when the balance should be paid. * Nicolasa admits having received this payment but there is no evidence that she sent it to her brother * After one year, Gregorio Jimenez went back to Alaminos and demanded that his sister surrender the piece of land to him, it being then in her possession.

* She refused upon some pretext or other to do so and as a result, plaintiff instituted an action to recover the land from her control * Meanwhile, Nicolasa executed and delivered to Rabot a deed purporting to convey to him the parcel of land

ISSUE: W/N the authority conferred on Nicolasa by the letter was sufficient to enable her to bind her brother of the sale made in favor of Rabot

RULING: Yes As a matter of formality, a power of attorney to convey real property ought to appear in a public document, just as any other instrument intended to transmit or convey an interest in such property ought to appear in a public document Art. 1713 of the Civil Code requires that the authority to alienate land shall be contained in an express mandate Subsection 5 of section 335 of Code of Civil Procedure say that the authority of the agent must be in writing and subscribed by the party to be charged SC: the authority expressed in the letter is a sufficient compliancw tih both requirements The purpose in giving a power of attorney is to substitute the mind and hand of the agent for the mind and hand of the principal; and if the character and extent of the power is so defined as to leave no doubt as to the limits within which the agent is authorized to act, and he acts within those limits, the principal cannot question the validity of his act The general rule here applicable is that the description must be sufficiently definite to identify the land either from the recitals of the contract or deed or from external facts referred to in the document, thereby enabling one to determine the identity of the land and if the description is uncertain on its face or is shown to be applicable with equal plausibility to more than one tract, it is insufficient. CITY-LITE REALTY CORPORATION V CA

FACTS * Private Respondent F.P. Holdings and Realty Corporation (F.P. Holdings), formerly the Sparta Holdings Inc, was the registered owner of a parcel of land situated along E. Rodriguez Avenue, Quezon City also known as the Violago Property or the San Lorenzo Ruiz Commercial Center, with an area of 71,754 sqm * The property was offered for sale to the general public through the circulation of a sales brochure containing the description of the property and the asking price of P6,250/sqm with terms of payment negotiable. In addition, brokers commission was 2% of selling price, net of withholding taxes and other charges. Contact person was Meldin Al G. Roy, Metro Drug Inc. * The front portion consisting of 9,192 sqm is the subject of this litigation * Al G. Roy sent a sales brochure, together with the location plan and copy of the TCT to Atty. Gelacio Mamaril, a practicing lawyer and a licensed real estate broker. Mamaril passed in turn passed on these documents to Antonio Teng, Executive Vice President, and Atty Victor Villanueva, Legal Counsel of City-Lite * City-Lite conveyed its interest to purchase a portion or one-half (1/2) of the front lot of the Violago Property Apparently, Roy subsequently informed City-Lites representative that it would take time to subdivide the lot and F.P. HOLDINGS was not receptive to the purchase of only half of the front lot * Atty. Mamaril wrote Metro Drug (Al G. Roy) expressing City-Lites desire to buy the entire front lot of the subject property instead of only half thereof provided the asking price of P6,250/sqm was reduced and that payment be in installment for a certain period * The parties reached an agreement and Roy agreed to sell the property to City-Lite provided only the latter submit its acceptance in writing to the terms and conditions of the sale * For some reason or another and despite demand, F.P. HOLDINGS refused to execute the corresponding deed of sale in favor of City-Lite of the front lot of the property * Trial court ruled in favor of City-Lite ordering F.P. HOLDINGS to execute a deed of sale of the property in favor of the former for the total consideration of P55,056,250 payable as follows: P15 M as downpayment to be payable immediately upon execution of the deed of sale and the balance within 6 months from downpayment without interest

* CA reversed TCs decision

ISSUE: W/N there was a perfected contract of sale between City-Lite and respondent F.P. HOLDINGS because of a lack of definite agreement on the manner of paying the purchase price and that Metro Drug and Meldin Al G. Roy were not authorized to sell the property to City-Lite, and that the authority of Roy was only limited to that of mere liaison or contact person

RULING: No, Roy mere contact person Art. 1874 of NCC: When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing, otherwise, the sale shal be void. The absence of authority to sell can be determined from the written memorandum issued by respondent F.P. HOLDINGS President requesting Metro Drugs assistance in finding buyers for the property Memorandum indicates that Meldin G. Roy and/or Metro Drug was only to assist F.P. Holdings in looking for buyers and referring to them possible prospects whom they were supposed to endorse to F.P. Holdings. But the final evaluation, appraisal and acceptance of the transaction could be made only by F.P. Holdings. In other words, Roy and/or Metro Drug was only a contact person with no authority to conclude a sale of the property Roy and/or Metro Drug was a mere broker and Roy/s only job was to bring parties the parties together for a possible transaction SC: for lack of a written authority to sell the Violago Property on the part of Roy and/or Metro Drug, the sale should be as it is declared null and void

COSMIC LUMBER vs. COURT OF APPEALS (CA) Petition for review on certiorari of Court of Appeals decision(CA decision: dismissed the case, against Cosmic Lumber

FACTS: -Cosmic Lumber Corporation executed a SPA to Villamil-Estrada asattorney in fact, to wit: (1) to initiate, institute and file an ejectment case against squatters/third persons on the Lot 9127 and 443, in order for the company to take material possession of the entire lot and (2) toappear at the pre-trial conference and enter into any stipulation offacts and/or compromise agreement so far as to protect the rights andinterest of the corporation. -

Villamil-Estrada instituted an action for ejectment of privaterespondent Perez -

Villamil-Estrada entered into a Compromise Agreement whichcontained:

Perez has been an occupant of a part of the lot for severalyears

Pays Php 26,640 at Php.80/sqm

Recognizes ownership and possession of Perez over said lot -

Compromise Agreement was approved by trial court which becamefinal without execution within the 5 yr period due to failure of petitioner to produce the owners duplicate copy. To wit, Perez filed a complaint to retrieve the judgment -

Cosmic Lumber asserts it did not know about the compromiseagreement until summons for the revival of judgment was served. -

Cosmic Lumber sought annulment of the decision of the trial court toCA on the grounds of (1) Villamil-Estrada did not have authority, (2)VillamilEstradas authority was only to file an ejectmen t case, (3)VillamilEstradas authority was limited, (4) the consideration was never received by Cosmic Lumber, (5) Villamil-Estrada acted in bad faith and(6) disposal of corporate property indispensably requires a BoardResolution.HELD:petition granted; CA decision is nullified; Compromise agreement is void;without prejudice to the right of Cosmic Lumber to pursue a complaint againstPerez for the recovery of the lotRATIO: -

SPA was explicit and exclusionary, compromise agreement wascoupled with an explicit limitation fixed by Cosmic Lumber that it should only be entered so far as it shall protect the rights and interestof the corporation in the aforementioned lots.

Price of Php.80/sqm is considerably less than its assessed value ofPhp.250/sqm and that Cosmic Lumber never received the proceeds ofthe sale. -

Art. 1874 of Civil Code: when a sale of a piece of land or any interestthereon is through an agent, the authority of the latter should be inwriting; otherwise the sale is void. -

The express mandate of the law requires of an appointed of an agencycouched in general terms, must include an express mention of a sale asa necessary ingredient. The express powers must be clear andunmistakable. When there is reasonable doubt, no such constructionshall be given in the document. -

Villamil-Estrada acted without or in obvious disregard of authority. -

Sale is ipso jure void and the judgment based thereon is also void. -

Cosmic Lumber is not in the position to question the compromiseagreement in the action to revive the compromise agreement, since itwas never PRIVY to such agreement. -

Trial court had no jurisdiction to render judgment. -

VillamilEstradas acts constituted extrinsic fraud (any fraudulent act of the prevailing party in a litigation which is committed outside of thetrial of the case, whereby the defeated party is prevented fromexhibiting fully his side of the case by deception practiced on him by hisopponent) -

Villamil-Estrada deliberately concealed from her principal (CosmicLumber) that a compromise agreement had been forged with the endresult of selling a portion of the property. -

General Rule: principal is chargeable with and bound by the knowledgeor notice to his agent (purpose: to protect those who exercise it ingood faith) -

Exception: conduct and dealings of agent are such as to raise a clear presumption that he will not communicate the facts in controversy(reason: when agent is committing fraud, it is contrary to commonsense to expect the agent to communicate the facts to the principal)

-Villamil-Estradas acts were not for the principal, rather he was acting for his own benefit. -The basic tenets of an agency rest on justice, equity and fair play. Agentis not permitted to pervert his authority to do such acts contrary to theinterests of the principal. San Juan Structural and Steel Fabricators vs CA Facts: On 14 February 1989, San Juan Structural and Steel Fabricators, Inc. (SJSSFI) entered into an agreement with Motorich Sales Corporation (MSC) for the transfer to it of a parcel of land identified as Lot 30, Block 1 of the Acropolis Greens Subdivision located in the District of Murphy, Quezon City, Metro Manila, containing an area of 414 square meters, covered by TCT (362909) 2876 (the lot was still registered in the name of ACL Development Corporation [ADC] at that time). As stipulated in the Agreement of 14 February 1989, SJSSFI paid the downpayment in the sum of P100,000.00, the balance to be paid on or before 2 March 1989. On 1 March 1989, Mr. Andres T. Co, SJSSFI president, wrote a letter to MSC requesting for a computation of the balance to be paid. Said letter was coursed through MSC's broker, Linda Aduca, who wrote the computation of the balance. On 2 March 1989, SJSSFI was ready with the amount corresponding to the balance, covered by Metrobank Cashier's Check 004223, payable to MSC. SJSSFI and MSC were supposed to meet in the office of SJSSFI but MSC's treasurer, Nenita Lee Gruenberg, did not appear. MSC, despite repeated demands and in utter disregard of its commitments had refused to execute the Transfer of Rights/Deed of Assignment which is necessary to transfer the certificate of title.

On 6 April 1989, ADC and MSC entered into a Deed of Absolute Sale whereby the former transferred to the latter the subject property. By reason of said transfer, the Registry of Deeds of Quezon City issued a new title in the name of MSC, represented by Nenita Lee Gruenberg and Reynaldo L Gruenberg, under Transfer Certificate of Title 3571. SJSSFI filed the complaint for damages against MSC, and Nenita Lee Gruenberg, as a result of the latters alleged bad faith in refusing to execute a formal Transfer of Rights/Deed of Assignment. It impleaded ADC and JNM Realty & Development Corp. (JRDC) as necessary parties, since Transfer Certificate of Title (362909) 2876 was in the name of ADC, and that JRDC is the transferor of right in favor of MDC. In its answer, MSC and Nenita Lee Gruenberg interposed as affirmative defense that the President and Chairman of Motorich did not sign the agreement adverted to; that Mrs. Gruenberg's signature on the agreement is inadequate to bind MSC as the other signature, that of Mr. Reynaldo Gruenberg, President and Chairman of MSC, is required; that SJSSFI knew this from the very beginning as it was presented a copy of the Transfer of Rights at the time the Agreement was signed; that SJSSFI itself drafted the Agreement and insisted that Mrs. Gruenberg accept the P100,000.00 as earnest money; that granting, without admitting, the enforceability of the agreement,

SJSSFI nonetheless failed to pay in legal tender within the stipulated period (up to 2 March 1989); that it was the understanding between Mrs. Gruenberg and SJSSFI that the Transfer of Rights/Deed of Assignment will be signed only upon receipt of cash payment; thus they agreed that if the payment be in check, they will meet at a bank designated by SJSSFI where they will encash the check and sign the Transfer of Rights/Deed, but that SJSSFI informed Mrs. Gruenberg of the alleged availability of the check, by phone, only after banking hours.

On the basis of the evidence, and on 18 June 1994, the Regional Trial Court of Makati, Metro Manila, Branch 63 (Civil Case 89-3511) rendered judgment, dismissing SJSSFI's complaint, finding that Nenita Lee Gutenberg was not authorized by the corporation to dispose of the property as such disposition is governed by the requirements of Section 40, Corporation Code; and that Nenita Lee Gutenberg did not in anyway misrepresent herself to be authorized by the corporation to sell the property to SJSSFI. The trial court also dismissed the counterclaim. SJSSFI appealed. On 18 March 1997, the Court of Appeals (CA GR CV 46801) modified the decision of the trial court by ordering Nenita Lee Gutenberg to refund or return to SJSSFI the downpayment of P100,000.00 which she received from the latter. SJSSFI moved for reconsideration, which was denied by the appellate court on 10 June 1997. SJSSFI filed the Petition for Review on Certiorari. SJSSFI argues, among others, that the veil of corporate fiction of MSC should be pierced, because the latter is a close corporation. Since "Spouses Reynaldo L. Gruenberg and Nenita R. Gruenberg owned all or almost all or 99.866% to be accurate, of the subscribed capital stock" 25 of Motorich, petitioner argues that Gruenberg needed no authorization from the board to enter into the subject contract. It adds that, being solely owned by the Spouses Gruenberg the company can be treated as a close corporation which can be bound by the acts of its principal stockholder who needs no specific authority.

Issue: Whether MSC is a close corporation, based on the fact that almost all of the shares of stock of the corporation are owned by said treasurer and her husband.

Held: Section 96 of the Corporation Code defines a close corporation provides that "A close corporation, within the meaning of this Code, is one whose articles of incorporation provide that: (1) All of the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (2) All of the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. Notwithstanding the foregoing, a corporation shall be deemed not a close corporation when at least

two-thirds (2/3) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the meaning of this Code." The articles of incorporation of MSC does not contain any provision stating that (1) the number of stockholders shall not exceed 20, or (2) a preemption of shares is restricted in favor of any stockholder or of the corporation, or (3) listing its stocks in any stock exchange or making a public offering of such stocks is prohibited. From its articles, it is clear that MSC is not a close corporation. MSC does not become one either, just because Spouses Reynaldo and Nenita Gruenberg owned 99.866% of its subscribed capital stock. The mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personalities. So, too, a narrow distribution of ownership does not, by itself, make a close corporation. Shell Co. v. Firemens Insurance Facts: This is an action for recovery of sum of money, based on alleged negligence of the defendants A car was brought to a Shell gasoline station owned by dela Fuente for washing and greasing. The car was placed on a hydraulic lifter for greasing. As some parts of the car couldnt be reached by the greaseman, the lifter was lowered. Unfortunately, for unknown reasons (probably due to mechanical failure or human error), while the lifter was being lowered, the car swung and fell from the plat form. 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 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 Issue: WON dela Fuente is merely an agent of Shell Co. Held: Yes. 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; That the service station belonged to the company and bore its trade name 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. 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. 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.

ISSUE: WON DE LA FUENTE is really SHELLs agent? Isnt he more of an independent contractor? HELD: DE LA FUENTE is SHELLs agent. The operator of a gasoline station is an agent of the oil company. He cannot be considered as an independent contractor by reason of SHELLs extensive control and supervision over his tasks. The assailed CA decision is affirmed. RATIO: O DE LA FUENTE owed his position to SHELL which could remove him or terminate his services at any time. He merely undertook to exclusively sell SHELLs products at the station he operates. For this purpose, he was placed in possession of all the equipments needed to operate it, including the hydraulic lifter from which SISONs automobile fell o But it must be noted that these equipments were delivered to DE LAFUENTE merely on loan basis. SHELL still took charge of its care and maintenance. It supervised DE LA FUENTE and conducted periodic inspection of the gasoline and service station o Moreover, SHELL did not leave the fixing of price for gasoline to DELA FUENTE; on the other hand, SHELL had complete control thereof; and it had supervision over DE LA FUENTE in the operation of the station and in the sale of its products therein o In fine, the gasoline and service station really belonged to SHELL. It bore its trade name and the operator DE LA FUENTE merely sold the products of SHELL there o Considering the above listed, in no wise can it be said that DE LAFUENTE is an independent contractor of SHELL. The extensive control and supervision that SHELL exercises over DE LA FUENTE militate heavily against this contention. On the contrary, such circumstances show the existence of agency between them o The existence of agency between SHELL and DE LA FUENTE is also evidenced by a receipt issued by SHELL and signed by DE LAFUENTE, acknowledging the delivery of equipments for the gas station in question and an official from of the inventory of said equipment containing DE LA FUENTEs signature above the words: "Agent's signature" RE: Liability of Principal for Agents breach of undertaking O As the CA correctly ruled, the fall of SISONs car from the hydraulic lift was the result of some unforeseen shortcoming of the mechanism itself. As the servicing job on SISONs car was accepted by DE LA FUENTE in the normal and ordinary conduct of his business as operator of SHELLs service station, and that the defective hydraulic lift caused the fall of the car, he is liable therefor. SHELL, his

principal, is also liable as DE LA FUENTE acted with in the representative authority granted him as SHELLs agent. As the act of the agent 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, SHELL undertook to "answer and see to it that the equipments are in good running order and usable condition."Obviously, SHELL failed to make a thorough check up of the hydraulic clifter. Hence, it was also negligent in that aspect to which it must answer, as the faulty lifter was the cause of the fall of the SISONs car.

Pacific commercial vs yatco

The broker, unlike the commission merchant, has no relation with the thing he sells or buys. He is merely an intermediary between the purchaser and the vendor. Facts: Pacific sold for the account of Victoria Milling Co. refined sugar up to the total amount of 1M. Pacific received by way of commission 29K. Victoria Milling paid merchant sales tax in its capacity as manufacturer and owner of the sugar sold. Likewise, Pacific paid tax also. There were two ways in which Pacific made the sales of sugar after looking for purchasers and sending the purchase order to Victoria Milling: 1)the purchase is made for the delivery of the sugar EX-WAREHOUSEsugar is first deposited in the warehouse of Pacific before delivery to the purchaser. 2)the purchase is made for the delivery EX-SHIPPacific would simply hand over the bill of lading to the purchaser and collect the price CFI of Manila: in the first case, Pacific acted as a commission merchant; in the second case as a broker ordered Yatco to return to Pacific the amount collected from it by way of tax on the sale of sugar to be delivered EX-SHIP and denied prayer for return of amount paid for the sales of sugar to be delivered EXWAREHOUSE. Issues: 1)WON there is double taxation NO 2)WON Pacific acted as a commission merchant as to the sugar delivered ex-warehouse

YES 3)WON Pacific acted as a mere commercial broker as to the sugar delivered ex-ship YES Ratio: 1) There is no double taxation. Tax is not upon property or products, but upon occupation or industry. 2) A commission merchant is one engaged in the purchase or sale for another of personal property which, for this purpose, is placed in his possession and at his disposal. He maintains a relation not only with his principal and the purchasers or vendors, but also with the property which is the property which is the subject matter of transaction. The deposit of the sugar in the warehouses of Pacific was made upon its own account and at its own risk until it was sold and taken by the purchaser. 3)The broker has no relation with the thing he sells or buys. He is merely an intermediary between the purchaser and the vendor. He acquired neither the possession nor the custody of the things sold. His only office is to bring together the parties to the transaction. The sugar was shipped by Pacific at its expense and risk until it reached its destination, where it was later taken ex-ship by the purchaser. Pacific never had possession of the sugar at any time. The bill of lading sent to the broker was sent only for the purpose of turning it over to the purchaser for the collection of the price. The sugar did not come to its possession in any sense. HAHN VS. CA and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT(BMW) 266 SCRA 537 Facts Alfred Hahn is a Filipino citizen doing business under the name and style of Hahn-Manila. BMW is a non resident foreign corporation existing under the laws of Germany. n March of 1967 Hahn executed in favor of BMW a Deed of Assignment. InFebruary of 1993, Hahn was informed that his exclusive dealership was indanger of being terminated due to deteriorating services and sales. Hahnclaimed that the termination of his exclusive dealership would be a breach ofthe deed of assignment. He then filed for a complaint of specific performanceand damages against BMW to compel it to continue with the exclusivedealership.BMW on the other hand filed for a motion to dismiss, contending that thecourt did not acquire jurisdiction over it because it was a foreign corporationand was not doing business in the Philippines. It further claimed that theexecution of the Deed of Assignment was an isolated transaction

and thatHahn was not its agent and was merely a middleman transacting business for his own name and for his own account. Issue Whether respondent company was doing business in the Philippines?Whether Alfred Hahn was an agent of BMW? Decision Yes. Alfred Hahn was an agent of BMW and consequently, respondentcompany was doing business in the Philippines. Ratio The phrase "doing business" includes "appointing representatives or distributors in the Philippines". (Foreign Investments Act of 1991)The question is whether petitioner Alfred Hahn is the agent or distributor in thePhilippines of private respondent BMW. If he is, BMW may be considered doingbusiness in the Philippines and the trial court acquired jurisdiction over it byvirtue of the service of summons on the Department of Trade and Industry. Hahn claimed he took orders for BMW cars and transmitted them to BMW.Upon receipt of the orders, BMW fixed the down payment and pricing charges,notified Hahn of the scheduled production month for the orders, andreconfirmed the orders by signing and returning to Hahn the acceptancesheets. Payment was made by the buyer directly to BMW. Title to carspurchased passed directly to the buyer and Hahn never paid for the purchaseprice of BMW cars sold in the Philippines. Hahn was credited with acommission equal to 14% of the purchase price upon the invoicing of a vehicleorder by BMW. Upon confirmation in writing that the vehicles had beenregistered in the Philippines and serviced by him, Hahn received an additional3% of the full purchase price. Hahn performed after-sale services, including,warranty services, for which he received reimbursement from BMW. All orderswere on invoices and forms of BMW.This arrangement shows an agency. An agent receives a commission upon thesuccessful conclusion of a sale. On the other hand, a broker earns his paymerely by bringing the buyer and the seller together, even if no sale iseventually made. Hahn v. Court of Appeals [266 SCRA 537 (January 22, 1997)]

Jurisdiction Over Foreign Corporation

Doing Business in the Philippines Without aLicenseFacts: Petitioner is a Filipino citizen doing business under the name of Hahn Manila. Private respondent BMW is a non -resident corporation incorporated in Germany. Petitioner executed in favor of private respondent a Deed of Assignment with a Special Power of

Attorney which constituted petitioner as the exclusive dealer of private respondent as long as the assignment of its trademark and device subsisted. However, noformal contract was drawn between the two parties. Thereafter, petitioner was informed that BMW was arranging to grant the exclusivedealership of BMW cars and products to Columbia Motors Corp. (CMC). BMW expressed dissatisfaction with various aspect of petitioners business but nonetheless also expressed willingness to continue business relations with petitioner on the basis of a standard BMW contract otherwise, if said offer was unacceptable to petitioner then BMW would terminate petitioners exclusive dealership. Petitioner refused BMWs offer in whichcase BMW withdrew its alternative offer and terminated petitioners exclusive dealership. Petitioner therefore filed an action for specific performance and damages against BMW to compel it to continue the exclusive dealership. BMW moved to dismiss the case contending that thetrial court did not acquire jurisdiction over it through the service of summons on DTI because BMW is a foreign corporation and is not doingbusiness in the Philippines. The trial court deferred the resolution of the motion for dismissal until after trial on the merits for the reason that thegrounds advanced by BMW did not seem indubitable. BMW appealed said order to the CA. The CA resolved that BMW was not doing business inthe country and therefore jurisdiction over it could not have been acquired through the service of summons on DTI and it dismissed the petition. Issue:

W/N BMW is doing business in the Philippines so as to enable the court to acquire jurisdiction over it through the service of summons on theDTI. HeId: RA 7042 enumerates what acts are considered as doing business. Section 3(d) enumerating such acts includes the phrase appointingrepresentatives or distributors in the Philippines but not when the representative or distributor transacts business in hi s own name for his ownaccount. In the case at bar, p etitioner is private respondent BMWs agent and not merely a broker. The record reveals that private respondentexercised control over petitioners activities as a dealer and made regular inspections of petitioners premises to enforce i ts standards. Since BMWis considered as doing business in the Philippines, the trial court validly acquired jurisdiction over it by virtue of the service of summons on the DTI.Furthermore, it is now settled that, for purposes of having summons served on a foreign corporation in accordance with the Rules of Court, it issufficient that it be alleged in the complaint that the foreign corporation is doing business in the Philippines. The court need not go beyond theallegations in the complaint in order to determine whether or not it acquired jurisdiction. Such determination that the foreign corporation is doingbusiness in the Philippines is only tentative and only for the purpose of enabling the court to acquire jurisdiction. A contrary determination may bemade based on the courts findings or evidence presented. Dela Cruz v Northern Theatrical Enterprises, Inc., et al Northern Theatrical Enterprises Inc. operated a movie house in Laoag, IlocosNorte. Domingo Dela Cruz was one of their security guards. He carried arevolver. One day, a Benjamin Martin wanted to enter without a ticket but delaCruz refused him entrance. Infuriated, Martin attacked him with a bolo and inorder to save his life, dela Cruz shot and killed Martin. Martin, thereafter, wascharged with homicide which, after re-investigation, was dismissed. A fewyears later, dela Cruz again figured in a homicide case related to his work assecurity guard for the theater. He was acquitted for the second charge. In bothinstances, dela Cruz employed a lawyer. He thereafter demandedreimbursement for his litigation expenses but was refused by the theater. After which, he filed an action for reimbursement plus damages. Northern Theater moved for the dismissal of the complaint. The Court foundfor Northern Theater and dismissed the complaint saying that dela Cruz had nocause of action. Dela Cruz filed present appeal (for the reason that onlyquestions of law are involved).Held: Judgment affirmed.

Agency DoctrineCFI was correct in rejecting the theory of dela Cruz that he was an agent of thedefendants and that as such agent he was entitled to reimbursement for theexpenses incurred by him in connection with the agency. The relationshipbetween the theater and the plaintiff was not that of principal and agent becausethe principle of representation was not involved. He was not employed torepresent defendant corporation in its dealings with third parties. He was merelyan employee hired to guard the cinema. Issue is primarily one of employer employee. Whether an employee who inline with the performance of his duty incur expenses caused not directly by hisemployer or fellow employees but by a third party or stranger, may recover against his employer. In this case, theres no legal obligation on the part of the employer, it might yet be regarded as a moral obligation. Since employer notlegally obligated to give legal assistance, plaintiff naturally cannot recover theamount from defendant.SC also says that the damage incurred did not flow from the performance of hisduties but only indirectly. Filing of the criminal charges was the efficient,intervening cause. As such, plaintiff cannot fix civil responsibility to thedefendant. DOMINGO DE LA CRUZ, plaintiff-appellant, vs. NORTHERN THEATRICAL ENTERPRISES INC.,ET AL, defendants-appellees. FACTS- Northern Theatrical Enterprises Inc., operated a movie house in Laoag and plaintiff DOMINGO DE LACRUZ, hired as a special guard whose duties were to guard the main entrance of the cine, to maintain peace and order and to report the commission of disorders within the premises.- One Benjamin Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of plaintiff De la Cruz to let him in without first providing himself with a ticket, Martin attacked him with a bolo. De la Cruz defended himself as best he could until he was cornered, at which moment to save himself he shot the gate crasher, resulting in the latter's death.- De la Cruz was charged with homicide, after a reinvestigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the complaint, which was granted by the court in January 1943. On July 8,1947, De la Cruz was again accused of the same crime of homicide, of the same Court.- After trial, he was finally acquitted of the charge on January 31, 1948. In both criminal cases De la Cruz employed a lawyer to defend him. He demanded from his former

employer reimbursement of his expenses but was refused. He filed the present action against the movie corporation and the three members of its board of directors, to recover amounts he had paid his lawyers and also moral damages said to have been suffered, a total of P15,000.- Court of First Instance after rejecting the theory of the plaintiff that he was an agent of the defendants and that as such agent he was entitled to reimbursement of the expenses incurred by him in connection with the agency found that plaintiff had no cause of action and dismissed the complaint without costs. ISSUEWhether an employee or servant who in line of duty and while in the performance of the task assigned tohim, performs an act which eventually results in his incurring in expenses, caused not directly by hismaster or employer or his fellow servants or by reason of his performance of his duty, but rather by athird party or stranger not in the employ of his employer, may recover said damages against his employer. HELDWe agree with the trial court that the relationship between the movie corporation and the plaintiff was notthat of principal and agent because the principle of representation was in no way involved.Plaintiff was not employed to represent the defendant corporation in its dealings with third parties. Hewas a mere employee hired to perform a certain specific duty or task, that of acting as special guard andstaying at the main entrance of the movie house to stop gate crashers and to maintain peace and orderwithin the premises.- The plaintiff was innocent and blameless. If despite his innocence and despite the absence of anycriminal responsibility on his part he was accused of homicide, then the responsibility for the improper accusation may be laid at the door of the heirs of the deceased and the State, and so theoretically, they arethe parties that may be held responsible civilly for damages and if this is so, we fail to see how thisresponsibility can be transferred to the employer who in no way intervened, much less initiated thecriminal proceedings and whose only connection or relation to the whole affairs was that he employedplaintiff to perform a specific duty or task, which task or duty was performed lawfully and withoutnegligence.In view of the foregoing, the judgment of the lower court is affirmed. Nielson & Co. Inc. vs. Lepanto Consolidated Mining Co. [GR L-21601, 28 December 1968]

Facts: [GR L-21601, 17 December 1966; Zaldivar (J): 6 concur, 2 took no part] An operating agreement was executed before World War II (on 30 January 1937) between Nielson & Co. Inc. and the Lepanto Consolidated Mining Co. whereby the former operated and managed the mining properties owned by the latter for a management fee of P2,500.00 a month and a 10% participation

in the net profits resulting from the operation of the mining properties, for a period of 5 years. In 1940, a dispute arose regarding the computation of the 10% share of Nielson in the profits. The Board of Directors of Lepanto, realizing that the mechanics of the contract was unfair to Nielson, authorized its President to enter into an agreement with Nielson modifying the pertinent provision of the contract effective 1 January 1940 in such a way that Nielson shall receive (1) 10% of the dividends declared and paid, when and as paid, during the period of the contract and at the end of each year, (2) 10% of any depletion reserve that may be set up, and (3) 10% of any amount expended during the year out of surplus earnings for capital account. In the latter part of 1941, the parties agreed to renew the contract for another period of 5 years, but in the meantime, the Pacific War broke out in December 1941. In January 1942 operation of the mining properties was disrupted on account of the war. In February 1942, the mill, power plant, supplies on hand, equipment, concentrates on hand and mines, were destroyed upon orders of the United States Army, to prevent their utilization by the invading Japanese Army.

The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and who were ousted from the mining properties only in August 1945. After the mining properties were liberated from the Japanese forces, LEPANTO took possession thereof and embarked in rebuilding and reconstructing the mines and mill; setting up new organization; clearing the mill site; repairing the mines; erecting staff quarters and bodegas and repairing existing structures; installing new machinery and equipment; repairing roads and maintaining the same; salvaging equipment and storing the same within the bodegas; doing police work necessary to take care of the materials and equipment recovered; repairing and renewing the water system; and retimbering. The rehabilitation and reconstruction of the mine and mill was not completed until 1948. On 26 June 1948 the mines resumed operation under the exclusive management of LEPANTO. Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement arose between NIELSON and LEPANTO over the status of the operating contract which as renewed expired in 1947. Under the terms thereof, the management contract shall remain in suspense in case fortuitous event or force majeure, such as war or civil commotion, adversely affects the work of mining and milling. On 6 February 1958, NIELSON brought an action against LEPANTO before the Court of First Instance of Manila to recover certain sums of money representing damages allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract entered into between them on 30 January 1937, including attorney's fees and costs. LEPANTO in its answer denied the material allegations of the complaint and set up certain special defenses, among them, prescription and laches, as bars against the institution of the action.

After trial, the court a quo rendered a decision dismissing the complaint with costs. The court stated that it did not find sufficient evidence to establish LEPANTO's counterclaim and so it likewise dismissed the same. NIELSON appealed. The Supreme Court reversed the decision of the trial court and enter in lieu thereof another, ordering Lepanto to pay Nielson (1) 10% share of cash dividends of December, 1941 in the amount of P17,500.00, with legal interest thereon from the date of the filing of the complaint; (2) management fee for January, 1942 in the amount of P2,500.00, with legal interest thereon from the date of the filing of the complaint; (3) management fees for the sixty-month period of extension of the management contract, amounting to P150,000.00, with legal interest from the date of the filing of the complaint; (4) 10% share in the cash dividends during the period of extension of the management contract, amounting to P1,400,000.00, with legal interest thereon from the date of the filing of the complaint; (5) 10% of the depletion reserve set up during the period of extension, amounting to P53,928.88, with legal interest thereon from the date of the filing of the complaint; (6) 10% of the expenses for capital account during the period of extension, amounting to P694,364.76, with legal interest thereon from the date of the filing of the complaint; (7) to issue and deliver to Nielson and Co. Inc. shares of stock of Lepanto Consolidated Mining Co. at par value equivalent to the total of Nielson's 10% share in the stock dividends declared on November 28, 1949 and August 22, 1950, together with all cash and stock dividends, if any, as may have been declared and issued subsequent to November 28, 1949 and August 22, 1950, as fruits that accrued to said shares; provided that if sufficient shares of stock of Lepanto's are not available to satisfy this judgment, Lepanto shall pay Nielson an amount in cash equivalent to the market value of said shares at the time of default, that is, all shares of stock that should have been delivered to Nielson before the filing of the complaint must be paid at their market value as of the date of the filing of the complaint; and all shares, if any, that should have been delivered after the filing of the complaint at the market value of the shares at the time Lepanto disposed of all its available shares, for it is only then that Lepanto placed itself in condition of not being able to perform its obligation; (8) the sum of P50,000.00 as attorney's fees; and (9) the costs.

Lepanto seeks the reconsideration of the decision rendered on 17 December 1966.

Issue: Whether the management contract is a contract of agency or a contract of lease of services.

Held: Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the contract of agency, one person binds himself to render some service or do something for the account or at the request of another." Article 1544, defining contract of lease of service, provides that "In a lease of work or services, one of the parties binds himself to make or construct something or to render a service to the other for a price certain." In both agency and lease of services one of the parties binds himself to render some service to the other party. Agency, however, is distinguished from lease of work or services in that the basis of agency is representation, while in the lease of work or services the basis is employment. The lessor of services does not represent his employer, while the agent represents his principal. Further, agency is a preparatory contract, as agency "does not stop with the agency because the purpose is to enter into other contracts." The most characteristic feature of an agency relationship is the agent's power to bring about business relations between his principal and third persons. "The agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties). Lease of services contemplate only material (non-juridical) acts." Herein, the principal and paramount undertaking of Nielson under the management contract was the operation and development of the mine and the operation of the mill. All the other undertakings mentioned in the contract are necessary or incidental to the principal undertaking these other undertakings being dependent upon the work on the development of the mine and the operation of the mill. In the performance of this principal undertaking Nielson was not in any way executing juridical acts for Lepanto, destined to create, modify or extinguish business relations between Lepanto and third persons. In other words, in performing its principal undertaking Nielson was not acting as an agent of Lepanto, in the sense that the term agent is interpreted under the law of agency, but as one who was performing material acts for an employer, for a compensation. It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase, or sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was to act only as an intermediary, not as an agent. Further, from the statements in the annual report for 1936, and from the provision of paragraph XI of the Management contract, that the employment by Lepanto of Nielson to operate and manage its mines was principally in consideration of the know-how and technical services that Nielson offered Lepanto. The contract thus entered into pursuant to the offer made by Nielson and accepted by Lepanto was a "detailed operating contract". It was not a contract of agency. Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated the management contract because it had lost its trust and confidence in Nielson.

Quiroga v. Parsons Facts:

Plaintiff engaged into a contract for the exclusive sale of its beds with defendants. Plaintiff filed a complaint against the defendant for violation of the following obligations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. Plaintiff alleged that the defendant was his agent.

Issue:

Whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds

Held:

There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. The words commission on sales used in clause (A) of article 1 mean nothing else, as stated in the contract itself, than a mere discount on the invoice price. The word agency, also used in articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiff's beds in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that they are not incompatible with the contract of purchase and sale.

COURT RULING:

The Supreme Court declared that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. GONZALO PUYAT & SONS v. ARCO AMUSEMENT COMPANY G.R. No. L-47538 June 20, 1941 Keywords: discounted price of sound reproducing equipment not disclosed; Arco Amusement seeks reimbursement. Facts: -In 1929, Arco Amusement Company (formerly known as Teatro Arco) was engaged in the business of operating cinematographs. 930, Arco Amusement approached Gonzalo Puyat & Sons, Inc., the exclusive agents in the Phils of the Starr Piano Company (of Richmond, Indiana, USA) to negotiate with them their intent to buy sound reproducing equipment from Starr Piano through Gonzalo Puyat & Sons. -

After some negotiations, the parties agreed that Gonzalo Puyat & Sons would order the equipment from Starr Piano and Arco Amusement would pay Gonzalo Puyat, in addition to the price of the

equipment, a 10% commission, plus expenses, such as freight, insurance, banking charges, cables etc. -

In ordering the equipment, Gonzalo Puyat & Sons was able to get a discounted price from Starr Piano. However, Gonzalo Puyat did not inform Arco Amusement of the discounted price, and still billed them the list price of $ 1,700 plus the 10% commission and the expenses incurred in ordering the equipment. -

Arco Amusement paid the bills and then placed another order for a second sound reproducing equipment, which was quoted at $1,600plus commission and other expenses. Arco paid the amount assessed by Gonzalo Puyat. -

3 years later, Arco Amusement discovered that the price quoted to them by Gonzalo Puyat was not the net price but was rather the list price and that Gonzalo Puyat obtained a discount from Starr Piano. -

They sought for reimbursement of what they have paid Gonzalo Puyat by filing a case for reimbursement. -

CFI of Manila held that the contract between the petitioner and the respondent was one of outright purchase and sale, and absolved Gonzalo Puyat from the complaint.

CA reversed the decision of the CFI, holding that the relation between Gonzalo Puyat and Arco Amusement was that of an agent and aprincipal, and sentenced Gonzalo Puyat to reimburse Arco Amusement of all the alleged overpayments in the total sum of $1,335.52 orPhp 2,671.04 Issue: WON the contract between Gonzalo Puyat and Arco Amusement is an Agency to merit Arco Amusement a reimbursement or is an Outright Purchase and Sale Contract that would absolve Gonzalo Puyat of the case. Held: The contract between Gonzalo Puyat and Arco Amusement is an Outright Purchase and Sale Contract Ratio: The contract is the law between the parties and should include all the things they are supposed to have agreed upon. The letters, by which Arco accepted the prices of $1,700 and S1,600 plus the commission and other expenses for the sound reproducing equipment are clear in their terms and admit of no other interpretation than that Arco agreed to purchase from Gonzalo Puyat the equipment in question at the prices indicated which are fixed and determinate. Arco admitted in its complaint filed with the CFI that Gonzalo Puyat agreed to sell to it the first sound reproducing equipment and machinery. Whatever unforeseen events might have taken place unfavorable to Arco, such as change in prices, mistake in their quotation, or failure of Starr Piano to properly fill the orders as per specifications, Gonzalo Puyat might still legally hold Arco to the prices fixed. This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided that he acts in accordance with the instructions received from his principal and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part. To hold the petitioner an agent of the respondent in the purchase of the equipment from Starr Piano is incompatible with the fact that the petitioner is the exclusive agent of the same company in the Phils. It is out of the ordinary for one to be

the agent of both the vendor and the vendee. It follows that Gonzalo Puyat as a vendor is not bound to reimburse Arco as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction. This is the very essence of commerce without which merchants or middlemen would not exist. Ker vs Lingad FACTS: The then Commissioner of Internal Revenue Domingo assessed the petitioner to pay Php20,272 as commercial brokers percentage tax. The petitioner requested for its cancellation but was denied and deemed liable as an agent of United States Rubber International, referred here as the Company. The petitioner was the Companys distributor. Their contract provides that the petitioner, as distributor, cannot dispose of the products for shipment elsewhere than the designated places. But the crucial stipulations state that 1) the consignment remains property of the Company until sold by the distributor and 2) the distributor is not constituted as an agent of the Company by this contract for any purpose whatsoever. Issue: Whether or not the contract between Ker & Co. and United States Rubber International was that of an agency? Holding: Yes, all the circumstances are irreconcilably antagonistic to the idea of an independent merchant. Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers and terms of which were subject to the companys control, the relation between the company and the dealer is one of agency. Distinguish from contract of sale: the price paid in the transfer of an agreement or title is the essence of sale. If such transfer puts the transferee in the attitude of an owner and makes him liable to the transferor as a debtor for an agreed price it is a contract of sale. The essence of agency to sell is the delivery to an agent not as his property but as the property of the principal who remains the owner and had the right to control sales, fix price and terms and demand proceeds. SEVILLA VS. COURT OF APPEALS Facts: Tourist World Services, Inc. (TWS) leased the premises belonging to Segundina Noguera to be used as a branch office. Sevilla held herself solidarily liable with TWS for the payment of the rent. When the branch office was opened, it was run by Sevilla payable to TWS by any airline for any fare brought in through the efforts of Sevilla,4% would go to Sevilla and 3% was to be withheld by TWS. When TWS was informed that Sevilla was connected with a rival firm, Philippine Travel Bureau, and since the branch

was losing, TWS considered closing down its office. The contract of lease was terminated. Canilao, the corporate secretary of TWS, went over to the branch and padlocked the premises to protect the interests of TWS. Sevilla and her employees could not enter. Sevilla filed for mandatory preliminary injunction which the trial court dismissed without prejudice. Sevilla filed an appeal, and one of her claims was that the trial court erred in holding that Sevillas arrangement with TWS was a mere employer-employee relation and not a joint business venture. She supports this claim by declaring that she was signatory to the lease contract and was solidarily liable with TWS for the prompt payment of the rent, that she did not receive any salary from TWS and that she earned commissions for her own passengers, her own bookings and her own business obtained from airline companies (She shared the 7%commission she got from the airline companies with TWS).The CA affirmed the decision of the trial court. ISSUE relevant to our topic: What was the nature of the relation between Sevilla and TWS? Held: PRINCIPAL-AGENT relationship. It was not an employer-employee relation. Sevillawas not subject to control by TWS either as to theresult or as to the means used. Her binding herself to be solidarily liable with TWS belies the claims of a master-servant relationship. Furthermore, Sevilla was not in the companys payroll.

It was not a joint venture. A joint venture,including a partnership, presupposes generally aof standing between the joint co-venturers orpartners, in which each party has an equalproprietary interest in the capital or propertycontributed and where each party exercises equalrights in the conduct of the business. 16 furthermore, the parties did not hold themselvesout as partners, and the building itself wasembellished with the electric sign "Tourist WorldService, Inc. in lieu of a distinct partnership name. It is a principal-agent relationship. 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 pre-assumed her principal's authority as owner of the business undertaking. But unlike simple grants of a power of attorney, the agency that in this case cannot be revoked at will because it is one coupled with an interest, the agency having been created for mutual interest of the agent and the principal. 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 cannot be revoked at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages. EXTRA: The Court is convinced that there is some malevolent design to put Sevilla in a bad light. There was no proof that the branch was losing and the padlocking was done 6 months after (rebuttal to the interest of the company argument of TWS). Lim v. People Facts: The appellant is a businesswoman. The appellant went to the house of Maria Ayroso and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of the appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was to receive the overprice for which she could sell the tobacco. The agreement was evidenced by a document. Demands for the payment of the balance of the value of the tobacco were made upon the appellant by Ayroso. The complainant filed a complaint against the appellant for estafa. Upon appeal, the appellant contended that the contract between her and Ayroso is a contract of sale and not a contract of agency to sell of the subject tobacco, thereby precluding criminal liability of petitioner for the crime charged. Issue: Whether or not the transaction between the parties is a contract of agency or a contract of sale. Ruling: Contract of agency to sell. Appellant is an agent of Ayroso. It is clear in the agreement, the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold, or, that the obligation was immediately demandable as soon as the tobacco was disposed of. Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso's tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something.

SIASAT and MARCELINO SIASAT vs. INTERMEDIATE APPELLATE COURT Facts: Respondent Teresita Nacianceno succeeded in convincing officials of the then Department of Education and Culture to purchase without public bidding, one million pesos worth of national flags for the use of public schools throughout the country. The respondent was able to expedite the approval of the purchase by hand-carrying the different indorsements from one office to another, s0 that all the legal requirements had been complied except the release of the purchase orders. When Nacianceno was informed by the Chief of the Budget Division that the purchase orders could not be released unless a formal offer to deliver the flags in accordance with the required specifications was first submitted for approval, she contacted the owners of the United Flag Industry. After the transaction was discussed, a document was drawn up authorizing Nacianceno to represent United Flag Industry to deal with any entity or organization, private or government, in connection with the marketing of Uniteds products-flags and its accessories, subject to 30% commission. After receiving the first payment of the delivery, Petitioner tendered 5% commission to respondent which the latter refused to accept contending that the agreed commission is 30%. But the Petitioner assured her that a full payment will be given to her upon the receipt of the payment of second delivery. However, the respondent learned that petitioner received the payment of the second delivery yet failed to pay her. When she confronted the petitioner they denied her participation in the transactions. Issue: WON Nacianceno is entitled to the commission despite the absence of specific authorization for the sale of Philippine flags to DECS. Ruling: Yes. Nacianceno is a general agent. A GENERAL AGENT is one authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business of a particular class or series. He has usually authority either expressly conferred

in general terms or in effect made general by the usages, customs or nature of the business which he is authorized to transact. G. R. No. 129919. February 6, 2002]DOMINION INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, RODOLFO S. GUEVARRA, and FERNANDO AUSTRIA, respondents The Facts

January 25,

1991: Rodolfo S. Guevarra instituted Civil Case No.8855 for sum of money against Dominion Insurance Corporation.Plaintiff sought to recover thereunder the sum of P156,473.90which he claimed to have advanced in his capacity as manager of defendant to satisfy certain claims filed by defendants clients

Dominion denied any liability to Guevarra and asserted acounterclaim for P249,672.53, representing premiums that plaintiff allegedly failed to remit.

August 8, 1991: Dominion filed a third-party complaint against Fernando Austria, who, at the time relevant to the case, was itsRegional Manager for Central Luzon area.

Pre-trial reset for many times

May 22, 1992 the case was again called for pre-trial conference.Only plaintiff and counsel were present. Despite due notice,defendant and counsel did not appear, although a messenger, RoyGamboa, submitted to the trial court a handwritten note sent to him by defendants counsel which instructed him to request for postponement. Plaintif fs counsel object postponement and moved to have defendant declared as indefault. TC granted motion.

Plaintiff presented his evidence on June 16, 1992. This wasfollowed by a written offer of documentary exhibits on July 8 anda supplemental offer of additional exhibits on July 13, 1992. Theexhibits were admitted in evidence in an order dated July 17,1992.

August 7, 1992: defendant corporation filed a MOTION TO LIFTORDER OF DEFAULT.

denied. MR also denied

TC decided in favor of Gue rrero. CA affirmed TCs decision. MR denied. Hence, the petition.The Issues (1)

whether respondent Guevarra acted within his authority asagent for petitioner (2)

whether respondent Guevarra is entitled to reimbursement of amounts he paid out of his personal money in settling the claimsof several insured.The Court's Ruling The petition is without merit.

By the contract of agency, a person binds himself to render someservice or to do something in representation or on behalf of another, with the consent or authority of the latter. The basis foragency is representation. On the part of the principal, there must be an actual intention to appoint

or an intention naturallyinferrable from his words or actions;

and on the part of the agent,there must be an intention to accept the appointment and act onit,

and in the absence of such intent, there is generally no agency.

A perusal of the Special Power of Attorney would show that petitioner (represented by third-party defendant Austria)and respondent Guevarra intended to enter into a principal-agent relationship.

Despite the word special in the title of the document, the contents reveal that what was constitutedwas actually a general agency. The terms of the agreement read: That we, FIRST CONTINENTALASSURANCE COMPANY, INC., a corporation dulyorganized and existing under and by virtue of the laws of the Republic of the Philippines, xxxrepresented by the undersigned as RegionalManager, xxx do hereby appoint RSG GuevarraInsurance Services represented by Mr. RodolfoGuevarra xxx to be our Agency Manager in SanFdo., for our place and stead, to do and performthe following acts and things: 1. To conduct, sign, manager (sic),carry on and transact Bonding and Insurancebusiness as usually pertain to a Agency Office, orFIRE, MARINE, MOTOR CAR, PERSONALACCIDENT, and BONDING with the right, uponour prior written consent, to appoint agents and sub-agents. 2. To accept, underwrite and subscribed (sic) cover notes or Policies

of Insurance and Bonds for and on our behalf. 3. To demand, sue, for (sic) collect,deposit, enforce payment, deliver and transfer for and receive and give effectual receipts and discharge for all money to which the FIRSTCONTINENTAL ASSURANCE COMPANY, INC.,may hereafter become due, owing payable ortransferable to said Corporation by reason of orin connection with the above-mentionedappointment. 4. To receive notices, summons, and legal processes for and in behalf of the FIRSTCONTINENTAL ASSURANCE COMPANY, INC., inconnection with actions and all legal proceedings against the said Corporation.[19]

[Emphasis supplied] The agency comprises all the business of the principal,but, couched in general terms, it is limited only to acts of administration.

A general power permits the agent to do all acts for which the lawdoes not require a special power. Thus, the acts enumerated in orsimilar to those enumerated in the Special Power of Attorney donot require a special power of attorney.

Article 1878, Civil Code, enumerates the instances when a specialpower of attorney is required. The pertinent portion that appliesto this case provides that:

Article 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; xxx xxx xxx

(15)

Any other act of strict dominion. PNB v Sta Maria Facts: PNB filed an action against the Sta. Mariafamily and Associated Surety for the collection of certainamounts representing unpaid balances on two crop loans duefrom the defendants. Maximo Sta Maria obtained a SpecialPower of Attorney, executed in his favor from his brothersand sisters. Said power of attorney authorized Maximo to mortgage or convey as security to any bank, company or toany

natural or juridical person, our undivided shares over acertain parcel of land together with the improvementsthereon. In addition, sister Valerina alone executed in favorof Maximo, a Special Power borrow money and make, execute, sign and delivermortgages of

of Attorney authorizing the latterto real estate in my name xxx

. By virtue of thesetwo powers, applied for two loans from the PNB. As

security, Maximo executed in his own name, in favor of PNB, twochattel mortgages over the standing crops on the land,guaranteed by Associated. The lower court found for PNC,holding that the Sta. Marias and Associated liable. The StaMaria brothers and sisters (except Maximo) appealed. TheSta Maria s

contend that they did not authorize Maximo toborrow money but only to mortgage the real estate jointlyowned by them.Issue: W/N the SPAs of (1) the Sta Marias and (2)Valeriana authorized Maximo to borrow money.Held: A Special Power of Attorney to mortgage realestate is limited to such authority to mortgage and does notcarry with it the authority to contract obligation unless thecontrary is shown.In the case at bar, the authority granted by the StaMarias (except Valeriana) to Maximo was merely to

mortgagethe property jointly owned by them. They did not grantMaximo any authority to contract for any loans in theirnames and behalf. MAximo alone and Valeriana whoauthorized him to borrow money, must answer for said loansand the others only liability is that the real estate authorizedby them would be

subject to foreclosure and sale to respondfor the obligations contracted by Maximo. Hence, in theabsence of ratification on their part by estoppel, they cannotbe held personally liable for the payment of such obligations. BPI vs. De Coster Facts: -

De Coster, La Orden and Poizat issued a promissorynote in favor of BPI for P292,000 -

The promissory note was secured by severalmortgages on the several properties of the debtors -

The debtors defaulted so BPI asked the court toforeclose the mortgages -

CFI issued an execution order against the threedebtors -

abriela de Coster, wife of Poizat, complained thatat the time of the filing of the complaint she was inParis and was absent in the Philippines .and has noknowledge of the actual facts. De Coster alsoalleged that the mortgage was made without herconsent and made in excess of the authority givenhis husband and therefore it was null and void.Issue: -

W/N de Coster is also liable as to the debt incurredby his husband Held: -No! - Husband has no authority to execute a promissorynote in behalf of his wife or to make the latter liableas an accommodation maker. Also, the debt was apreexisting debt of the husband wherein the wifewas not a party and has no legal obligation to pay. - The obligation of the husband stated in the power if attorney was to borrow money for or in account of his wife as her agent as her attorney in fact. Thatdoes not carry with it the power to make his wifeliable as a surety for his preexisting debt -Also, the husband, the agent of his wife, failed torepresent the interest of his principal in court. Thisgave the principal the authority to obtain relief under section 113 of the Code of Civil Procedure. Hodges vs. Salas and Salas Agent Facts: s powers arelimited by the stipulation in the PoA

Salas and Salas executed a PoA in favor of Felix Yuloauthorizing the latter to obtain a loan in the Salas name and mortgage a parcel of land owned by theSalas . This PoA was registered in the RD.

Yulo obtained a loan from C.N. Hodges in theamount of 28k and mortgaged the land of the Salas loan was in the name of Salas and Salas, holdingthem solidarily liable. -

.The

The whole 28k was not delivered to the Yulo. Part of it was applied to a separate loan obtained by Yulofrom Hodges. -

Salas and Salas was not able to pay at maturity soHodges filed for foreclosure of the mortgaged land. -

RTC absolved Salas and Salas from liability on thewhole amount. The RTC only held the Salas liablefor the amount which was actually delivered tothem.Issue: -

W/n the Salas -

can be held liable for the whole debt.Held:

SC says no. The powers granted to Yulo by the PoA securingsuch with a mortgage on the property of the Salas

swere only limited to obtaining a loan and .There is nothing to indicate that the Salas

hadauthorized Yulo to convert the money to hispersonal use. In applying part of the loan to pay hisobligations, Yulo exceeded the authority granted tohim by the PoA s. in cases like this, the agent

wasobliged to turn over the money to the principal or atleast, place it at their disposal. -

(side issues) Registration of the mortgage wasproven through oral evidence. The SC allowed thisbecause there was no objection to the presentationof such evidence. Also, the loans were not usurious.The law allows the creditor to require payments of interest in advance, provided it does not exceed 1year. Strong vs Gutierrez Repide Facts:- Strong owned Phil. Sugar Estates Dev t Co. (company) -the company, through its majority stockholder, agent,administrator general and one if its directors Repide,negotiated to sell its friar land to the gov t- pending negotiations, Repide employed Kauffman,

who inturn designated Sloan to purchase 800 shares of stock in thecompany- such shares were then possessed by Jones, the agent of Strong- Sloan and Jones did not know who really wanted to buy thestocks- contract of sale of the shares of stock was consummatedbetween Jones (who assumed he had the power w/oconsulting w/ the principal Strong) and Sloan- the shares of stock were delivered to Kauffman who paid itat a much lower price (about 1/10 of the amount it couldhave been sold to the gov t)- Kauffman delivered them to Repide- Mrs. Strong sued to recover from Repide the shares of stockalleging that such had been sold and delivered by her agent(Jones) to the agent of Repide (Kauffman) w/o her authority- Strong contends that she would not have sold the shareshad she known they would ultimately go to Repide- Strong contends that Repide, by hiring an agent to purchasethe shares, fraudulently concealed who the ultimate buyerwas Issue: W/N Repide is guilty of fraud in the purchase of thestock. Held. Yes.- by employing an agent to buy, concealing his identity as thebuyer and his knowledge of the state of the negotiations forthe sale of the lands to the gov t and the probable resultthereof, Repide s

violated his duty as an agent of the company- Repide, being a director, owner of of the company

entirestock, administrator general of the company engaged innegotiations w/ the sale of the lands to the gov t w/c greatlyenhances the value of the stock, it was his duty to act in goodfaith, to disclose to Sloan (agent of Strong) that fact w/cmight affect the value of the stock- Repide employed deceit in the purchase of stocks- had Sloan known the actual state of the negotiations on thelands, he would not have sold the stocks- Repide liable for fraud. Katigbak vs. Tai Hing Co Facts:

Barreto mortgaged his land to PNB for a loan of P60,000 -

Po Tecsi executed a general power of attorney infavor of Barreto authorizing him to buy and sell allsorts of property belonging to Po Tecsi -Po Tecsi acknowledged his indebtedness to Barretofor the sum of P68,000 by virtue of the generalpower of attorney -A second mortgage was made by Barreto on thesame land to Limjuico for P140,000 -

Thereafter, Barreto sold the land to Po Tecsi forP10,000 subject to the 2 mortgages -

Then, using his general power of attorney sold theland to Katigbak mentioning only the PNB mortgageand without recording the sale in the TCT -

Po Tecsi remained on possession of the land becauseof an oral contract of lease -

Po Tecsi died and he was replaced by his son Po SunSuy

Po Sun Suy failed to pay the rents so Katigbak filedthe case -

PO Sun Suy: Katigbak is not the real owner of theland because the sale made by Barreto is null andvoid for lack of registration of the said power of attorney in the Registry of Deeds Issue: -W/N Barreto is authorized to sell the land toKatigbak Held: -Yes! -The general power of attorney authorized Barreto tosell any kind of realty Tecsin.The use of the words might belong and not belong that might belong Po

means that the authority given

referrednot only to the property Po Tecsin had at the time of the execution of the power of attorney, but also toall properties he might acquire afterwards. -Although the sale was not recorded in the Registry of Deeds and the it does not bind third parties, it doeshowever bind the principal to acknowledge the actsperformed by his agent. It is evident in the case thatPo Tecsin acknowledged and was aware of the saleto Katigbak. V da. De Chua vs IAC Facts:- Herrera executed a contract of lease in favor of Tian On.The contract of lease contains a stipulation giving the lesseesan option to buy the leased property. Tian On erected aresidential house on the leased premises.- Tian On executed a deed of absolute sale of building in favorof Chua Bok (predecessor-in-interest of petitioners herein)whereby Tian On sold the said residential house to Chua.Chua Bok and his family resided in the said residentialbuilding and paid the rentals thereof. When the contract of lease expired, Chua Bok and Herrera, landowner, through heralleged attorney-in-fact

Vicenta Reynes, executed anothercontract of lease over the same parcel of land.- Herrera then through another attorney-in-fact, Luz Tormis,sold lots leased by Chua Bok to Vicente and Victoria Go. Thespouses registered the sale.- Chua Bok filed this complaint for the annulment of the saidsale between Herrera and Spouses Go. The trial courtdismissed the complaint against the spouses Go and declared that the contract of lease (yung 2nd na contract) betweenHerrrera and Chua void. Issue: W/n the contract of lease is void... Held: YES.- The contract involves a lease of real property for a period of more than one year. The contract was entered into by theagent of the lessor Herrera and not Herrera herself. In such acase the law requires that the agent be armed with a specialpower of attorney to lease premises. Art 1878 par 8 states"to lease any real property for more that one year". VicentaReynes the agent was not armed with a special power of attorney to enter into a lease contract for a period of morethat one year. Austria vs. CA (Liability of Agent in case of loss of the thing)Facts: y

Abad received from Austria one pendant withdiamonds to be sold on commission or to bereturned on demand. y

However, while Abad was walking home, the jewelrywas snatched. The incident gave rise to a case of robbery against the men who allegedly stole theitem. y

As Abad failed to return the jewelry or pay for itsvalue, Austria brought an action against the formerfor the recovery of the pendant. y

TC favored Austria and said that Abad failed to provethe fact of robbery or that it was not negligent whenthe item was stolen. CA reversed and said that Abadwas not responsible for the loss of the pendant onaccount of a fortuitous event. y

Austria contends that for robbery to fall under thecategory of a fortuitous event, there should be afinding on the guilt of the persons liable thereon.Issue:Can Abad be held liable for the loss of the pendant? Is a priorconviction of persons who committed the robbery necessaryto exempt the consignee from liability of such loss?Held:No (in both questions). It is not disputed that if Abad wereindeed the victim of robbery, then the occurrence of suchfortuitous event would extinguish her liability. And in order toavail of this exempting circumstance, Art 1174 ( no personshall be responsible for those events which could not ) of theCivil Code should be satisfied. In this

beforeseen, or which, though foreseen, were inevitable.

provision, the emphasisis on the event and not on the agents or factors responsiblefor the same. It is not necessary that the person responsiblefor occurrence should be found or punished; it is sufficient toprove that the unforeseeable event took place without theconcurrent fault of the debtor. This can be established bypreponderant evidence. To require prior conviction of theculprits in the criminal case would be to demand proof beyond reasonable doubt. PNB vs Manila Surety Facts:PNB had opened a letter of credit and advanced thereon$120,000 to Edgington Oil Refinery for 8,000 tons of hotasphalt. Of this amount, 2,000 tons worth P279,000 werereleased and delivered to ATACO under a trust receiptguaranteed by Manila Surety and Fidelity.To pay for the asphalt, ATACO constituted PNB its assigneeand attorney-in-fact to receive and collect for Bureau of Public Works the amount out of the funds payable to theassignor.ATACO delivered to the Bureau of Public Works and the latteraccepted. Of this amount the Bank regularly collected.Thereafter for unexplained reasons, the Bank ceased tocollect from the bureau. It was later on discovered that moremoney were payable to ATACO from the Public Works officebut the bank allowed another creditor to collect the fundsdue to ATACO.Issue: W/n the bank was negligent in failing to collect thefunds from the bureau and therefore liable for damages...Held: Yes.The bank has been negligent in having stopped collectingfrom the bureau the moneys falling due in favor of ATACO,thereby allowing such funds to be taken and exhausted byother creditors to the prejudice of the surety.These acts of PNB were contrary to its duty as holder of

anexclusive and irrevocable power of attorney to make suchcollection, since an agent is required to act with the care of agood father of a family. PNB thereby becomes liable for thedamages which the principal may suffer through its non-performance.Manila Surety is released from liability as guarantor of theobligation. By the acts of the creditor PNB, guarantor ManilaSurety cannot be subrogated to the rights of PNB. Domingo vs. Domingo Facts:Vicente Domingo granted Gregorio Domingo the exclusiveagency to sell his lot with a commission of 5% on the totalprice Gregorio authorized Teofilo Purisima to look for a buyer withhalf of the 5% as his commissionTeofilo introduced Oscar de Leon to Gregorio as a prospectivebuyerOscar offered to purchase the lot at a lower price than thatmade by Vicente. G regorio was able to persuade Vicente to accept Oscar's offerand an agreement was made between Vicente and OscarP1,000 was given by Oscar as earnest money P300 of whichwas advanced by Vicente to G regorio as his commissionAlso, G regorio received P1,000 from Oscar as 'promised' byOscar if G regorio will be able to persuade Vicente to sell thelot at a lower priceThis 'promised money' or secret bonus of G regorio was notdisclosed to VicenteOscar talked to G regorio that he is now canceling the sale buthe will not try to recover the earnest money of the secretbonus he gave

G regorio, sensing something fishy, went to the Register of Deeds and discovered that Vicente actually sold the land toOscar's wife as shown in the title G regorio approached Vicente and demanded his commissionbut the latter refused to give him any amountIssue:W/N Vicente is still liable to pay G regorio his commissioneven though the latter failed to disclose everything hereceived form the transactionHeld: G regorio cannot demand from Vicente his commissionArticle 1891 states that every agent is bound to render anaccount of his transactions and to deliver to the principalwhatever he may have received by virtue of the agencyWhen Gregorio accepted the secret bonus and failed todisclose this to his principal, he violated the agencyagreement and FORFEITS HIS RIGHT TO COLLECT THECOMMISSION FORM THE PRINCIPAL. This is regardless toW/N the principal suffered any injury because of the breachof trust.His acceptance of the secret profit corrupted his duty to servethe interest only of the principal. Instead of exerting his bestto persuade the buyer to purchase the lot on the mostadvantageous terms desired by his principal, he succeeded inpersuading his principal to accept the terms of the buyer tothe detriment of his principal. Severino vs. SeverinoFacts: During the lifetime of Melecio Severino, his brotherAgapito was the administrator of his property. This isevidenced by a possessory information secured by Agapito onMelecio's behalf. Melecio died. The land became subject of acadastral proceeding. Thus, Hofilena (Agapito's lawyer)appeared on his behalf. At this point, Fabiola was still aminor.The claim was successful. Agapito was able to register theland in his name. Fabiola now claims the parcel of landTC: ruled in favor of FabiolaAgapito contends that his title to the land is indefeasible Issue:

who has a better claim to the parcel of land? Will theregistration of hte land under the Torrens system divestFabiola of ownership? Ruling: The relations of an agent and his principal arefiduciary in nature. In regard to the property of Melecio,Agapito is estopped from acquiring or asserting title adversethat of his principal.Agapito is a trustee and whatever he does for the advantageof the trust estate inures to the benefit of the principal. DUNGO v. LOPENA 6 SCRA 1007 FACTS:

Anastacio Dungo and Rodrigo Gonzales purchased 3 parcels of land from Adriano Lopena and Rosa Ramos for the total priceof P269,804.00. P28.000.00 was given as down payment withthe agreement that the balance of P241,804.00 would be paidin 6 monthly installments.

To secure the payment of the balance, the Dungo and Gonzalesexecuted over the same parcels of land Deed of Real EstateMortgage in favor of Lopena and Ramos. This deed was dulyregistered with the Office of the Register of Deeds Rizal, withthe condition that failure of the vendees to pay any of theinstallments on their maturity dates shall automatically causethe entire unpaid balance to become due and demandable.

Dungo and Gonzales defaulted on the 1 st

installment.

Lopena and Ramos filed a complaint for the foreclosure of thereal estate mortgage with the CFI of Rizal

There were 2 other civil cases filed in the same lower court against the same defendants Dugo and Gonzales. The plaintiff in one was a certain Dionisio Lopena, and in the other case, thecomplainants were Bernardo Lopena and Maria de la Cruz. All3 cases arose out of one transaction. In view of the identicalnature of the cases, they were consolidated by the lower court into just one proceeding.

This present decision refers solely to the interests and claim of Adriano Lopena against Anastacio Dugo alone. Before the cases could be tried, a compromise agreement wassubmitted to the lower court for approval. It was signed byLopena and Ramos on one hand, and Gonzales, on the other. It was not signed by Dungo. However, Gonzales represented that his signature was for both himself and the Dugno. Moreover,Dugo's counsel of record, Atty. Chan, the same lawyer whosigned and submitted for him the answer to the complaint, waspresent at the preparation of the compromise agreement andthis counsel affixed his signature thereto.This compromiseagreement was approved by the lower court on the same day it was submitted Subsequently a so-called Tri-Party Agreement 2 was drawn.The signatories to it were Dugo and Gonzales as debtors,Lopena and Ramos as creditors, and, one Emma R. Santos aspayor.

When Dugo and Gonzales failed to pay the balance, Lopenaand Ramos filed a Motion for the Sale of Mortgaged Property.Although this last motion was filed ex parte, Dugo andGonzales were notified of it by the lower court. Neither of them filed any opposition thereto. The lower court granted theabove motion and ordered the sale of the mortgaged property.

The 3 parcels of land were sold by the Sheriff at a publicauction where at herein petitioners, together with theplaintiffs of the other two cases won as the highest bidders.The said sheriff's sale was later confirmed by the lower court.Before confirming the sale, the lower court gave due notice of the motion for the confirmation to the herein petitioner whofiled no opposition therefore.

Dugo filed a motion to set aside all the proceedings on theground that the compromise agreement was void ab initio withrespect to him because he did not sign the same. Consequently,he argued, all subsequent proceedings under and by virtue of the compromise agreement, including the foreclosure sale,were void and null as regards him. This motion to set asidewas denied by the lower court

Dugo filed a Notice of Appeal from the order approving theforeclosure sale, as well as the order denying his motion to set aside. The approval of the record on appeal however, wasopposed by the respondent spouses who claimed that thejudgment was not appealable having been rendered by virtueof the compromise agreement. The opposition was containedin a motion to dismiss the appeal. The lower court dismissedthe appeal ISSUES/HELD

Was the compromise agreement, the Order of the same dateapproving the same, and, all the proceedings subsequent thereto, valid or void insofar as Dungo is concerned? YES

Dugo - the Compromise Agreement was void ab initio andcould have no effect whatsoever against him because he didnot sign the same. Furthermore, as it was void, all theproceedings subsequent to its execution, including the Orderapproving it, were similarly void and could not result toanything adverse to his interest.chanroblesvirtualawlibrarychanrobles virtual law library

It is true that a compromise is, in itself, a contract.

ART. 2028. A compromise is a contract whereby the parties, bymaking reciprocal concessions, avoid a litigation or put an endto one already commenced.

Moreover, under Art. 1878 3 of the Civil Code, a third personcannot bind another to a compromise agreement unless he, thethird person, has obtained a special power of attorney for that purpose from the party intended to be bound.

Although the Civil Code expressly requires a special power of attorney in order that one may compromise an interest of another, it is neither accurate nor correct to conclude that itsabsence renders the compromise agreement void. In such acase, the compromise is merely unenforceable. It must begoverned by the rules and the law on contracts.

ART. 1403. The following contracts are unenforceable, unlessthey are ratified :Those entered into in the name of another person by onewho has been given no authority or legal representation,or who has acted beyond his power WON Dugo had ratified the compromise agreement. YES

The ratification of the compromise agreement wasconclusively established by the Tri-Party Agreement. It is to benoted that the compromise agreement was submitted to andapproved by the lower court. Now, the Tri-Party Agreement referred itself to that order

4 .

Rivero v. Rivero - When it appears that the client, on becomingaware the compromise and the judgment thereon, fails torepudiate promptly the action of his attorney, he will not afterwards be heard to contest its validity

This Court has not overlooked the fact that which indeedDugo was not a signatory to the compromise agreement, theprincipal provision of the said instrument was for his benefit.Originally, Dugo's obligation matured and becamedemandable on October 10, 1959. However, the compromiseagreement extended the date of maturity to June 30, 1960.More than anything the compromise agreement operated tobenefit of Dungo because it afforded him more time andopportunity to fulfill his monetary obligations under thecontract. If only for this reason, this Court believes that theherein petitioner should not be heard to repudiate the saidagreement.

The compromise agreement stated "that, should thedefendants fail to pay the said mortgage indebtedness,judgment of foreclosure shall thereafter be entered against thesaid defendants:" Beyond doubt, this was ratified by the Tri-Party Agreement when it covenanted that - If the MAYORdefaults or fails to pay anyone of the installments in themanner stated above, the MAYOR and the DEBTOR herebypermit the CREDITOR to execute the order of sale referred toabove (the Judgment of Foreclosure), and they (PAYOR andDEBTOR) hereby waive any and all objections or oppositionsto the propriety of the public auction sale and to theconfirmation of the sale to be made by the Court.

Dugo - even assuming that the compromise agreement wasvalid, it nevertheless could not be enforced against himbecause it has been novated by the Tri-Party Agreement whichbrought in a third party, Santos, who assumed the mortgagedobligation of Dungo.

Novation by presumption has never been favored. To besustained, it need be established that the old and newcontracts are incompatible in all points, or that the will tonovate appears by express agreement of the parties or in actsof similar import.

An obligation to pay a sum of money is not novated, in a newinstrument wherein the old is ratified, by changing only theterm of payment and adding other obligations not incompatible with the old one or wherein the old contract ismerely supplemented by the new one

Dungo claims that when a third party, Santos, came in andassumed the mortgaged obligation, novation resulted therebyinasmuch as a new debtor was substituted in place of theoriginal one.

In this kind of novation, however, it is not enough that thejuridical relation of the parties to the original contract isextended to a third person; it is necessary that the old debtorbe released from the obligation, and the third person or newdebtor take his place in the new relation. Without such release,there is no novation; the third person who has assumed theobligation of the debtor merely becomes a co-debtor or surety.If there is no agreement as to solidarity, the first and the newdebtors are considered obligation jointly. There was no suchrelease of the original debtor in the Tri-Party Agreement.

It is a very common thing in the business affairs for a strangerto a contract to assume its obligations; while this may have theeffect of adding to the number of persons liable, it does not necessarily imply the extinguishment of the liability of the first debtor). The mere fact that the creditor receives a guaranty oraccepts payments from a third person who has agreed toassume the obligation, when there is no

agreement that thefirst debtor shall be released from responsibility, do not constitute a novation, and the creditor can still enforce theobligation against the original debtor .

The Tri-Party Agreement was an instrument intended torender effective the compromise agreement. It merelycomplemented and ratified the same. That a third person wasinvolved in it is inconsequential. Nowhere in the newagreement may the release of Dungo be Ignacio Vicente vs Ambrosio Geraldez Facts: In 1967, HI Cement Corporation was granted authority to operate mining facilities in Bulacan. However, the areas allowed for it to explore cover areas which were also being explored by Ignacio Vicente, Juan Bernabe, and Moises Angeles. And so a dispute arose between the three and HI Cement as neither side wanted to give up their mining claims over the disputed areas. Eventually, HI Cement filed a civil case against the three. During pre-trial, the possibility of an amicable settlement was explored where HI Cement offered to purchase the areas of claims of Vicente et al at the rate of P0.90 per square meter. Vicente et al however wanted P10.00 per square meter.

In 1969, the lawyers of HI Cement agreed to enter into a compromise agreement with the three whereby commissioners shall be assigned by the court for the purpose of assessing the value of the disputed areas of claim. An assessment was subsequently made pursuant to the compromise agreement and the commissioners recommended a price rate of P15.00 per square meter.

One of the lawyers of HI Cement, Atty. Francisco Ventura, then notified the Board of Directors of HI Cement for the approval of the compromise agreement. But the Board disapproved the compromise agreement hence Atty. Ventura filed a motion with the court to disregard the compromise agreement. Vicente et al naturally assailed the motion. Vicente et al insisted that the compromise agreement is binding because prior to entering into the compromise agreement, the three lawyers of HI Cement declared in open court that they are authorized to enter into a compromise agreement for HI Cement; that one of the lawyers of HI Cement, Atty. Florentino Cardenas, is an executive official of HI Cement; that

Cardenas even nominated one of the commissioners; that such act ratified the compromise agreement even if it was not approved by the Board. HI Cement, in its defense, averred that the lawyers were not authorized and that in fact there was no special power of attorney executed in their favor for the purpose of entering into a compromise agreement. Judge Ambrosio Geraldez ruled in favor of HI Cement.

ISSUE: Whether or not a compromise agreement entered into by a lawyer purportedly in behalf of the corporation is valid without a written authority.

HELD: No. Corporations may compromise only in the form and with the requisites which may be necessary to alienate their property. Under the corporation law the power to compromise or settle claims in favor of or against the corporation is ordinarily and primarily committed to the Board of Directors but such power may be delegated. The delegation must be clearly shown for 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. In the case at bar, there was no special power of attorney authorizing the three lawyers to enter into a compromise agreement. This is even if the lawyers declared in open court that they are authorized to do so by the corporation (in this case, the transcript of stenographic notes does not show that the lawyers indeed declare such in open court).

The fact that Cardenas, an officer of HI Cement, acted in effecting the compromise agreement, i.e. nominating a commissioner, does not ratify the compromise agreement. There is no showing that Cardenas act binds HI Cement; no proof that he is authorized by the Board; no proof that there is a provision in the articles of incorporation of HI Cement that he can bind the corporation. Insular Drug Company VS National Bank Facts:U.E. Foerster was formerly a salesman of the drug company for the island ofPanay and Negros. He also acted as a collector of the company, mainly takingchecks from the Iloilo branch of the drug company and depositing them to thecompany account with Philippine National Bank. Upon examination of the checks deposited by Foerster with PNB, there wereseveral indorsements guaranteed by the PNB manager Angel Padilla for

Carmen E. de Foerster, the wife of U.E. Foerster, which was consequentlywithdrawn by the couple and a certain V. Bacaldo (stenographer of Foerster).When the Manila office of the drug company investigated and discovered theanomalies, Foerster committed suicide. Although there was no evidenceshowing that the bank knew that Foerster was misappropriating the funds ofhis principal, the Insular Drug Co. claims that it never received the face value ofthe 132 checks in question covering a total of Php 18, 285.92.The drug company saw fit to stand on the proposition that checks drawn in its favor were improperly and illegally cashed by the bank for Foersters personal account. Issue: Whether the bank is liable for the amount indorsed and withdrawn by Foerster using company checks even if the latter is an agent of the drug company.Whether the bank is liable for the negligence of its agents when they allowedencashing of the checks without prior authority from the company. Ratio: Yes on both issues.The bank is liable for the amount withdrawn by Foerster and will have to standthe loss occasioned by negligence of its agents. 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 moneybelonging to his principal does not have the implied authority to indorse checksreceived in payment. Any person taking checks made payable to a corporation,which can [be acted upon] only by agents does so at his peril, and must abide bythe consequences if the agent who indorses the same is without authority. The fact that the bank acted in good faith does not relieve it fromresponsibility. The bank could tell by the checks themselves that the moneybelonged to the Insular Drug Company and not to Foerster, his wife or hisclerk. When the bank permitted the withdrawals without the authority fromthe drug company, the bank made itself responsible to the drug company for the amounts represented by the checks.The bank could have relieved itself from the responsibility had it proven thatthe money withdrawn by Foerster passed to the drug company but it hasntdone so. Municipal Council of Iloilo vs. Evangelista and Tan TocoFACTS: This is an appeal taken by Tan Toco of the decision of CFI of Iloilo, declaring validand binding 1.

the deed of assignment of the credit executed by Tan Toco's widow,through her attorney-in-fact Tan Buntiong, in favor of late Antero Soriano2.

the assignment executed by the latter during his lifetime in favor of thedefendant Mauricio Cruz & Co., Inc. The CFI of Iloilo rendered judgment in a case awarding Tan Toco the recoveryof the value of a strip of land taken by the municipality of Iloilo from her. After the case was remanded to the court of origin, Atty. Evangelista, in his behalfand as counsel for the administratrix of Jo se Ma. Arroyos intestate estate, filed a claim in the same case for professional services rendered by him, whichthe court, acting with the consent of the appellant widow, fixed at 15 per centof the amount of the judgment.At the hearing on said claim, the claimants appeared, as did also the PhilippineNational Bank, which prayed that the amount of the judgment be turned over to it because the land taken over had been mortgaged to it. Antero Sorianoalso appeared claiming the amount of the judgment as it had been assigned tohim, and by him, in turn, assigned to Mauricio Cruz & Co., Inc.After hearing all the adverse claims on the amount of the judgment the courtordered that the attorney's lien in the amount of 15 per cent of the judgment,be recorded in favor of Attorney Jose Evangelista, in his own behalf and ascounsel for the administratrix of the deceased Jose Ma .Arroyo, and directedthe municipality of Iloilo to file an action of interpleading against the adverseclaimants, the Philippine National Bank, Antero Soriano, Mauricio Cruz & Co.,Jose Evangelista and Jose Arroyo, as was done, the case being filed in theCourt of First Instance of Iloilo.Then municipal treasurer of Iloilo deposited with the clerk of the Court of FirstInstance of Iloilo the amount of P6,000 on account of the judgment renderedin said civil case No. 3514. In pursuance of the resolution of the court belowordering that the attorney's lien in the amount of 15 per cent of the judgmentbe recorded in favor of Attorney Jose Evangelista, in his own behalf and ascounsel for the late Jose Ma. Arroyo, the said clerk of court delivered on thesame date to said Attorney Jose Evangelista the said amount of P6,000. At thehearing of the instant case, the codefendants of Attorney Jose Evangelistaagreed not to discuss the payment made to the latter by the clerk of the Courtof First Instance of Iloilo of the amount of P6,000 mentioned above inconsideration of said lawyer's waiver of the remainder of the 15 per cent of saidjudgment amounting to P444.69. With these two payments of P6,000 eachmaking a total of P12,000, the judgment for P42,966.44 against themunicipality of Iloilo was reduced to P30,966.40, which was adjudicated bysaid court to Mauricio Cruz & Co.This appeal, then, is confined to the claim of Mauricio

Cruz & Co. as allegedassignee of the rights of the late Attorney Antero Soriano by virtue of the saidjudgment in payment of professional services rendered by him to the saidwidow and her coheirs. ISSUE: Whether the deeds of assignment in this case are null and void HELD: NO.

Tan Toco contends, in the first place, that said assignments was notmade in consideration of professional services by Attorney AnteroSoriano, for they had already been satisfied before the execution ofsaid deed of assignment, but in order to facilitate the collection of theamount of said judgment in favor of the appellant, for the reason that,being Chinese, she had encountered many difficulties in trying tocollect. In support of her contention on this point, the appellant allegesthat the payments admitted by the court in its judgment, as made byTan Toco's widow to Attorney Antero Soriano for professional servicesrendered to her and to her coheirs, amounting to P2,900, must beadded to the P700, on the ground that they were considered aspayments made for professional services rendered, not by AnteroSoriano personally, by the firm of Soriano & Arroyo.

An agent of attorney-in -fact empowered to pay the debts of theprincipal, and to employ lawyers to defend the latter's interests, isimpliedly empowered to pay the lawyer's fees for services rendered inthe interests of said principal, and may satisfy them by an assignmentof a judgment rendered in favor of said principal

When a person appoints two attorneys-in-fact independently, theconsent of the one will not be required to validate the acts of theother unless that appears positively to have been the principal'sattention

The assignment of the amount of a judgment made by a person to hisattorney, who has not taken any part in the case wherein saidjudgment was rendered, made in payment of professional services inother cases, does not contravene the prohibition of article 1459, case5, of the Civil Code. Green Valley Poultry and Allied Products, Inc. v. Intermediate Appellate Court FACTS: E.R. Squib entered into an letter agreement with Green Valley whichappointed Green Valley as an non-exclusive distributor for Squib VeterinaryProducts.For goods delivered to Green Valley but unpaid, Squib filed a suit to collect.Green Valley claimed that the contract with Squib was an agency to sell; thatthey never purchased goods; that the products received were on consignmentonly with the obligation to turn over proceeds less commission or to returnunsold goods and since it has sold the goods but had not been able to collectfrom the purchasers the action was premature.Squib claimed that the contract was a contract to sell so that Green Valley wasobligated to pay for the goods upon expiration of the 60 day period.The Trial Court and the Court of Appeals ruled in favor of Squib saying theagreement was a sales contract and ordering Green Valley to pay Squib. ISSUE: Whether or not the agreement was a contract of agency and if so, doesit relieve Green Valley of any liability? HELD: The Supreme Court ruled that whether the agreement was an salescontract or an agency to sell, Green Valley was still liable.The Supreme Court further held that even if the contract was an agency tosell, Green Valley would still be liable because it sold on credit withoutauthority from its principal. Del Rosario and Costa vs. La BadeniaFacts: "[P]laintiffs Teofila del Rosario de Costa and her husband, BernardinoCosta, brought this action to recover from the defendant corporation the sumof 1,795.25 [pesos] a balance alleged to be due Teofila del Rosario de Costa asthe agent of the defendant corporation for services rendered and expensesincurred in the sale of its products. The defendant denied the claim and set upcounterclaim for 55.43 [pesos]. Judgment having been rendered in favor of thedefendant, the record is now before us on plaintiffs' bill of exceptions."

Defendant La Badenia, with head office in Manila, makes and sells tobaccoproducts. To introduce its products to the retail trade, defendant started aselling campaign. One of the locations chosen for the

campaign was Albay,Sorsogon. Celestino Aragon, a general agent of the corporation, went toLegaspi, Albay to conduct the selling campaign. Aragon established a centraldistributing agency or depot with the plaintiff Teofila del Rosario de Costa,nominally in charge, though her husband appears to have been the actualmanager of the agency. Throughout the course of the business betweenplaintiffs and defendant, no settlement of their accounts were ever made.Aragon took residence (rent was paid to plaintiffs) in the house of plaintiffsand used the lower part of the house as a store room for the tobacco products.Eventually Aragon made a settlement of accounts with the plaintiff. "In thisstatement goods received by the Legaspi agency from the factory in Manila arecharged against Teofila del Rosario Costa, while credits are given on variousitems, such as, withdrawals of goods from the depository at Legaspi shipped toother towns, remittances made to the head office in Manila, money paid over to the general agent, advertising expenses, commissions on sales, salaries ofemployees [other people hired by Aragon], and other expenses incident to theconduct of business. x x x The defendant corporation however, refused to payover to the plaintiffs the balance of 1,795.25 [pesos], claiming that plaintiffshad been improperly allowed a credit of 1,850 [pesos] which representedunpaid accounts due the business in Legaspi for cigars and cigarettes sold by it.If these uncollected items are charged to the defendant corporation a balanceis left in favor of plaintiffs amounting to 1,795.25 [pesos]; and if charged toplaintiffs there remains a balance in favor of the defendant corporationamounting to 55.43 [pesos]."Defendant claims that plaintiffs are just merchants who purchased the goodsand were never employed as agents. Plaintiffs claim that they were the agentsof the defendant; "that they received commissions on the sales made by theagency; and that they were authorized to extend a reasonable credit under thesupervision of the general agent." Issue: Are the plaintiffs merchants or sub-agents? Held: Plaintiffs are sub-agents for the defendant corporation. Plaintiffs won. Ratio: "It is not denied however, that Aragon was acting as the general agentof the defendant corporation and that as such he was invested with theauthority to inaugurate and carry out a selling campaign with a view ofinteresting the sale of the defendant's products in the territory assigned tohim. The record does not show what limitations, if any, were placed upon hispowers to act for the corporation. x x x It appears further that the head officein Manila was fully informed of plaintiffs' relations with the general agent inextending the sales of its products. Plaintiffs made direct remittances to thehead office in Manila and these remittances were credited to the account ofthe agency at Legaspi, and acknowledgment was made directly

to theplaintiffs. Neither the head office nor Aragon appear to have made anydistinction between the business done by Aragon and that done by theplaintiffs. x x x The fact that the defendant corporation carried the Legaspiaccount in the name of the general agent, Aragon, and carried no account withthe plaintiffs, would seem to negative the contention that plaintiffs weresimply merchants purchasing their good in Manila at wholesale and sellingthem locally on their own account."

The pieces of evidence of note were the two letters (sent by defendant toplaintiff) presented by plaintiffs which the Court deemed "sufficient to showthat the defendant was fully aware of plaintiffs' connection with the agency atLegaspi, and recognized them as agents of the company, and clearly did notconsider them as independent merchants buying solely on their own account,but rather as subagents working under the supervision of the general agent,Aragon."The general agent did not consider plaintiffs as independent merchants, butrather as agents cooperating with him and working under his supervision. "Thedefendant carried no account whatever with the plaintiffs, and havingentrusted the entire management of the Legaspi business to Aragon, it can notnow come into court and repudiate the account confirmed by him, unless it canshow that he acted beyond the scope of his authority in making thearrangement he did with the plaintiffs. x x x [T]he record does not disclosewhat were the precise terms of the arrangement made with the plaintiffs. Therecord does show however, that in many instances the plaintiffs were allowedcommissions on the sales made by them, but whether or not these were inaddition to other profits allowed them the record does not show." International Films v Lyric Film Facts: Bernard Gabelman was the Philippine agent of International Films. 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 inquestion whatever the cause.After the last showing of the said film, Vicente Albo, the Chief of the film department of The Lyric FilmExchange, called Gabelman and inquired where he wished to have the film returned to him and Gabelmanreplied that he wished to see him personally in Albos office. When they were in the said office, Gabelmanasked whether he could deposit the said film in the vault of The Lyric Film Exchange, because InternationalFilms did not yet have a safety vault as required by the regulations of the fire department. The chief of International Films, OMalley, after the case was referred to him, answered that the deposit could not bemade because the film would not be covered by the

insurance of Lyric Film Exchange. Gabelman thenrequested Albo to permit him to deposit said film in the vault of Lyric Film Exchange, under Gabelmansown responsibility. As there was a verbal contract between Gabelman and Lyric Film Exchange, wherebythe film would be shown elsewhere, OMalley agreed and the film was deposited in Lyric Film Exchangesvault under Gabelmans

responsibility.Gabelman was then succeeded by Lazarus Joseph as agent of International Films. Joseph was informed of the said deposit and and about the verbal contract entered into between Gabelman and Lyric FilmExchange, whereby Lyric Film Exchange would act as a subagent of International Films with authority toshow the said film in any theater where Lyric Film Exchange might wish to show it. Joseph asked for the return of the three films, including Monte Carlo Madness, but the said film could notbe returned because it was to be shown in Cebu. Thereafter, the bodega of Lyric Film Exchange wasburned, including the film, which was not insured. Issue: W/N Lyric Film Exchange is liable to International Films for the the destruction of the film by fire.Held: NO. Lyric Film Exchange, as subagent of the International Films in the exhibition of the film "MonteCarlo Madness", was not obliged to insure it against fire, not having received any express mandate to thateffect, and it is not liable for the accidental destruction thereof by fire. The preponderance of evidence shows that the verbal agreement had between Bernard Gabelman, theformer agent of the International Films, and Vicente Albo, chief of the film department of the Lyric FilmExchange, was that said film "Monte Carlo Madness" would remain deposited in the safety vault of thedefendant company under the responsibility of said former agent and that the defendant company, as hissubagent, could show it in its theaters. The verbal contract between Bernard Gabelman, the former agent of the plaintiff company, and VicenteAlbo, chief of the film department of the defendant company, was a sub-agency or a submandate, thedefendant company is not civilly liable for the destruction by fire of the film in question because as a meresubmandatary or subagent, it was not obliged to fulfill more than the contents of the mandate and toanswer for the damages caused to the principal by his failure to do so. The fact that the film was not insured against fire does not constitute fraud or negligence on the part of the defendant company, the Lyric Film Exchange, Inc., because as a subagent, it received no instruction tothat effect from its principal and the insurance of the film does not form a part of the obligation imposedupon it by law.