AGENCY CASES (2ND HALF)

LIM VS CA
RULING:
In determining proper venue in these cases, the following acts material and essential to
each crime and requisite to its consummation must be considered: (a) the seven (7)
checks were issued to LINTON at its place of business in Balut, Navotas; b) they were
delivered to LINTON at the same place; (c) they were dishonored in Kalookan City; and,
(d) petitioners had knowledge of the insufficiency of their funds in SOLIDBANK at the
time the checks were issued. Since there is no dispute that the checks were dishonored in
Kalookan City, it is no longer necessary to discuss where the checks were dishonored.
Under Sec. 191 of the Negotiable Instruments Law the term "issue" means the first
delivery of the instrument complete in form to a person who takes it as a holder. On the
other hand, the term "holder" refers to the payee or indorsee of a bill or note who is in
possession of it or the bearer thereof. In People v. Yabut 26 this Court explained
. . . The place where the bills were written, signed, or dated does not necessarily fix or
determine the place where they were executed. What is of decisive importance is the
delivery thereof. The delivery of the instrument is the final act essential to its
consummation as an obligation. An undelivered bill or note is inoperative. Until delivery,
the contract is revocable the issuance as well as the delivery of the check must be to a
person who takes it as a holder, which means "(t)he payee or indorsee of a bill or
note, who is in possession of it, or the bearer thereof." Delivery of the check signifies
transfer of possession, whether actual or constructive, from one person to another
with intent to transfer title thereto . . .
Although LINTON sent a collector who received the checks from petitioners at their
place of business in Kalookan City, they were actually issued and delivered to LINTON
at its place of business in Balut, Navotas. The receipt of the checks by the collector of
LINTON is not the issuance and delivery to the payee in contemplation of law. The
collector was not the person who could take the checks as a holder, i.e., as a payee or
indorsee thereof, with the intent to transfer title thereto. Neither could the collector
be deemed an agent of LINTON with respect to the checks because he was a mere
employee. As this Court further explained in People v. Yabut 27
Modesto Yambao's receipt of the bad checks from Cecilia Que Yabut or Geminiano
Yabut, Jr., in Caloocan City cannot, contrary to the holding of the respondent
Judges, be licitly taken as delivery of the checks to the complainant Alicia P. Andan
at Caloocan City to fix the venue there. He did not take delivery of the checks as
holder, i.e., as "payee" or "indorsee." And there appears to be no contract of agency
between Yambao and Andan so as to bind the latter for the acts of the former. Alicia
P. Andan declared in that sworn testimony before the investigating fiscal that Yambao is
but her "messenger" or "part-time employee." There was no special fiduciary relationship

that permeated their dealings. For a contract of agency to exist, the consent of both
parties is essential. The principal consents that the other party, the agent, shall act
on his behalf, and the agent consents so as to act. It must exist as a fact. The law
makes no presumption thereof. The person alleging it has the burden of proof to
show, not only the fact of its existence, but also its nature and extent . . .
COMPANIA MARITIMA
RULING:
n Viaa vs. Al Lagadan et al., G.R. No. L-8967, May 31, 1956, the Supreme Court states
the rule as follows.
'In determining the existence of employer-employee relationship, the following elements
are generally considered, namely: (1) the selection and engagement of the employees; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct although the latter is the most important element (35 Am. Jur.
445). Assuming that the share received by the deceased could partake of the nature of
wages on which we need not and do not express our view and that the second
element, therefore, exists in the case at bar, the record does not contain any specific data
regarding the third and fourth elements.'
The clear implication of the decision of the Supreme Court is that if the defendant
has no power of control which, according to the Supreme Court, is the "most
important element" there is no employer-employee relationship. (Emphasis
supplied)
The conclusion thus reached by the court a quo is in full accord with the facts and
the applicable jurisprudence. We totally agree with the court a quo that AFWU was
an independent contractor. And an independent contractor is not an "employee".17
Neither is there any direct employment relationship between MARITIMA and the
laborers. The latter have no separate individual contracts with MARITIMA. In fact,
the court a quo found that it was AFWU that hired them. Their only possible
connection with MARITIMA is through AFWU which contracted with the latter. Hence,
they could not possibly be in a better class than AFWU which dealt with MARITIMA.18
In this connection, it is interesting to note that the facts as found by the court a quo
strongly indicate that it is AFWU itself who is the "employer" of those laborers. The
facts very succinctly show that it was AFWU, through its officers, which (1) selected
and hired the laborers, (2) paid their wages, (3) exercised control and supervision
over them, and (4) had the power to discipline and dismiss them. These are the very
elements constituting an employer-employee relationship.19
Of course there is no legal impediment for a union to be an "employer". 20 Under the
particular facts of this case, however, AFWU appears to be more of a distinct and

completely autonomous business group or association. Its organizational structure and

operational system is no different from other commercial entities on the same line. It even
has its own bill collectors and trucking facilities. And that it really is engaged in business
is shown by the fact that it had arrastre and stevedoring contracts with other shipping
firms in Iligan City.
Now, in its all-out endeavor to make an "employer" out of MARITIMA, AFWU citing an
impressive array of jurisprudence, even goes to the extent of insisting that it be
considered a mere "agent" of MARITIMA. Suffice it to say on this point that an agent
can not represent two conflicting interests that are diametrically opposed. And that
the cases sought to be relied upon did not involve representatives of opposing
interests.(READ FULL CASE!)
NAGUIAT VS CA
RULING:
Naguiat questions the admissibility of the various written representations made by
Ruebenfeldt on the ground that they could not bind her following the res inter alia acta
alteri nocere non debet rule. The Court of Appeals rejected the argument, holding that
since Ruebenfeldt was an authorized representative or agent of Naguiat the situation falls
under a recognized exception to the rule.22 Still, Naguiat insists that Ruebenfeldt was
not her agent.
Suffice to say, however, the existence of an agency relationship between Naguiat and
Ruebenfeldt is supported by ample evidence. As correctly pointed out by the Court
of Appeals, Ruebenfeldt was not a stranger or an unauthorized person. Naguiat
instructed Ruebenfeldt to withhold from Queao the checks she issued or indorsed
to Queao, pending delivery by the latter of additional collateral. Ruebenfeldt
served as agent of Naguiat on the loan application of Queaos friend, Marilou
Farralese, and it was in connection with that transaction that Queao came to know
Naguiat.23 It was also Ruebenfeldt who accompanied Queao in her meeting with
Naguiat and on that occasion, on her own and without Queao asking for it,
Reubenfeldt actually drew a check for the sum of P220,000.00 payable to Naguiat, to
cover for Queaos alleged liability to Naguiat under the loan agreement.24
The Court of Appeals recognized the existence of an "agency by estoppel25 citing
Article 1873 of the Civil Code.26 Apparently, it considered that at the very least, as a
consequence of the interaction between Naguiat and Ruebenfeldt, Queao got the
impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to
correct Queaos impression. In that situation, the rule is clear. One who clothes
another with apparent authority as his agent, and holds him out to the public as
such, cannot be permitted to deny the authority of such person to act as his agent, to
the prejudice of innocent third parties dealing with such person in good faith, and in
the honest belief that he is what he appears to be.27 The Court of Appeals is correct

in invoking the said rule on agency by estoppel.1awphi1.nt

More fundamentally, whatever was the true relationship between Naguiat and
Ruebenfeldt is irrelevant in the face of the fact that the checks issued or indorsed to
Queao were never encashed or deposited to her account of Naguiat.
LIM VS SABAN
RULING:
The Court gives due course to the petition, but agrees with the result reached by the Court
of Appeals.
The Court affirms the appellate courts finding that the agency was not revoked
since Ybaez requested that Lim make stop payment orders for the checks payable
to Saban only after the consummation of the sale on March 10, 1994. At that time,
Saban had already performed his obligation as Ybaezs agent when, through his
(Sabans) efforts, Ybaez executed the Deed of Absolute Sale of the lot with Lim and
the Spouses Lim.
To deprive Saban of his commission subsequent to the sale which was consummated
through his efforts would be a breach of his contract of agency with Ybaez which
expressly states that Saban would be entitled to any excess in the purchase price
after deducting the P200,000.00 due to Ybaez and the transfer taxes and other
incidental expenses of the sale.22
In Macondray & Co. v. Sellner,23 the Court recognized the right of a broker to his
commission for finding a suitable buyer for the sellers property even though the
seller himself consummated the sale with the buyer.24 The Court held that it would
be in the height of injustice to permit the principal to terminate the contract of
agency to the prejudice of the broker when he had already reaped the benefits of the
brokers efforts.
In Infante v. Cunanan, et al.,25 the Court upheld the right of the brokers to their
commissions although the seller revoked their authority to act in his behalf after they had
found a buyer for his properties and negotiated the sale directly with the buyer whom he
met through the brokers efforts. The Court ruled that the sellers withdrawal in bad
faith of the brokers authority cannot unjustly deprive the brokers of their
commissions as the sellers duly constituted agents.
The pronouncements of the Court in the aforecited cases are applicable to the present
case, especially considering that Saban had completely performed his obligations
under his contract of agency with Ybaez by finding a suitable buyer to preparing
the Deed of Absolute Sale between Ybaez and Lim and her co-vendees. Moreover,
the contract of agency very clearly states that Saban is entitled to the excess of the
mark-up of the price of the lot after deducting Ybaezs share of P200,000.00 and

the taxes and other incidental expenses of the sale.

However, the Court does not agree with the appellate courts pronouncement that Sabans
agency was one coupled with an interest. Under Article 1927 of the Civil Code, an
agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of
fulfilling an obligation already contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal from the management is
unjustifiable. Stated differently, an agency is deemed as one coupled with an interest
where it is established for the mutual benefit of the principal and of the agent, or for
the interest of the principal and of third persons, and it cannot be revoked by the
principal so long as the interest of the agent or of a third person subsists. In an
agency coupled with an interest, the agents interest must be in the subject matter of
the power conferred and not merely an interest in the exercise of the power because
it entitles him to compensation. When an agents interest is confined to earning his
agreed compensation, the agency is not one coupled with an interest, since an agents
interest in obtaining his compensation as such agent is an ordinary incident of the
agency relationship.26
Sabans entitlement to his commission having been settled, the Court must now
determine whether Lim is the proper party against whom Saban should address his claim.
Sabans right to receive compensation for negotiating as broker for Ybaez arises
from the Agency Agreement between them. Lim is not a party to the contract.
However, the record reveals that she had knowledge of the fact that Ybaez set the price
of the lot at P200,000.00 and that the P600,000.00the price agreed upon by her and
Sabanwas more than the amount set by Ybaez because it included the amount for
payment of taxes and for Sabans commission as broker for Ybaez.
RAMOS VS CA
RULING:
The decision of the Court of Appeals is evidently based on the assumption that since
Calanoc was the efficient agent who brought about the Wellington & Co. contract, it
follows that he was entitled to the 2% commission which he claims was the overprice he
secured for Ramos' merchandise. The assumption is not borne out by the record. As
already observed, and this was confirmed by the Court of Appeals, the arrangement was
for Calanoc "to sell the merchandise at a mark-up price of twenty-three percent of
the invoice value of the importation and the overprice would constitute his
commission." Nothing in the agreement guaranteed Calanoc a fixed commission,
which depended upon the overprice the buyer would pay. And it is a fact,
undisputed by Calanoc that what Ramos received in the Wellington & Co.
transaction in excess of his original 23% mark-up price was only P13,330.00 and not
P53,320.00, the amount claimed and awarded by the trial court and the Court of
Appeals.

The one feature of this case which militates most strongly against the conclusions arrived
at by the courts below is that they did not necessarily follow from the facts established.
Calanoc never brought the buyer, Mrs. Salustiana Dee, to Ramos. The agreement, if any,
regarding the 25% buying price was made solely between Calanoc and Mrs. Dee.
Ramos did not intervene nor participate in any manner in that supposed agreement.
While it is true, as Calanoc claims, that he informed petitioner that Mrs. Dee had
already agreed to pay the 25% premium, there is absent in the records of this case
any evidence to show that Mrs. Dee confirmed such agreement with petitioner and
that the latter could have bound her to it. Petitioner had fixed for himself a 23%
mark-up, allowing anything over that amount as commission. If Mrs. Dee changed
her mind and refused to pay the 25% premium, and paid only 23-1/2%, that was her
prerogative; petitioner had neither the duty nor the right to compel her to contract
for more than what she was willing to pay, when she was ready to meet his price. t.
hqw
.... a broker is never entitled to commissions for unsuccessful efforts. The risk of
failure is wholly his. The reward comes only with his success. That is the plain contract
and contemplation of the parties. The broker may devote his time and labor, and
expend his money with ever so much of devotion to the interest of his employer, and
yet if he fails, if without effecting an agreement or accomplishing a bargain, he
abandons the effort, or his authority is fairly and in good faith terminated, he gains
no right to commissions. .. He may have introduced to each other parties who
otherwise would have never met; he may have created impressions, which under
later and more favorable circumstances naturally lead to and materially assist in the
consummation of a sale; he may have planted the very seed from which others reap
the harvest; but all that gives him no claim. It was part of his risk that failing
himself, not successful in fulfilling his obligation, others might be left to some extent
to avail themselves of the fruit of his labors. .. in such a case the principal violates no
right of the broker by selling to the first party who offers the price asked, and it
matters not that sale is to the very party with whom the broker had been
negotiating. He failed to find or produce a purchaser upon the terms prescribed in
his employment, and the principal was under no obligation to wait longer that he
might make further efforts. The failure therefore and its consequences were the risk
of the broker only however must be taken with one important and necessary
limitation
If the efforts of the broker are rendered a failure by the fault of the employer; if
capriciously he changes his mind after the purchaser, ready and willing, and consenting
to the prescribed terms, is produced; or if the latter declines to complete the contract
because of some defect of title in the ownership of the seller, some unremoved
encumbrance, some defect which is the fault of the latter, then the broker does not lose
his commissions. And that upon the familiar principle that no one can avail himself of
non-performance of a condition precedent who has himself occasioned its nonperformance. But this limitation is not even an exception to the general rule affecting the
broker's right for it goes on the ground that the broker has done his duty, that he has
brought buyer and seller to an agreement, but that the contract is not consummated and

fails through the after-fault of the seller." (Danon vs. Brimo & Co., 42 Phil. 133,139141).
It is significant that in his complaint Calanoc does not attribute bad faith, fraud or
fault to Ramos. All that he claims is that since he had informed Ramos of Mrs. Dee's
alleged commitment to pay a 25% mark-up, the latter had consequently lost the
right to reduce it. But as already observed, there is no showing that such a
commitment to Calanoc was a contract which Ramos himself could enforce against
Mrs. Dee, or that she was ready and willing to pay him the 25% mark-up, despite
which he accepted only 23-1/2%, And certainly, if she was, vis-a-vis Ramos, willing
to pay only 23-1/2%, he was not precluded from accepting it without being liable to
Calanoc for the difference.
In the absence of independent proof that the non-payment by Mrs. Dee of the 25%
premium over the mark-up price was due to the fault, fraud or bad faith of Ramos, we are
not prepared to share the Court of Appeals' view in this regard. He gained nothing by the
reduction, and it cannot be presumed that he accepted it in order to cause prejudice to
Calanoc.