Agency

Barretto v Santa Marina (1913)

Torres
Under what topic: How is agency extinguished; Revocation.
Plaintiff-Appellee: Antonio Barretto
Defendant-Appellant: Jose Santa Marina
Synopsis: Barretto was agent/manager of Santa Marinas business. A Chinaman didnt pay his
debt to the company, so Barretto felt responsible for the loss. He sent a letter to Santa Marina in
this wise: I have always thought that when the manager of a business trips up in a matter
like this, he should tender his resignationThe position is at your disposal as you like.

Santa Marina did not reply; he eventually appointed another agent. Barretto seeks the payment
of his salary. He claims that and that the revocation of his agency is in violation of the contract
between him and Santa Marina. Court held that the agency was validly revoked. Barrettos
resignation was freely and voluntarily made. Even if Santa Marina did not reply to Barrettos
letter, the silence and lack of reply on his part was sufficient indication that the resignation had
been virtually accepted. Barretto had no right to demand an indemnity, particularly since he
acknowledged that he had been negligent in the discharge of his duties. Barretto voluntarily
resigned and placed at Santa Marinas disposal the position of agent and manager. And if Santa
Marina deemed it suitable to relieve him for his acts of negligence and overstepping, as well as
of resigning, it cannot be explained how such a person can be entitled to indemnity for losses
and damages from his principal who merely exercised his lawful right of relieving Barretto from
the position which he had voluntarily given up.
Doctrine: In view of the resignation of the agent, the principal had to look for and appoint
another a lawful act which cannot serve as a ground upon which to demand indemnity. The
agent could not expect, nor ought to have expected, that the principal should have insisted on
his unsuccessful continuance of his position or that the principal should not have accepted the
resignation.
By the mere fact that the principal remained silent and later designated another person as
agent, the agent (who resigned) should have understood that the resignation had been
accepted. If the acceptance was not communicated to him immediately, it was owing to the
circumstance that the owner did not have anyone else whom he could appoint. And as soon as
the principal appointed another, the principal had revoked the agency.
Facts: Antonio Barretto filed suit against
Jose Santa Marina, the owner and proprietor
of La Insular Cigar and Cigarette Factory.
Barretto, for many years prior, held the
position of Agent of Santa Marina in the
Philippines for the management of the
business. His services were rendered
pursuant to a contract whereby Santa Marina
obligated himself to hire Barretto and pay
him P37,000 per annum for so long as
[Barretto] should not show discouragement.

Barretto alleged that Santa Marina, without

reason, justification, or pretext and in
violation
of
the
contract
mentioned,
summarily and arbitrarily dispensed with his
services and removed him from the
management of the business. Since then, he
refused to pay Barretto compensation due
him for services rendered. Barretto stated
that he suffered losses and damages in the
sum of P100,000.
Santa Marina denied each and all allegations
contained in the complaint. He set forth that

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the Barretto had no contract with him in
which
any
period
of
time
was
stipulated. He said that he revoked for
just cause the power conferred and that
subsequent to the revocation of such power
and on occasion of Barretto having sold his
rights and interests in the business and in
consideration of the sum he had received,
Barretto had renounced all action,
intervention, and claim that he might
have had against Santa Marina.
Counsel presented to the court a stipulation
from the will of Don Joaquin Sana Marina
(predecessor of Jose Santa Marina) which
provided for a salary, allotment or
emolument
for
Barretto
as
judicial
administration of Joaquins estate. This
renumeration paid to him was independent
to that which pertained to him as manager of
La Insular factory before and after he was
the judicial administrator.
Demand is made in the present suit for the
sum of P137,000, together with legal interest
P37,000 as salary for the year 1910 and
P100,000 as an indemnity for losses and
damages when he was unjustly removed.
Issue: Whether Barretto was entitled to the
P100,000 (indemnity). NO.
The most important fact of the case is
Barrettos renunciation or resignation
of the position he held as agent and
manager of La Insular, which was freely
and voluntarily made by him on the
occasion
of
the
insolvency
and
disappearance of Uy Yan, who bought from
the factory products amounting to P97,000
without paying for his debt.
In a letter dated January 2, 1909 and
addressed to Santa Marina, Barretto reported
Uy Yans failure to pay the amount and how
he acknowledged that he had been more
generous to Uy Yan than he should have
been. He then said that I have always
thought that when the manager of a
business trips up in a matter like
this,
he
should
tender
his

resignation The position is at your

disposal as you like.
The letter is authentic and neither party
denied nor rejected it. Santa Marina did not
immediately reply to the letter and tell him
what his opinion and decision was but it is no
less true that the silence and lack of
reply on the part of the chief owner of
the factory were sufficient indications
that the resignation had been virtually
accepted. He intended to act cautiously. As
the addressee, he knew, at that time, of no
one who could relieve Barretto, who had
resigned, and it was thereafter presumed
that he was looking for someone to
substitute the said agent and manager
of La Insular. He later communicated to
Barretto that he had revoked the power
conferred and had appointed Mr. J.
McGavin to substitute him in the
position, whereby his resignation was
expressly accepted.
Barretto had resigned his position and
notwithstanding the lapse of several
months before its express acceptance,
it cannot be understood that he has any
right to demand an indemnity for losses
an damages, particularly since he
ostensibly and frankly acknowledged
that he had been negligent in the
discharge of his duties and had
overstepped his authority with respect
to the said Chinaman.
Record does not show that Santa Marina
required him to resign but that he
voluntarily did so as stated by the letter.
For the reasons therein mentioned, he
resigned and placed at the latters
disposal the position of agent and
manager. And if Santa Marina deemed it
suitable to relieve him for his acts of
negligence and overstepping, as well as
of resigning, it cannot be explained how
such a person can be entitled to
indemnity for losses and damages from
his principal who merely exercised his
lawful right of relieving Barretto from
the position which he had voluntarily
given up.

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Barretto was thus not really dismissed or

removed. What occurred was that in view of
his resignation, the owner had to look for
and
appoint
another
agent
and
manager a lawful act performed by
the principal owner and which cannot
serve as a ground upon which to
demand indemnity. The plaintiff could not
expect, nor ought to have expected, that the
defendant should have insisted on his
unsuccessful continuance of his position or
that the owner should not have accepted the
resignation.
By the mere fact that he remained
silent and later designate another
person to discharge Barrettos previous
duties,
Barretto
should
have
understood that the resignation had
been accepted. If the acceptance was
not communicated to him immediately,
it was owing to the circumstance that
the owner did not have anyone else
whom he could appoint. As soon as he
appointed McGavin, he revoked the
power he revoked the power through a
letter which was presented to him by
McGavin himself.
Issue: Whether Barretto was entitled to the
P37,000. NO.
RE: Contract between Barretto and deceased
Joaquin
Santa
Marina.
Santa
Marina
acknowledged the verbal contract and its
ratification by him. However, he denied that
there was any stipulation therein that
Barretto should hold his office for any
specific period of time fixed by and between
the contracting parties for the deceased
Joaquin, in conferring power upon the
plaintiff did not do so for any specific time,
nor did he indicate a set period for which
Barretto should be agent and manager. The
date for termination was also not indicated.
Santa Marina, in executing the instruement
whereby the agreement between Joaquin
and Barretto was ratified, did no more than
to accord to Barretto the same

confidence
that
the
predecessor had in him.

defendants

Art. 1733 of the CC states that The

principal may, at his will, revoke the
power and compel the agent to return
the instrument containing the same in
which the authority was given. Art. 279 of
the Code of Commerce provides that
The
principal
may
revoke
the
commission instructed to an agent at
any stage of the transaction, advising
him thereof, but always being liable for the
result of the transactions which took place
before the latter was informed of the
revocation.,
From the above legal provisions it is clearly
to be inferred that the contract of agency
can subsist only so long as the principal
has confidence in his agent, because,
from the moment such confidence
disappears and although there be a
fixed period for the excercise of the
office of agent, a circumstance that
does not appear in the present case the
principal has a perfect right to revoke
the power that he had conferred upon
the agent owing to the confidence he
had in him and which for sound reasons
had ceased to exist.
It would be improper, for the purpose of
supplying such defect, to apply to the
present case the provisions of article 1128 of
the Civil Code. This article relates to
obligation for which no period has been fixed
for their fulfillment, but, which, from their
nature and circumstances, allow the
inference that there was an intention to
grant such period to the debtor, wherefore
the courts are authorized to fix the duration
of the same, and the reason why it is
inapplicable is that the rights and obligations
existing between Barretto and Santa Marina
are absolutely different from those to which
it refers, for, according to article 1732 of the
Civil Code, agency is terminated.
It is not incumbent upon the courts to fix
the period during which contracts for
services shall last. Their duration is

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understood to be implicity fixed, in default of
express stipulation, by the period for the
payment of the salary of the employee.
Therefore the doctrine of the tacit renewal of
leases of property, established in article
1566 of the Civil Code, is not applicable to
the case at bar. And even though the annual
salary fixed for the services to be rendered
by the plaintiff as agent and manager of the
La Insular factory, was P37,000, yet, in
accordance with the custom universally
observed throughout the world, salaries fixed
for the year are collected and paid in
monthly installments as they fall due, and so
the plaintiff collected and was paid his
remuneration; therefore, on the latter's
discontinuance in his office as agent, he
would at most be entitled to the salary for
one month and some odd days, allowed in
the judgment of the lower court.

From the mere fact that the principal no

longer had confidence in the agent, he
is entitled to withdraw it and to revoke
the power he conferred upon the latter,
even before the expiration of the period of
the engagement or of the agreement made
between them; but, in the present case, once
it has been shown that, between the
deceased Joaquin Santa Marina and the
latter's heir, now the defendant, on the one
hand, and the plaintiff Barretto, on the other,
no period whatever was stipulated
during which the last-named should hold the
office and manager of the said factory, it is
unquestionable that the defendant,
even without good reasons, could
lawfully revoke the power conferred
upon the plaintiff and appoint in his
place Mr. McGavin.