Arvin, Dane, Dinnah, Du, Ellery, Gelo, Gilbert, Hana, Hannah, Jau, Jhoana, Justin, Kym, Les, Liz, Luz, Marianne, Mark, Marsie, Rhey

The Law on Agency | Prof. Sanchez, J. (Batch 5)Angeli, Arvin, Dane, Dinnah, Du, Ellery, Gelo, Gilbert, Hana, Hannah, Jau, Jhoana, Joel, Justin, Kim, Kym, Les, Liz, Luz, Marianne, Mark, Marsie, Richard, Rhey44

III. RIGHTS, OBLIGATIONS, and LIABILITY OF THE AGENT

A. Rights

1. To compensation

Inland Realty Investment Service, Inc. v. CA (1997, Hermosisima Jr.)

Parties: Petitioners Inland Realty investment Service, Inc. and Rodolfo de los Reyes/ Respondents CA, Gregorio Araneta, Inc. and J. Armando EduqueFACTS:

On Sept. 16, 1975, Gregorio Araneta, Inc. (D) granted Inland Realty Investment Service, Inc. (P) a 30-day authority to sell its 9,800 shares of stock in Architects Bldg., Inc. at the price of P1,500/share. P sent proposal letters to its prospective buyers, one of which was Stanford Microsystems, Inc. Stanford offered to buy the shares at P1,000/share. P sent a letter to D to register Stanford as one of its prospective buyers. D replied that the price offered by Stanford was too low and suggested if P may make it better. Ps authority to sell was extended several times: 1) Oct. 2, 1975 for 30 days 2) October 28, 1975 for 30 days and 3) Dec. 2, 1975 for 30 days. On July 8, 1977, the shares were finally sold to Stanford. P then demanded payment of their 5% brokers commission from the proceeds of P13.5M or P675,000. D declined to pay. P filed a claim for unpaid agents commission for brokering the sales transaction. TC dismissed Ps complaint holding that after the authority to sell expired 30 days from Dec. 2, 1975 or on Jan. 1, 1976, P abandoned the sales transaction and were no longer privy to the consummation and documentation thereof.

P appealed. CA dismissed appeal holding that there was no longer any agency after the last extension (Dec. 2). Ps agency contract and authority to sell expired on Jan. 1, 1976 while the consummation of the sale to Stanford occurred more than 1 year and 5 months after the said expiration (July 8, 1977).

ISSUE/HELD:

WON P was instrumental in the final consummation of the sale to Stanford which was the same company name submitted to D as prospective buyer - NO

WON P is entitled to brokers commission - NOP insists that in the Letter dated Oct. 28, 1976 (Exhibit L), Gregorio Araneta III, in behalf of Araneta, Inc. renewed Ps authority to sell for another 30 days.

Court: P have conspicuously failed to attach a certified copy, or even a machine copy, of the said letter. They also attempted to mislead to mislead the Court by saying that the said letter was marked Exhibit L when the actual letter marked as such is dated Oct. 28, 1975, not 1976.

P claims that there is another Letter dated Nov. 16, 1976 and marked Exhibit M.

Court: No probative value. It allegedly contained a listing of 4 prospective buyers which does not at all prove that the agency contract and authority to sell was renewed after it expired on Jan. 1, 1976. Furthermore, it was signed by P de los Reyes, which makes such document self-serving and therefore, has no evidentiary value.

RATIO:

Where a party is not the efficient procuring cause in bringing about a sale, he is not entitled to the stipulated brokers commission.

From Sept. 16, 1975 to Jan. 1, 1976, when Ps authority to sell was subsisting, if at all, P had nothing to show that they actively served their principals interests, pursued to sell the shares in accordance with the terms and conditions, and performed substantial acts that proximately and causatively led to the consummation of the sale to Stanford of Araneta, Inc.s shares in Architects.

DISPOSITIVE: Instant petition is HEREBY DISMISSED. Costs against petitioners.DANON V. BRIMO (1921; Johnson, J.)

Plaintiff-Appellee: Julio Danon

Defendant-Appellant: Antonio A. Brimo & Co.

Facts:

1. Plaintiff-Appellee instituted an action to recover the sum of P60K. He claims that he was hired by Defendant Company to look for a purchaser for its factory ("Holland American Oil Co.,") under the following terms:

a. That he was to sell the property for P1.2M cash; and

b. That he was to receive a commission of 5% of said sum if the sale was consummated or if he should find a purchaser ready, able, and willing to buy the factory for said sum.

2. Plaintiff-Appellee claims that although he did find a purchaser, it was Defendant-Appellant that refused to sell said factory without any justifiable reason and without notifying him.

a. He claims that they preferred to sell the property to an American buyer and when he learned of such preference, he found them another (American) buyer Mr. Leas.

b. However, he claims that the sale to Mr. Leas was not consummated because Sellner, another broker, allegedly came with an offer from another buyer for P1.3M while Brimo was reading Leas letter and then and there closed the deal for the bigger amount.

TC:Found in favor of the Plaintiff, ordering the Defendant to pay P60K plus costs. Appealed directly to the SC.

Issues:

1. WON plaintiff was actually given authority to sell the property.

2. WON plaintiff performed what was required of him in order to entitle him to a commission.

Held/Ratio:

1. NO, there was no proof of said authority.

a. The only proof presented were the testimonies of Plaintiff, on the one hand, and of Brimo (manager of Defendant-company) on the other.

b. It was found that he was only to broker the transaction, as evidenced by the fact that there was another broker (Sellner) who was also attempting to negotiate a sale of the same property.

2. NO, he did not.

a. Although plaintiff found a prospective buyer (Mr. Prieto, president of the Santa Ana Oil Mill) for the proposed price, said sale was not perfected because Sellner found a purchaser willing to pay a higher price for the factory (P1.3M) and Mr. Prieto never came to see Brimo to perfect the negotiation. In any case, the permission of the Board of Directors of Santa Ana Oil Mill was required for the sale, and not merely the companys president.

b. The action is not for damages for breach of contract but an action to recover the reasonable value for services rendered. In order to be entitled to said value, plaintiff must have performed his part of the contract (that is, to find a purchaser for the factory). He should have been the efficient agent or the procuring cause of the sale. His acts must result in the sale.

c. Generally, broker bears the risk of the sale not pushing through. The exceptions to this general rule are when:

i. If the efforts of the broker are rendered a failure by the fault of the employer;

ii. Ifcapriciouslyhe changes his mind after the purchaser, ready and willing, andconsenting to the prescribed terms, is produced; or

iii. If the latter declines to complete the contract because of some defect of title in the ownership of the seller, some unremoved encumbrance, some defect which is the fault of the latter, then the broker does not lose his commissions.

d. Since there was no time frame within which he was to find a buyer, either party is at liberty to terminate the contract at will, subject only to the requirements of good faith.

i. If the termination was done by the principal in good faith, the broker still cannot claim compensation even though the sale was made to a customer with whom the broker unsuccessfully negotiated, and even though, to some extent, the seller might justly be said to have availed himself of the fruits of the broker's labor.

Dispositive: judgment revoked [sic] and defendant absolved from all liability.People v. Castillo

Pardo, J., 2000

FACTS:

(Kidnap for Ransom case)

Wilhelmina Andrada was engaged in the real estate business. She was Vice President and Treasurer of her own agency. Prosecution witness Nancy Millo was her secretary for ten years. Accused-appellants, spouses Macario and Mercedita Castillo were both her sales agents on commission basis.

In November 1992, her agency had a house for sale. On November 25, 1992, "Albert Gutierrez" , who turned out to be accused Arnulfo Cinco, called Wilhelmina and asked for a discount on the property. He asked if they could meet the next day.

Cinco called and asked if they could meet at De los Santos Hospital in Quezon City. Wilhelmina agreed. She and her secretary, Nancy, proceeded to De los Santos Hospital and met with the Cinco and another man, Fernando Malapayon.

With Wilhelmina driving, they proceeded in Wilhelminas car to Lantana St. as Fernando A. Malapayon supposedly needed to fetch his wife. They reached a house with a brown gate. Fernando A. Malapayon instructed Wilhelmina to stop. She heard Nancy shout. She turned and found Fernando A. Malapayon pointing a .45 caliber pistol at Nancy, instructing her not to move. Wilhelmina tried to get out of the car but Cinco grabbed her by the neck and locked her in his grip. She wrestled herself from him and got out of the car. She saw a man in a blue shirt and asked him for help. Instead of helping, the man, one of the accused, Teodoro M. Cinco, dragged her back into the car. Nancy however, was able to escape.

The 3 men then took the victim to a safe house. Fernando Malapayon then instructed Remigio Gonzales to guard Wilhelmina Andrada at all times. While held captive, the victim saw and identified Macario U. Castillo, Rafael B. Abello and Remigio R. Gonzales asthemen holding her captive. They then demanded a ransom of 8Mphp.The ransom was never paid as Wilhelmina was timely rescued by the PNP.

It must be noted that Accused-appellants, spouses Macario and Mercedita Castillo referred Fernando Malapayon to Wilhemina.

RTC convicted accused Macario U. Castillo, Mercedita Padilla-Castillo, Remigio R. Gonzales, Rafael B. Abello, Fernando Malapayon, Arnulfo Cinco and Teodoro M. Cinco of Kidnapping for ransom.

Of the seven (7) accused, only Mercedita Padilla-Castillo, Macario U. Castillo, Rafael B. Abello and Remigio R. Gonzales appealed.

ISSUES:

1.WON Mercedita Castillo is guilty-YES

First, Mercedita referred the accused, Fernando A. Malapayon to Wilhelmina. She and her spouse, accused-appellant, Macario Castillo are the links that introduced Fernando A. Malapayon to victim, Wilhelmina.

Second, when "Albert Gutierrez" called Wilhelmina to inquire about the house for sale, he never mentioned that he was referred by either of the Castillos.This is suspicious. Common practice is for a buyer to inform the seller who referred him. Likewise, agents working on commission basis will not normally pass up a commission by not informing their principal of a referred buyer.

Third, while Wilhelmina was held captive, Mercedita freely entered and exited the safe house. She was seen and photographed coming out of the safe house.

To justify conviction upon circumstantial evidence, the combination of circumstantial evidence must leave no reasonable doubt as to the guilt of the accused. From the aforementioned circumstances, a fair and logical conclusion--that Mercedita participated in the crime of kidnapping Wilhelmina for ransom can be reached.

2.WON Macario Castillo is guilty-YES

Wilhelmina testified that when she was brought to the safe house, she saw three men, among them, accused-appellant Macario. Macario saw Wilhelmina, his employer, bound and blindfolded. She was clearly held against her will. Yet, he did not do anything to help her. The reasons which sufficed to convict Mercedita apply also to Macario

3.WON Remigio Gonzales is guilty-YES

There is sufficient evidence of Remigios participation in the conspiracy to kidnap the victim. By guarding Wilhelmina at gun point, Remigio concurred with the criminal design of the principals and performed an act indispensable to the crimes commission.

4.WON Rafael Abello is guilty- NO

We come to the appeal of Rafael Abello. Rafael reasons that he was at the safe house because he was hired to do a painting job. Fernando Malapayon confirmed that at about that time, he hired helpers to paint the apartment. Unlike Macario, Rafael sufficiently explained his presence at the safe house. His justification was not rebutted by the prosecution. Failure of the prosecution to overcome the constitutional presumption of innocence entitles the accused-appellant to an acquittal.

INFANTE vs. CUNANAN (August 31, 1953, BAUTISTA ANGELO)

Parties: CONSEJO INFANTE,petitioner; JOSE CUNANAN, JUAN MIJARES,respondents

FACTS: Consejo Infante (owner of 2 parcels of land with a house in Mla covered by TCT No. 61786) contracted the services of Cunanan and Mijares (on or before November 30, 1948) to sell this property for P30,000 on condition that the purchaser would assume the existing mortgage with Rehabilitation Finance Corporation. She agreed to pay respondents a 5% commission on the purchase price plus whatever overprice they may obtain for the property.

Respondents found Pio S. Noche who was willing to buy the property under the terms agreed upon with Infante. However, when they introduced Noche to Infante, the latter informed them that she was no longer interested in selling the property and made them sign a document acknowledging that written authority given them was already cancelled. Subsequently on December 20, 1948, Infante dealt directly with Noche selling to him the property for P31,000. Upon knowing this transaction, respondents demanded the payment of their commission, but petitioner refused. Respondents then filed present action.

Petitioner admitted contracting respondents to sell her property. However, she claims:

1. to have agreed only to pay them a commission of P1,200 on condition that they buy her a property somewhere in Taft Avenue where she can transfer after the sale of her property

2. that while respondents tried to sell her property, they sold the property at Taft Avenue to another party which failure resulted to the agreement of the cancellation of the authority given to respondents

CFI: preponderance of evidence was in favor of respondents ( sentenced petitioner to pay respondents P2,500 with legal interest from February 2,1949 plus the costs of action

CA: affirmed

Petitioners contention: authority was already withdrawn on November 30, 1948 when, by the voluntary act of respondents, they executed a document stating that said authority shall be considered cancelled and without any effect ( THUS, when petitioner sold the property to Noche on December 20, 1948, she was already free from her commitment with respondents and not duty bound to pay them any commission ISSUE: WON respondents are entitled to the agreed commission

RULING: YES

UNDISPUTED that respondents were authorized by petitioner to sell her property for P30,000 on condition that they will be given a 5% commission plus whatever overprice they may obtain for the property

If petitioners contention is true ( then, no doubt that she would have no obligation to pay respondents the commission which was promised them under the original authority

SINCE old Civil Code recognized her right to withdraw such authority ( A principal may withdraw the authority given to an agent at will (Article 1733)

HOWEVER, this very fact is disputed

Thus, respondents claim that while they agreed to cancel the written authority given to them, they did so only with the verbal assurance by petitioner that, should the property be sold to Pio S. Noche, they would be given the commission agreed upon

Although the verbal assurance does not appear in the written cancellation and also disputed by petitioner ( STILL respondents were allowed to present oral evidence to prove it, and this is now assigned as error in this petition for review

plea that oral evidence should not have been allowed to prove the alleged verbal assurance ( SC: well taken since written authority given to respondents has been cancelled in a written statement

RULE: "When the terms of an agreement have been reduced to writing, it is to be considered as containing all those terms, and, therefore, there can be, between parties and their successors in interest, no evidence of the terms of the agreement other than the contents of the writing"

Exceptions:

"(a)Where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings"; and

"(b) Where there is an intrinsic ambiguity in the writing."

HERE, point raised not one of the exceptions ( terms of the cancellation document CLEAR and they do not contain any reservation which may in any way run counter to the clear intention of the parties

Yet, even disregarding the oral evidence of respondents in contravention of the parole conclusion reached by CFI and CA to the effect that respondents are entitled to the commission originally agreed upon

CA found that after petitioner had given the written authority to respondents to sell her land for the sum of P30,000, respondents found a buyer (Pio S. Noche) who was willing to buy the property under the terms agreed upon, and this matter was immediately made known to petitioner however the latter (as a scheme) told respondents that she was no longer interested in the deal and was able to make them sign a document agreeing to the cancellation of the written authority

Fact that petitioner changed her mind even if respondents had found a buyer who was willing to close the deal ( is a matter that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the petitioner

However, it is a different situation if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest ( resulting act is unfair amounting to bad faith

This act cannot be sanctioned without according the party prejudiced the reward which is due him ( as in this case

Petitioner took advantage of the services by respondents, but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation ( UNSANTIONABLE and cant be used as a way to evade payment of the commission agreed upon

DISPOSITIVE: decision appealed from is hereby affirmedLABRADOR,J.,concurring and dissenting:

concur in the result YET disagree with ruling that respondents cant introduce evidence of the circumstances under which the document was signed, i.e. upon promise by respondent that should the property be sold to petitioner's buyer they would nevertheless be entitled to the commission agreed upon

Such evidence is not excluded by the parole evidence rule, because it does not tend to alter or vary the terms of the document

This document was merely a withdrawal of the authority granted the petitioner to sell the property, not an agreement that they shall not be paid their commissionSanchez v Medicard Philippines Inc

2005 Ponente: Sandoval-GutierezPrincipal: Medicard Phils. Inc

Agent: Carlos Sanchez (Pet)

Facts:

Medicard, respondent, appointed petitioner as its special corporate agent. As such agent, Medicard gave him a commission based on the cash brought in (he gets commission for every insurance sold). Through petitioners efforts, Medicard and United Laboratories Group of Companies (Unilab) executed a Health Care Program Contract.

Under the contract - Unilab shall pay Medicard a fixed monthly premium for the health insurance of its personnel.Unilab paid premium for 1 year and Sanchez got 18% of the amount paid by Unilab to Medicard.

Following year, it was renewed through Sanchezs efforts insurance premium was increased along with Sanchezs commission. Prior to expiration of this renewed contract, Medicard proposed, though Sanchez, an increase in premium payments from Unilab. Unilab said it was too high, prompting Dr. Nicanor Montoya (Medicards president and general manager), also a respondent, to request petitioner to reduce his commission, but the latter refused. Unilab then confirmed its decision not to renew the health program contract with Medicard.

In order not to prejudice its personnel by the termination of their health insurance, Unilab, through respondent Ejercito, negotiated with Dr. Montoya and other officers of Medicard, to discuss ways in order to continue the insurance coverage of those personnel. Under the new scheme, Unilab shall pay Medicard only the amount corresponding to the actual hospitalization expenses incurred by each personnel (i.e. Unilab will pay a lot less than it would under the previous scheme)

Medicard did not give petitioner any commission under the new scheme. Petitioner demanded from Medicard payment of P338,000.00 as his commission plus damages, but the latter refused to heed his demand. He filed complaint for collection of money against Medicard in RTC dismissed. CA affirmed.

CA ratio: no proof that the execution of the new contract between the parties under the cost plus system is a strategy to deprive petitioner of his commission; that Medicard did not commit any fraudulent act in revoking its agency contract with Sanchez; that when Unilab rejected Medicards proposal for an increase of premium, their Health Care Program Contract on its third year was effectively revoked; and that where the contract is ineffectual, then the agent is not entitled to a commission.

Issue: WON CA erred in holding that the contract of agency (the one under the old contract) has been revoked by Medicard (under the new scheme), hence, petitioner is not entitled to a commission.

Held: Yes. Sanchez did not help in the consummation of the contract creating the new scheme under Medicard and Unilab

Ratio:

GEN RULE: in order for an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. In other words, an agent receives his commission only upon the successful conclusion of a sale

EXC: In Prats v CA as a measure of equity an agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring back together the parties, such that a sale was finalized and consummated between them. Manotok Bros. v CA applied this rule - agent (in Manotok) is entitled to a commission since he was the efficient procuring cause of the sale, notwithstanding that the sale took place after his authority had lapsed.

Through petitioners efforts, Medicard was able to enter into a one-year Health Care Program Contract with Unilab. As a result, Medicard paid petitioner his commission. Again, through his efforts, the contract was renewed and once more, he received his commission. Before the expiration of the renewed contract, Medicard, through petitioner, proposed an increase in premium, but Unilab rejected this proposal.

Unilab, through respondent Ejercito, negotiated with respondent Dr. Montoya of Medicard, in order to find mutually beneficial ways of continuing the Health Care Program. The negotiations resulted in a new contract wherein Unilab shall pay Medicard the hospitalization expenses actually incurred by each employees, plus a service fee.

It is clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner. We hold that such revocation is authorized by Article 1924 - agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

Moreover, petitioner did not render services to Medicard, his principal, to entitle him to a commission. There is no indication from the records that he exerted any effort in order that Unilab and Medicard, after the expiration of the Health Care Program Contract, can renew it for the third time. In fact, his refusal to reduce his commission constrained Medicard to negotiate directly with Unilab.Petition DENIED

DOMINGO vs. DOMINGO

GR No. L-30573, Oct. 29, 1971 (J. Makasiar)

Petitioners: Vicente Domingo represented by his heirs

Respondents: Gregorio Domingo [Vicente Domingos agent & broker]

Intervenor: Teofilo Purisima

Facts:

Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agency to sell his Lot No. 883, Piedad Estate in a document. Said lot has an area of 88,477 sq. m.

said lot must be sold for P2 per sq. m. Gregorio is entitled to 5% commission on the total price if the property is sold:

by Vicente or by anyone else during the 30-day duration of the agency or

by Vicente within 3 months from the termination of the agency to a purchaser to whom it was submitted by Gregorio during the effectivity of the agency with notice to Vicente

contract is in triplicate (Original and 1 copy w/ Gregorio and last copy with Vicente)

Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without notifying Vicente. promising Teofilo of the 5% commission

Teofilo introduced Oscar de Leon to Gregorio as a prospective buyer, Oscar submitted a written offer which was very much lower than the P2/sq. m. price. Gregorio was directed by Vicente to tell Oscar to raise his offer

Oscar raised his offer to P1.20 per sq. m. or P109,000 in total. Vicente agreed to said offer.

Upon Vicentes demand, Oscar issued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Gregorio.

Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente.

The written agreement, Exhibit C, between the parties was amended.

Oscar will vacate on or about September 15, 1956 his house and lot at Denver St., QC, which is part of the purchase price

Later on, it was again amended to state that Oscar will vacate his house and lot on Dec. 1, 1956 because his wife was pregnant at that time.

Oscar gave Gregorio P1,000 as a gift or propina for succeeding in persuading Vicente to sell his lot at P1.20 per sq. m. gregorio did not disclose said gift or propina to Vicente.

Moreover, Oscar did not pay Vicente the additional P1,000 Vicente asked from him as earnest money.

The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from his brother in the US, which he communicated to Gregorio.

Gregorio did not see Oscar for several weeks thus sensing that something fishy might be going on. So, he went to Vicentes house where he read a portion of the agreement to the effect that Vicente was still willing to pay him 5% commission, P5,450.

Thereafter, Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was executed by Amparo de Leon, Oscars wife, over their house and lot in favor of Vicente.

After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded in writing the payment of his commission.

Gregorio also conferred with Oscar. Oscar 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 P104,000. In his reply, 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. CA: exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to Oscar.Issue:

WON Gregorios act of accepting the gift or propina from Oscar constitutes a fraud which would cause the forfeiture of his 5% commission [YES]

Ratio:

Article 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.

and Article 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 The modification contained in the first paragraph Article 1891 consists in changing the phrase "to pay" to "to deliver", which latter term is more comprehensive than the former. Paragraph 2 of Article 1891 is a new addition designed to stress the highest loyalty that is required to an agent condemning as void any stipulation exempting the agent from the duty and liability imposed on him in paragraph one thereof. Article 1909 demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as of the strictest justice. Gregorio Domingo as the broker, received a gift or propina from the prospective buyer Oscar de Leon, without the knowledge and consent of his principal, 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 P3000 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, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the property at P1.20 per sq. m. The duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal. An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it. Rationale: prevent the possibility of any wrong not to remedy or repair an actual damage

agent thereby assumes a position wholly inconsistent with that of being an agent for hisprincipal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed

The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy.

As a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his principal.

Situations where the duty mandated by Art 1891 does not apply

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 agent or broker had informed the principal of the gift or bonus or profit he received from the purchaser and his principal did not objectTeofilo Purisimas entitlement to his share in the 5% commission Teofilo can only recover from Gregorio his 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 already received a total of P1,300 from Oscar and Vicente, P650 of which should be paid by Gregorio to Teofilo.Dispositive: CA decision reversed. PRATS vs. COURT OF APPEALS

January 31, 1978

Justice Fernandez

Facts

Antonio Prats, doing business under the name of Philippine Real Estate Exchange, filed a complaint for recovery of sum of money and damages against Alfonso Doronilla. Doronilla is the owner of a piece of land in Montalban, Rizal. He offered the property to the Social Security System but failed to consummate any sale. His offer to sale having failed, Doronilla gave the plaintiff an exclusive option and authority in writing on February 14, 1968 to negotiate the sale of his property subject to the following conditions: The exclusive option and authority is good for a period of sixty (60) days from the date of conformity; provided, however, that should negotiations have been started with a buyer, said period is automatically extended until said negotiations is terminated, but not more than fifteen (15) days; The written offers must be made by the prospective buyers If no written offer is made until the last day of this authorization, this option and authority shall expire and become null and void. As a result of the grant of the exclusive option and authority to negotiate the sale, Doronilla wrote a letter to SSS withdrawing his previous offer to sell the same and requesting the return to him of all papers concerning his offered property on February 20, 1968. SSS complied with the request. On February 27, Doronilla received a letter from SSS, inviting him to meet with the Chairman of SSS. Doronilla declined the invitation and requested them instead to deal directly with the plaintiff. On March 16, at the suggestion of Doronilla, plaintiff wrote a letter to SSS to the effect that plaintiff would be glad to sit with the officials of SSS to discuss the sale of the property. April 18 Doronilla extended the plaintiffs exclusive option and authority to expire on May 18. This was not extended anymore. May 30 Philrex wrote to Doronilla advising the latter that SSS has agreed to purchase the parcel of land. June 20 SSS passed a resolution which formalized its counter-offer of 3.25 per square meter. July 17 SSS passed a resolution approving the purchase of Doronillas piece of land. Doronilla received the full purchase price of his lot. Hence, PHILREX (plaintiff) demanded payment of its professional services as real estate broker. Doronilla failed to pay. TRIAL COURT ordered Doronilla to pay COURT OF APPEALS reversed the decision of the trial court The authority of Philrex expired on June 2 (15 days after May 18), hence the inquiry would only be whether up to that time, a written offer was made by Doronilla in behalf of SSS. The stipulation is clear on this point. There should be a written offer by the prospective buyer. If no such written offer is made until the last day of the authorization, the option and authority shall expire and become null and void.Issue: WON Philrex is entitled to receive commission NO

Held

The offer of Doronilla to sell the parcel of land to SSS was formally accepted only on June 20, 1968 after the exclusive authority had expired.

According to the testimony of Prats, he arranged with Mr. Gilberto Teodoro, SSS Administrator, a meeting with Doronilla. Teodoro specifically requested Prats not to be present at the meeting as he wanted to deal with Doronilla alone. It is manifest that the SSS officials never wanted to be in any way guided by the mediation or intervention of Philrex relative to the purchase of the property.

On May 6, he made an offer to the SSS to sell the property at P6.00 per square meter, to which he received no answer. This cold indifference of the SSS must have prompted him to look for other buyers.

For him to claim that it was he who aroused the interest of the SSS is to ignore the fact that as early as June 1967, the SSS had directly dealt with Prats. It can truly be said then that the interest of SSS to acquire the property had been sufficiently aroused for there to be any need for appellee to stimulate it further.

There should be a written offer by the prospective buyer. If no such written offer is made until the last day of the authorization, the option and authority shall expire and become null and void. Yet, no such written offer was made.

In equity however, the Court noted that Prats had diligently taken steps to bring back together Doronilla and the SSS.

Prats had several dinner and luch meetings with Doronilla regarding the progress of the negotiations with the SSS.

The court has noted on the other hand that Doronilla finally sold the property to SSS at 3.25 per square meter when he alone was dealing with the latter long before Prats came into the picture but that on the other hand Prats efforts somehow were instrumental in bringing them together again and finally consummating the transaction, although such finalization was after the expiration of Prats extended exclusive authority.

Under the circumstances, the Court grants in equity the sum of 100,000.00 by way of compensation for his efforts and assistance in the transaction.

Manotok Brothers Inc. v. CA (1993, Campos, Jr., J.)

PetS: Manotok Brothers, Inc.

RESPS: CA, RTC Judge, Salvador SaligumbaFACTS:

Manotok, Inc. owns the parcel of land and building formerly leased by the City of Manila and used by the Claro M. Recto High School.

Thru a letter (July 1966), Manotok authorized Saligumba to negotiate with the City of Manila the sale of the aforementioned property for not less than P425K. Manotok also agreed to pay Saligumba a 5% commission in the event the sale is finally consummated and paid.

Subsequently, Manotok executed 2 letters (Mar. 1967, and June 1967), extending the Saligumbas authority for 120 days (per letter of extension).

Finally, through another letter (Nov. 16, 1967), Manotok authorized Saligumba to finalize and consummate the sale of the property to the City of Manila for not less than P410K ( Came with another extension of 180 days.

The Municipal Board of said city eventually passed Ordinance No. 6603, appropriating P410,816 for the purchase of the property which Saligumba was authorized to sell. However, said ordinance was signed by the Mayor only on May 17, 1968 (183 days after the last letter of authorization).

Jan. 1969: Parties signed the deed of sale. The initial payment (P200K) having been made, the purchase price was fully satisfied with a second payment (Apr. 1969) by a check for P210,816.

Notwithstanding the realization of the sale, Saligumba never received any commission (P20,554.50). ( Manotok refused to pay Saligumba as it does not recognize the latter's role as agent in the transaction.

AT THE CFI: Saligumba filed a complaint against Manotok.

Saligumba: It was because of his efforts that the Municipal Board passed the ordinance which appropriated the sum for the payment of the property subject of the sale, narrated as follows:

He met with Rufino Manotok (president of Manotok, Inc.), Atty. Dominador Bisbal (then PTA president) and Fructuoso Ancheta (principal of the school), where the latter party asked Saligumba to negotiate the sale of the school lot and building to the City. Saligumba then went to Councilor Mariano Magsalin (author of the ordinance) to present the project. He also went to the Assessor's Office for appraisal of the value of the property.

While these events transpired and his letters of authority expired, Rufino Manotok always renewed the former's authorization until the last letter was given (to remain in force until May 14, 1968). After securing the report of the appraisal committee, he went to the Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila. The Superintendent approved the report, so Saligumba went back to the Mayor's Office, which thereafter indorsed the same to the Municipal Board for appropriation.

Subsequently, the ordinance was passed by the Municipal Board. Manotok received the full payment of the purchase price, but Saligumba did not receive a single centavo as commission.

Ancheta and Atty. Bisbal both testified acknowledging Saligumbas authority regarding the transaction.

Manotok, Inc.: Denied Saligumbas claim: (1) Saligumba would be entitled to a commission only if the sale was consummated and the price paid within the period given in the respective letters of authority; and (2) Saligumba was NOT the person responsible for the negotiation and consummation of the sale, but Filomeno Huelgas (a former PTA president of the Claro M. Recto High School.

Huelgas: After being inducted as PTA president (Aug. 1967) he followed up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17, 1968.

He came to know Rufino Manotok only in Aug. 1968, at which meeting the latter told him that he would be given a gratification (P20K) if the sale was expedited.

Rufino Manotok: Confirmed that he knew Huelgas and that there was an agreement between the 2 of them regarding the "gratification".

ON REBUTTAL: Atty. Bisbal ( Huelgas was present in the PTA meetings from 1965-1967 but he never offered to help in the acquisition of said property. Moreover, Huelgas was aware of the fact that it was Saligumba who was negotiating the sale of the subject property.

CFI: Sentenced Manotok, Inc. and/or Rufino Manotok to pay Saligumba P20,540 by way of his commission fees with legal interest thereon from the date of the filing of the complaint until payment. (P4K as attorney's fees).

AT THE CA: Affirmed the said ruling.

AT THE SC: Issued a Minute Resolution ordering Saligumba to comment on Manotoks petition for review on certiorari.

The resolution was returned unserved ( The Court issued another Resolution requiring Manotok to locate Saligumba and to inform the Court of Saligumbas present address within 10 days from notice. Manotok was unsuccessful, so it opted to manifest that Saligumba's last address was the same as that address to which the Court's resolution was forwarded.

SC: Issued a Resolution dismissing Manotok's case ( The issues raised in the case at bar cannot be joined, thus the case became final and executory by the entry of judgment.

Jan. 9, 1990: Saligumba filed a Motion to Execute the said judgment before the court of origin.

Upon discovery of said development, Manotok verified with the court of origin the circumstances by which Saligumba obtained knowledge of the Courts resolution.

Sensing a fraudulent scheme, Manotok then instituted this instant Petition for Relief ( Amended to include, in the alternative, its petition to re-file its earlier Petition for Certiorari.

ISSUE: W/N Saligumba is entitled to the 5% agent's commission. PET: As a broker, Saligumba's job is to bring together the parties to a transaction. (If the broker does not succeed in bringing the minds of the purchaser and the vendor to an agreement with respect to the sale, he is not entitled to a commission.

RESP: Maintains that it was because of his efforts that a purchase actually materialized between the parties.

HELD/RATIO: YES, Saligumba is entitled to the 5% commission. It would seem that he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired.

By this alone, one might be misled to believe that this case squarely falls within the ambit of the established principle that a broker or agent is not entitled to any commission until he has successfully done the job given to him.

Going deeper into the case would reveal that it is within the coverage of the exception rather than of the general rule as provided in Prats v. CA (where the Court ruled in favor of the claimant-agent despite the expiration of his authority, when a sale was finally consummated)

Prats v. CA: While the factual findings established that the claimant-agent here was not the efficient procuring cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority), still petitioner was awarded compensation for his services (rule of equity).

HERE: Saligumba is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve.

In an earlier case, the Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission.

HERE: Without discounting the fact that when the Ordinance was signed by the Mayor on May 17, 1968, Saligumba's authority had already expired ( The ordinance was approved on April 26, 1968 when Saligumba's authorization was still in force.

Moreover, the approval by the Mayor came only 3 days after the expiration of Saligumba's authority.

From the records, the only party given a written authority by petitioner to negotiate the sale from July 5, 1966 - May 14, 1968 was Saligumba.

Danon v. Brimo does not apply squarely to the instant petition. ( Claimant-agent in said case fully comprehended the possibility that he may not realize the agent's commission as he was informed that another agent was also negotiating the sale and thus, compensation will pertain to the one who finds a purchaser and eventually effects the sale.

HERE: Saligumba pursued with his goal of seeing that the parties reach an agreement, on the belief that he alone was transacting the business with the City Government as this was what petitioner made it to appear.

While it may be true that Huelgas followed up the matter with Councilor Magsalin (author of the ordinance) and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed (when the buyer has already agreed to the purchase and to the price for which said property is to be paid). ( Without the efforts of Saligumba then, Mayor Villegas would have nothing to approve in the first place.

It was actually Saligumba's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated.

DISPOSITIVE: CA decision is AFFIRMED.2. To appoint a substitute

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)

3. Retain objects of the Agency Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault.

The reimbursement shall include interest on the sums advanced, from the day on which the advance was made. (1728)

Art. 1913. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. (1729)

Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730)

B. Obligations

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. (1719)

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)

DOMINGO v. DOMINGO supra

ROSA VILLA MONNA,plaintiff-appellee,vs.GUILLERMO GARCIA BOSQUE, ET AL.,defendants.GUILLERMO GARCIA BOSQUE, F. H. GOULETTE, and R. G. FRANCE,appellants.(1926, Street)FACTS:

1. The plaintiff, Rosa Villa y Monna, viuda de E. Bota, was the owner of a printing establishment and bookstore located at 89 Escolta, Manila, and known as La Flor de Cataluna, Viuda de E. Bota

2. On Sept. 17, 1919, Monna (plaintiff) a resident of Barcelona, Spain, acting through Manuel Pirretas, as attorney in fact, sold the establishment to the defendants Guillermo Garcia Bosque and Jose Pomar Ruiz, residents of the City of Manila, for the stipulated sum of P55,000, payable as follows (P15,000) on November 1, next ensuing upon the execution of the contract, being the date when the purchasers were to take possession; (P10,000) at one year from the same date (P15,000) at two years; and the remaining (P15,000) at the end of three years. By the contract of sale the deferred installments bear interest at the rate of 7 per centum per annum.

3. R. G. France and F.H. Goulette obligated themselves as solidary sureties with the principals Bosque and Ruiz, to answer for any balance, including interest, which should remain due and unpaid after the dates stipulated for payment of said installments, expressly renouncing the benefit of exhaustion of the property of the principals

4. The first installment of P15,000 was paid conformably to agreement.

5. In 1920, Pirretas went on a prolonged visit to Spain and and in contemplation of his departure he executed a document (Exhibit B), dated January 22, 1920, purporting to be a partial substitution of agency, whereby he transferred to "the mercantile entity Figueras Hermanos" the powers that had been previously conferred on Pirretas by the plaintiff "in order that ,they may be able to effect the collection of such sums of money as may be due to the plaintiff by reason of the sale of the bookstore and printing establishment already mentioned, issuing for such purpose the receipts, vouchers, letters of payment, and other necessary documents for whatever they shall have received and collected of the character indicated."

6. purchasers were unable to pay when the 2nd installment and accrued interest became due

7. after certain negotiations between said purchasers and one Alfredo Rocha, representative of Figueras Hermanos, acting as attorney in fact for the plaintiff, an agreement was reached, whereby Figueras Hermanos accepted the payment of P5,800 on November 10, 1920, and received for the balance five promissory notes payable, respectively, on Dec 1, 1920, Jan 1, 1921, February 1, 1921, March 1, 1921, and April 1, 1921

8. These notes were not paid promptly at maturity but the balance due upon them was finally paid in full by Bosque on December 24, 1921

9. About this time the owners of the business La Flor de Catalua, converted it into a limited partnership under the style of Guillermo Garcia Bosque, S. en C.;" and presently a corporation was formed to take over the business under the name "Bota Printing Company, Inc." ( partnership conveyed all its assets to this corporation for consideration of P15,000

10. Meanwhile, 7 notes representing the unpaid balance of the second installment and interest were failing due without being paid. Because of this and the dilatoriness of debtor, M. T. Figueras entered into an agreement (Exhibit 1) where it is recited that Guillermo Garcia Bosque. S. en C., is indebted to Rosa Villa, viuda de E. Bota, in the amount of P32,000 for which R. G. France and F. H. Goulette are bound as joint and several sureties, and that the partnership mentioned had transferred all its assets to the Bota Printing Company, Inc., of which one George Andrews was a principal stockholder. It is then stipulated that France and Goulette shall be relieved from all liability on their contract as sureties and that in lieu thereof the creditor, Doa Rosa Villa y Monna, accepts the Bota Printing Company, Inc., as debtor to the extent of P20,000, which indebtedness was expressly assumed by it, and George Andrews as debtor to the extent of P12,000, which he undertook to pay at the rate of P200 per month thereafter

11. Monna instituted action in CFI Manila to recover from the Bosque and Rui, and from the defendants R. G. France and F. H. Goulette, as solidary sureties for said principals, the sum of P20,509.71, with interest, as a balance alleged to be due to the plaintiff upon the purchase price of the establishment

ISSUE(s): WON plaintiff is bound by the said agreement NO! Exhibit 1 is not binding on the plaintiff.

Bosque: agreement as constitutes a novation such as to relieve him from personal liability

Sureties: agreement released them

All defendants: plaintiff has ratified the agreement by accepting part payment of the amount due thereunder with full knowledge of its terms

Plaintiff: Figueras had no authority to execute the contract containing the release and that the same had never been ratified by her

HELD/RATIO:

It is obvious upon the face of the act of substitution that the sole purpose was to authorize Figueras Hermanos to collect the balance due to the plaintiff upon the price of La Flor de Catalua, the sale of which had already been affected by Pirretas "). There is nothing here that can be construed to authorize Figueras Hermanos to discharge any of the debtors without payment or to novate the contract by which their obligation was created. On the contrary the terms of the substitution shows the limited extent of the power

Under the Exhibit B the substituted authority should be exercised by the mercantile entity Figueras Hermanos or the person duly authorized to represent the same In the actual execution of Exhibit 1 (agreement in issue), M. T. Figueras intervenes as purpoted attorney in fact without anything whatever to show that he is in fact the legal representative of Figueras Hermanos or that he is there acting in such capacity. The act of substitution conferred no authority whatever on M. T. Figueras as an individual.

Figueras had no authority to execute the contract of release and novation in the manner attempted; and apart from this it is shown that in releasing the sureties Figueras acted contrary to instructions

(For instance, in a reply letter from Pirretas, he expressed the conformity of Doa Rosa in any adjustment of the claim that Figueras should see fit to make, based upon payment of P20,000 in cash, the balance in installments, payable in the shortest practicable periods, it being understood, however, that the guaranty of Messrs. France and Goulette should remain intact. From this it is obvious that Figueras had no actual authority whatever to release the sureties or to make a novation of the contract without their additional guaranty.

The proposition of the defendants to the effect that the plaintiff has ratified Exhibit 1 by retaining the sum of P14,000, paid by the Bota Printing Co., Inc., as above stated, is untenable. By the assumption of the debts of its predecessor the Bota Printing Co., Inc., had become a primary debtor to the plaintiff; and she therefore had a right to accept the payments made by the latter and to apply the same to the satisfaction of the third installment of the original indebtedness. Nearly all of this money was so paid prior to the execution of Exhibit 1 and although the sum of P200 was paid a few days later, we are of the opinion that the plaintiff was entitled to accept and retain the whole, applying it in the manner above stated. In other words the plaintiff may lawfully retain that money notwithstanding her refusal to be bound by Exhibit 1

DISPOSITIVE: As a result of our examination of the case we find no error in the record prejudicial to any of the appellants, and the judgment appealed from will be affirmed, So ordered, with costs against the appellants

PHILIPPINE NATIONAL BANK, vs.MANILA SURETY and FIDELITY CO., INC. and THE COURT OF APPEALS (July 30, 1965)Ponente: REYES, J.B.L.

The Philippine National Bank petitions for the review and reversal of the decision rendered by the Court of Appeals (Second Division), in its case CA-G.R. No. 24232-R, dismissing the Bank's complaint against respondent Manila Surety & Fidelity Co., Inc., and modifying the judgment of the Court of First Instance of Manila in its Civil Case No. 11263.

The Philippine National Bank opened a letter of credit and advanced $120,000.00 to Edgington Oil Refinery for 8,000 tons of hot asphalt.

Of this amount, 2,000 tons worth P279,000.00 were released and delivered to Adams & Taguba Corporation (ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. up to the amount of P75,000.00.

To pay for the asphalt, ATACO constituted the Bank (its assignee and attorney-in-fact) to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor under Purchase Order No. 71947.

conditions of assignment:

1. irrevocable until the said credit accomodation is fully liquidated.

2. The PHILIPPINE NATIONAL BANK is hereby appointed as our Attorney-in-Fact for us and in our name, place and stead, to collect and to receive the payments to be made by virtue of the aforesaid Purchase Order, with full power and authority to execute and deliver on our behalf, receipt for all payments made to it; to endorse for deposit or encashment checks, money order and treasury warrants which said Bank may receive, and to apply said payments to the settlement of said credit accommodation.

power of attorney shall also remain irrevocable until total indebtedness to the said Bank have been fully liquidated.

ATACO delivered to the Bureau of Public Works, and the latter accepted, asphalt to the total value of P431,466.52. Of this amount the Bank regularly collected, from April 21, 1948 to November 18, 1948, P106,382.01.

Thereafter, for unexplained reasons, the Bank ceased to collect, until in 1952 its investigators found that more moneys were payable to ATACO from the Public Works office, because Public Works office had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of P311,230.41.

Its demands on the principal debtor and the Surety having been refused, the Bank sued both in the Court of First Instance of Manila to recover the balance of P158,563.18 plus interests and costs.

the trial court rendered a decision in favor of PNB (ATACO and Manila Surety to pay P174,462.34)

Manila Surety & Fidelity Co., Inc. duly perfected its appeal. The Central Bank of the Philippines did not appeal, while defendant ATACO failed to perfect its appeal.

The Bank recoursed to the Court of Appeals, which rendered an adverse decision and modified the judgment of the trial court as to the surety's liability. MR is denied hence appeal.

CA: Bank isnegligent in having stopped collecting from the Bureau of Public Works the moneys falling due in favor of the principal debtor, ATACO, from and after November 18, 1948, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety, and held that the Bank's negligence resulted in exoneration of respondent Manila Surety & Fidelity Company.ISSUE

WON the power of attorney obtained from ATACO was merely in additional security to its favor, and that it was the duty of the surety, and not that of the creditor, owed to see to it that the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any sum from the principal debtor (Banks Argument)

HELD SC states that such argument misses the point

REASONING

The Court of Appeals did not hold the Bank answerable for negligence in failing to collectfrom the principal debtorbut for its neglect in collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). Certainly, the Bank could not expect that the Bank would diligently perform its duty under its power of attorney, but because they could not have collected from the Bureau even if they had attempted to do so. It must not be forgotten that the Bank's power to collect was expressly madeirrevocable, so that the Bureau of Public Works could very well refuse to make payments to the principal debtor itself, and afortiorireject any demands by the surety.

Even if the assignment with power of attorney from the principal debtor were considered as mere additional security still, by allowing the assigned funds to be exhausted without notifying the surety, the Bank deprived Manila Surety of any possibility of recoursing against that security. The Bank thereby exonerated the surety, pursuant to Article 2080 of the Civil Code:

ART. 2080. The guarantors,even though they be solidary, are released from their obligation whenever by come act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. (Emphasis supplied.)

DISPOSITIVE

WHEREFORE, the appealed decision is affirmed, with costs against appellant Philippine National Bank.

CONSOLACION L. RAMOS,vs. BENIGNO A. CAOIBES(JUGO,J.: 1954)Parties:

Appelle (W) Administratrix: Consolacion Ramos Appellant (L) Atty.-in-fact:BenignoCaoibes

(Note: they didnt have counsels in this case, they represented themselves!)

FACTS

AUG 16, 1948 - Concepcion Ramos Dipusoy executed before a notary public 2 documents an SPA and an affidavit.

SPA SUMMARY: Concepcion appointed Caoibes to collect any amount due from the Philippine War Damage Commission re: claim for her properties in Batangas lost in the war as if it were Concepcion herself claiming such.

That I, Concepcion Ramos Dipusoy, of legal age, single, Filipino citizen and resident of Balayan, Batangas, have made, constituted and appointed, and by these presents do make, constitute and appoint Mr. Benigno A. Caoibes, also of legal age, married, Filipino citizen and at present residing at 1047 Antipolo Street, Sampaloc, Manila, my true and lawful attorney-in-fact, for me and in my name, place and stead, to collect any amount due me from the Philippine War Damage Commission, regarding my claim filed for my properties that were lost during the last war in Balayan, Batangas, to cash checks, warrants and to sign receipts, vouchers, documents which shall be necessary to the said purpose.

That I am giving and granting unto my said attorney-in-fact Benigno A. Caoibes, full and absolute power and authority to do and perform all any every act or thing whatsoever to be done necessary in and about the premises, as fully to all intents and purposes as I might or could myself do if I were personally present, and hereby confirming and ratifying all that my said attorney-in-fact shall lawfully do or cause to be done and by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila, Philippines.

(Miss) CONCEPCION RAMOS DIPUSOY

This SPA was duly notarized in Manila before Artemio Abaya and further an AFFIDAVIT was executed to the effect that:

That in case payment of any amount or amounts collected from the Philippine War Damage Commission, my nephew and at the same time attorney-in-fact, shall give my sister TeopistaVda. deBasa one-half (), of the corresponding amount and the other half () shall be given to my nephew and niece Mr. and Mrs. Benigno A. Caoibes.

IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila.

(Sgd.) CONCEPCION RAMOS DIPUSOY

WITNESSES WHO SIGNED SPA and Affidavit (Consolacion Ramos and Socorro Ramos

Concepcion died testate on August 19, 1948( will admitted to probate on October 4, 1948, in which she ordered that the credits due to her be distributed among the children of the deceased Antonino Ramos, namely, Consolacion, Ramon, Socorro and Cirila.

Aug 31, 1948 The Philippine war damage Commission issued check = P501.62, payable Concepcion

This check was returned to the Commission and substituted by a check for the same amount BUT payable to Benigno A. Caoibes who presented SPA and the affidavit which he cashed for himself.

The administratrix, Consolacion discovered the collection made by Caoibes when she saw the note "previous payment" which appeared in the account sent to her by the Commission on October 13, 1950.

Consolacion filed a motion asking that Caoibes be ordered to deposit the sum of P501.62 with the clerk of court.

Caoibes answered the motion admitted having received in cash P501.62 and that he was willing to deliver to the clerk the sum of P250.81. He contended that, by virtue of the SPA and the affidavit that he had the right to retain, for himself, half of the sum of P501.62.

CFI DECISION (Caoibes was ordered to turn over the amount of P250.81 to the Clerk of this Court. It is ordered that the said Atty. Caoibes deposit the said amount to be at the disposal of the administratrix and the other parties in this intestate proceedings.

MR filed by Consolacion was denied hence this case

ISSUE: WON Caoibes by virtue of the SPA and the affidavit had a right to keep half of the amount that the Philippine war damage commission awarded his principal Concepcion?

HELD: NO

Ratio: The court considers both SPA and the affidavit to determine WON Caoibes has a right.

THE SPA (Caoibes, as agent, had the obligation to deliver the amount collected by virtue of said power to his principal, Concepcion, or, after her death, to the administratrix of her estate, Consolacion.

There is absolutely no cession of rights made in favor of Caoibes in the SPA, and under Article 1711 of the old Civil Code (which was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless the agent is a professional agent. There is no proof that Caoibes was such.

Furthermore, according to OCC Article 1732 an agency is terminated, among other causes, by the death of the principal or of the agent. When Caoibes made use of the power of attorney, his principal, Concepcion was already dead.

The affidavit ( the alleged document of donation, SC notes that it is not a donation of real but of personal property and is governed by OCC article 632: Donations of personal property may be made verbally or in writing. Verbal donation requires the simultaneous delivery of the gift. In the absence of this requisite the donation shall produce no effect, unless made in writing and accepted in the same form.

SC notes that donation was made in writing but NO acceptance in same form! ( NOT VALID!

AlsoCANNOT be considered a donation upon valuable consideration, for no services nor any valuable consideration had passed from the donees to the donor. The mere fact that Caoibes collected the claim from the War Damage Commission is not such a service as to require compensation. Caoibes did not even prepare the claim.

SC said CFI judgment is wrong because Consolacion as admin NEVER consented to the reduction of the claim.

DECISION( REVERSED.Caoibes is ordered to deposit with the Clerk of Court of Batangas P501.62 to be at the disposal of the administratrix.

Gutierrez Hermanos v. Oria Hermanos & Co.(November 12, 1918, Torres, J.)

Parties:Gutierrez Hermanos (plaintiff-appellee), OriaHermanos& Co. (defendant-appellant)

Facts: August 12, 1909: Counsel for the commercial firm of Gutierrez Hermanos, of the city of Manila, filed a complaint in the CFI, seeking to recover from the firm of OriaHermanos& Co., the payment of the sum P147,204.28 besides interest, alleging among other things that it had commercial relations with the OriaHermanos which gave rise to their books of a mutual current account where there remained a balance in the said sum against OriaHermanos and that Gutierrez Hermanos had sent an abstract of the current account showing the balance. OriaHermanosalleged, in turn, that Gutierrez Hermanos was a commission agent which bound itself to buy and sell certain merchandise for Oria, and that Gutierrez Hermanos entered fraudulent prices of goods in its accountsand for this reason it is prayed that it be ordered to render an account of its transactions as commission agent. CFI (April 24, 1912): Ordered Gutierrez Hermanos to render an account supported by vouchers of the amounts charged against Oria as regards the internal revenue taxes, the price and weight of the sacks of rice, and the value of the boxes of kerosene oil acquired by the plaintiff in the name and for the account of the defendant company, and condemning the defendant company to pay the plaintiff the amount prayed for in the complaint after deducting therefrom whatever amount or amounts would result in favor of the defendant company from the accounts to be rendered by the plaintiff. SC (March 30, 1915): Plaintiff was ordered to render to the defendant an account supported by vouchers of the price and other expenses incurred in the shipment of rice and also the price of all the kerosene oil acquired by the plaintiff for the defendant (supported by invoices) and lastly, to account for the amounts paid as ad valorem duties on the rice, salt, kerosene oil, and other goods the duties on which were charged against the defendant. CFI (on remand):Plaintiff company presented to the court a written statement of the accounts and notified the plaintiff to present to the court the vouchers supporting said accounts. D. M. Fleming was appointed as referee by virtue of a written agreement between the parties. Pursuant to his duties, the referee made a report (some invoices for rice were not proved and not supported by vouchers and that in the invoices for kerosene oil comprising 592 cans, there were overcharges amounting to P78.63 as discounts not granted, and in one particular case, there was a recharge of the price.)The court ordered the referee to file an amended report(refer to case for contents), which the lower court approved. Pursuant to this second report, the court adjudicated to the plaintiff the sum claimed in the complaint less the sum of P36,744.49 (total sum which should be allowed in favor of OriaHermanos y Ca according to report), or the net balance of P110,459.79. An order of attachment was decreed. SC: Appeal by Oria.Gutierrez Hermanos argument:

OriaHermanos is liable to Gutierrez Hermanos for P147,204.28 which is the balance standing against the defendant company in their books of mutual current account.OriaHermanos argument:

Gutierrez Hermanos was a commission agent which bound itself to buy and sell certain merchandise for Oria, and that Gutierrez Hermanos entered fraudulent prices of goods in its accounts. (Amount claimed should be lower)Issue: W/N the second report by the referee is correct as to the liability of OriaHermanos (with regard to the kerosene oil invoices).Held: NO.The first report is correct. As commission agent of the OriaHermanos, Gutierrez Hermanoshad no right to retain for itself the discounts obtained.Ratio:

Proof of invoices:The first report of the referee cannot be the proper basis.The referee in his first report says that 76 invoices of rice and 73 invoices of kerosene oil were not supported by vouchers, and that the charges made by way of internal revenue taxes could not be estimated, unless all the invoices of rice were proved.In his second report, estimating the average error which might have been committed in the invoices not satisfactorily proved, proceeded to fix at his own discretion the mistake proportionally to the figures as stated in the invoices.Although the defendant company cannot be held liable for the value of the invoices not duly proved by the plaintiff, nevertheless, if the records show that the defendant company had received the goods consigned to it under invoices and the only defect was that excessive prices were charged and certain amounts were unduly debited, it would not be just, that for said failure on the part of the plaintiff to prove all of the invoices, the defendant company would deny liability to pay for the goods received by it, after deducting from the price the excess and the quantities for which it was not liable. Picos of rice: The referee has not proceeded in his estimates through whimsical and arbitrary methods in reducing the picos of Saigon rice to correspond with the picos of Manila, with the corresponding reduction for waste and leakage.The referee fixed the difference between the pico of Saigon and that of Manila at 5 per cent of Saigon, including waste and leakage, in accordance with the book of weights and measures of international commerce by Macmillan & Co., wherein it appears that a pico in the Straits Settlements weighs 60.478 kilos, and the Saigon pico is considered equal to that of the Straits Settlements.Witness Tomas Oriastated that the pico of Manila weighs 63.25 kilos and that of Saigon, 63 kilos (difference of 3.15). According to the referee 1/2 per cent is the reduction effected by reason of waste and leakage and estimated for each sack which weighs more than a pico, a reduction of 3.50%is reasonable. Commission:Amounts include internal revenue taxes unduly charged. In the invoices, the plaintiff company never took its commission on said taxes, but took it on the value of the invoice, without including the internal revenue charges. Compound interest:The record furnishes sufficient data whereby the compound interests, which resulted from the unlawful charges entered against the defendant, could have been adjusted in a correct and reasonable manner, for such interests can be determined as shown in the current accountof OriaHermanos& Co. opened in the books of the plaintiff during the second semester of 1908 ([amounts x number of days during earning interest]/100 = interest). Invoices of kerosene oil (relevant): Mistake in the invoices amounts to P78.63. He adjudged 15 centavos a box to cover the shortage in addition to the discounts which should be allowed to the defendants.Gutierrez Hermanos, in buying the kerosene oil, specified in 5 invoices sometimes obtained a discount of 2 1/2 per cent and at other time a discount of 1 per cent, and that the purchase price was less than that stated in the invoices. The first decision which held that the plaintiff, as commission agent of the defendant, had no right to retain for itself the discounts obtained is correct and so plaintiff should reimburse to the defendant the discounts and the interest thereon. The amount to be paid back is to be determined notonly by the number of boxes of kerosene oil invoiced, but by both the increase in prices (depends on number of boxes)and also of the discounts (total price of invoice). All other conclusions by referee are just and reasonable.Gutierrez Hermanosshould pay to OriaHermanos& Co., the sum of P37,063.57. Thus Oria is only entitled to a reduction of the sum of P37,063.57 from the amount of P147,204.28 adjudged in favorof the plaintiff firm in the previous decision of this court, and for this reason the defendant OriaHermanos& Co. is found liable to pay Gutierrez Hermanos the remaining balance of P110,140.71 and the interest.Dispositive:

After deducting the sum of P37,063.57 from the amount specified in the previous decision of this court, OriaHermanos& Co. should pay to Gutierrez Hermanos the sum of P110,140.71 and 8% interest thereon from June 30, 1909.United States v. Reyes (1917, Malcolm)

PARTIES:Plaintiff: United StatesDefendant: Domingo Reyes (agent)Offended Party/Principal: RB Blackman

FACTS: R. B. Blackman is a surveyor in the Province of Pangasinan. Domingo Reyes, the accused, also lives in that province. Blackman employed Reyes to collect certain amounts due from twelve individuals for Blackman's work in connection with the survey of their lands.

The total amount to be collected by Reyes was P860. He only succeeded in collecting P540. He delivered to Blackman P368. He retained the balance, or P172. The difficult point concerns the exact terms of the contract. It was merely an oral agreement between Blackman and Reyes. Blackman claims that he agreed to pay Reyes a commission of 10 per cent. Reyes claims that he was to receive a commission of 20 per cent. - To return to the figures again, it will be noticed that if the statements of Blackman are accepted, Reyes was entitled to 10 per cent of the collected amount of P540 (or P530), or P54, making P172 misappropriated, or, if we deduct his commission, P118. On the other hand, if the statements of Reyes are accepted, then 20 per cent of the total amount to be collected, P860, is exactly P172, the amount claimed to have been misappropriated.

Trial Court Estafa filed by Blackman against Reyes. Reyes found guilty of estaga and obliged to indemnify RB Blackman in the sum of118 with subsidiary imprisonment in case of insolvency

ISSUE(s): WON Reyes,as agent of Blackman, can be held liable for estafaHELD/RATIO: Reyes is liable for estafa There are a number of reasons which impelled the Court to the conclusion that the defendant and appellant is guilty as charged. In the first place, in view of the discrepancy in the evidence the Court is not disposed to set up its judgment as superior to that of the trial court. In the second place, conceding that Reyes was to receive 20 per cent, this, unless some contrary and express stipulation was included, would not entitle him in advance to 20 per cent of the amount actually collected. In the third place, the right to receive a commission of either 10 or 20 per cent did not make to hold out any sum he chose. In the fourth place, under the oral contract Reyes was an agent who was bound to pay to the principal all that he had received by virtue of the agency. And, lastly, since for all practical purposes, the agency was terminated, the agent was under the obligation to turn over to the principal the amount collected, minus his commission on that amount.

All the requisites ofestafaas punished by article 535, paragraph 5, of the Penal Code, and as construed by the commentators, are here present. The assignment of error relative to the nonproduction by the fiscal of the transcription of the preliminary investigation is not particularly important as secondary evidence was admitted and the substantial rights of the accused were not affected.

DISPOSITIVE: The judgment of the trial court being in accord with the facts and the law is hereby affirmed with the costs. So ordered. DBP v CA (1994, Quiason, J.)

Plaintiff/Appellant/Agent: Development Bank of the Philippines

Defendant/Appellee: CA, Estate of the Late Juan B. Dans, represented by Candida G. Dans and the DBP Mortgage Redemption Insurance Pool

Principal: DBP MRI Pool

Facts:

May 1987, Juan Dans, and wife Candida, son and daughter-in-law, applied for a 500K loan with DBP Basilan. Dans, principal mortgagor, was then 76 y/o, and was advised by DBP to obtain mortgage redemption insurance (MRI) with the DBP MRI Pool.

4 Aug 87, reduced loan of 300K was approved. It was released on 11 Aug. From this amount DBP deducted P1476 as payment for the MRI premium. 15 Aug Dans accomplished and submitted the MRI Application for Insurance and the Health Statement for DBP MRI Pool

20 Aug, MRI premium of Dans, less DBP service fee of 10%, was credited by bank to the savings account f the BDP MRI Pool. Latter was advised of such

3 Sept, Dans died of cardiac arrest. 23 Sept, DBP MRI Pool notified DBP that Dans was not eligible for coverage, as he was over 60 y/o at time of application

21 Oct, DBP apprised Candida of the disapproval. It offered to refund the premium, but Candida refused to accept, demanding payment of the face value of the MRI, OR an amount equivalent to the loan. She also refused to accept DBPs offer of 30K ex gratia settlement.

RTC: 10 Feb 89, respondend Estate, through Candida, filed a complaint against DBP and the Pool for collection of sum of money with damages, alleging that Dans was insured by the Pool when DBP, with full knowledge of Dans age at the time of application, required him to apply for MRI, and later collected the insurance premium.

DBP asserted a cross-claim against the Pool.

Decision rendered was in favor of Estate and against DBP. Pool was absolved from liability, as there was no privity of contract between it and Dans. DBP declared in estoppel for having led Dans into applying for MRI and actually collecting the premium nd the service fee, despite knowledge of the age ineligibility.

Thus it ordered DBO to return and reimburse 139,500 plus interest, as amortization payment paid under protest; consider the mortgage loan of 300K to have been settled, satisfied, or set-off by virtue of the insurance coverage of the late Dans; pay attorneys fees, costs of litigation, and other expenses.

CA affirmed.

Issue:

(1) WON DBP is liable.Held/Ratio: YES, DBP is liable.

(1) In dealing with Dans, DBP was wearing two legal hats: the first as a lender, and the second as an insurance agent. As an insurance agent, DBP made Dans go through the motions of applying for said insurance, thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. But DBP had full knowledge that Dan's application was never going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned.(2) CC1987, "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." Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age, DBP exceeded the scope of its authority when it accepted Dan's application for MRI by collecting the insurance premium, and deducting its agent's commission and service fee.(3) The liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent's powers. There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI. If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the agent, then the latter is liable for damages to him. The rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting, or in affirming, or concealing the authority under which he assumes to act. Thus the provisions of CC 19-21 come into play.(4) However, BDPs liability cannot be for the entire value of the insurance policy. To assume that were it not for DBP's concealment of the limits of its authority, Dans would have secured an MRI from another insurance company, and therefore would have been fully insured by the time he died, is highly speculative. Considering his advanced age, there is no absolute certainty that Dans could obtain an insurance coverage from another company. It must also be noted that Dans died almost immediately, i.e., on the nineteenth day after applying for the MRI, and on the twenty-third day from the date of release of his loan.(5) Thus, damages: no actual damages as they are too remote to be accurate; moral damages of 50K, considering that DBP offered to pay 30K ex gratia settlement, and its non-disclosure of the limits of its authority amounted to a deception to its client. Note: There was no perfected contract of insurance between Dans and the Pool; the latter cannot be held liable on a contract that doesnt exist. When the former applied, he filled up and personally signed a Health Statement for DBP MRI Pool, where the provisions required that MRI coverage shall take effect (1) when the application shall be approved by the insurance pool; and (2) when the full premium is paid during the continued good health of the applicant. These two conditions must concur. Also, the power to approve MRI applications is lodged with the DBP MRI Pool. But it did not approve Dans application. There is also no showing that it accepted the sum of P1,476.00, which DBP credited to its account with full knowledge that it was payment for Dan's premium.Judgment affirmed with modification, and petitioner DBP is ORDERED: (1) to REIMBURSE respondent Estate of Juan B. Dans the amount of P1,476.00 with legal interest from the date of the filing of the complaint until fully paid; and (2) to PAY said 50K as moral damages and 10K as attorney's fees.ALBERT v. UNIVERSITY PUBLISHING CO., INC. (1965, Bengzon, J.P., J.)

Plaintiff-appellant: Mariano Albert

Defendant-appelleee: University Publishing Co., Inc.

FACTS

September 24, 1949 - Mariano A. Albert sued University Publishing Co., Inc. Plaintiff alleged inter alia that defendant was a corporation duly organized and existing under the laws of the Philippines; that on July 19, 1948, defendant, through Jose M. Aruego, its President, entered into a contract with plaintifif; that defendant had thereby agreed to pay plaintiff P30,000.00 for the exclusive right to publish his revised Commentaries on the Revised Penal Code and for his share in previous sales of the book's first edition; that defendant had undertaken to pay in eight quarterly installments of P3,750.00 starting July 15, 1948; that per contract failure to pay one installment would render the rest due; and that defendant had failed to pay the second installment.

Defendant admitted plaintiff's allegation of defendant's corporate existence; admitted the execution and terms of the contract dated July 19, 1948; but alleged t