Agency Outline

NATURE, FORM AND KINDS OF AGENCY
Art. 1868. By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with
the consent or authority of the latter. (1709a)
Art. 1869. Agency may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority.
Agency may be oral, unless the law requires a specific form. (1710a)
Art. 1870. Acceptance by the agent may also be express, or implied from
his acts which carry out the agency, or from his silence or inaction
according to the circumstances. (n)
Art. 1871. Between persons who are present, the acceptance of the agency
may also be implied if the principal delivers his power of attorney to the
agent and the latter receives it without any objection. (n)
Art. 1872. Between persons who are absent, the acceptance of the agency
cannot be implied from the silence of the agent, except:
(1) When the principal transmits his power of attorney to the agent,
who receives it without any objection;
(2) When the principal entrusts to him by letter or telegram a power
of attorney with respect to the business in which he is habitually
engaged as an agent, and he did not reply to the letter or telegram.
Art. 1873. If a person specially informs another or states by public

advertisement that he has given a power of attorney to a third person, the
latter thereby becomes a duly authorized agent, in the former case with
respect to the person who received the special information, and in the latter
case with regard to any person.
The power shall continue to be in full force until the notice is
rescinded in the same manner in which it was given.
Art. 1874. When a 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
shall be void.
AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 1

Art. 1875. Agency is presumed to be for a compensation, unless there is
proof to the contrary. (n)
Art. 1876. An agency is either general or special.

The former comprises all the business of the principal. The latter, one
or more specific transactions. (1712)
Art. 1877. An agency couched in general terms comprises only acts of

administration, even if the principal should state that he withholds no power
or that the agent may execute such acts as he may consider appropriate, or
even though the agency should authorize a general and unlimited
management. (n)
Art. 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;
(2) To effect novations which put an end to obligations already in
existence at the time the agency was constituted;
(3) To compromise, to submit questions to arbitration, to renounce
the right to appeal from a judgment, to waive objections to the venue
of an action or to abandon a prescription already acquired;
(4) To waive any obligation gratuitously;
(5) To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration;
(6) To make gifts, except customary ones for charity or those made
to employees in the business managed by the agent;
(7) To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration;
(8) To lease any real property to another person for more than one
year;
(9) To bind the principal to render some service without
compensation;
(10) To bind the principal in a contract of partnership;
(11) To obligate the principal as a guarantor or surety;
(12) To create or convey real rights over immovable property;
(13) To accept or repudiate an inheritance;

(14) To ratify or recognize obligations contracted before the agency;
(15) Any other act of strict dominion. (n)
Art. 1879. A special power to sell excludes the power to mortgage; and a
special power to mortgage does not include the power to sell. (n)
Art. 1880. A special power to compromise does not authorize submission to

arbitration. (1713a)
Art. 1881. The agent must act within the scope of his authority. He may do
such acts as may be conducive to the accomplishment of the purpose of the
agency. (1714a)
Art. 1882. The limits of the agent's authority shall not be considered
exceeded should it have been performed in a manner more advantageous
to the principal than that specified by him. (1715)
Art. 1883. If an agent acts in his own name, the principal has no right of
action against the persons with whom the agent has contracted; neither
have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with
whom he has contracted, as if the transaction were his own, except when
the contract involves things belonging to the principal.
The provisions of this article shall be understood to be without
prejudice to the actions between the principal and agent.
SPOUSES YU ENG CHO & FRANCISCO TAO YU v. PAN AMERICAN

WORLD AIRWAYS, INC.
(GR 123560, March 27, 2000)
FACTS:
Plaintiff Yu Eng Cho is the owner of Young Hardware Co. and Achilles
Marketing. In connection with [this] business, he travels from time to time
to Malaysia, Taipei and Hongkong. On July 10, 1976, plaintiffs bought plane
tickets (Exhs. A & B) from defendant Claudia Tagunicar who represented
herself to be an agent of defendant Tourist World Services, Inc. (TWSI).
The destination[s] are Hongkong, Tokyo, San Francisco, U.S.A., for the
amount of P25,000.00 per computation of said defendant Claudia Tagunicar

(Exhs. C & C-1). The purpose of this trip is to go to Fairfield, New Jersey,
U.S.A. to buy to two (2) lines of infrared heating system processing
textured plastic article
A few days before the scheduled flight of plaintiffs, their son, Adrian
Yu, called the Pan Am office to verify the status of the flight. According to
said Adrian Yu, personnel of defendant Pan Am told him over the phone that
plaintiffs' booking[s] are confirmed.
On July 23, 1978, plaintiffs left for Hongkong and stayed there for
five (5) days. They left Hongkong for Tokyo on July 28, 1978. Upon their
arrival in Tokyo, they called up Pan-Am office for reconfirmation of their
flight to San Francisco. Said office, however, informed them that their
names are not in the manifest. Since plaintiffs were supposed to leave on
the 29th of July, 1978, and could not remain in Japan for more than 72
hours, they were constrained to agree to accept airline tickets for Taipei
instead, per advise of JAL officials. This is the only option left to them
because Northwest Airlines was then on strike, hence, there was no chance
for the plaintiffs to obtain airline seats to the United States within 72 hours.
Plaintiffs paid for these tickets.
Upon reaching Taipei, there were no flight[s] available for plaintiffs,

thus, they were forced to return back to Manila on August 3, 1978, instead
of proceeding to the United States. [Japan] Air Lines (JAL) refunded the
plaintiffs the difference of the price for Tokyo-Taipei [and] Tokyo-San
Francisco (Exhs. I & J) in the total amount of P2,602.00.
In view of their failure to reach Fairfield, New Jersey, Radiant Heat

Enterprises, Inc. cancelled Yu Eng Cho's option to buy the two lines of infra-
red heating system (Exh. K). The agreement was for him to inspect the
equipment and make final arrangement[s] with the said company not later
than August 7, 1978. From this business transaction, plaintiff Yu Eng Cho
expected to realize a profit of P300,000.00 to P400,000.00.
Defendant Tagunicar claims that on July 13, 1978, a few days before
the scheduled flight, plaintiff Yu Eng Cho personally went to her office,
pressing her about their flight. She called up defendant Julieta Canilao, and
the latter told her "o sige Claudia, confirm na." She even noted this in her

index card (Exh. L), that it was Julieta who confirmed the booking (Exh. L-
1). It was then that she allegedly attached the confirmation stickers (Exhs.
2, 2-B TWSI) to the tickets. These stickers came from TWSI.
Defendant Tagunicar alleges that it was only in the first week of

August, 1978 that she learned from Adrian Yu, son of plaintiffs, that the
latter were not able to take the flight from Tokyo to San Francisco, U.S.A.
After a few days, said Adrian Yu came over with a gentleman and a lady,
who turned out to be a lawyer and his secretary. Defendant Tagunicar
claims that plaintiffs were asking for her help so that they could file an
action against Pan-Am. Because of plaintiffs' promise she will not be
involved, she agreed to sign the affidavit prepared by the lawyer.
A complaint for damages was filed by petitioners against private

respondents Pan American World Airways, Inc. (Pan Am), Tourist World
Services, Inc. (TWSI), Julieta Canilao (Canilao), and Claudia Tagunicar
(Tagunicar) for expenses allegedly incurred such as costs of tickets and
hotel accommodations when petitioners were compelled to stay in
Hongkong and then in Tokyo by reason of the non-confirmation of their
booking with Pan-Am. In a Decision dated November 14, 1991, the Regional
Trial Court of Manila, Branch 3, held the defendants jointly and severally
liable, except defendant Julieta Canilao
Only respondents Pan Am and Tagunicar appealed to the Court of

Appeals. On 11 August 1995, the appellate court rendered judgment
modifying the amount of damages awarded, holding private respondent
Tagunicar solely liable therefor, and absolving respondents Pan Am and
TWSI from any and all liability.
ISSUE:
Whether here is no agency relationship among PAN-AM, TWSI and
Tagunicar are contrary to the judicial admissions of PAN-AM, TWSI and
Tagunicar and likewise contrary to the findings of fact of the trial court.
HELD:
By the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another, with
the consent or authority of the latter. 7 The elements of agency are: (1)

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 agent acts as a representative and not for himself; (4) the agent acts
within the scope of his authority. 8 It is a settled rule that persons dealing
with an assumed agent are bound at their peril, if they would hold the
principal liable, to ascertain not only the fact of agency but also the nature
and extent of authority, and in case either is controverted, the burden of
proof is upon them to establish it.
In the case at bar, petitioners rely on the affidavit of respondent

Tagunicar where she stated that she is an authorized agent of TWSI. This
affidavit, however, has weak probative value in light of respondent
Tagunicar's testimony in court to the contrary. Affidavits, being taken ex
parte, are almost always incomplete and often inaccurate, sometimes from
partial suggestion, or for want of suggestion and inquiries. Their infirmity as
a species of evidence is a matter of judicial experience and are thus
considered inferior to the testimony given in court. 10 Further, affidavits
are not complete reproductions of what the declarant has in mind because
they are generally prepared by the administering officer and the affiant
simply signs them after the same have been read to her. 11 Respondent
Tagunicar testified that her affidavit was prepared and typewritten by the
secretary of petitioners' lawyer, Atty. Acebedo, who both came with Adrian
Yu, son of petitioners, when the latter went to see her at her office. This
was confirmed by Adrian Yu who testified that Atty. Acebedo brought his
notarial seal and notarized the affidavit of the same day. 12 The
circumstances under which said affidavit was prepared put in doubt
petitioners' claim that it was executed voluntarily by respondent Tagunicar.
It appears that the affidavit was prepared and was based on the answers
which respondent Tagunicar gave to the questions propounded to her by
Atty. Acebedo. 13 They never told her that the affidavit would be used in a
case to be filed against her. 14 They even assured her that she would not
be included as defendant if she agreed to execute the affidavit. 15
Respondent Tagunicar was prevailed upon by petitioners' son and their
lawyer to sign the affidavit despite her objection to the statement therein
that she was an agent of TWSI. They assured her that "it is immaterial" 16
and that "if we file a suit against you we cannot get anything from you." 17
This purported admission of respondent Tagunicar cannot be used by
petitioners to prove their agency relationship. At any rate, even if such

affidavit is to be given any probative value, the existence of the agency
relationship cannot be established on its sole basis. The declarations of the
agent alone are generally insufficient to establish the fact or extent of his
authority. 18 In addition, as between the negative allegation of respondents
Canilao and Tagunicar that neither is an agent nor principal of the other,
and the affirmative allegation of petitioners that an agency relationship
exists, it is the latter who have the burden of evidence to prove their
allegation, 19 failing in which, their claim must necessarily fail.
We stress that respondent Tagunicar categorically denied in open

court that she is a duly authorized agent of TWSI, and declared that she is
an independent travel agent. 20 We have consistently ruled that in case of
conflict between statements in the affidavit and testimonial declarations,
the latter command greater weight. 21
As further proofs of agency, petitioners call our attention to TWSI's

Exhibits "7", "7-A", and "8" which show that Tagunicar and TWSI received
sales commissions from Pan Am. Exhibit "7" 22 is the Ticket Sales Report
submitted by TWSI to Pan Am reflecting the commissions received by TWSI
as an agent of Pan Am. Exhibit "7-A" 23 is a listing of the routes taken by
passengers who were audited to TWSI's sales report. Exhibit "8" 24 is a
receipt issued by TWSI covering the payment made by Tagunicar for the
tickets she bought from TWSI. These documents cannot justify the decision
that Tagunicar was paid a commission either by TWSI or Pan Am. On the
contrary, Tagunicar testified that when she pays TWSI, she already deducts
in advance her commission and merely gives the net amount to TWSI. 25
From all sides of the legal prism, the transaction is simply a contract of sale
wherein Tagunicar buys airline tickets from TWSI and then sells it at a
premium to her clients.
WHEREFORE, the decision appealed from is hereby AFFIRMED. Cost

against petitioners. SO ORDERED.
CONSTANTE AMOR DE CASTRO v. CA
(GR 115838, July 8 2002)
FACTS:
Appellants5 were co-owners of four (4) lots located at EDSA corner
New York and Denver Streets in Cubao, Quezon City. In a letter dated
January 24, 1984 (Exhibit "A-1, p. 144, Records), appellee6 was authorized

by appellants to act as real estate broker in the sale of these properties for
the amount of P23,000,000.00, five percent (5%) of which will be given to
the agent as commission. It was appellee who first found Times Transit
Corporation, represented by its president Mr. Rondaris, as prospective
buyer which desired to buy two (2) lots only, specifically lots 14 and 15.
Eventually, sometime in May of 1985, the sale of lots 14 and 15 was
consummated. Appellee received from appellants P48,893.76 as
commission.
It was then that the rift between the contending parties soon
emerged. Appellee apparently felt short changed because according to him,
his total commission should be P352,500.00 which is five percent (5%) of
the agreed price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the two (2) lots, and that it was he who introduced the buyer
to appellants and unceasingly facilitated the negotiation which ultimately led
to the consummation of the sale. Hence, he sued below to collect the
balance of P303,606.24 after having received P48,893.76 in advance.
On the other hand, appellants completely traverse appellee's claims

and essentially argue that appellee is selfishly asking for more than what he
truly deserved as commission to the prejudice of other agents who were
more instrumental in the consummation of the sale. Although appellants
readily concede that it was appellee who first introduced Times Transit
Corp. to them, appellee was not designated by them as their exclusive real
estate agent but that in fact there were more or less eighteen (18) others
whose collective efforts in the long run dwarfed those of appellee's,
considering that the first negotiation for the sale where appellee took active
participation failed and it was these other agents who successfully brokered
in the second negotiation. But despite this and out of appellants' "pure
liberality, beneficence and magnanimity", appellee nevertheless was given
the largest cut in the commission (P48,893.76), although on the principle of
quantum meruit he would have certainly been entitled to less. So appellee
should not have been heard to complain of getting only a pittance when he
actually got the lion's share of the commission and worse, he should not
have been allowed to get the entire commission. Furthermore, the purchase
price for the two lots was only P3.6 million as appearing in the deed of sale
and not P7.05 million as alleged by appellee. Thus, even assuming that

appellee is entitled to the entire commission, he would only be getting 5%
of the P3.6 million, or P180,000.00."
Private respondent Francisco Artigo ("Artigo" for brevity) sued

petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A.
De Castro ("Corazon" for brevity) to collect the unpaid balance of his
broker's commission from the De Castros. The Trial Court finds defendants
Constante and Corazon Amor de Castro jointly and solidarily liable to
plaintiff.
The Court of Appeals affirmed in toto the decision of the RTC. Hence,
this petition.
ISSUE:
Whether the complaint merits dismissal for failure to implead other
co-owners as indispensable parties
HELD:
The De Castros argue that Artigo's complaint should have been
dismissed for failure to implead all the co-owners of the two lots. The De
Castros claim that Artigo always knew that the two lots were co-owned by
Constante and Corazon with their other siblings Jose and Carmela whom
Constante merely represented. The De Castros contend that failure to
implead such indispensable parties is fatal to the complaint since Artigo, as
agent of all the four co-owners, would be paid with funds co-owned by the
four co-owners.
The De Castros' contentions are devoid of legal basis.
An indispensable party is one whose interest will be affected by the

court's action in the litigation, and without whom no final determination of
the case can be had.7 The joinder of indispensable parties is mandatory and
courts cannot proceed without their presence.8 Whenever it appears to the
court in the course of a proceeding that an indispensable party has not been
joined, it is the duty of the court to stop the trial and order the inclusion of
such party.9

However, the rule on mandatory joinder of indispensable parties is
not applicable to the instant case.
There is no dispute that Constante appointed Artigo in a handwritten note
dated January 24, 1984 to sell the properties of the De Castros for P23
million at a 5 percent commission. The authority was on a first come, first
serve basis.
Constante signed the note as owner and as representative of the

other co-owners. Under this note, a contract of agency was clearly
constituted between Constante and Artigo. Whether Constante appointed
Artigo as agent, in Constante's individual or representative capacity, or
both, the De Castros cannot seek the dismissal of the case for failure to
implead the other co-owners as indispensable parties. The De Castros
admit that the other co-owners are solidarily liable under the
contract of agency,10 citing Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a

common transaction or undertaking, they shall be solidarily liable to
the agent for all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against

the De Castros' theory that the other co-owners should be impleaded as
indispensable parties.
When the law expressly provides for solidarity of the obligation, as in

the liability of co-principals in a contract of agency, each obligor may be
compelled to pay the entire obligation.12 The agent may recover the whole
compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may
sue any of the solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made
against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has
not been fully collected.

Thus, the Court has ruled in Operators Incorporated vs. American
Biscuit Co., Inc. that
"x x x solidarity does not make a solidary obligor an

indispensable party in a suit filed by the creditor. Article 1216
of the Civil Code says that the creditor `may proceed against anyone
of the solidary debtors or some or all of them simultaneously'."
(Emphasis supplied)
BA FINANCE CORPORATION v. CA
GR 94566, July 1992
FACTS:
On December 17, 1980, Renato Gaytano, doing business under the
name Gebbs International, applied for and was granted a loan with
respondent Traders Royal Bank in the amount of P60,000.00. As security
for the payment of said loan, the Gaytano spouses executed a deed of
suretyship whereby they agreed to pay jointly and severally to respondent
bank the amount of the loan including interests, penalty and other bank
charges.
In a letter dated December 5, 1980 addressed to respondent bank,

Philip Wong as credit administrator of BA Finance Corporation for and in
behalf of the latter, undertook to guarantee the loan of the Gaytano
spouses.
Partial payments were made on the loan leaving an unpaid balance in

the amount of P85,807.25. Since the Gaytano spouses refused to pay their
obligation, respondent bank filed with the trial court complaint for sum of
money against the Gaytano spouses and petitioner corporation as
alternative defendant.
The Gaytano spouses did not present evidence for their defense.
Petitioner corporation, on the other hand, raised the defense of lack of
authority of its credit administrator to bind the corporation.

On December 12, 1988, the trial court rendered a decision in favor of
plaintiff and against defendants/Gaytano spouses, ordering the latter to
jointly and severally pay the plaintiff.
Not satisfied with the decision, respondent bank appealed with the
Court of Appeals. On March 13, 1990, respondent appellate court rendered
judgment modifying the decision of the trial court. Hence, this petition.
ISSUE:
Whether the letter of guaranty is ultra vires and thus invalid and/or
unenforceable.
HELD:
It is a settled rule that persons dealing with an assumed agent,
whether the assumed agency be a general or special one are bound at their
peril, if they would hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to establish it (Harry Keeler
v. Rodriguez, 4 Phil. 19). Hence, the burden is on respondent bank to
satisfactorily prove that the credit administrator with whom they transacted
acted within the authority given to him by his principal, petitioner
corporation. The only evidence presented by respondent bank was the
testimony of Philip Wong, credit administrator, who testified that he had
authority to issue guarantees as can be deduced from the wording of the
memorandum given to him by petitioner corporation on his lending
authority. The said memorandum which allegedly authorized Wong not only
to approve and grant loans but also to enter into contracts of guaranty in
behalf of the corporation.
Although Wong was clearly authorized to approve loans even up to

P350,000.00 without any security requirement, which is far above the
amount subject of the guaranty in the amount of P60,000.00, nothing in the
said memorandum expressly vests on the credit administrator power to
issue guarantees. We cannot agree with respondent's contention that the
phrase "contingent commitment" set forth in the memorandum means
guarantees. It has been held that a power of attorney or authority of an
agent should not be inferred from the use of vague or general words.
Guaranty is not presumed, it must be expressed and cannot be extended

beyond its specified limits (Director v. Sing Juco, 53 Phil. 205). In one case,
where it appears that a wife gave her husband power of attorney to loan
money, this Court ruled that such fact did not authorize him to make her
liable as a surety for the payment of the debt of a third person (Bank of
Philippine Islands v. Coster, 47 Phil. 594).
The sole allegation of the credit administrator in the absence of any

other proof that he is authorized to bind petitioner in a contract of guaranty
with third persons should not be given weight. The representation of one
who acts as agent cannot by itself serve as proof of his authority to act as
agent or of the extent of his authority as agent (Velasco v. La Urbana, 58
Phil. 681). Wong's testimony that he had entered into similar transactions
of guaranty in the past for and in behalf of the petitioner, lacks credence
due to his failure to show documents or records of the alleged past
transactions. The actuation of Wong in claiming and testifying that he has
the authority is understandable. He would naturally take steps to save
himself from personal liability for damages to respondent bank considering
that he had exceeded his authority. The rule is clear that an agent who
exceeds his authority is personally liable for damages (National Power
Corporation v. National Merchandising Corporation, Nos. L-33819 and
L-33897, October 23, 1982, 117 SCRA 789).
Anent the conclusion of respondent appellate court that petitioner is

estopped from alleging lack of authority due to its failure to cancel or
disallow the guaranty, We find that the said conclusion has no basis in fact.
Respondent bank had not shown any evidence aside from the testimony of
the credit administrator that the disputed transaction of guaranty was in
fact entered into the official records or files of petitioner corporation, which
will show notice or knowledge on the latter's part and its consequent
ratification of the said transaction. In the absence of clear proof, it would be
unfair to hold petitioner corporation guilty of estoppel in allowing its credit
administrator to act as though the latter had power to guarantee.
ACCORDINGLY, the petition is GRANTED and the assailed decision of

the respondent appellate court dated March 13, 1990 is hereby REVERSED
and SET ASIDE and another one is rendered dismissing the complaint for
sum of money against BA Finance Corporation. SO ORDERED.

QUIROGA v PARSONS HARDWARE CO
38 Phil
FACTS:
On January 24, 1911, in this city of manila, a contract was entered
into by and between the plaintiff, as party of the first part, and J. Parsons
(to whose rights and obligations the present defendant later subrogated
itself), as party of the second part.
Of the three causes of action alleged by the plaintiff in his complaint, only
two of them constitute the subject matter of this appeal and both
substantially amount to the averment that the defendant violated 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. As may be seen, with the exception of the
obligation on the part of the defendant to order the beds by the dozen and
in no other manner, none of the obligations imputed to the defendant in the
two causes of action are expressly set forth in the contract. But the plaintiff
alleged that the defendant was his agent for the sale of his beds in Iloilo,
and that said obligations are implied in a contract of commercial agency.
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:
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. The price agreed upon was the one determined by the plaintiff
for the sale of these beds in Manila, with a discount of from 20 to 25 per
cent, according to their class. Payment was to be made at the end of sixty
days, or before, at the plaintiff's request, or in cash, if the defendant so

preferred, and in these last two cases an additional discount was to be
allowed for prompt payment. These are precisely the essential features of a
contract of purchase and sale. 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.
It would be enough to hold, as we do, that the contract by and

between the defendant and the plaintiff is one of purchase and sale, in
order to show that it was not one made on the basis of a commission on
sales, as the plaintiff claims it was, for these contracts are incompatible
with each other. But, besides, examining the clauses of this contract, none
of them is found that substantially supports the plaintiff's contention. Not a
single one of these clauses necessarily conveys the idea of an agency. 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.
The plaintiff calls attention to the testimony of Ernesto Vidal, a

former vice-president of the defendant corporation and who established and
managed the latter's business in Iloilo. It appears that this witness, prior to
the time of his testimony, had serious trouble with the defendant, had
maintained a civil suit against it, and had even accused one of its partners,
Guillermo Parsons, of falsification. He testified that it was he who drafted
the contract Exhibit A, and, when questioned as to what was his purpose in
contracting with the plaintiff, replied that it was to be an agent for his beds
and to collect a commission on sales. However, according to the defendant's
evidence, it was Mariano Lopez Santos, a director of the corporation, who

prepared Exhibit A. But, even supposing that Ernesto Vidal has stated the
truth, his statement as to what was his idea in contracting with the plaintiff
is of no importance, inasmuch as the agreements contained in Exhibit A
which he claims to have drafted, constitute, as we have said, a contract of
purchase and sale, and not one of commercial agency. This only means that
Ernesto Vidal was mistaken in his classification of the contract. But it must
be understood that a contract is what the law defines it to be, and not what
it is called by the contracting parties.
The plaintiff also endeavored to prove that the defendant had

returned beds that it could not sell; that, without previous notice, it
forwarded to the defendant the beds that it wanted; and that the defendant
received its commission for the beds sold by the plaintiff directly to persons
in Iloilo. But all this, at the most only shows that, on the part of both of
them, there was mutual tolerance in the performance of the contract in
disregard of its terms; and it gives no right to have the contract considered,
not as the parties stipulated it, but as they performed it. Only the acts of
the contracting parties, subsequent to, and in connection with, the
execution of the contract, must be considered for the purpose of
interpreting the contract, when such interpretation is necessary, but not
when, as in the instant case, its essential agreements are clearly set forth
and plainly show that the contract belongs to a certain kind and not to
another. Furthermore, the return made was of certain brass beds, and was
not effected in exchange for the price paid for them, but was for other beds
of another kind; and for the letter Exhibit L-1, requested the plaintiff's prior
consent with respect to said beds, which shows that it was not considered
that the defendant had a right, by virtue of the contract, to make this
return. As regards the shipment of beds without previous notice, it is
insinuated in the record that these brass beds were precisely the ones so
shipped, and that, for this very reason, the plaintiff agreed to their return.
And with respect to the so-called commissions, we have said that they
merely constituted a discount on the invoice price, and the reason for
applying this benefit to the beds sold directly by the plaintiff to persons in
Iloilo was because, as the defendant obligated itself in the contract to incur
the expenses of advertisement of the plaintiff's beds, such sales were to be
considered as a result of that advertisement.

In respect to the defendant's obligation to order by the dozen, the
only one expressly imposed by the contract, the effect of its breach would
only entitle the plaintiff to disregard the orders which the defendant might
place under other conditions; but if the plaintiff consents to fill them, he
waives his right and cannot complain for having acted thus at his own free
will.
For the foregoing reasons, we are of opinion 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.
The judgment appealed from is affirmed, with costs against the

appellant. So ordered.
ALBALADEJO v PHILIPPINE REFINING CO

45 Phil 556
FACTS:
It appears that Albaladejo y Cia. is a limited partnership, organized in
conformity with the laws of these Islands, and having its principal place of
business at Legaspi, in the Province of Albay; and during the transactions
which gave origin to this litigation said firm was engaged in the buying and
selling of the products of the country, especially copra, and in the conduct
of a general mercantile business in Legaspi and in other places where it
maintained agencies, or sub-agencies, for the prosecution of its commercial
enterprises.
The Visayan Refining Co. is a corporation organized under the laws of

the Philippine Islands; and prior to July 9, 1920, it was engaged in
operating its extensive plant at Opon, Cebu, for the manufacture of coconut
oil.
On August 28, 1918, the plaintiff made a contract with the Visayan
Refining Co.
Pursuant to this agreement the plaintiff, during the year therein

contemplated, bought copra extensively for the Visayan Refining Co. At the
end of said year both parties found themselves satisfied with the existing

arrangement, and they therefore continued by tacit consent to govern their
future relations by the same agreement. In this situation affairs remained
until July 9, 1920, when the Visayan Refining Co. closed down its factory at
Opon and withdrew from the copra market.
When the contract above referred to was originally made, Albaladejo

y Cia. apparently had only one commercial establishment, i.e., that at
Legaspi; but the large requirements of the Visayan Refining Co. for copra
appeared so far to justify the extension of the plaintiff's business that
during the course of the next two or three years it established some twenty
agencies, or subagencies, in various ports and places of the Province of
Albay and neighboring provinces.
After the Visayan Refining Co. had ceased to buy copra, as above
stated, of which fact the plaintiff was duly notified, the supplies of copra
already purchased by the plaintiff were gradually shipped out and accepted
by the Visayan Refining Co., and in the course of the next eight or ten
months the accounts between the two parties were liquidated. The last
account rendered by the Visayan Refining Co. to the plaintiff was for the
month of April, 1921, and it showed a balance of P288 in favor of the
defendant. Under date of June 25, 1921, the plaintiff company addressed a
letter from Legaspi to the Philippine Refining Co. (which had now succeeded
to the rights and liabilities of the Visayan Refining Co.), expressing its
approval of said account. In this letter no dissatisfaction was expressed by
the plaintiff as to the state of affairs between the parties; but about six
weeks thereafter the present action was begun.
This action was instituted in the Court of First Instance of the

Province of Albay by Albaladejo y Cia., S. en C., to recover a sum of money
from the Philippine Refining Co., as successor to the Visayan Refining Co.,
two causes of action being stated in the complaint. Upon hearing the cause
the trial judge absolved the defendant from the first cause of action but
gave judgment for the plaintiff to recover the sum of P49,626.68, with
costs, upon the second cause of action. From this judgment the plaintiff
appealed with respect to the action taken upon the first cause of action, and
the defendant appealed with respect to the action taken upon the second
cause of action. It results that, by the appeal of the two parties, the

decision of the lower court is here under review as regards the action taken
upon both grounds of action set forth in the complaint.
ISSUE:
Whether he defendant liable for the expenses incurred by the plaintiff
in keeping its organization intact during the period now under consideration.
HELD:
We note that in his letter of July 10, 1920, Mr. Day suggested that if
the various purchasing agents of the Visayan Refining Co. would keep their
organization intact, the company would endeavor to see that they should
not lose by the transaction in the long run. These words afford no sufficient
basis for the conclusion, which the trial judge deduced therefrom, that the
defendant is bound to compensate the plaintiff for the expenses incurred in
maintaining its organization. The correspondence sufficiently shows on its
face that there was no intention on the part of the company to lay a basis
for contractual liability of any sort; and the plaintiff must have understood
the letters in that light. The parties could undoubtedly have contracted
about it, but there was clearly no intention to enter into contractual
relation; and the law will not raise a contract by implication against the
intention of the parties. The inducement held forth was that, when
purchasing should be resumed, the plaintiff would be compensated by the
profits then to be earned for any expense that would be incurred in keeping
its organization intact. It is needless to say that there is no proof showing
that the officials of the defendant acted in bad faith in holding out this hope.
In the appellant's brief the contention is advanced that the contract

between the plaintiff and the Visayan Refining Co. created the relation of
principal and agent between the parties, and the reliance is placed upon
article 1729 of the Civil Code which requires the principal to indemnify the
agent for damages incurred in carrying out the agency. Attentive perusal of
the contract is, however, convincing to the effect that the relation between
the parties was not that of principal and agent in so far as relates to the
purchase of copra by the plaintiff. It is true that the Visayan Refining Co.
made the plaintiff one of its instruments for the collection of copra; but it is
clear that in making its purchases from the producers the plaintiff was
buying upon its own account and that when it turned over the copra to the
Visayan Refining Co., pursuant to that agreement, a second sale was

effected. In paragraph three of the contract it is declared that during the
continuance of this contract the Visayan Refining Co. would not appoint any
other agent for the purchase of copra in Legaspi; and this gives rise
indirectly to the inference that the plaintiff was considered its buying agent.
But the use of this term in one clause of the contract cannot dominate the
real nature of the agreement as revealed in other clauses, no less than in
the caption of the agreement itself. In some of the trade letters also the
various instrumentalities used by the Visayan Refining Co. for the collection
of copra are spoken of as agents. But this designation was evidently used
for convenience; and it is very clear that in its activities as a buyer the
plaintiff was acting upon its own account and not as agents, in the legal
sense, of the Visayan Refining Co. The title to all of the copra purchased by
the plaintiff undoubtedly remained in it until it was delivered by way of
subsequent sale to said company.
For the reasons stated we are of the opinion that no liability on the
part of the defendant is shown upon the plaintiff's second cause of action,
and the judgment of the trial court on this part of the case is erroneous.
The appealed judgment will therefore be affirmed in so far as it

absolves the defendant from the first cause of action and will be reversed in
so far as it gives judgment against the defendant upon the second cause of
action; and the defendant will be completely absolved from the complaint.
So ordered, without express findings as to costs of either instance.
CARAM v. LAURETA
103 SCRA 7
FACTS:
This is a petition for certiorari to review the decision of the Court of
Appeals promulgated on January 29, 1968 in CA-G. R. NO. 35721-R entitled
"Claro L. Laureta, plaintiff-appellee versus Marcos Mata, Codidi Mata and
Fermin Caram, Jr., defendants- appellants; Tampino (Mansaca), et al.
Intervenors-appellants," affirming the decision of the Court of First Instance
of Davao in Civil Case No. 3083.
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance
of Davao an action for nullity, recovery of ownership and/or reconveyance

with damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin
Z. Caram, Jr. and the Register of Deeds of Davao City.
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural

land covered by Original Certificate of Title No. 3019 in favor of Claro
Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor
of the plaintiff was not registered because it was not acknowledged before a
notary public or any other authorized officer. At the time the sale was
executed, there was no authorized officer before whom the sale could be
acknowledged inasmuch as the civil government in Tagum, Davao was not
as yet organized. However, the defendant Marcos Mata delivered to Laureta
the peaceful and lawful possession of the premises of the land together with
the pertinent papers thereof such as the Owner's Duplicate Original
Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and
other papers related thereto. Since June 10, 1945, the plaintiff Laureta had
been and is stin in continuous, adverse and notorious occupation of said
land, without being molested, disturbed or stopped by any of the
defendants or their representatives. In fact, Laureta had been paying realty
taxes due thereon and had introduced improvements worth not less than
P20,000.00 at the time of the filing of the complaint.
On May 5, 1947, the same land covered by Original Certificate of Title

No. 3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr.,
petitioner herein. The deed of sale in favor of Caram was acknowledged
before Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through
Attys. Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of
First Instance of Davao a petition for the issuance of a new Owner's
Duplicate of Original Certificate of Title No. 3019, alleging as ground
therefor the loss of said title in the evacuation place of defendant Marcos
Mata in Magugpo, Tagum, Davao. On June 5, 1947, the Court of First
Instance of Davao issued an order directing the Register of Deeds of Davao
to issue a new Owner's Duplicate Certificate of Title No. 3019 in favor of
Marcos Mata and declaring the lost title as null and void. On December 9,
1947, the second sale between Marcos Mata and Fermin Caram, Jr. was
registered with the Register of Deeds. On the same date, Transfer
Certificate of Title No. 140 was issued in favor of Fermin Caram Jr.

On August 29, 1959, the defendants Marcos Mata and Codidi Mata
filed their answer with counterclaim admitting the existence of a private
absolute deed of sale of his only property in favor of Claro L. Laureta but
alleging that he signed the same as he was subjected to duress, threat and
intimidation for the plaintiff was the commanding officer of the 10th division
USFIP operating in the unoccupied areas of Northern Davao with its
headquarters at Project No. 7 (Km. 60, Davao Agusan Highways), in the
Municipality of Tagum, Province of Davao; that Laureta's words and
requests were laws; that although the defendant Mata did not like to sell his
property or sign the document without even understanding the same, he
was ordered to accept P650.00 Mindanao Emergency notes; and that due to
his fear of harm or danger that will happen to him or to his family, if he
refused he had no other alternative but to sign the document.
The defendants Marcos Mata and Codidi Mata also admit the
existence of a record in the Registry of Deeds regarding a document
allegedly signed by him in favor of his co-defendant Fermin Caram, Jr. but
denies that he ever signed the document for he knew before hand that he
had signed a deed of sale in favor of the plaintiff and that the plaintiff was
in possession of the certificate of title; that if ever his thumb mark appeared
in the document purportedly alienating the property to Fermin Caram, did
his consent was obtained through fraud and misrepresentation for the
defendant Mata is illiterate and ignorant and did not know what he was
signing; and that he did not receive a consideration for the said sale.
The defendant Fermin Caram Jr. filed his answer on October 23, 1959
alleging that he has no knowledge or information about the previous
encumbrances, transactions, and alienations in favor of plaintiff until the
filing of the complaints.
The trial court rendered a decision declaring that the deed of sale,
Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta stands and
prevails over the deed of sale, in favor of Fermin Caram, Jr.
The defendants appealed from the judgment to the Court of Appeals

which promulgated its decision affirming the judgment of the trial court.

ISSUE:
Whether there is a valid sale of the property was made through his
representatives, Pedro Irespe and Atty. Abelardo Aportadera.
HELD:
The contention of the petitioner has no merit. The facts of record
show that Mata, the vendor, and Caram, the second vendee had never met.
During the trial, Marcos Mata testified that he knows Atty. Aportadera but
did not know Caram. Thus, the sale of the property could have only been
through Caram's representatives, Irespe and Aportadera. The petitioner, in
his answer, admitted that Atty. Aportadera acted as his notary public and
attorney-in-fact at the same time in the purchase of the property.
The petitioner contends that he cannot be considered to have acted

in bad faith because there is no direct proof showing that Irespe and
Aportadera, his alleged agents, had knowledge of the first sale to Laureta.
This contention is also without merit.
Even if Irespe and Aportadera did not have actual knowledge of the
first sale, still their actions have not satisfied the requirement of good faith.
Bad faith is not based solely on the fact that a vendee had knowledge of the
defect or lack of title of his vendor.
In the instant case, Irespe and Aportadera had knowledge of

circumstances which ought to have put them an inquiry. Both of them knew
that Mata's certificate of title together with other papers pertaining to the
land was taken by soldiers under the command of Col. Claro L. Laureta. 16
Added to this is the fact that at the time of the second sale Laureta was
already in possession of the land. Irespe and Aportadera should have
investigated the nature of Laureta's possession. If they failed to exercise
the ordinary care expected of a buyer of real estate they must suffer the
consequences. The rule of caveat emptor requires the purchaser to be
aware of the supposed title of the vendor and one who buys without
checking the vendor's title takes all the risks and losses consequent to such
failure.
The principle that a person dealing with the owner of the registered
land is not bound to go behind the certificate and inquire into transactions

the existence of which is not there intimated should not apply in this case.
It was of common knowledge that at the time the soldiers of Laureta took
the documents from Mata, the civil government of Tagum was not yet
established and that there were no officials to ratify contracts of sale and
make them registerable. Obviously, Aportadera and Irespe knew that even
if Mata previously had sold t he Disputed such sale could not have been
registered.
There is no doubt then that Irespe and Aportadera, acting as agents

of Caram, purchased the property of Mata in bad faith. Applying the
principle of agency, Caram as principal, should also be deemed to have
acted in bad faith.
Since Caram was a registrant in bad faith, the situation is as if there

was no registration at all.
The question to be determined now is, who was first in possession in

good faith? A possessor in good faith is one who is not aware that there
exists in his title or mode of acquisition any flaw which invalidates it.
Laureta was first in possession of the property. He is also a possessor in
good faith. It is true that Mata had alleged that the deed of sale in favor of
Laureta was procured by force. 21 Such defect, however, was cured when,
after the lapse of four years from the time the intimidation ceased, Marcos
Mata lost both his rights to file an action for annulment or to set up nullity
of the contract as a defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the
second deed of sale, Exhibit "F", is a voidable contract. Being a voidable
contract, the action for annulment of the same on the ground of fraud must
be brought within four (4) years from the discovery of the fraud. In the
case at bar, Laureta is deemed to have discovered that the land in question
has been sold to Caram to his prejudice on December 9, 1947, when the
Deed of Sale, Exhibit "F" was recorded and entered in the Original
Certificate of Title by the Register of Deeds and a new Certificate of Title
No. 140 was issued in the name of Caram. Therefore, when the present
case was filed on June 29, 1959, plaintiff's cause of action had long
prescribed.

The petitioner's conclusion that the second deed of sale, "Exhibit F",
is a voidable contract is not correct. I n order that fraud can be a ground for
the annulment of a contract, it must be employed prior to or simultaneous
to the, consent or creation of the contract. The fraud or dolo causante must
be that which determines or is the essential cause of the contract. Dolo
causante as a ground for the annulment of contract is specifically described
in Article 1338 of the New Civil Code of the Philippines as "insidious words
or machinations of one of the contracting parties" which induced the other
to enter into a contract, and "without them, he would not have agreed to".
The second deed of sale in favor of Caram is not a voidable contract. No
evidence whatsoever was shown that through insidious words or
machinations, the representatives of Caram, Irespe and Aportadera had
induced Mata to enter into the contract.
Since the second deed of sale is not a voidable contract, Article 1391,
Civil Code of the Philippines which provides that the action for annulment
shall be brought within four (4) years from the time of the discovery of
fraud does not apply. Moreover, Laureta has been in continuous possession
of the land since he bought it in June 1945.
A more important reason why Laureta's action could not have

prescribed is that the second contract of sale, having been registered in bad
faith, is null and void. Article 1410 of the Civil Code of the Philippines
provides that any action or defense for the declaration of the inexistence of
a contract does not prescribe.
In a Memorandum of Authorities submitted to this Court on March

13, 1978, the petitioner insists that the action of Laureta against Caram has
prescribed because the second contract of sale is not void under Article
1409 23 of the Civil Code of the Philippines which enumerates the kinds of
contracts which are considered void. Moreover, Article 1544 of the New Civil
Code of the Philippines does not declare void a second sale of immovable
registered in bad faith.
The fact that the second contract is not considered void under Article
1409 and that Article 1544 does not declare void a deed of sale registered
in bad faith does not mean that said contract is not void. Article 1544
specifically provides who shall be the owner in case of a double sale of an

immovable property. To give full effect to this provision, the status of the
two contracts must be declared valid so that one vendee may contract must
be declared void to cut off all rights which may arise from said contract.
Otherwise, Article 1544 win be meaningless.
The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the

Court of Appeals sought to be reviewed is affirmed, without pronouncement
as to costs. SO ORDERED.
FIEGE & BROWN v SMITH, BELL & COMPANY, LTD.

43 Phil 113
FACTS:
The defendant, Smith, Bell & Co. Ltd., is a corporation organized
under the laws of the Philippine Islands with its principal office in the city of
Manila. In 1918, the defendant Cowper was in the employ of the defendant
corporation, which among other things, was engaged in the sale of
machinery and equipment for the use of manufacturers of coconut oil.
As the result of negotiations with the company, on May 6, 1918,

Cowper wrote a letter.
This letter referred to what is known in the evidence as the Harden

contract. Later, both plaintiffs here became associated with Cowper in
finding purchasers and in the sale of such machinery for the defendant
corporation. Outside of the above letter, there is no written contract as to
what the plaintiffs should receive or the defendant should pay them for their
services, and there is but little, if any, oral evidence of any contract
between Fiege, Brown, and Cowper, as one party, and the defendant
corporation, as the other.
As a result of their services, a number of purchasers were found for

the machinery with whom the defendant corporation entered into written
contracts for its sale and delivery, and undertook in good faith to carry out
the terms and provisions of the different contracts with the respective
purchasers. The plaintiffs Fiege and Brown now claim that the signing of the

respective purchasers made and constituted a complete sale of the
machinery, and that their compensation should be based upon the gross
amount of the contracts, which should be construed as completed sales. In
other words, which when the contracts were signed, their services were
complete and their commissions were earned.
Claiming that the defendant company has breached its contract, and
refused to account or settle with the plaintiffs for their services, they
commenced this action, to recover from the defendant corporation, and
because Cowper refused to join the plaintifs, he was made a defendant in
the action.
Among other things, the complaint alleges that, under the terms and
conditions of the contract, the plaintiffs and their associate Cowper were to
seek buyers for the machinery which were acceptable to the defendant
company, and that the prices were to be fixed by the plaintiffs, as brokers,
but which should, in no case, be less than P10,000 for each expeller, and
that the date of delivery should not be specific but only approximate.
That the plaintiffs secured order for machinery and equipment and
which were delivered to, and accepted by , the defendant company, as
follows: (Here follows a list of the contracts, dates, with whom made, and
amounts aggregating to P313,000.)
It is then alleged that, for the purpose of carrying out the respective
contracts, the defendant imported all of the specified machinery, but that it
has failed and refused and still refuses to make any settlement with the
plaintiffs or to render any accounting of the cost of the machinery, or to
make any payment, either in full or on account, of the services rendered.
That the plaintiffs have no way to determine the amount of the
compensation which they should receive, and that it can only ascertained by
means of an accounting, which the defendant company should make. That
they are entitled to recover approximately P35,000, and they pray that the
defendant company be required within a reasonable time to furnish the
plaintiffs a full and complete accounting, and to pay them the amount found
to be due for the service rendered, upon which they should have interest
from the time the machinery was imported, and for such other and further
relief as may be just and equitable.

For answer, the defendant admits that at the times alleged the
plaintiffs were associated, as partners, under the firm name of the
Philippine General Commercial Company; that it is a corporation as alleged;
and that in the year, 1918, it engaged the plaintiffs to act as brokers for the
sale of machinery and equipmetn, and they delivered purchasers' contracts
to the defendant company, which it accepted, amounting to P313,000 as
alleged in paragraph 6 of the complaint. The defendant J.C. Cowper was
formerly a partner of the plaintiffs, and withdrew from the partnership won
August 8, 1918, and that he had an interest in the amount which the
plaintiffs should recover, but refused to join with them, and denies all other
material allegations of the complaint, and, as a further and separate
defense, alleges that the plaintiffs and defendant Cowper secured orders for
machinery and equipment, for which the company, "agreed to pay plaintiffs
and the defendant J.C. Cowper, in equal shares, one-half of the net profits
derived by said defendant, Smith, Bell & Co., Ltd., from said orders."
It is then alleged that outside of P2,000 paid by the Insular Coconut

Oil, Co., on its order of August 22, 1918, no other payment s have been
made on the respective contracts by any of the other purchaser, which were
secured by the plaintiffs. That until such payments have been made, the
defendant company cannot ascertain the net profits, but that it has not
received any profits whatever from any of the other orders, and that, as
soon as full payment of any order is made by the purchaser, the company
will render an accounting to plaintiffs, and pay them any amount found due.
Upon such issues, the case was tried, and a judgment was rendered
for plaintiffs for P6,511.17, without interest or costs, from which they
appealed, claiming that the court erred in failing to find that the plaintifs
were entitled to commissions on two different contracts; that the court
erred in failing to find that the plaintiffs were entitled to commissions on
two different contracts; that the court erred in holding that plaintiffs'
recovery should be based upon the defendant company realizing a profit on
the respective contracts; and in rendering judgement without interest or
costs.
ISSUE:
Whether the one half agreed upon by the party should be one-half of
the difference between the cost of the machinery laid down at Manila and

the price specified in the contracts with the respective purchasers or "one-
half of the net profits."
HELD:
Although the oral evidence pro and con is more or less conflicting,
the trial court found that the letter of May 6, 1918, above quoted, was basis
of the contract under which the services were rendered, and that the
plaintiffs were only entitled to recover one-half of the net profits that the
company made out of its contracts with the purchasers, and limited the
amount of plaintiffs' recovery to the one-half of the net profits, which the
company had actually received and collected under the contracts ,or
P6,511.17.
April 15, 1918, Fiege, Brown and Cowper formed a partnership

known as the Philippine General Commercial Company to do a general
brokerage business. It is admitted that on May 6, 1918, Cowper wrote the
letter above quoted, and that the different members of the firm and the
defendant company knew that the letter was written and received. August
15, 1918, the respective members of the firm signed a writing, which,
among, other things, recites:
It is further agreed that whatever commissions may be due or

become due to the members of the copartnership on order for
machinery or merchandise shall be paid by Smith, Bell & Co. pro rata
among the three partners, etc."and that on the same date the three
members of the firm addressed the following letter to the defendant
company:
The undersigned hereby request that all commissions that may

accrue on orders for machinery or merchandise accepted or pending
acceptance in which we, or any of us, may be interested, be paid as
same fall due to the undersigned individually in pro rata shares of
one-third of such commissions . . . . "
The contract with Harden was dated May 16; with Vicente Sotelo two
contracts were dated August 16, and two August 20; one with A. Chicote
was August 11; and the other August 19, and the one with the Insular
Coconut Oil Co., August 22, all in the year, 1918. When you consider the

dates of the respective contracts, the recital in the agreement between the
members of the firm, and the letter to the firm of August 15, become
important. The firm agreement recites "that whatever commissions may be
due or become due," and the letter recites " that all commission that may
accrue on orders for machinery or merchandise accepted or pending
acceptance."
The expellers were not to be sold for less than P10,000. As we

construe the contract, the plaintiffs and Cowper during his partnership, as
one party, and the defendant company, as the other party, were to divide
equally the profits of each contract, and until such time as the company
made a profit on a given contract, plaintiffs' commission was not earned as
to that contract. There was no profit through the mere signing of the
contract by the purchaser and its acceptance by the company. There would
not be any profit until the purchaser paid all the money and complied with
his contract. Until such time as the company realized a profit on the
contracts, there was nothing to share or divide.
The authorities cited by the attorneys for the appellants are good
law, but, under the facts in this case, they are not in point.
Plaintiffs commission was to paid out of, and is limited to, net profits,
and except as to the amount found by the trial court, there is no evidence
of net profit on any of the contracts.
No tender was made before October 15, 1919, the date of filing the
complaint, and none is alleged in the answer.
September 8, 1920, through its attorneys, the defendant wrote a

letter to plaintiffs' attorneys, in which they say they are willing to pay as
commissions on contracts for the sale of a machinery the sum of P6,511.17,
"in full settlement of all claims which they have upon our clients on that
behalf as of this date," and we "hereby tender you the sum of P6,511.17 in
full settlement of all claims due by our clients as of this date."
As applied to the existing facts, it might be questioned as to whether

this was a good tender of the P6,511.17. But, assuming that it was valid for
that amount, it was made nearly one year after the action was commenced

and more than one year after the defendant had collected the money upon
the contracts, and it does not include interest on the money collected or the
accrued costs.
The evidence shows, and the company in effect admits, that from and
out of moneys which it had previously collected on the contracts, the
plaintiffs were entitled to have and received P6,511.17. Under the contract
between the plaintiffs and the company, this money should have been paid
to the plaintiffs when it was collected.
The lower court found that the plaintiffs were not entitled to interest
and costs. That was error. In so far as it found that the plaintiffs were
entitled to judgment for P6,511.17, the judgment of the lower court is
affirmed. In all other respects, it is reversed, and a judgement will be
entered here in favor of the plaintiffs for P6,511.17, with interest from the
15th of October,1919, at the rate of six per cent per annum, together with
costs in favor of the plaintiffs in both this and the lower court.
This judgment to be without prejudice to plaintiffs' right to recover

any other profits which may have accrued or which may hereafter accrue
upon any of the remaining contracts. So ordered.
LIM TEK GOAN v AZORES

76 Phil 363
FACTS:
The accused was arraigned on August 7, 1952 and the case set for
hearing on September 19, 1952. On the latter date, after the first witness
for the prosecution has testified, counsel for private prosecution moved for
the postponement of the trial on the ground that their next witness was sick
and unable to come to court. This motion was granted and the trial was
postponed to October 17, 1952, this time to be held at Calamba, Laguna.
When this date came, the private prosecution, through counsel, presented
an urgent motion for continuance of the trial, which was granted with the
conformity of the defense, the court setting it on November 13, 1952.
On said date, November 13, counsel for private prosecution, instead

of going to trial, again filed a motion for postponement, this time seeking to

transfer the case to the San Pablo branch alleging as reasons that his
witnesses were all residents of San Pablo City and it would be to their
convenience, as well as of the defendants, who were likewise residing in the
same place, that the trial be continued there. This motion was objected to
not only by the defense but also by Fiscal David Carreon who argued that
he saw no reason for the transfer in view of the fact that the case had
already been partially tried at the Calamba branch. In the course of the
argument that ensued, counsel for the accused intervened and joined Fiscal
David Carreon in his opposition to the transfer making the observation in
passing that since the private prosecutor was acting under the direction and
control of the fiscal and the latter had registered his objection, he found no
reason for him to insist on his petition more so when his appearance in this
case was not as a matter of right but merely by tolerance on the part of the
court.
This observation came as a surprise to the counsel for private

prosecution who then and there asked the court for a ruling as to whether
his appearance in the case was a matter of right or a matter of tolerance as
insinuated, intimating that if this should be resolved against him he would
bring the matter to the Supreme Court for a definite ruling. Forthwith, the
court ruled that in cases of this nature which do not involve any civil liability
the appearance of a private prosecutor cannot be considered as a matter of
right and if allowed it would only be upon tolerance of the court and of the
parties. This conclusion notwithstanding, the court noted that counsel for
the private prosecution cannot claim any prejudice on his part for he could
continue appearing as such by tolerance of the court until after the final
termination of the case. Not satisfied with this ruling, counsel interposed
the present petition for certiorari.
ISSUE:
Whether in the prosecution of a criminal case commenced either by
complaint or by information an offended party may intervene, personally or
by attorney, as a matter of right as claimed by petitioner, or upon mere
tolerance, as ruled by respondent judge.
HELD:
The law on this point is clear. Section 4, Rule 106, provides that "all
criminal actions either commenced by complaint or by information shall be

prosecuted under the direction and control of the fiscal"' and, as a corollary,
it is also provided that "unless the offended party has waived the civil action
or expressly reserved the right to institute it after the termination of the
criminal case, . . . he may intervene, personally or by attorney, in the
prosecution of the offense." (Section 15, Rule 106.) From these provisions
we can clearly infer that while criminal actions as a rule are prosecuted
under the direction and control of the fiscal, however, an offended party
may intervene in the proceeding, personally or by attorney, specially in
cases of offenses which cannot be prosecuted except at the instance of the
offended party. (People vs. Dizon, 44 Phil., 267; Herrero vs. Diaz, 75 Phil.,
489.) The only exception to this rule is when the offended party waives his
right to civil action or expressly reserves his right to institute it after the
termination of the case, in which case he loses his right to intervene upon
the theory that he is deemed to have lost his interest in its
prosecution.(People vs. Velez, 77 Phil., 1026, 44 Off. Gaz., [6], 1811;
People vs. Capistrano, 90 Phil., 823.) And in any event, whether an
offended party intervenes in the prosecution of a criminal action, his
intervention must always be subject to the direction and control of the
prosecuting official (Idem.).
Considering the foregoing observations, it is apparent that the ruling

of respondent judge that in cases like the one under consideration which do
not involve any civil liability an offended party can only appear upon
tolerance on the part of the court is not well taken it being contrary to the
law and precedents obtaining in this jurisdiction. In this respect, the law
makes no distinction between cases that are public in nature and those that
can only be prosecuted at the instance of the offended party. In either case
the law gives to the offended party the right to intervene, personally or by
counsel, and he is deprived of such right only when he waives the civil
action or reserves his right to institute one. Such is not the situation in the
present case. The case at bar involves a public crime and the private
prosecution has asserted its right to intervene in the proceedings. The
respondent judge, therefore, erred in considering the appearance of counsel
merely as a matter of tolerance.
We believe, however, that the incident at bar is not of such a

character as to give rise to a petition for certiorari for it does not involve
grave abuse of discretion. While the ruling of the judge is erroneous, he has

however caused no prejudice to counsel since he has expressly manifested
in his order that he could continue representing the interest of his client.
The action of the judge may at most be considered an error of judgment
which can be remedied by appeal. We find therefore no reason for granting
the relief now urged by counsel in his petition for certiorari.
Wherefore, the petition is denied, without pronouncement as to

costs.
OBLIGATIONS OF AGENT
Art. 1884. The agent is bound by his acceptance to carry out the agency,
and is liable for the damages which, through his non-performance, the
principal may suffer.
He must also finish the business already begun on the death of the
principal, should delay entail any danger. (1718)
Art. 1885. In case a person declines an agency, he is bound to observe the

diligence of a good father of a family in the custody and preservation of the
goods forwarded to him by the owner until the latter should appoint an
agent or take charge of the goods. (n)
Art. 1886. Should there be a stipulation that the agent shall advance the
necessary funds, he shall be bound to do so except when the principal is
insolvent. (n)
Art. 1887. In the execution of the agency, the agent shall act in
accordance with the instructions of the principal.
In default thereof, he shall do all that a good father of a family would
do, as required by the nature of the business.
Art. 1888. An agent shall not carry out an agency if its execution would
manifestly result in loss or damage to the principal. (n)
Art. 1889. The agent shall be liable for damages if, there being a conflict
between his interests and those of the principal, he should prefer his own.
(n)

Art. 1890. If the agent has been empowered to borrow money, he may
himself be the lender at the current rate of interest. If he has been
authorized to lend money at interest, he cannot borrow it without the
consent of the principal. (n)
Art. 1891. Every agent is bound to render an account of his transactions

and to deliver to the principal whatever he may have received by virtue of
the agency, even though it may not be owing to the principal.
Every stipulation exempting the agent from the obligation to render
an account shall be void. (1720a)
Art. 1892. The agent may appoint a substitute if the principal has not
prohibited him from doing so; but he shall be responsible for the acts of the
substitute:
(1) When he was not given the power to appoint one;
(2) When he was given such power, but without designating the
person, and the person appointed was notoriously incompetent or
insolvent.
All acts of the substitute appointed against the prohibition of the principal
shall be void. (1721)
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article,
the principal may furthermore bring an action against the substitute with
respect to the obligations which the latter has contracted under the
substitution. (1722a)
Art. 1894. The responsibility of two or more agents, even though they
have been appointed simultaneously, is not solidary, if solidarity has not
been expressly stipulated. (1723)
Art. 1895. If solidarity has been agreed upon, each of the agents is
responsible for the non-fulfillment of agency, and for the fault or negligence
of his fellows agents, except in the latter case when the fellow agents acted
beyond the scope of their authority. (n)

Art. 1896. The agent owes interest on the sums he has applied to his own
use from the day on which he did so, and on those which he still owes after
the extinguishment of the agency. (1724a)
Art. 1897. The agent who acts as such is not personally liable to the party
with whom he contracts, unless he expressly binds himself or exceeds the
limits of his authority without giving such party sufficient notice of his
powers. (1725)
Art. 1898. If the agent contracts in the name of the principal, exceeding
the scope of his authority, and the principal does not ratify the contract, it
shall be void if the party with whom the agent contracted is aware of the
limits of the powers granted by the principal. In this case, however, the
agent is liable if he undertook to secure the principal's ratification. (n)
Art. 1899. If a duly authorized agent acts in accordance with the orders of
the principal, the latter cannot set up the ignorance of the agent as to
circumstances whereof he himself was, or ought to have been, aware. (n)
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is
within the terms of the power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority according to an understanding
between the principal and the agent. (n)
Art. 1901. A third person cannot set up the fact that the agent has
exceeded his powers, if the principal has ratified, or has signified his
willingness to ratify the agent's acts. (n)
Art. 1902. A third person with whom the agent wishes to contract on
behalf of the principal may require the presentation of the power of
attorney, or the instructions as regards the agency. Private or secret orders
and instructions of the principal do not prejudice third persons who have
relied upon the power of attorney or instructions shown them. (n)
Art. 1903. The commission agent shall be responsible for the goods
received by him in the terms and conditions and as described in the

consignment, unless upon receiving them he should make a written
statement of the damage and deterioration suffered by the same. (n)
Art. 1904. The commission agent who handles goods of the same kind and
mark, which belong to different owners, shall distinguish them by
countermarks, and designate the merchandise respectively belonging to
each principal. (n)
Art. 1905. The commission agent cannot, without the express or implied
consent of the principal, sell on credit. Should he do so, the principal may
demand from him payment in cash, but the commission agent shall be
entitled to any interest or benefit, which may result from such sale. (n)
Art. 1906. Should the commission agent, with authority of the principal,
sell on credit, he shall so inform the principal, with a statement of the
names of the buyers. Should he fail to do so, the sale shall be deemed to
have been made for cash insofar as the principal is concerned. (n)
Art. 1907. Should the commission agent receive on a sale, in addition to

the ordinary commission, another called a guarantee commission, he shall
bear the risk of collection and shall pay the principal the proceeds of the
sale on the same terms agreed upon with the purchaser. (n)
Art. 1908. The commission agent who does not collect the credits of his
principal at the time when they become due and demandable shall be liable
for damages, unless he proves that he exercised due diligence for that
purpose. (n)
Art. 1909. The agent is responsible not only for fraud, but also for
negligence, which shall be judged with more or less rigor by the courts,
according to whether the agency was or was not for a compensation.
(1726)
DOMINGO v. DOMINGO
42 SCRA 131
FACTS:
In a document, Vicente M. Domingo granted Gregorio Domingo, a
real estate broker, the exclusive agency to sell his lot No. 883 of Piedad

Estate with an area of about 88,477 square meters at the rate of P2.00 per
square meter (or for P176,954.00) with a commission of 5% on the total
price, if the property is sold by Vicente or by anyone else during the 30-day
duration of the agency or if the property is sold by Vicente within three
months from the termination of the agency to apurchaser to whom it was
submitted by Gregorio during the continuance of the agency with notice to
Vicente. The said agency contract was in triplicate, one copy was given to
Vicente, while the original and another copy were retained by Gregorio.
On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to
look for a buyer, promising him one-half of the 5% commission.
Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as

a prospective buyer.
After several conferences between Gregorio and Oscar de Leon, the

latter raised his offer to P109,000.00 on June 20, 1956 , to which Vicente
agreed by signing. Upon demand of Vicente, Oscar de Leon issued to him a
check in the amount of P1,000.00 as earnest money, after which Vicente
advanced to Gregorio the sum of P300.00. Oscar de Leon confirmed his
former offer to pay for the property at P1.20 per square meter in another
letter. Subsequently, Vicente asked for an additional amount of P1,000.00
as earnest money, which Oscar de Leon promised to deliver to him.
Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the
sum of One Thousand Pesos (P1,000.00) for succeeding in persuading
Vicente to sell his lot at P1.20 per square meter or a total in round figure of
One Hundred Nine Thousand Pesos (P109,000.00). This gift of One
Thousand Pesos (P1,000.00) was not disclosed by Gregorio to Vicente.
Neither did Oscar pay Vicente the additional amount of One Thousand Pesos
(P1,000.00) by way of earnest money. In the deed of sale was not executed
on August 1, 1956 as stipulated in Exhibit "C" nor on August 15, 1956 as
extended by Vicente, Oscar told Gregorio that he did not receive his money
from his brother in the United States, for which reason he was giving up the
negotiation including the amount of One Thousand Pesos (P1,000.00) given
as earnest money to Vicente and the One Thousand Pesos (P1,000.00)
given to Gregorio as propina or gift. When Oscar did not see him after
several weeks, Gregorio sensed something fishy. So, he went to Vicente
and read a portion of Exhibit "A" marked habit "A-1" to the effect that
Vicente was still committed to pay him 5% commission, if the sale is

consummated within three months after the expiration of the 30-day period
of the exclusive agency in his favor from the execution of the agency
contract on June 2, 1956 to a purchaser brought by Gregorio to Vicente
during the said 30-day period. Vicente grabbed the original of Exhibit "A"
and tore it to pieces. Gregorio held his peace, not wanting to antagonize
Vicente further, because he had still duplicate of Exhibit "A". From his
meeting with Vicente, Gregorio proceeded to the office of the Register of
Deeds of Quezon City, where he discovered Exhibit "G' deed of sale
executed on September 17, 1956 by Amparo Diaz, wife of Oscar de Leon,
over their house and lot No. 40 Denver Street, Cubao, Quezon City, in favor
Vicente as down payment by Oscar de Leon on the purchase price of
Vicente's lot No. 883 of Piedad Estate. Upon thus learning that Vicente sold
his property to the same buyer, Oscar de Leon and his wife, he demanded
in writting payment of his commission on the sale price of One Hundred
Nine Thousand Pesos (P109,000.00), Exhibit "H". He also conferred with
Oscar de Leon, who told him that Vicente went to him and asked him to
eliminate Gregorio in the transaction and that he would sell his property to
him for One Hundred Four Thousand Pesos (P104,000.0 In Vicente's reply
to Gregorio's letter, Exhibit "H", Vicente stated that Gregorio is not entitled
to the 5% commission because he sold the property not to Gregorio's
buyer, Oscar de Leon, but to another buyer, Amparo Diaz, wife of Oscar de
Leon.
The Court of Appeals found from the evidence that Exhibit "A", the
exclusive agency contract, is genuine; that Amparo Diaz, the vendee, being
the wife of Oscar de Leon the sale by Vicente of his property is practically a
sale to Oscar de Leon since husband and wife have common or identical
interests; that Gregorio and intervenor Teofilo Purisima were the efficient
cause in the consummation of the sale in favor of the spouses Oscar de
Leon and Amparo Diaz; that Oscar de Leon paid Gregorio the sum of One
Thousand Pesos (P1,000.00) as "propina" or gift and not as additional
earnest money to be given to the plaintiff, because Exhibit "66", Vicente's
letter addressed to Oscar de Leon with respect to the additional earnest
money, does not appear to have been answered by Oscar de Leon and
therefore there is no writing or document supporting Oscar de Leon's
testimony that he paid an additional earnest money of One Thousand Pesos
(P1,000.00) to Gregorio for delivery to Vicente, unlike the first amount of
One Thousand Pesos (P1,000.00) paid by Oscar de Leon to Vicente as

earnest money, evidenced by the letter Exhibit "4"; and that Vicente did not
even mention such additional earnest money in his two replies Exhibits "I"
and "J" to Gregorio's letter of demand of the 5% commission.
ISSUE:
(1) whether the failure on the part of Gregorio to disclose to Vicente the
payment to him by Oscar de Leon of the amount of One Thousand Pesos
(P1,000.00) as gift or "propina" for having persuaded Vicente to reduce the
purchase price from P2.00 to P1.20 per square meter, so constitutes fraud
as to cause a forfeiture of his commission on the sale price.
HELD:
In the case at bar, defendant-appellee Gregorio Domingo as the
broker, received a gift or propina in the amount of One Thousand Pesos
(P1,000.00) from the prospective buyer Oscar de Leon, without the
knowledge and consent of his principal, herein petitioner-appellant Vicente
Domingo. His acceptance of said substantial monetary gift corrupted his
duty to serve the interests only of his principal and undermined his loyalty
to his principal, who gave him partial advance of Three Hundred Pesos
(P300.00) on his commission. As a consequence, instead of exerting his
best to persuade his prospective buyer to purchase the property on the
most advantageous terms desired by his principal, the broker, herein
defendant-appellee Gregorio Domingo, succeeded in persuading his
principal to accept the counter-offer of the prospective buyer to purchase
the property at P1.20 per square meter or One Hundred Nine Thousand
Pesos (P109,000.00) in round figure for the lot of 88,477 square meters,
which is very much lower the the price of P2.00 per square meter or One
Hundred Seventy-Six Thousand Nine Hundred Fifty-Four Pesos
(P176,954.00) for said lot originally offered by his principal.
The duty embodied in Article 1891 of the New Civil Code will not
apply if the agent or broker acted only as a middleman with the task of
merely bringing together the vendor and vendee, who themselves
thereafter will negotiate on the terms and conditions of the transaction.
Neither would the rule apply if the agent or broker had informed the
principal of the gift or bonus or profit he received from the purchaser and
his principal did not object therto. 11 Herein defendant-appellee Gregorio
Domingo was not merely a middleman of the petitioner-appellant Vicente

Domingo and the buyer Oscar de Leon. He was the broker and agent of said
petitioner-appellant only. And therein petitioner-appellant was not aware of
the gift of One Thousand Pesos (P1,000.00) received by Gregorio Domingo
from the prospective buyer; much less did he consent to his agent's
accepting such a gift.
The fact that the buyer appearing in the deed of sale is Amparo Diaz,
the wife of Oscar de Leon, does not materially alter the situation; because
the transaction, to be valid, must necessarily be with the consent of the
husband Oscar de Leon, who is the administrator of their conjugal assets
including their house and lot at No. 40 Denver Street, Cubao, Quezon City,
which were given as part of and constituted the down payment on, the
purchase price of herein petitioner-appellant's lot No. 883 of Piedad Estate.
Hence, both in law and in fact, it was still Oscar de Leon who was the buyer.
As a necessary consequence of such breach of trust, defendant-

appellee Gregorio Domingo must forfeit his right to the commission and
must return the part of the commission he received from his principal.
Teofilo Purisima, the sub-agent of Gregorio Domingo, can only

recover from Gregorio Domingo his one-half share of whatever amounts
Gregorio Domingo received by virtue of the transaction as his sub-agency
contract was with Gregorio Domingo alone and not with Vicente Domingo,
who was not even aware of such sub-agency. Since Gregorio Domingo
received from Vicente Domingo and Oscar de Leon respectively the amounts
of Three Hundred Pesos (P300.00) and One Thousand Pesos (P1,000.00) or
a total of One Thousand Three Hundred Pesos (P1,300.00), one-half of the
same, which is Six Hundred Fifty Pesos (P650.00), should be paid by
Gregorio Domingo to Teofilo Purisima.
Because Gregorio Domingo's clearly unfounded complaint caused

Vicente Domingo mental anguish and serious anxiety as well as wounded
feelings, petitioner-appellant Vicente Domingo should be awarded moral
damages in the reasonable amount of One Thousand Pesos (P1,000.00)
attorney's fees in the reasonable amount of One Thousand Pesos
(P1,000.00), considering that this case has been pending for the last fifteen
(15) years from its filing on October 3, 1956.

WHEREFORE, the judgment is hereby rendered, reversing the decision of
the Court of Appeals and directing defendant-appellee Gregorio Domingo:
(1) to pay to the heirs of Vicente Domingo the sum of One Thousand Pesos
(P1,000.00) as moral damages and One Thousand Pesos (P1,000.00) as
attorney's fees; (2) to pay Teofilo Purisima the sum of Six Hundred Fifty
Pesos (P650.00); and (3) to pay the costs.
DUHART FRERES Y CIE v MACIAS

54 Phil 613
FACTS:
The change made in the names of the plaintiffs by the amended
complaint filed on October 14, 1927, substituting for the partnership
"Duhart Freres & Cie.," the names of Pedro Duhart and Eugenio Duhart,
who according to said amended complaint are the sole collective partners,
and the managing partners according to the evidence, does not constitute a
substantial alternation of the party plaintiff, and does not effect the validity
and legal force of the attachment of the defendants' property, issued in
favor of said "Duhart Freres & Cie.," upon a prior complaint, which writ still
subsist as well in favor of the original plaintiff "Duhart Freres & Cie.," as for
the same entity in the persons of its own sole collective partners, the
plaintiffs Pedro Duhart and Eugenio Duhart. Whenever it happens, as in the
instant case, that there is no real change of the party plaintiff, the writ of
attachment issued in favor of said plaintiff as an entry, remains unchanged
and in favor of said plaintiff as and there is no necessity for issuing another
in favor of such as may later appear in the cause as plaintiff, so long as
they are to all intents and purposes the same party plaintiff or its
successors-in-interest. The alternation thus introduced into the complaint
does not amount to a real change in the party plaintiff. Furthermore, this
question has already been decided by this court against the defendants
herein in the certiorari proceedings instituted by them on January, 1928,
G.R. No. 28895.
The appellants contend that as the plaintiffs subscribed the contract

Exhibit A on behalf of the partnership "Duhart Freres & Cie," they cannot
now sue in their town behalf, and in the instant action must be instituted by
the partnership. It was so done in the beginning, but said defendant having
demurred, and the court sustained their demurrer, the complaint had to bee

amended, naming the collective partners as plaintiffs in favor of the original
plaintiff, the partnership "Duhart Freres & Cie., It is to be noted that the
present plaintiffs, in executing and signing the contract Exhibit A, did so,
according to its own terms, "as partners of the firm "Duhart Freres & Cie."
doing business in the aforementioned city." At any rate, the defendant,
Ernesto Macias, who, in Exhibit A contracted with the plaintiffs, cannot now
gainsay their right to bring this suit as partners of said firm. As to the
defendant "E Macias Commission Impex Co., Ltd.," the parties entered into
an agreement in contract Exhibit A (Clause V) as an agency under said
commercial name, and it appears from paragraph 2 of the fifth special
defense of the defendants that said defendant is an agency created and
organized in the Philippines by virtue of said contract Exhibit A. The
defendants come under the doctrine laid down by this court in Strachan &
MacMurray vs. Emaldi (22 Phil., 295).
ISSUE:
Whether the document Exhibit A was a contract of agency and in
ordering its rescission, and in not declaring that said document was a
partnership contract of joint account.
HELD:
There is no merit in the assertion that the contract evidence by
instruments Exhibit A, is a joint-account partnership contract. We are not
concerned with an accidental association confined to definite transaction,
being thus free from any solemnity in its formation (art. 240, Code of
Commerce; Merchantile Law, Carreras, p. 300, 3d edition), nor did they in
the contract agree upon any capital, or that Ernesto Macias subscribed or
would contribute a part of said capital (art. 239, Code of Commerce). On
the contrary, it is the opening of an "agency," a word and an idea, repeated
and explained throughout the instrument as signifying, a commercial
agency. And notwithstanding the wise sphere of action granted to said
agency, the parties does not render it any the less an agency, which,
however, agreed upon a limit, until further stipulation, as may be seen in
clause VIII of the contract, namely, "commissions," which are one of the
kinds of a commercial agency, specifically so called in article 244 of the
Code of Commerce.

We see no sufficient reason for holding that the plaintiffs violated the
contract, and therefore, we find no error in the judgment appealed from
ordering the dismissal of the defendants' counterclaim.
It appears of record that the defendant Ernesto Macias violated

clauses VIII, XI, XII, and XIII of the contract, for it has been established
that if he did open a banking credit for fifty per cent centum of the value of
his orders, which were not paid, neither paid for the credit, nor sent a
monthly statement, nor kept accounts, nor forwarded to the plaintiffs a
balance and semestral inventory. All of which gives the plaintiffs a right to
rescind the contract as agreed upon in clause XIX thereof.
As to the amount awarded to the plaintiffs, we find no reason in

these proceedings to depart lower court's findings in this matter.
With regard to the order that defendant Macias render a detailed

account to the plaintiffs of the business of said agency, as prayed for in the
complaint, we deem it justified. It is simply the consequence of the
recession of the contract of agency, also decreed by the court below. Every
agent must give an account of his operations, a general principle expressly
laid down in article 1720 of the Civil Code. It is no obstacle to this order to
render accounts that a sum of money has been adjudged to the plaintiffs, or
that the defendants' counterclaim has been dismissed. Both the claim of
said sum of the counterclaim are questioned raised and submitted by the
parties to the court, which, in view of the evidence, had no decide and did
in fact decide, and it has not been shown that they represent all the
transactions between the parties or all the operations of the agency.
The appeal being without merit, we affirm the judgment appealed

from, with cost against the defendants. So ordered.
MUNICIPAL COUNCIL OF ILOILO v EVANGELISTA

55 Phil 290
FACTS:
On March 20, 1924, the Court of First Instance of Iloilo rendered
judgment in civil case No. 3514 thereof, wherein the appellant herein, Tan
Ong Sze Vda. de Tan Toco was the plaintiff, and the municipality of Iloilo

the defendant, and the former sought to recover of the latter the value of a
strip of land belonging to said plaintiff taken by the defendant to widen a
public street; the judgment entitled the plaintiff to recover P42,966.40,
representing the value of said strip of land, from the defendant (Exhibit A).
On appeal to this court (G. R. No .22617) 1 the judgment was affirmed on
November 28, 1924 (Exhibit B).
After the case was remanded to the court of origin, and the judgment
rendered therein had become final and executory, Attorney Jose
Evangelista, in his own behalf and as counsel for the administratrix of Jose
Ma .Arroyo's intestate estate, filed a claim in the same case for professional
services rendered by him, which the court, acting with the consent of the
appellant widow, fixed at 15 per cent of the amount of the judgment.
At the hearing on said claim, the claimants appeared, as did also the
Philippine National 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 Soriano also appeared claiming the amount of the judgment as it
had been assigned to him, and by him, in turn, assigned to Mauricio Cruz &
Co., Inc.
After hearing all the adverse claims on the amount of the judgment
the court ordered 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 as counsel for the administratrix of the deceased Jose Ma
.Arroyo, and directed the municipality of Iloilo to file an action of
interpleading against the adverse claimants, the Philippine National Bank,
Antero Soriano, Mauricio Cruz & Co., Jose Evangelista and Jose Arroyo, as
was done, the case being filed in the Court of First Instance of Iloilo as civil
case No. 7702.
After due hearing, the court rendered the decision quoted from at
the beginning.
On March 29, 1928, the municipal treasurer of Iloilo, with the

approval of the auditor of the provincial treasurer of Iloilo and of the
Executive Bureau, paid the late Antero Soriano the amount of P6,000 in
part payment of the judgment mentioned above, assigned to him by Tan

Boon Tiong, acting as attorney-in-fact of the appellant herein, Tan Ong Sze
Vda. de Tan Toco.
On December 18, 1928, the municipal treasurer of Iloilo deposited

with the clerk of the Court of First Instance of Iloilo the amount of P6,000
on account of the judgment rendered in said civil case No. 3514. In
pursuance of the resolution of the court below ordering 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 as counsel for the late Jose
Ma. Arroyo, the said clerk of court delivered on the same date to said
Attorney Jose Evangelista the said amount of P6,000. At the hearing of the
instant case, the codefendants of Attorney Jose Evangelista agreed not to
discuss the payment made to the latter by the clerk of the Court of First
Instance of Iloilo of the amount of P6,000 mentioned above in consideration
of said lawyer's waiver of the remainder of the 15 per cent of said judgment
amounting to P444.69.
With these two payments of P6,000 each making a total of P12,000,

the judgment for P42,966.44 against the municipality of Iloilo was reduced
to P30,966.40, which was adjudicated by said court to Mauricio Cruz & Co.
This appeal, then, is confined to the claim of Mauricio Cruz & Co. as
alleged assignee of the rights of the late Attorney Antero Soriano by virtue
of the said judgment in payment of professional services rendered by him to
the said widow and her coheirs.
ISSUE:
Whether the assignment made by Tan Boon Tiong as attorney-in-fact
of the appellant Tan Ong Sze Viuda de Tan Toco, to Attorney Antero
Soriano, of all the credits, rights and interests belonging to said appellant
Tan Ong Sze Viuda de Tan Toco entitled Viuda de Tan Toco vs. The
Municipal Council of Iloilo, adjudicating to said widow the amount of
P42,966.40, plus the costs of court, against said municipal council of Iloilo,
in consideration of the professional services rendered by said attorney to
said widow of Tan Toco and her coheirs.

HELD:
A glance at these receipts shows that those amounts were received by
Attorney Antero Soriano for the firm of Soriano & Arroyo, which is borne out
by the stamp on said receipts reading, "Befete Soriano & Arroyo," and the
manner in which said attorney receipted for them, "Soriano & Arroyo, by A.
Soriano."
Therefore, the appellant's contention that the amounts of P200 and

P500 evidence by said receipts should be considered as payments made to
Attorney Antero Soriano for professional services rendered by him
personally to the interests of the widow of Tan Toco, is untenable.
Besides, if at the time of the assignments to the late Antero Soriano

his professional services to the appellant widow of Tan Toco had already
been paid for, no reason can be given why it was necessary to write him
money in payment of professional services on March 14, 1928 (Exhibit 5-G
Tan Toco) and December 15, of the same year (Exhibit 5-H Tan Toco) after
the deed of assignment, (Exhibit 2-Cruz) dated September 27, 1927, had
been executed. In view of the fact that the amounts involved in the cases
prosecuted by Attorney Antero Soriano as counsel for Tan Toco's widow,
some of which cases have been appealed to this court, run into the
hundreds of thousands of pesos, and considering that said attorney had
won several of those cases for his clients, the sum of P10,000 to date paid
to him for professional services is wholly inadequate, and shows, even if
indirectly, that the assignments of the appellant's rights and interests made
to the late Antero Soriano and determined in the judgment aforementioned,
was made in consideration of the professional services rendered by the
latter to the aforesaid widow and her coheirs.
The defendant-appellant also contends that the deed of assignment

Exhibit 2-Cruz was drawn up in contravention of the prohibition contained in
article 1459,
It does not appear that the Attorney Antero Soriano was counsel for
the herein appellant in civil case No. 3514 of the Court of First Instance of
Iloilo, which she instituted against the municipality of Iloilo, Iloilo, for the
recovery of the value of a strip of land expropriated by said municipality for
the widening of a certain public street. The only lawyers who appear to

have represented her in that case were Arroyo and Evangelista, who filed a
claim for their professional fees .When the appellant's credit, right, and
interests in that case were assigned by her attorney-in-fact Tan Boon Tiong,
to Attorney Antero Soriano in payment of professional services rendered by
the latter to the appellant and her coheirs in connection with other cases,
that particular case had been decided, and the only thing left to do was to
collect the judgment. There was no relation of attorney and client, then,
between Antero Soriano and the appellant, in the case where that judgment
was rendered; and therefore the assignment of her credit, right and
interests to said lawyer did not violate the prohibition cited above.
As to whether Tan Boon Tiong as attorney-in-fact of the appellant,

was empowered by his principal to make as assignment of credits, rights
and interests, in payment of debts for professional services rendered by
lawyers, in paragraph VI of the power of attorney, Exhibit 5-Cruz, Tan Boon
Tiong is authorized to employ and contract for the services of lawyers upon
such conditions as he may deem convenient, to take charge of any actions
necessary or expedient for the interests of his principal, and to defend suits
brought against her. This power necessarily implies the authority to pay for
the professional services thus engaged. In the present case, the assignment
made by Tan Boon Tiong, as Attorney-in-fact for the appellant, in favor of
Attorney Antero Soriano for professional services rendered in other cases in
the interests of the appellant and her coheirs, was that credit which she had
against the municipality of Iloilo, and such assignment was equivalent to
the payment of the amount of said credit to Antero Soriano for professional
services.
With regard to the failure of the other attorney-in-fact of the

appellant, Tan Montano, authorized by Exhibit 1 Tan Toco, to consent to
the deed of assignment, the latter being also authorized to pay, in the name
and behalf of the principal, all her debts and the liens and encumbrances
her property, the very fact that different letters of attorney were given to
each of these two representatives shows that it was not the principal's
intention that they should act jointly in order to make their acts valid.
Furthermore, the appellant was aware of that assignment and she not only
did not repudiate it, but she continued employing Attorney Antero Soriano
to represent her in court.

For the foregoing considerations, the court is of opinion and so
holds: (1) That an agent of attorney-in -fact empowered to pay the debts of
the principal, and to employ lawyers to defend the latter's interests, is
impliedly empowered to pay the lawyer's fees for services rendered in the
interests of said principal, and may satisfy them by an assignment of a
judgment rendered in favor of said principal; (2) that when a person
appoints two attorneys-in-fact independently, the consent of the one will
not be required to validate the acts of the other unless that appears
positively to have been the principal's attention; and (3) that the
assignment of the amount of a judgment made by a person to his attorney,
who has not taken any part in the case wherein said judgment was
rendered, made in payment of professional services in other cases, does not
contravene the prohibition of article 1459, case 5, of the Civil Code.
By virtue whereof, and finding no error in the judgment appealed

from, the same is affirmed in its entirety, with costs against the appellant.
So ordered.
E. MACIAS & CO v WARNER, BARNES & CO.

43 Phil 155
FACTS:
The plaintiff is a corporation duly registered and domiciled in Manila.
The defendant is a corporation duly licensed to do business in the Philippine
Islands, and is the resident agent of insurance companies "The China Fire
Insurance Company, Limited, of Hongkong," "The Yang-Tsze Insurance
Association Limited, of Shanghai," and "The State Assurance Company,
Limited, of Liverpool. The plaintiff is an importer of textures and commercial
articles for wholesale.
In the ordinary course of business, it applied for, and obtained, the

following policies against loss by fire:
Policy No. 4143, of P12,000, recites that Mrs. Rosario Vizcarra,

having paid to the China Fire Insurance Company, Limited, P102 for
insuring against or damage by fire certain merchandise the description of
which follows, "the company agrees with the insured that, if the property
above described, or any party thereof, shall be destroyed or damaged by

fire between September 16, 1918, and September 16, 1919," etc., "The
company will, out of its capital, stock and funds, pay or make good all such
loss or damage, not exceeding" the amount of the policy. This policy was
later duly assigned to the plaintiff.
Policy No. 4382, for P15,000, was issued by the same company to,
and in the name of, plaintiff.
Policy No. 326, for P10,000, was issued to, and in the name of policy No.
326, for P10,000, was issued to, and in the name of the plaintiff by The
Yang-Tsze Insurance Association, Limited, and recites that the premium of
P125 was paid by the plaintiff to the association, and that, in the event of
loss by fire between certain dates, "the funds and property of the said
association shall be subject and liable to pay, reinstate, or make good to
the said assured, their heirs, executors, or administrators, such loss or
damage as shall be occasioned by fire to the property above-mentioned and
hereby insured," not exceeding the amount of the policy.
Policy No. 796111, for P8,000, was issued by The States Assurance
Company, Limited, to the plaintiff for a premium of P100, which was paid to
the Assurance Company through the defendant, its authorized agent, and
recites that "the company agrees with the insured that in the event of loss
by fire between certain dates, the company will, out of its capital, stock and
funds, pay the amount of such loss or damage," not exceeding the amount
of the policy, and it is attested by the defendant, through its "Cashier and
Accountant and Manager, Agents, State Assurance Co., Ltd.," authorized
agents of the Assurance Company.
Policy No. 4143 is attested "on behalf of The China Fire Insurance
Company, Limited," by the cashier and accountant and manager of the
defendant, as agents of The China Fire Insurance Company, Limited. The
same is true as to policy no. 4382.
Policy No. 326 recites the payment of a premium of P125 by the

plaintiff to The Yang-Tsze Insurance Association, Limited, and that, in the
event of loss, "the funds and property of the said association shall be
subject and liable to pay, reinstate, or make good to the said assured, their
heirs, executors, or administrators, such loss or damage as shall be
occasioned by fire or lightning to the property" insured, not exceeding the

amount of the policy, and it is attested by the defendant, through its
cashier and accountant and manager, as agents of the association "under
the authority of a Power of Attorney from The Yang-Tsze Insurance
Association, Limited," "to sign, for and on behalf of the said Association,
etc."
March 25, 1919, and while the policies were in force, a loss occurred
in which the insured property was more or less damaged by fire and the use
of water resulting from the fire.
The plaintiff made a claim for damages under its policies, but could not
agree as to the amount of loss sustained. It sold the insured property in its
then damaged condition, and brought this action against Warner, Barnes &
Co., in its capacity as agents, to recover the difference between the amount
of the policies and the amount realized from the sale of the property, and in
the first cause of action, it prayed for judgment for P23,052.99, and in the
second cause of action P9,857.15.
The numbers and amounts of the policies and the names of the
insurance companies are set forth and alleged in the complaint.
After trial the court found that there was due the plaintiff from the
three insurance companies p18,493.29 with interest thereon at the rate of 6
per cent per annum, from the date of the commencement of the action, and
costs
ISSUE:
Whether the resident agent in Manila of the companies, and was
authorized to solicit and do business for them as such agent; that each
company is a foreign corporation.
HELD:
This is not a case of an undisclosed agent or an undisclosed principal.
It is a case of a disclosed agent and a disclosed principal.
The policies on their face shows that the defendant was the agent of
the respective companies, and that it was acting as such agent in dealing
with the plaintiff. That in the issuance and delivery of the policies, the
defendant was doing business in the name of, acting for, and representing,

the respective insurance companies. The different policies expressly recite
that, in the event of a loss, the respective companies agree to compensate
the plaintiff for the amount of the loss. the defendant company did not
insure the property of the plaintiff, or in any manner agree to pay the
plaintiff the amount of any loss. There is no contract of any kind. either oral
or written, between the plaintiff and Warner, Barnes & Co. Plaintiff's
contracts are with the insurance companies, and are in writing, and the
premiums were paid to the insurance companies, and are in writing, and
the premiums were paid to the insurance companies and the policies were
issued by, and in the name of, the insurance companies, and on the face of
the policy itself, the plaintiff knew that the defendant was acting as agent
for, and was representing, the respective insurance companies in the
issuance and deliver of the policies. The defendant company did not
contract or agree to do anything or to pay the plaintiff any money at any
time or on any condition, either as agent or principal.
There is a very important distinction between the power and duties of

a resident insurance agent of a foreign company and that of an executor,
administrator, or receiver. An insurance agent as such is not responsible
for, and does not have, any control over the corpus or estate of the
corporate property, as does an executor, administrator, or receiver. Subject
only to the order of the court, such officers are legal custodians and have
actual possession of the corporate property. It is under their control and
within their jurisdiction.
As stated by counsel for Warner, Barnes & Co., an attorney of record

for an insurance company has greater power and authority to act for, and
bind, the company than does a soliciting agent of an insurance company.
Yet, no attorney would contend that a personal action would lie against local
attorneys who represent a foreign corporation to recover on a contract
made by the corporation. On the same principles by which plaintiff seeks to
recover from the defendant, an action could be maintained against the
cashier of any bank on every foreign draft which he signed for, and on
behalf of, the bank.
Every cause of action ex contractu must be founded upon a contract,

oral or written, either express or implied.

Warner, Barnes & Co., as principal or agent, did not make any contract,
either or written, with the plaintiff. The contracts were made between the
respective insurance companies and the insured, and were made by the
insurance companies, through Warner, Barnes & Co., as their agent.
As in the case of a bank draft, it is not the cashier of the bank who
makes the contract to pay the money evidenced by the draft, it is the bank,
acting through its cashier, that makes the contract. So, in the instant case,
it was the insurance companies, acting through Warner, Barnes & Co., as
their agent, that made the written contracts wit the insured.
The trial court attached much importance to the fact that in the further and
separate answer, an admission was made "that defendant was at all times
ready and will not to pay, on behalf of the insurance companies by whom
each was proportionately liable, the actual damage" sustained by the
plaintiff covered by the policies upon the terms and conditions therein
stated.
When analyzed, that is nothing more than a statement that the

companies were ready and willing to prorate the amount when the losses
were legally ascertained. Again, there is not claim or pretense that Warner,
Barnes & Co. had any authority to act for, and represent the insurance
companies in the pending action, or to appear for them or make any
admission which would bind them. As a local agent, it could not do that
without express authority. That power could only exercised by an executive
officer of the company, or a person who was duly authorized to act for, and
represent, the company in legal proceedings, and there is no claim or
pretense, either express or implied, that the defendant has any such
authority.
Plaintiff's cause of action, if any, is direct against the insurance

companies that issued the policies and agreed to pay the losses.
The only defendant in the instant case is "Warner, Barnes & Co., in
its capacity as agents of:" the insurance companies. Warner, Barnes & Co.
did not make any contract with the plaintiff, and are not liable to the
plaintiff on any contract, either as principal or agent. For such reason,
plaintiff is not entitled to recover its losses from Warner, Barnes & Co.,
either as principal or agent. There is no breach of any contract with the

plaintiff by Warners, Barnes & Co., either as agent or principal, for the
simple reason that Warner, Barnes & Co., as agent or principal, never made
any contract, oral or written, with the plaintiff. This defense was promptly
raised before the taking of the testimony, and again renewed on the motion
to set aside the judgment.
Plaintiff's own evidence shows that any cause of action it may have is
against the insurance companies which issued the policies.
The complaint is dismissed, and the judgment of the lower court is

reversed, and one will be entered here in favor of Warner, Barnes & Co.,
Ltd., against the plaintiff, for costs in both this and the lower court. So
ordered.
CADWALLADER v SMITH, BELL & COMPANY

7 Phil 461
FACTS:
In this action the plaintiff, as assignee of the Pacific Export Lumber
Company, sues for $3,486, United States currency, the differences between
the amount turned over to the company on account of a cargo of cedar piles
consigned to the defendants as its agents and afterwards bought by them,
and the amount actually received by them on the subsequent sale thereof.
The defendant were allowed by the court below a counterclaim of
$6,993.80, United States currency, from which was deducted $2,063.16 for
the plaintiffs claim, leaving a balance in favor of the defendants of
$4,930.64, for the equipment of which, to wit, 9,861.28 pesos, judgment
was entered. The defendants have not appealed. The plaintiff took several
exceptions, but on the argument its counsel stated that its contention was
confined to the allowance by the trial court of the commissions of the
defendant on selling the piling.
In May 1902, the Pacific Export Lumber Company of Portland shipped

upon the steamer Quito five hundred and eighty-one (581) piles to the
defendant, Henry W. Peabody & Company, at Manila, on the sale of which
before storage the consignees were to receive a commission of one half of
whatever sum was obtained over $15 for each pile and 5 per cent of the

price of the piles sold after storage. After the arrival of the steamer on
August 2, Peabody and Company wrote the agent of the Pacific Company at
Shanghai that for lack of a demand the piles would have to be sold at
considerably less than $15 apiece; whereupon the company's agent
directed them to make the best possible offer for the piles, in response to
which on August 5 they telegraphed him an offer of $12 apiece. It was
accepted by him on August 6, in consequence of which the defendant paid
the Pacific Company $6,972.
It afterwards appeared that on July 9 Peabody & Company had

entered into negotiations with the Insular Purchasing Agent for the sale for
the piles at $20 a piece, resulting of August 4 in the sale to the Government
of two hundred and thirteen (213) piles at $19 each. More of them were
afterwards sold to the Government at the same figure and the remainder to
other parties at carrying prices, the whole realizing to the defendants
$10,41.66, amounting to $3,445.66 above the amount paid by the
defendant to the plaintiff therefor. Thus it is clear that at the time when the
agents were buying from their principal these piles at $12 apiece on the
strength of their representation that no better price was obtainable, they
had already sold a substantial part of them at $19. In these transactions
the defendant, Smith, Bell & Company, were associated with the
defendants, Henry W. Peabody & Company, who conducted the
negotiations, and are consequently accountable with them.
It is plaint that in concealing from their principal the negotiations with

the Government, resulting in a sale of the piles at 19 a piece and in
misrepresenting the condition of the market, the agents committed a
breach of duty from which they should benefit. The contract of sale to
themselves thereby induced was founded on their fraud and was subject to
annulment by the aggrieved party. (Civil Code, articles 1265 and 1269.)
Upon annulment the parties should be restored to their original position by
mutual restitution. (Article 1303 and 1306.) Therefore the defendants are
not entitled to retain their commission realized upon the piles included
under the contract so annulled. In respect of the 213 piles, which at the
time of the making of this contract on August 5 they had already sold under
the original agency, their commission should be allowed.

The court below found the net amount due from the defendants to
the plaintiff for the Quito piles, after deducting the expense of landing the
same and $543.10 commission, was $1,760.88, on which it allowed interest
at the rate of 6 per cent from March 1, 1903. This amount should be
increased by the addition thereto of the amount of the commission
disallowed, to wit, $331.17 giving $2,092.05. Interest computed on this
sum to the date of the entry of judgment below amounts to $359.77, which
added to the principal sum makes $2,241.82, the amount of plaintiff's
claim, which is to be deducted from defendants' counterclaim of $6,993.80,
leaving a balance of $4,541.98, equivalent to 9,083.96 pesos, the amount
for which judgment below should have been entered in favor of the
defendants.
Let the judgment of the Court of First Instance be modified

accordingly, without costs to either party.
After expiration of twenty days let judgment be entered in

accordance herewith and ten days thereafter the record remanded to the
court below for proper action. So ordered.
NATIONAL BANK v. BAGAMASPAD

G.R. No. L-3407 June 29, 1951
FACTS:
The plaintiff Philippine National Bank, initiated this suit in the Court of
First Instance of Cotabato for the purpose of collecting from the defendants
Bernardo Bagamaspad and Bienvenido M. Ferrer who, in the years 1946
and 1947, were its Agent and Assistant Agent, respectively, in its Cotabato
Agency, the sum of P704,903.18, said to have been disbursed and released
by them as special crop loans, without authority and in a careless manner
to manifestly insolvent, unqualified or fictitious borrowers, all contrary to
the rules and regulations of the plaintiff Bank.
The theory on which the Bank's claim and complaint are based is that
the two defendants Bagamaspad and Ferrer acting as Agent and Assistant
Agent of the Cotabato Agency, in granting new crop loans after November
13, 1946, violated the instructions of the Bank, and that furthermore, in

granting said crop loans, they acted negligently and did not exercise the
care and precaution required of them in order to prevent the release of crop
loans to persons who were neither qualified borrowers nor entitled to the
assistance being rendered by the Government and the Bank, all contrary to
the rules and regulations issued by the Bank.
In the course of the trial, upon petition of plaintiff's counsel, the

amount of the claim was reduced to P699,803.57, due to payments made
by some of the borrowers. On March 31, 1949, the trial court rendered
judgment in favor of the plaintiff, ordering both defendants to pay jointly
and severally to it the sum of P699,803.57, representing the uncollected
balance of the special crop loans improperly released by said defendants,
with legal interest thereon from the date of the filing of the complaint, plus
costs. The two defendants appealed from that decision. The appeal was first
taken to the Court of Appeals but in view of the amount involved it was
certified to this Tribunal by the said Court of Appeals.
ISSUE:
Whether the appellants, as agents were extremely lax, negligent and
careless in granting new special crop loans.
HELD:
The lower court as may be seen, severely critcized and condemned
the acts of laxity, negligence and carelessness of the appellants. But the
severity of this criticism and condemnation would appear to be amply
warranted by the evidence. Out of the numerous acts of laxity, negligence
and carelessness established by the record, a few cases may be cited.
The evidence shows that in violation of these instructions and

regulations, the defendants released large loans aggregating P348,768.22
to about 103 borrowers who were neither landowners or tenants but only
public land sales applicants that is to say, persons who have merely filed
applications to buy public lands.
Appellants in their over-enthusiasm and seemingly inordinate desire

to grant as many loans as possible and in amounts disproportionate to the
needs of the borrowers, admitted and passed upon more loan applications
than they could properly handle. From July, 1946 to March, 1947 the total

amount of about eight and half (81/2) million pesos was released in the
form of special crop loans to about 5,105 borrowers and this, in a relatively
sparsely populated province like Cotabato.
Also, contrary to the Bank's rules and regulations regarding the

granting of special crops loans, the defendants allowed intermediaries to
intervene in the granting of special crop loans.
The trial court based the civil liability of the appellants herein on the
provisions of Arts. 1718 and 1719 of the Civil Code, defining and
enumerating the duties and obligations of an agent and his liability for
failure to comply with such duties, and Art. 259 of the Code of Commerce
which provides that an agent must observe the provisions of law and
regulations with respect to business transactions entrusted to him otherwise
he shall be responsible for the consequences resulting from their breach or
omissions; and also Art. 1902 of the Civil Code which provides for the
liability of one for his tortious act, that is to say, any act or omission which
causes damage to another by his fault or negligence. Appellants while
agreeing with the meaning and scope of the legal provisions cited,
nevertheless insist that those provisions are not applicable to them
inasmuch as they are not guilty of any violation of instructions or
regulations of the plaintiff Bank; and that neither are they guilty of
negligence of carelessness as found by the trial court. A careful study and
consideration of the record, however, convinces us and we agree with the
trial court that the defendants-appellants have not only violated instructions
of the plaintiff Bank, including things which said Bank wanted done or not
done, all of which were fully understood by them, but they (appellants) also
violated standing regulations regarding the granting of loans; and, what is
more, thru their carelessness, laxity and negligence, they allowed loans to
be granted to persons who were not entitled to receive loans.
In view of all the foregoing, and finding no reversible error in the

decision appealed from, the same is hereby affirmed with costs against the
appellants. So ordered.

GONZALEZ v. E.J. HABERER
G.R. No. L-22604 February 3, 1925
FACTS:
This action is brought to recover the sum of P34,260 alleged to be
due the plaintiffs from the defendant upon a written agreement for the sale
of a tract of land situated in the Province of Nueva Ecija. The plaintiffs also
ask for damages in the sum of P10,000 for the alleged failure of the
defendant to comply with his part of the agreement.
The defendant in his answer admits that of the purchase price stated
in the agreement a balance of P31,000 remains unpaid, but by way of
special defense, cross-complaint and counter-claim alleges that at the time
of entering into the contract the plaintiffs through false representations lead
him to believe that they were in possession of the land and that the title to
the greater portion thereof was not in dispute; that on seeking to obtain
possession he found that practically the entire area of the land was
occupied by adverse claimants and the title thereto disputed; that he
consequently has been unable to obtain possession of the land; and that
the plaintiffs have made no efforts to prosecute the proceedings for the
registration of the land. He therefore asks that the contract be rescinded;
that the plaintiffs be ordered to return to him the P30,000 already paid by
him to them and to pay P25,000 as damages for breach of the contract.
The court below dismissed the plaintiffs' complaint, declared the contract
rescinded and void and gave the defendant judgment upon his counterclaim
for the sum of P30,000, with interest from the date upon which the
judgment becomes final. The case is now before this court upon appeal by
the plaintiffs from that judgment.
ISSUE:
Whether Gonzalez cannot be charged with the misrepresentations of
Gomez
HELD:
As to the contention that the plaintiff Gonzalez cannot be charged
with the misrepresentations of Gomez, it is sufficient to say that the
latter in negotiating for the sale of the land acted as the agent and

representative of the other plaintiff, his wife; having accepted the
benefit of the representations of her agent she cannot, of course,
escape liability for them. (Haskell vs. Starbird, 152 Mass., 117; 23
A.S.R., 809.)
The contention of the appellants that the symbolic delivery effected

by the execution and delivery of the agreement was a sufficient delivery of
the possession of the land, is also without merit. The possession referred to
in the contract is evidently physical; if it were otherwise it would not have
been necessary to mention it in the contract. (See Cruzado vs. Bustos and
Escaler, 34 Phil., 17.)
The judgment appealed from is in accordance with the law, is fully

sustained by the evidence, and is therefore affirmed, with the costs against
the appellants. So ordered.
COMMERCIAL BANK v REPUBLIC ARMORED CAR

G.R. Nos. L-18223 and L-18224 September 30, 1963
FACTS:
Defendant-appellant Damaso Perez has presented a motion for new
trial on the ground of newly discovered evidence. It is claimed that movant
was not aware of the nature of the power of attorney that Ramon Racelis
used, purportedly signed by him, to secure the loans for the Republic
Armored Car Service Corporation and the Republic Credit Corporation. In
the motion it is claimed that a photostatic copy of the power of attorney
used by Ramon Racelis was presented at the trial. This photostatic copy or
a copy thereof has not been submitted to us, for this reason We cannot rule
upon his claim and contention that Ramon Racelis had no authority to bind
the movant as surety for the loans obtained from the appellee Commercial
Bank & Trust Company. Not having before Us the supposed photostatic
copy of the power of attorney used to secure the loans, there is no reason
for Us to rule, in accordance with his contention, that Racelis exceeded his
authority in securing the loans subject of the present actions.
The motion for reconsideration, however, presents a copy of a power

of attorney purportedly executed by movant on October 22, 1952. It is not
expressly mentioned that this is the precise power of attorney that Ramon

Racelis Utilized to secure the loans the collection of which is sought in these
cases. But assuming, for the sake of argument, that the said power of
attorney incorporated in the motion for reconsideration was the one used to
obtain the loans. We find that the movant's contention has no merit. In
accordance with the document, Racelis was authorized to negotiate for a
loan or various loans .. with other being institution, financing corporation,
insurance companies or investment corporations, in such sum or sums,
aforesaid Attorney-in-fact Mr. Ramon Racelis, may deem proper and
convenient to my interests, ... and to execute any and all documents he
deems requisite and necessary in order to obtain such loans, always having
in mind best interest; ...
ISSUE:
Whether the general power of attorney is sufficient for Atty. Racelis
to obtain a loan
HELD:
SC holds that this general power attorney to secure loans from any
banking institute was sufficient authority for Ramon Racelis to obtain the
credits subject of the present suits.
It will be noted furthermore that Racelis, as agent Damaso Perez,

executed the documents evidencing the loans signing the same "Damaso
Perez by Ramon Racelis," and in the said contracts Damaso Perez agreed
jointly and severally to be responsible for the loans. As the document as
signed makes Perez jointly and severally responsible, there is no merit in
the contention that Perez was only being held liable as a guarantor.
Furthermore, the promissory notes evidencing the loan are attached

to the complaint in G.R. Nos. L-182 and L-18224. If the movant Perez
claims that Raceli had no authority to execute the said promissory notes,
the authenticity of said documents should have been specifically denied
under oath in defendant's answers in the lower court. This was done;
consequently Perez could not and may not now claim that his agent did not
have authority to execute the loan agreements.
Motion for new trial is denied.

HERMOSA, v EPIFANIO M. LONGARA
G.R. No. L-5267 October 27, 1953
FACTS:
This is an appeal by way of certiorari against a decision of the Court
of Appeals, fourth division, approving certain claims presented by Epifanio
M. Longara against the testate estate of Fernando Hermosa, Sr. The claims
are of three kinds, namely, P2,341.41 representing credit advances made to
the intestate from 1932 to 1944, P12,924.12 made to his son Francisco
Hermosa, and P3,772 made to his grandson, Fernando Hermosa, Jr. from
1945 to 1947, after the death of the intestate, which occurred in December,
1944. The claimant presented evidence and the Court of Appeals found, in
accordance therewith, that the intestate had asked for the said credit
advances for himself and for the members of his family "on condition that
their payment should be made by Fernando Hermosa, Sr. as soon as he
receive funds derived from the sale of his property in Spain." Claimant had
testified without opposition that the credit advances were to be "payable as
soon as Fernando Hermosa, Sr.'s property in Spain was sold and he receive
money derived from the sale." The Court of Appeals held that payment of
the advances did not become due until the administratrix received the sum
of P20,000 from the buyer of the property. Upon authorization of the
probate court in October, 1947, and the same was paid for subsequently.
The Claim was filed on October 2, 1948.
ISSUE:
Whether the obligation contracted by the intestate was subject to a
condition exclusively dependent upon the will of the debtor (a condicion
potestativa) and therefore null and void
Whether the sale was not effected in the lifetime of the debtor (the
intestate), but after his death and by his administrator, the very wife of the
claimant
HELD:
In accordance with article 1115 of the old Civil Code. The case of
Osmea vs. Rama, (14 Phil. 99) is cited to support appellants contention. In
this case, this court seems to have filed that a promise to pay an
indebtedness "if a house of strong materials is sold" is an obligation the

performance of which depended on the will of the debtor. We have
examined this case and we find that the supposed ruling was merely an
assumption and the same was not the actual ruling of the case.
A careful consideration of the condition upon which payment of the

sums advanced was made to depend, "as soon as he (intestate) receive
funds derived from the sale of his property in Spain," discloses the fact that
the condition in question does not depend exclusively upon the will of the
debtor, but also upon other circumstances beyond his power or control. If
the condition were "if he decides to sell his house." or "if he likes to pay the
sums advanced," or any other condition of similar import implying that upon
him (the debtor) alone payment would depend, the condition would be
protestativa, dependent exclusively upon his will or discretion. In the form
that the condition was found by the Court of Appeals however the condition
implies that the intestate had already decided to sell his house, or at least
that he had made his creditors believe that he had done so, and that all
that we needed to make his obligation (to pay his indebtedness)
demandable is that the sale be consummated and the price thereof remitted
to the islands. Note that if the intestate would prevent or would have
prevented the consummation of the sale voluntarily, the condition would be
or would have been deemed or considered complied with (article 1119, old
Civil Code).The will to sell on the part of the intestate was, therefore,
present in fact, or presumed legally to exist, although the price and other
conditions thereof were still within his discretion and final approval. But in
addition of the sale to him (the intestate-vendor), there were still other
conditions that had no concur to effect the sale, mainly that of the presence
of a buyer, ready, able and willing to purchase the property under the
conditions demanded by the intestate. Without such a buyer the sale could
not be carried out or the proceeds thereof sent to the islands. It is evident,
therefore sent to the islands. It is evident, therefore, that the condition of
the obligation was not a purely protestative one, depending exclusively
upon the will of the intestate, but a mixed one, depending partly upon the
will of intestate and partly upon chance, i.e., the presence of a buyer of the
property for the price and under the conditions desired by the intestate. The
obligation is clearly governed by the second sentence of article 1115 of the
old Civil Code (8 Manresa, 126). The condition is, besides, a suspensive
condition, upon the happening of which the obligation to pay is made

dependent. And upon the happening of the condition, the debt became
immediately due and demandable.
One other point needs to be considered, and this is the fact that the
sale was not effected in the lifetime of the debtor (the intestate), but after
his death and by his administrator, the very wife of the claimant. On this
last circumstance we must bear in mind that the Court of Appeals found no
evidence to show that the claim was the product of a collusion or
connivance between the administratrix and the claimant. That there was
really a promise made by the intestate to pay for the credit advances
maybe implied from the fact that the receipts thereof had been preserved.
Had the advances been made without intention of demanding their payment
later, said receipts would not have been preserved. Regularity of the
advances and the close relationship between the intestate and the claimant
also support this conclusion.
As to the fact that the suspensive condition took place after the death
of the debtor, and that advances were made more than ten years before
the sale, we supported in our conclusion that the same is immaterial by
Sanchez Roman, who says, among other things, as to conditional
obligations.
As the obligation retroacts to the date when the contract was entered
into, all amounts advanced from the time of the agreement became due,
upon the happening of the suspensive condition. As the obligation to pay
became due and demandable only when the house was sold and the
proceeds received in the islands, the action to recover the same only
accrued, within the meaning of the statute of limitations, on date the money
became available here hence the action to recover the advances has not yet
prescribed.
The above considerations dispose of the most important questions

raised on this appeal. It is also contended that the third group of claims,
i.e., credits furnished the intestate's grandson after his (intestate's) death
in 1944, should have been allowed. We find merit in this contention. Even if
authorization to furnish necessaries to his grandson may have been given,
this authorization could not be made to extend after his death, for two
obvious reasons. First because the obligation to furnish support is personal

and is extinguished upon the death of the person obliged to give
support(article 150, old Civil Code), and second because upon the death of
a principal (the intestate in this case), his agent's authority or authorization
is deemed terminated (article 1732, old Civil Code). That part of the
decision allowing this group of claims, amounting to P3,772 should be
reversed.
One last contention of the appellant is that the claims are barred by
the statute of non-claims. It does not appear from the record that this
question was ever raised in any of the courts below. We are, therefore,
without authority under our rules to consider this issue at this stage of the
proceedings.
The judgment appealed from is hereby affirmed in so far as it

approves the claims of appellee in the amounts of P2,341 and P12,942.12,
and reversed as to that of P3,772. Without costs.
RALLOS v. FELIX GO CHAN

G.R. No. L-24332 January 31, 1978
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 pursuant to a power of attorney which the principal had
executed in favor. The administrator of the estate of the went to court to
have the sale declared uneanforceable 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.
Hence, this Petition for Review on certiorari.
Concepcion and Gerundia both surnamed Rallos were sisters and

registered co-owners of a parcel of land known as Lot No. 5983 of the
Cadastral Survey of Cebu covered by Transfer Certificate of Title No. 11116
of the Registry of Cebu. On April 21, 1954, the sisters executed a special
power of attorney in favor of their brother, Simeon Rallos, authorizing him
to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion Rallos
died. On September 12, 1955, Simeon Rallos sold the undivided shares of

his sisters Concepcion and Gerundia in lot 5983 to Felix Go Chan & Sons
Realty Corporation for the sum of P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled,
and a new transfer certificate of Title No. 12989 was issued in the named of
the vendee.
On May 18, 1956 Ramon Rallos as administrator of the Intestate

Estate of Concepcion Rallos filed a complaint docketed as Civil Case No. R-
4530 of the Court of First Instance of Cebu, praying (1) that the sale of the
undivided share of the deceased Concepcion Rallos in lot 5983 be d
unenforceable, and said share be reconveyed to her estate; (2) that the
Certificate of 'title issued in the name of Felix Go Chan & Sons Realty
Corporation be cancelled and another title be issued in the names of the
corporation and the "Intestate estate of Concepcion Rallos" in equal
undivided and (3) that plaintiff be indemnified by way of attorney's fees and
payment of costs of suit. Named party defendants were Felix Go Chan &
Sons Realty Corporation, Simeon Rallos, and the Register of Deeds of Cebu,
but subsequently, the latter was dropped from the complaint. The complaint
was amended twice; defendant Corporation's Answer contained a crossclaim
against its co-defendant, Simon Rallos while the latter filed third-party
complaint against his sister, Gerundia Rallos While the case was pending in
the trial court, both Simon and his sister Gerundia died and they were
substituted by the respective administrators of their estates.
ISSUES:
What is the legal effect of an act performed by an agent after the
death of his principal? Applied more particularly to the instant case, We
have the query. is the sale of the undivided share of Concepcion Rallos in
lot 5983 valid although it was executed by the agent after the death of his
principal?
What is the law in this jurisdiction as to the effect of the death of the
principal on the authority of the agent to act for and in behalf of the latter?
Is the fact of knowledge of the death of the principal a material factor in
determining the legal effect of an act performed after such death?
HELD:

By reason of the very nature of the relationship between Principal
and agent, agency is extinguished by the death of the principal or the
agent. This is the law in this jurisdiction.
Manresa commenting on Art. 1709 of the Spanish Civil Code explains

that the rationale for the law is found in the juridical basis of agency which
is representation Them being an in. integration of the personality of the
principal integration that of the agent it is not possible for the
representation to continue to exist once the death of either is establish.
Pothier agrees with Manresa that by reason of the nature of agency, death
is a necessary cause for its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso jure upon the death of
either without necessity for the heirs of the fact to notify the agent of the
fact of death of the former.
The same rule prevails at common law the death of the principal
effects instantaneous and absolute revocation of the authority of the agent
unless the Power be coupled with an interest. This is the prevalent rule in
American Jurisprudence where it is well-settled that a power without an
interest confer. red upon an agent is dissolved by the principal's death, and
any attempted execution of the power afterward is not binding on the heirs
or representatives of the deceased.
In the instant case, it cannot be questioned that the agent, Simeon

Rallos, knew of the death of his principal at the time he sold the latter's
share in Lot No. 5983 to respondent corporation. The knowledge of the
death is clearly to be inferred from the pleadings filed by Simon Rallos
before the trial court. 12 That Simeon Rallos knew of the death of his sister
Concepcion is also a finding of fact of the court a quo 13 and of respondent
appellate court when the latter stated that Simon Rallos 'must have known
of the death of his sister, and yet he proceeded with the sale of the lot in
the name of both his sisters Concepcion and Gerundia Rallos without
informing appellant (the realty corporation) of the death of the former.
On the basis of the established knowledge of Simon Rallos concerning

the death of his principal Concepcion Rallos, Article 1931 of the Civil Code is
inapplicable. The law expressly requires for its application lack of knowledge
on the part of the agent of the death of his principal; it is not enough that

the third person acted in good faith. Thus in Buason & Reyes v. Panuyas,
the Court applying Article 1738 of the old Civil rode now Art. 1931 of the
new Civil Code sustained the validity , of a sale made after the death of the
principal because it was not shown that the agent knew of his principal's
demise.
Whatever conflict of legal opinion was generated by Cassiday v.
McKenzie in American jurisprudence, no such conflict exists in our own for
the simple reason that our statute, the Civil Code, expressly provides for
two exceptions to the general rule that death of the principal revokes ipso
jure the agency, to wit: (1) that the agency is coupled with an interest (Art
1930), and (2) that the act of the agent was executed without knowledge of
the death of the principal and the third person who contracted with the
agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine
followed in Cassiday, and again We stress the indispensable requirement
that the agent acted without knowledge or notice of the death of the
principal In the case before Us the agent Ramon Rallos executed the sale
notwithstanding notice of the death of his principal Accordingly, the agent's
act is unenforceable against the estate of his principal.
IN VIEW OF ALL THE FOREGOING, We set aside the ecision of

respondent appellate court, and We affirm en toto the judgment rendered
by then Hon. Amador E. Gomez of the Court of First Instance of Cebu,
quoted in pages 2 and 3 of this Opinion, with costs against respondent
realty corporation at all instances.
DE LA PEA v HIDALGO
G.R. No. L-6626 October 6, 1911
FACTS:
This decision concerns the appeals entered under respective bills of
exception by counsel for Jose de la Pea y de Ramon, the administrator of
the estate of the deceased Jose de la Pea y Gomiz, from the order of the
18th of the same month, directing that the amount deposited as bond, by
counsel for the intervening attorneys, Chicote & Miranda, Frederick G.
Waite, and C. W. O'Brien, from the said order of October 18, in so far as it
declares that the counterclaim by the said Hidalgo against de la Pea was
presented in his capacity as administrator of the aforementioned estate and

that the intervener's lien could not avail to prevent the set-off decreed in
the said first order appealed from.
After a regular trial in the Court of First Instance of this city of the
case of Jose de la Pea y de Ramon, as administrator of the estate of his
deceased father, Jose de la Pea y Gomiz, vs. Federico Hidalgo, for the
payment of a sum of money, the record of the proceedings was forwarded
to this court on appeal. By the decision rendered Hidalgo to pay to Jose de
la Pea y de Ramon, as administrator, the sum of P6,774.50 with legal
interest from May 23, 1906, and, likewise, sentenced the said Jose de la
Pea y de Ramon to pay to Federico Hidalgo, as a counterclaim, the sum of
P9,000, with legal interest thereon from May 21, 1907, the date of the
counterclaim; and affirmed the judgment appealed from in so far as it was
in agreement with the said decision, and reversed it in so far as it was not
in accordance therewith. That decision became final.
The record of proceedings having been remanded for execution to

the Court of First Instance whence it originated, the judge, by order of
October 14, 1910, decreed that both amounts for which the defendant
Hidalgo and the administrator Pea were mutually liable in concurrent
sums, should off-set each other, and that, consequently, the plaintiff, Pea
y de Ramon, in conformity with the final decision of this court, was liable for
the payment of the difference between such amounts, or P2,274.93,
together with the interests at 6 per cent from the said date.
At this stage of the proceedings for the execution of the judgment

that had become final, the attorneys for the said plaintiff, Messrs. Chicote &
Miranda, Frederick Garfield Waite, and C. W. O'Brien represented by C. A.
DeWitt, asked that they be permitted to intervene in the proceedings, as
they held a lien upon the amount awarded in the said decision of this court,
rendered in favor of the plaintiff and against the defendant, and alleged that
the lien which they held was upon the judgment entered in favor of the
plaintiff in his capacity as administrator, against the defendant; that the
defendant was entitled to the judgment awarded him by virtue of his
counterclaim, yet, in consideration of the fact that their lien affected the
judgment of the lower court, which was in no wise reversed, the said lien
was valid with respect to any judgment that the plaintiff had obtained
against the defendant, notwithstanding such counterclaim. In spite of the

defendant's opposition, the court, ruling on this incidental question raised,
issued the aforecited order of October 18, 1910.
ISSUE:
Whether the counterclaim by the said Hidalgo against de la Pea was
presented in his capacity as administrator of the aforementioned estate and
that the intervener's lien could not avail to prevent the set-off decreed in
the said first order appealed from.
HELD:
It is evident, by a simple perusal of the finding of facts an of the
grounds of law of the final decision rendered in that action, that the same
was instituted by Jose de la Pea y de Ramon, not by himself and in his
own representation, but in his capacity as administrator of the estate of his
deceased father, Jose de la Pea y Gomiz, demanding payment of certain
amounts which, according to his third mended complaint, the defendant
Federico Hidalgo owed the latter; and it is none the less evident that the
counterclaim presented by the defendant Federico Hidalgo had for its sole
object the collection of a certain sum which was owing to him by the
deceased testator, Jose de la Pea y Gomiz, and that the plaintiff, Jose de
la Pea y de Ramon, per se and personally, had nothing to do with this debt
of the estate, which concerned him only as such administrator.
If in any place or in any line of said decision mention was made of

the name of the plaintiff Pea y de Ramon without the title of his office as
administrator of the estate, it probably was because the complaint was filed
and the action was brought by him in his capacity of administrator, and the
counterclaim, also, was directed him as such administrator; and if in any
paragraph the said title of his office was omitted in designating him, such
omission can not serve as a ground for concluding that the counterclaim
allowed and the sentence imposed in the said decision were against Jose de
la Pea y de Ramon as a private individual and not as the administrator of
the aforementioned estate; and the sentence contained in the decision
referred to can in no wise be understood to have been made against Jose
de la Pea y de Ramon personally, but in his capacity of administrator of
the estate, which alone was liable for the debt owing to the defendant; if
mention was therein made of the plaintiff by name, it is because he was the
representative of the debtor estate.

In the aforementioned decision of this court, by which the complaint
and the counterclaim presented by the parties to the said suit were
disposed of, the amount which the defendant Hidalgo should pay to the
administrator of the estate of the deceased Pea y Gomiz and the sum
which the said administrator, designated by his name of Jose de la Pea y
de Ramon, should, by virtue of the counterclaim, pay to the defendant,
Federico Hidalgo, alone were specified; the resultant difference, after the
set-off should have been made, was not stated, as it was considered that
this merely arithmetical operation would necessarily be performed in the
course of the execution proceedings by the judge of the Court of First
Instance charged with carrying out the final decision rendered in the case.
This, in fact, he did do in his order of October 14, by directing that the
plaintiff should pay the said sum, that it, the difference which was found to
exist, after making the set-off between the respective amounts the litigating
parties were sentenced to pay. The failure to state in the said decision that
both debts were set off against each other up to a concurrent sum, can not
avail as a ground for alleging that the attorneys of the administrator Pea y
de Ramon have acquired a lien on the amount which Hidalgo should pay to
the administrator Pea y de Ramon in preference to the creditor of the
amount that is the subject of the counterclaim.
If it just be that the estate of the deceased Pea y Gomiz should

collect the amount owing it by Hidalgo, as determined by final decision, it is
equally just that Hidalgo should have the same right to collect the sum
which the said estate owes him, according to the same decision; therefore,
in order to comply with such decision, determining the two liabilities directly
opposed to each other, it consequently and logically follows that a set-off of
both credits, up to a concurrent amount, must be affected; and if the lien or
the right to collect professional fees on the part of the attorneys were
superior to the right of the creditor of the estate, the result would be that
the executory decision would not be complied with; there would then be no
set-off and the defendant would be compelled to pay to the said
administrator his debt to the estate, through the aforementioned lien of the
intervening attorneys, but could not collect, nor apply to the payment of the
credit owing him by the same estate, the amount of his debt to the latter;
this would be illegal and opposed to the most rudimentary principles of

justice and, furthermore, would be an absurdity and contrary to common
sense
The judgment appealed from having been reversed with respect to

that portion thereof relative to the liability asked by the administrator of the
estate to be laid against Federico Hidalgo, the sole judgment to be executed
is that contained in the decision rendered in second instance and in this
decision, as has been shown; and the result, in short, has been in no wise
favorable to the plaintiff because, instead of being able to collect the
amount of his credit owing by Hidalgo to the estate, he still finds himself
obliged to pay the defendant the difference resulting from the set-off to
which the counterclaim, made by the latter for a greater sum, gave rise;
and therefore, the right claimed by the appellant attorneys to collect their
fees out of the amount awarded to the said administrator, is in all respects
unsustainable, inasmuch as, in consequence of the counterclaim, there was
a set-off against that amount and the plaintiff has nothing to collect, but, on
the contrary, is still liable for the difference which was found to exist after
the reciprocal debts of both parties had been set off against each other.
The right of attorneys for the administrator Pea y de Ramon, to

collect fees for professional service, under section 37 of the Code of Civil
Procedure, is restricted to the personal founds of their client, to amounts
awarded to the latter by final decision, but does not comprise sums of
money which, according to the same decision, must be applied to be made
in such decision by virtue of a prior counterclaim.1awphil.net
We know of no legal provision which grants to the attorneys for the

losing party in a suit, or who has not obtained a judgment authorizing him
to collect money from the adverse party, the privilege of collecting their
professional fees with preference over, and better right then, the said
adverse party, the legitimate creditor of the said attorneys' client.
The suit was prosecuted for the collection of amounts which both
parties reciprocally were owing each other, and a decision was rendered
deciding the complaint and the counterclaim and determining the sums
which the litigating parties must mutually pay; therefore, the final judgment
must be executed, as provided by the trial judge, pursuant to its terms, and
no impediment to such execution can be had in the improper contention

made by the appellant attorneys, who can invoke no law or just reason
which authorizes them to collect their professional fees out of the bond
given by Hidalgo, once the same was not deposited as security for the
payment of the said fees.
For the foregoing reasons, whereby the errors attributed by the

appellant attorneys to the trial judge have been duly refuted, it is our
opinion and we hold that we should and hereby do affirm the order of
October 14, 1910, and also the order of the 18th of the same month, with
the exception of the final provision of this last order, of October 18, which
we reversed and direct tat return be made to Federico Hidalgo of the sum of
P8,500 retained by the clerk of the court below as a result of the motion of
intervention herein concerned. No special finding is made as to the costs.
So ordered.
VALERA v. VELASCO
FACTS:
By virtue of the powers of attorney, the defendant was appointed
attorney-in-fact of the said plaintiff with authority to manage his property in
the Philippines, consisting of the usufruct of a real property located of
Echague Street, City of Manila.
The defendant accepted both powers of attorney, managed plaintiff's

property, reported his operations, and rendered accounts of his
administration; and on March 31, 1923 presented exhibit F to plaintiff,
which is the final account of his administration for said month, wherein it
appears that there is a balance of P3,058.33 in favor of the plaintiff.
The liquidation of accounts revealed that the plaintiff owed the

defendant P1,100, and as misunderstanding arose between them, the
defendant brought suit against the plaintiff, civil case No. 23447 of this
court. Judgment was rendered in his favor on March 28, 1923, and after the
writ of execution was issued, the sheriff levied upon the plaintiff's right of
usufruct, sold it at public auction and adjudicated it to the defendant in
payment of all of his claim.

Subsequently, on May 11, 1923, the plaintiff sold his right of
redemption to one Eduardo Hernandez, for the sum of P200 (Exhibit A). On
September 4, 1923, this purchaser conveyed the same right of redemption,
for the sum of P200, to the plaintiff himself, Federico Valera (Exhibit C).
After the plaintiff had recovered his right of redemption, one Salvador
Vallejo, who had an execution upon a judgment against the plaintiff
rendered in a civil case against the latter, levied upon said right of
redemption, which was sold by the sheriff at public auction to Salvador
Vallejo for P250 and was definitely adjudicated to him. Later, he transferred
said right of redemption to the defendant Velasco. This is how the title to
the right of usufruct to the aforementioned property later came to vest the
said defendant.
ISSUE:
Whether one of the ways of terminating an agency is by the express
or tacit renunciation of the agent;
Whether Miguel Velasco was, and at present is, an authorized

representative of the plaintiff Federico Valera
HELD:
The misunderstanding between the plaintiff and the defendant over
the payment of the balance of P1,000 due the latter, as a result of the
liquidation of the accounts between them arising from the collections by
virtue of the former's usufructuary right, who was the principal, made by
the latter as his agent, and the fact that the said defendant brought suit
against the said principal on March 28, 1928 for the payment of said
balance, more than prove the breach of the juridical relation between them;
for, although the agent has not expressly told his principal that he
renounced the agency, yet neither dignity nor decorum permits the latter to
continue representing a person who has adopted such an antagonistic
attitude towards him. When the agent filed a complaint against his principal
for recovery of a sum of money arising from the liquidation of the accounts
between them in connection with the agency, Federico Valera could not
have understood otherwise than that Miguel Velasco renounced the agency;
because his act was more expressive than words and could not have caused
any doubt. (2 C. J., 543.) In order to terminate their relations by virtue of

the agency the defendant, as agent, rendered his final account on March
31, 1923 to the plaintiff, as principal.
Briefly, then, the fact that an agent institutes an action against his
principal for the recovery of the balance in his favor resulting from the
liquidation of the accounts between them arising from the agency, and
renders and final account of his operations, is equivalent to an express
renunciation of the agency, and terminates the juridical relation between
them.
If, as we have found, the defendant-appellee Miguel Velasco, in

adopting a hostile attitude towards his principal, suing him for the collection
of the balance in his favor, resulting from the liquidation of the agency
accounts, ceased ipso facto to be the agent of the plaintiff-appellant, said
agent's purchase of the aforesaid principal's right of usufruct at public
auction held by virtue of an execution issued upon the judgment rendered
in favor of the former and against the latter, is valid and legal, and the
lower court did not commit the fourth and fifth assignments of error
attributed to it by the plaintiff-appellant.
In regard to the third assignment of error, it is deemed unnecessary

to discuss the validity of the sale made by Federico Valera to Eduardo
Hernandez of his right of redemption in the sale of his usufructuary right
made by the sheriff by virtue of the execution of the judgment in favor of
Miguel Velasco and against the said Federico Valera; and the same thing is
true as to the validity of the resale of the same right of redemption made
by Eduardo Hernandez to Federico Valera; inasmuch as Miguel Velasco's
purchase at public auction held by virtue of an execution of Federico
Valera's usufructuary right is valid and legal, and as neither the latter nor
Eduardo Hernandez exercised his right of redemption within the legal
period, the purchaser's title became absolute.
Moreover, the defendant-appellee, Miguel Velasco, having acquired

Federico Valera's right of redemption from Salvador Vallejo, who had
acquired it at public auction by virtue of a writ of execution issued upon the
judgment obtained by the said Vallejo against the said Valera, the latter lost
all right to said usufruct.

And even supposing that Eduardo Hernandez had been tricked by
Miguel Velasco into selling Federico Valera's right of repurchase to the latter
so that Salvador Vallejo might levy an execution on it, and even supposing
that said resale was null for lack of consideration, yet, inasmuch as Eduardo
Hernandez did not present a third party claim when the right was levied
upon for the execution of the judgment obtained by Vallejo against Federico
Vallera, nor did he file a complaint to recover said right before the period of
redemption expired, said Eduardo Hernandez, and much less Federico
Valera, cannot now contest the validity of said resale, for the reason that
the one-year period of redemption has already elapsed.
Neither did the trial court err in not ordering Miguel Velasco to render
a liquidation of accounts from March 31, 1923, inasmuch as he had
acquired the rights of the plaintiff by purchase at the execution sale, and as
purchaser, he was entitled to receive the rents from the date of the sale
until the date of the repurchase, considering them as part of the redemption
price; but not having exercised the right repurchase during the legal period,
and the title of the repurchaser having become absolute, the latter did not
have to account for said rents.
Summarizing, the conclusion is reached that the disagreements

between an agent and his principal with respect to the agency, and the
filing of a civil action by the former against the latter for the collection of
the balance in favor of the agent, resulting from a liquidation of the agency
accounts, are facts showing a rupture of relations, and the complaint is
equivalent to an express renunciation of the agency, and is more expressive
than if the agent had merely said, "I renounce the agency."
By virtue of the foregoing, and finding no error in the judgment

appealed from, the same is hereby affirmed in all its parts, with costs
against the appellant. So ordered.
PASNO v. FORTUNATA RAVINA

G.R. No. L-31581 February 3, 1930
FACTS:
Gabina Labitoria during her lifetime mortgaged three parcels of land
to the Philippine National Bank to secure an indebtedness of P1,600. It was

stipulated in the mortgage, among other things, that the mortgagee "may
remove, sell or dispose of the mortgaged property or any buildings,
improvements or other property in, on or attached to it and belonging to
the mortgagor in accordance with the provisions of Act No. 3135 or take
other legal action that it may deem necessary." The mortgagor died, and a
petition was presented in court for the probate of her last will and
testament. During the pendency of these proceedings, a special
administrator was appointed by the lower court who took possession of the
estate of the deceased, including the three parcels of land mortgaged to the
Philippine National Bank. The estate having failed to comply with the
conditions of the mortgage, the Philippine National Bank, pursuant to the
stipulations contained in the same, asked the sheriff of Tayabas to proceed
with the sale of the parcels of land. When the attorney for the special
administrator received notice of the proposed action, he filed a motion in
court in which an order was asked requiring the sheriff to vacate the
attachment over the mortgaged properties and to abstain from selling the
same. The lower court granted the petition in an order of February 14,
1929, and later denied a motion for reconsideration presented on behalf of
the Philippine National Bank.
The mortgage makes special reference to Act No. 3135. That Act is
one to regulate the sale of property under special powers inserted in or
annexed to real-estate mortgages. It fails to make provision regarding the
sale of mortgaged property which is in custodia legis. Under these
circumstances, it would be logical to suppose that the general provisions of
Philippine law would govern this latter contingency. It is a familiar rule that
statutes in pari materia are to be read together. The legislative body which
enacted Act No. 3135 must be presumed to have been acquainted with the
provisions of such a well known law as the Code of Civil Procedure and to
have passed Act No. 3135 with reference thereto.
ISSUE:
Whether the right of sale of the mortgaged property can survive and
can be enforced under special power while the mortgaged property is in
custodia legis
HELD:

The power of sale given in a mortgage is a power coupled with an interest
which survives the death of the grantor. One case, that of Carter vs.
Slocomb ([1898], 122 N. C., 475), has gone so far as to hold that a sale
after the death of the mortgagor is valid without notice to the heirs of the
mortgagor. However that may be, conceding that the power of sale is not
revoked by the death of the mortgagor, nevertheless in view of the silence
of Act No. 3135 and in view of what is found in section 708 of the Code of
Civil Procedure, it would be preferable to reach the conclusion that the
mortgagee with a power of sale should be made to foreclose the mortgage
in conformity with the procedure pointed out in section 708 of the Code of
Civil Procedure. That would safeguard the interests of the estate by putting
the estate on notice while it would not jeopardize any rights of the
mortgagee. The only result is to suspend temporarily the power to sell so as
not to interfere with the orderly administration of the estate of a decedent.
A contrary holding would be inconsistent with the portion of our law
governing the settlement of estates of deceased persons.
It results that the trial judge committed no error in sustaining the petition
of the administrator of the estate of the deceased Gabina Labitoria and in
denying the motion of the Philippine National Bank.
Agreeable to the foregoing pronouncements, the judgment and

orders appealed from will be affirmed, with one-half of the costs of this
instance against the oppositors and appellants Fortunata Ravina and
Ponciano Ravina, and the other half of the costs of this instance against the
Philippine National Bank.

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NATURE, FORM AND KINDS OF AGENCY

Art. 1873. If a person specially informs another or states by public

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 1

Art. 1876. An agency is either general or special.

Art. 1877. An agency couched in general terms comprises only acts of

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 2

Art. 1880. A special power to compromise does not authorize submission to

SPOUSES YU ENG CHO & FRANCISCO TAO YU v. PAN AMERICAN

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 3

Upon reaching Taipei, there were no flight[s] available for plaintiffs,

In view of their failure to reach Fairfield, New Jersey, Radiant Heat

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 4

Defendant Tagunicar alleges that it was only in the first week of

A complaint for damages was filed by petitioners against private

Only respondents Pan Am and Tagunicar appealed to the Court of

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 5

In the case at bar, petitioners rely on the affidavit of respondent

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 6

We stress that respondent Tagunicar categorically denied in open

As further proofs of agency, petitioners call our attention to TWSI's

WHEREFORE, the decision appealed from is hereby AFFIRMED. Cost

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 7

On the other hand, appellants completely traverse appellee's claims

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 8

Private respondent Francisco Artigo ("Artigo" for brevity) sued

The De Castros' contentions are devoid of legal basis.

An indispensable party is one whose interest will be affected by the

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 9

Constante signed the note as owner and as representative of the

Art. 1915. If two or more persons have appointed an agent for a

The solidary liability of the four co-owners, however, militates against

When the law expressly provides for solidarity of the obligation, as in

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 10

"x x x solidarity does not make a solidary obligor an

In a letter dated December 5, 1980 addressed to respondent bank,

Partial payments were made on the loan leaving an unpaid balance in

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 11

Although Wong was clearly authorized to approve loans even up to

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 12

The sole allegation of the credit administrator in the absence of any

Anent the conclusion of respondent appellate court that petitioner is

ACCORDINGLY, the petition is GRANTED and the assailed decision of

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 13

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 14

It would be enough to hold, as we do, that the contract by and

The plaintiff calls attention to the testimony of Ernesto Vidal, a

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 15

The plaintiff also endeavored to prove that the defendant had

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 16

The judgment appealed from is affirmed, with costs against the

ALBALADEJO v PHILIPPINE REFINING CO

The Visayan Refining Co. is a corporation organized under the laws of

Pursuant to this agreement the plaintiff, during the year therein

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 17

When the contract above referred to was originally made, Albaladejo

This action was instituted in the Court of First Instance of the

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 18

In the appellant's brief the contention is advanced that the contract

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 19

The appealed judgment will therefore be affirmed in so far as it

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 20

On June 10, 1945, Marcos Mata conveyed a large tract of agricultural

On May 5, 1947, the same land covered by Original Certificate of Title

AGENCY ***** ANNA L. ILAGAN-MALIPOL, AB, MD Page 21