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 and authority of the latter. (1709a)

ISSUE2: W/N the CFI can order American Air to reinstate Orient Air as its General Sales Agent HELD: NO To do so would be violative of the principles and essence of agency, defined by law as a contract whereby "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. In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. The Agreement itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable." We, therefore, set aside the portion of the ruling of the respondent appellate court reinstating Orient Air as general sales agent of American Air. <BOS> 2. Thomas v. Pineda, 89 Phil. 312 (1951); June 28, 1951; Tuason

1. Orient Air Services & Hotel Representatives v. Court of Appeals, 197 SCRA 645 (1991); Padilla, J.; May 29, 1991 As the designated exclusive General Sales Agent of American Air, Orient Air was responsible for the promotion and marketing of American Air's services for air passenger transportation, and the solicitation of sales therefor. In return for such efforts and services, Orient Air was to be paid commissions of two (2) kinds: first, a sales agency commission, ranging from 7-8% of tariff fares and charges from sales by Orient Air when made on American Air ticket stock; and second, an overriding commission of 3% of tariff fares and charges for all sales of passenger transportation over American Air services. Alleging that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net proceeds of sales for the months of January to March 1981 in the amount of US $254,400.40, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated the Agreement in accordance with Paragraph 13 thereof (Termination). American Air also instituted suit against Orient Air with the Court of First Instance of Manila, Branch 24, for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order averring the aforesaid basis for the termination of the Agreement as well as therein defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff." In its Answer with counterclaim dated 9 July 1981, Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions. Further, the defendant contended that the actions taken by American Air in the course of terminating the Agreement as well as the termination itself were untenable, Orient Air claiming that American Air's precipitous conduct had occasioned prejudice to its business interests. CFI: for Orient Air plus damages and Reinstatement as Agent CA: Affirmed, less damages ISSUE1: W/N all of the Philippine sales of American Air by Orient Air are subject to the 3% overriding commission [Is it total flown revenue or is it total ticketed sales?] HELD: YES - Orient Air was to be paid commissions of two (2) kinds: first, a sales agency commission, ranging from 7-8% of tariff fares and charges from sales by Orient Air when made on American Air ticket stock; and second, an overriding commission of 3% of tariff fares and charges for all sales of passenger transportation over American Air services. It is immediately observed that the precondition attached to the first type of commission does not obtain for the second type of commissions. The latter type of commissions would accrue for sales of American Air services made not on its ticket stock but on the ticket stock of other air carriers sold by such carriers or other authorized ticketing facilities or travel agents. To rule otherwise, i.e., to limit the basis of such overriding commissions to sales from American Air ticket stock would erase any distinction between the two (2) types of commissions and would lead to the absurd conclusion that the parties had entered into a contract with meaningless provisions. Such an interpretation must at all times be avoided with every effort exerted to harmonize the entire Agreement. It is clear from the records that American Air was the party responsible for the preparation of the Agreement. Consequently, any ambiguity in this "contract of adhesion" is to be taken "contra proferentem", i.e., construed against the party who caused the ambiguity and could have avoided it by the exercise of a little more care. Thus, Article 1377 of the Civil Code provides that the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.

The Silver Dollar Caf FAST FACTS Before the war, Pineda was Thomas agent and trustee, tasked to manage the latters business, Silver Dollar Caf. To protect the business from being seized by Japanese forces, it was agreed that Pineda would pretend to be the buyer of the business with the secret understanding in a written contract that such sale is fictitious and that after the war, the sale becomes null and void. Blinded by greed, Pineda refused to make an accounting after the war and put up another bar with the same name registered as its tradename, Silver Dollar Caf, to the exclusion of Thomas business right to said tradename. COA1 Dave Thomas filed for Accounting against Hermogenes Pineda, the former claiming ownership of Silver Dollar Caf. Court below found for Pineda COA2 Thomas filed for injunction against Pineda to stop using the tradename Silver Dollar Caf Court below found for Thomas. Thomas bought the bar and restaurant known as Silver Dollar Cafe located at Plaza Santa Cruz, Manila and employed Pineda, the former owners employee, as a bartender, He eventually became cashier and manager of the business. The outbreak of war found him holding the latter position with a monthly compensation of P250. To prevent the business and its property from falling into enemy hands, David Thomas on or about December 28, 1941, made a fictitious sale thereof to the Pineda for P10k; and to clothe the sale with a semblance of reality, the bill of sale was antedated November 29, 1941. They executed another agreement in secret, stating that the sale is fictitious, was prepared and executed only for the purpose of avoiding the seizure of the said establishment if and when the enemy forces entered the City of Manila. Upon the restoration of peace and order, the said document automatically becomes null and void and of no effect, the P10k having been not paid. Pineda managed the business as Thomas employee or trustee during the Japanese occupation of the City of Manila. But on February 3, 1945, the building was destroyed by fire but the defendant had been able to remove some of its furniture, the cash register, the piano, the safe, and a considerable quantity of stocks to a place of safety. According to the defendant, all of these goods were accounted for and turned over to the plaintiff after the City of Manila had been retaken by the American Forces. On May 8, 1945, a bar was opened on Bambang, under the old name of Silver Dollar Cafe. Housed in a makeshift structure, which was erected on a lot belonging to the defendant, the Bambang shop was conducted for about four months, i.e., until September of the same year, when it was transferred to the original location of the Silver Dollar Cafe at No. 15 Plaza Sta. Cruz. It is asserted and denied that they both took a more or less active part in the management of the post-liberation business, on a share of the profits basis, until about the middle of September of the following year, when, it is also alleged, Thomas brought a CPA to the establishment for the purpose of examining the books of the business. Pineda threatened them with a gun if they persisted in their purpose. Thomas forthwith filed the present action, and set up a separate business under the same trade-name, Silver Dollar Cafe, on

a different location (Echague Street). Pineda remained with the Silver Dollar Cafe at Plaza Sta. Cruz, which was burn down on December 15, 1946. Pineda put up another business registered with the same name on September 27, 1945, prompting the second COA. Defendant Pineda endeavored to prove that there was a third, verbal, agreement, the import of which was that he was to operate the business with no liability other than to turn it over to the plaintiff Thomas as he would find it after the war. But such understanding would be at war with the care and precaution which the Thomas took to insure his rights in the business and its assets. - that all the proceeds from the business had been used to support Thomas and his daughters and to entertain or bribe Japanese officers and civilians dispense with Pineda's duty to account. It was wrong for the court below to declare that there were no surplus profits, and to call matters even. Furthermore, the following tends to prove that it is not true that Thomas no longer was connected to the bar: - After release from prison camp, Thomas immediately took to opening the new bar in Bambang. - The Bambang bar was named Silver Dollar Caf as well - Thomas was named as lessee in the reopened Sta. Cruz bar, personally paid advanced rent to lessor, and in most months the rentals were paid for in the name of Thomas (except when BIR required it to be in the name of Pineda for 3 months only to be reissued in the name of Thomas) - The business cards that Pineda himself had caused to be printed showed him in the first as manager, and not in the second; both cards showed Thomas a sole prop - Pineda handed Thomas various amounts totaling 24,100 without even requiring receipt as share in the profits SECOND COA Pineda alleges that Thomas expressly allowed him to appropriate the trade-name ISSUE: W/N Pineda can register the trade name Silver Dollar Caf for the second bar as his own. HELD: NO - "The relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property forming the subject matter of the agency, he is estopped from acquiring or asserting a title adverse to that of principal. His position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que trust. A receiver, trustee, attorney, agent or any other person occupying fiduciary relations respecting property or persons utterly disabled from acquiring for his own benefit the property committed to his custody for management. This rule is entirely independent of the fact whether any fraud has intervened. No fraud in fact need be shown, and no excuse will be heard from any such inquiry that the rule takes so general form. The rule stands on the moral obligation to refrain from placing one's self in position which ordinarily excite conflicts between self-interest at the expense of one's integrity and duty to another, by making it possible to profit by yielding to temptation. (citing Barreto vs. Tuason, 50 Phil. 888; Severino vs. Severino, 44 Phil., 343) <BOS> 3. Rallos v. Felix Go Chan & Sons Realty Corp. 18 SCRA 251 (1978); January 31, 1978; Munoz Palma FAST FACTS: Attorney-in-fact Simeon Rallos, who after the death of one of his principal, Concepcion Rallos, sold a parcel of land to Felix Go Chan & Sons pursuant to a SPA which the 2 principals, both his sisters, had executed in his favor. The administrator of the estate of Concepcion sued to have the sale declared unenforceable and to recover said undivided share. Simeon and Gerundia died before trial ended, causing substitution by heirs. The trial court granted the relief prayed for. Felix Go Chan & Sons appealed to the CA, which sided with the corp and upheld the validity of the sale.

ISSUE: Is the sale of the undivided share valid although it was executed by the agent after the death of his principal? HELD: NO A contract entered into in the name of another by one who has no authority or the legal representation or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party (CC1403) Out of the above given principles, sprung the creation and acceptance of the relationship of agency whereby one party, caged the principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agents acts as a representative and not for himself, and (4) the agent acts within the scope of his authority. Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit se. "He who acts through another acts himself". Agency is extinguished by, among others, ipso jure the death, civil interdiction, insanity or insolvency of the principal or of the agent (CC 1919) 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 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 in 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. Two Exceptions: ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (NOT APPLICABLE BECAUSE CONTRACT SILENT AS TO COUPLED INTEREST) ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of his principal is valid and effective only under two conditions, viz: (1) that the agent acted without knowledge of the death of the principal and (2) that the third person who contracted with the agent himself acted in good faith. Good faith here means that the third person was not aware of the death of the principal at the time he contracted with said agent. These two requisites must concur the absence of one will render the act of the agent invalid and unenforceable. 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. Any act of an agent after the death of his principal is void ab initio unless the same falls under the exception provided for in the aforementioned Articles 1930 and 1931. Article 1931, being an exception to the general rule, is to be strictly construed, it is not to be given an interpretation or application beyond the clear import of its terms for otherwise the courts will be involved in a process of legislation outside of their judicial function. Revocation rules not applicable because this is death.

The Civil Code does not impose a duty on the heirs to notify the agent of the death of the principal What the Code provides in Article 1932 is that, if the agent die his heirs must notify the principal thereof, and in the meantime adopt such measures as the circumstances may demand in the interest of the latter. Hence, the fact that no notice of the death of the principal was registered on the certificate of title of the property in the Office of the Register of Deeds, is not fatal to the cause of the estate of the principal. <BOS> 4. Palma v. Cristobal, 77 Phil. 712 (1946); December 11, 1946; Perfecto

A parcel of land on Quesada St., Manila was titled in the name of spouses Petitioner Pablo Palma and Luisa Cristobal in trust for the real owners, one of whom is Respondent Eduardo Reyes Cristobal. This confidence, close relationship, and the fact that the coowners were receiving their shares in the rentals, were the reasons why no step had been taken to partition the property. On her deathbed, Luisa told Pablo to give to Eduardo and the other real owners their respective shares through apportionment. Eduardo told her not to worry about it, that it was more important for her to recover. Pablo told his dying wife that she should not worry about it, that he would do as she said. But a fter Luisas death, Pablo had the land titled solely in his name, with the help of Eduardo as lawyer. Pablo alleged that the Court of Appeals erred in not holding Eduardo estopped from claiming that Pablo is not the absolute owner of the property in question because, after Luisa Cristobal, petitioner's wife, died in 1922, instead of moving for the partition of the property, considering specially that petitioner had promised such a partition at the deathbed of the deceased, respondent appeared as attorney for petitioner and prayed that a new certificate of title be issued in the name of said petitioner as the sole owner of the property. Petitioner initially filed an ejectment case against respondent Eduardo, who had situated himself with a house in said land. Eduardo raised the matter of ownership, causing the dismissal of the first complaint. Pablo then filed another complaint for ownership and possession against Eduardo. CFI dismissed; CA Affirmed; SC - Affirmed ISSUE1: W/N a Principal may be barred by estoppels or prescription from asserting his right against a principal ISSUE2: W/N an agent may acquire his Principals property HELD: NO; NO Pablo held the property and secured its registration in his name in a fiduciary capacity, and it is elementary that a trustee cannot acquire by prescription the ownership of the property entrusted to him. The position of a trustee is of representative nature. His position is the position of a cestui que trust. It is logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to the benefit of his principal. The fact that Eduardo has been a party to the deception which resulted in petitioner's securing in his name the title to a property not belonging to him, is not valid reason for changing the legal relationship between the latter and its true owners to such an extent as to let them lose their ownership to a person trying to usurp it. Whether petitioner and respondent are or are not jointly responsible for any fraud upon a court of justice, cannot affect the substantial rights of the real owners of the title of a real property. Respondent is not barred because his appearance as attorney for petitioner was not a misrepresentation which would induce petitioner to believe that respondent recognized the former as the sole owner of the property in controversy. The misrepresentation could deceive the court and outsiders, because they were not aware of the understanding between the co-owners that the property be registered in the name of petitioner. The Court of Appeals found, and the finding is not now in issue, that petitioner was a party to the understanding and assumed the role of an instrument to make it effective. Respondent's appearance, as attorney for petitioner in 1923, was a consequence of the understanding, and petitioner could not legitimately assume that it had the effect of breaking or reversing said understanding. In Severino vs. Severino (43 Phil., 343), this court declared that "the relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to

property forming the subject-matter of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que trust." Affirming the said doctrine in Barretto vs. Tuason (50 Phil., 888), the Supreme Court declared that the registration of the property in the name of the trustees in possession thereof, must be deemed to have been effected for the benefit of the cestui que trust. In Palet vs. Tejedor (55 Phil., 790), it was declared that whether or not there is bad faith or fraud in obtaining a decree with respect to a registered property, the same does not belong to the person in whose favor it was issued, and the real owners be entitled to recover the ownership of the property so long as the same has not been transferred to a third person who has acquired it in good faith and for a valuable consideration. (This right to recover is sanctioned by section 55 of Act No. 496, as amended by Act No. 3322.) <BOS> 5. Albaladejo y Cia v. Phil. Refining Co., 45 Phil. 556 (1923); G.R. No. L20726 December 20, 1923; Street. Albaladejo y Cia., a limited partnership, 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. Visayan Refining Co., maker of coconut oil and predecessor of Philippine Refining Co, entered into a MOA with Albaladejo y Cia, whereby, for one year: (1) Albaladejo y Cia would sell to VRC all the copra purchased by the former in the Province of Albay; (2) at the Cebu Market Price less transportation to VRCs factory in Cebu and less shrinkage, plus costs by Albaladejo y Cia; (3) that VRC will not appoint appoint another agent in Legaspi or buy from another supplier in Legaspi; (4) VRC will advise AyC of Cebu prices; (5) and VRC will provide transportation of copra to Cebu. After a year of satisfactory relationship, the parties continued by tacit consent to govern their relationship by the same agreement. Due to the increasing demand of VRC, AyC established 21 agencies, or subagencies, in various ports and places of the Province of Albay and neighboring provinces. After years of operation, demand for oil dwindled until VRC ceased buying copra. The accounts between the parties were liquidated, with a final account of P288 in favor of, PRC, successor to VRC and to which AyC agreed. COA1: Claiming negligence on the part of PRC/VRC, AyC sued the former for failure to provide transportation of Copra to Ceby per agreement, leading to diminution of weight of copra. Trial Court found PRC/VRC not negligent in this regard. COA2: Claiming that the expansion (hiring 21 subagents) of AyC was at the express request or requirement of VRC/PRC, AyC sought to recover costs of P110k. Trial Court found for AyC, stating that indeed VRC/PRC promised compensation for the efforts of expansion by AyC, but only awarded 30% AyC appealed. ISSUE1: W/N AyC is an agent of VRC/PRC ISSUE2: W/N AyC as agent is entitled to compensation/reimbursement from VRC/PRC as Principal for damages in the form of unrecovered expansion costs. Or Is this unrecovered expansion costs the same as damages incurred by the agent subject to indemnity by the Principal provided in Art. 1729 (now 1913) of CC HELD: NO They are not principal-agent; NO Not entitled to indemnity because not agent and no promise. ISSUE1 - 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. ISSUE2One of several letters from VRC/PRC to AyC - (Letter of July 10, 1920, from K. B. Day, General Manager, to Albaladejo y Cia.) The market continues to grow weaker. Conditions are so uncertain that this company desires to drop out of the copra market until conditions have a chance to readjust themselves. We request therefore that our agents drop out of active competition for copra temporarily. Stocks that are at present on hand will, of course, be liquidated, but no new stocks should be acquired. Agents should do their best to keep their organizations together temporarily, for we expect to be in the market again soon stronger than ever. We expect the cooperation of agents in making this effective; and if they give us this cooperation, we will endeavor to see that they do not lose by the transaction in the long run. This company has been receiving copra from its agents for a long time at prices which have netted it a loss. The company has been supporting its agents during this period. It now expects the same support from its agents. Agents having stocks actually on hand in their bodegas should telegraph us the quantity immediately and we will protect same. But stocks not actually in bodegas cannot be considered. 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. <BOS>

6.

Air France v. Court of Appeals, 126 SCRA 448 (1983)

7. Victorias Milling Co., Inc. v. Court Appeals, 333 SCRA 663 (2000), Quisumbing PARTIES: Petitioner Victorias Milling Co., Inc. | Respondents CA & Consolidated SugarCorporation FACTS: St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co.,Inc., (VMC). In the course of their dealings, VMC issued several Shipping List/DeliveryReceipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M which covers 25,000 bags of sugar. STM sold toprivate respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M. CSC issued one check dated October 25, 1989 and three checks postdated November13, 1989 in payment. That same day, CSC wrote petitioner that it had been authorizedby STM to withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were acopy of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to withdrawfor and in our behalf the refined sugar covered by SLDR No. 1214M. SLDR was sold andindorsed to CSC. CSC was only able to withdraw 2,000 of the 25,000 bags of sugar covered by SLDRNo. 1214M. VMC replied that it could not allow any further withdrawals of sugar against SLDR No.1214M because STM had already withdrawn all the sugar covered by the cleared checks. CSC demanded the release of the 23,000 bags. Victorias Milling reiterated that allbags had been fully withdrawn. Pre-trial CSC filed a complaint for specific performance. Defendants were Teresita Ng Sy(doing business under the name of St. Therese Merchandising) and Victorias Milling. CSCdid not pursue case against Sy and instead used her as a witness. CSC: Fully paid so no reason to refuse delivery VMC:

Said checks appear to have beenhonored and duly credited to the account of VMC as evidenced by an official receipt issued by VMC in favor of STM. The testimony of Teresita Ng Go is further supported by a computer printout of VMC, showing the quantity and value of the purchases made by STM, the SLDR no.issued to cover the purchase, the official receipt no., and the status of payment. It isclearly indicated in that document that with respect to the sugar covered by SLDRNo. 1214, the same has been fully paid as indicated by the word 'cleared' appearingunder the column of 'status of payment.' VMC: That the purchase price of the 25,000 bags of sugar purchased by STM covered bySLDR No. 1214 has not been fully paid is supported only by the testimony of ArnulfoCaintic. TC: The testimony of Arnulfo Caintic is merely a sweeping barren assertion that thepurchase price has not been fully paid and is not corroborated by any positive evidence. Court of Appeals VMC appealed. VMC: Dealings between it and STM were part of a series of transactions involving onlyone account or one general contract of sale. Pursuant to this contract, STM or any of its authorized agents could withdraw bags of sugar only against cleared checks of STM. CSC: SLDR No. 1214M is a separate transaction. CA first MODIFIED RTC, VMC to deliver 12,586 bags but on MR modified its own judgment, VMC to deliver 23,000 bags. STMs and CSCs specially informing VMC that CSC was authorized by buyer STM towithdraw sugar against SLDR No. 1214M "for and in our (STM) behalf," CSCswithdrawing of 2,000 bags of sugar for STM, and STM's empowering other persons as itsagents to withdraw sugar against the same SLDR No. 1214M, rendered CSC like theother persons, an agent of STM as held in Rallos v. Felix Go Chan & Realty Corp., and precluded it from subsequently claiming and proving being an assignee of SLDR No.1214M and from suing by itself for its enforcement because it was conclusivelypresumed to be an agent (Sec. 2, Rule 131, Rules of Court) and estopped from doing so. RELEVANT ISSUES:

23,000 bags were withdrawn by STM corresponding to the cleared checks SLDRs, which it had issued, were not documents of title, but mere delivery receiptsissued pursuant to a series of transactions entered into between it and STM. The SLDRs prescribed delivery of the sugar to the party specified therein and did notauthorize the transfer of said party's rights and interests. Trial Court TC rendered judgment in favor of CSC. VMC was ordered to deliver 23,000 bags of sugar. CSC: HELD/RATIO: The testimony of plaintiff's witness Teresita Ng Go, that she had fully paid thepurchase price of P15,950,000.00 of the 25,000 bags of sugar bought by her coveredby SLDR No. 1214 as well as the purchase price of P15,950,000.00 for the 25,000bags of sugar bought by her covered by SLDR No. 1213 on the same date, October16, 1989 (date of the two SLDRs) is duly supported by documentary evidence ,inclusive of which are post-dated checks dated October 27, 1989 issued by St. Therese Merchandising in favor of VMC at the time it purchased the 50,000 bags of sugar covered by SLDR No. 1213 and 1214. 1.NO. CA did not err when it held that CSC was not STMs agent. CSC could independently sue VMC. VMC: Relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No. 1214M to show that the latter was STM's agent: 2.W/N CA erred in applying the law on compensation to the transaction under SLDR No.1214M so as to preclude VMC from offsetting its credits on the other SLDRs.3.W/N CA erred in not ruling that the sale of sugar under SLDR No. 1214M was aconditional sale or a contract to sell and hence freed VMC from further obligations. 1. W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.( (Note: Issue 1st raised on appeal; so an issue which was not raised during the trial in thec ourt below could not be raised for the first time on appeal as to do so would beoffensive to the basic rules of fair play, justice, and due process. BUT since CA ruledupon it SC must address it)

This is to authorize Consolidated Sugar Corporation or its representative to withdraw for and in our behalf (stress supplied) the refined sugar covered by Shipping List/Delivery Receipt = Refined Sugar (SLDR) No. 1214 dated October 16,1989 in the total quantity of 25, 000 bags." The Civil Code defines a contract of agency as follows: " Art. 1868 . By the contract of agency a person binds himself to render some serviceor to do something in representation or on behalf of another, with the consent orauthority of the latter." From Article 1868 it is clear that the basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or anintention naturally inferable from his words or action ; and on the part of the agent, there must be an intention to accept the appointment and act on it, and inthe absence of such intent, there is generally no agency. One factor which most clearly distinguishes agency from other legal concepts is control; one person - the agent - agrees to act under the control or direction of another -the principal. Indeed, the very word "agency" has come to connote control by theprincipal. The control factor, more than any other, has caused the courts to put contractsbetween principal and agent in a separate category. Where the relation of agency is dependent upon the acts of the parties, the lawmakes no presumption of agency, and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show not only the fact of itsexistence, but also its nature and extent. CSC was a buyer of the SLDFR form, and not an agent of STM. CSC was not subject to STM's control. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scopeand effect of the language employed. That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency. Ultimately, what isdecisive is the intention of the parties. That no agency was meant to be established bythe CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No.1214M had been "sold and endorsed" to it. The use of the words "sold and endorsed"means that STM and CSC intended a contract of sale, and not an agency. 2.NO. CA did not err when it refused to apply Article 1279 of NCC. VMC: Insists that its debt has been offset by its claim for STM's unpaid purchases,pursuant to Article 1279 NCC. However, TC and CA found that the purchase of sugar covered by SLDR No. 1214Mwas a separate and independent transaction; it was not a serial part of a singletransaction or of one account contrary to petitioner's insistence. Evidence shows thatVMC had been paid for the sugar purchased under SLDR No. 1214M. VMC clearly had the obligation to deliver said commodity to STM or its assignee.Since said sugar had been fully paid for, VMC and CSC, as assignee of STM, were notmutually creditors and debtors of each other. 3.YES. CA erred in ruling that the transaction was a contract to sell. It is acontract of sale. VMC: The sale of sugar under SLDR No. 1214M is a conditional sale or a contract tosell, with title to the sugar still remaining with the vendor. SLDR No. 1214M contains thefollowing terms and conditions:"It is understood and agreed that by payment by buyer/trader of refined sugar and/orreceipt of this document by the buyer/trader personally or through a representative, title to refined sugar is transferred to buyer/trader and delivery to him/it is deemed effected and completed and buyer/trader assumes full responsibility therefore The terms and conditions clearly show that VMC transferred title to the sugar to thebuyer or his assignee upon payment of the purchase price. Said terms clearly

establish a ontract of sale, not a contract to sell. VMC is now estopped from alleging thecontrary. Having transferred title to the sugar in question, VMC is now obliged to deliver it tothe purchaser or its assignee. The contract is the law between the contracting parties. Where the terms andconditions so stipulated are not contrary to law, morals, good customs, public policy orpublic order, the contract is valid and must be upheld DISPOSITIVE: The instant petition is DENIED for lack of merit. Costs against petitioner. 8. Eurotech Industrial Technologies, Inc. v. Cuizon, 521 SCRA 584 (2007)

Eurotech Industrial Technologies, Inc. vs. CuizonFacts:The petitioner is engaged in a business of importation and distribution of various European industrial instruments. One of its customers is Impact Systems Sales (Impact Systems) which is a sole proprietorship owned by respondent ERWIN Cuizon (ERWIN). Respondent EDWIN is the sales manager of Impact Systems and was impleaded in the court a quo in said capacity. Respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 by making a down payment of fifty thousand pesos. When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of Assignment of receivables in favor of petitioner to collect payment from Toledo Power Company. Respondents, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the amount of P365,135.29 as evidenced by Check Voucher No. 09339 prepared by said power company and an official receipt dated 15 August 1995 issued by Impact Systems. Alarmed by this development, petitioner made several demands upon respondents to pay their obligations. As a result, respondents were able to make partial payments to petitioner. On 7 October 1996, petitioners counsel sent respondents a final demand letter wherein it was stated that as of 11 June 1996, respondents total obligations stood at P295,000.00. Because of respondents failure to abide by said final demand letter, petitioner instituted a complaint for sum of money, damages, with application for preliminary attachment against herein respondents before the Regional Trial Court of Cebu City. By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact. The Court directs that defendant Edwin B. Cuizon be dropped as party defendant .Aggrieved by the adverse ruling of the trial court, petitioner brought the matter to the Court of Appeals, which, however, affirmed the 29 January 2002 Order of the court a quo. ISSUE: Is Edwin Cuizon as SALES Manager personally liable given that he has neither acted beyond the scope of his agency nor did he participate in the perpetuation of a fraud in COLLECTING the Toledo Accounts Receivable? Held: NO - In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latters consent. The underlying principle of the contract of agency is to accomplish results by using the services of others to do a great variety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence qui facit per alium facit per se. The elements of the contract of agency are: (1) consent, express or implied, of the parties to establishthe 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. Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liable to the party with whom he contracts. The same provision, however, presents two instances when an agent becomes personally liable to a third person. The

first is when he expressly binds himself to the obligation and the second is when he exceeds his authority. In the last instance, the agent can be held liable if he does not give the third party sufficient notice of his powers. We hold that respondent EDWIN does not fall within any of the exceptions contained in this provision. 9. Philex Mining Corp. v. Commissioner of Internal Revenue, 551 SCRA 428, April 16, 2008, Ynares-Santiago, J. Philex Mining Corp. entered into an agreement with Baguio Gold Mining Co. for the former to manage and operate the latters mining claim, known as the Sto. Nino Mine. The parties agreement was denominated as Power of Attorney which provides inter alia:4. Within three (3) years from date thereof, the PRINCIPAL (Baguio Gold) shall make available tothe MANAGERS (Philex Mining) up to ELEVEN MILLION PESOS (P11,000,000.00), in such amounts asfrom time to time may be required by the MANAGERS within the said 3-year period, for use in theMANAGEMENT of the STO. NINO MINE. The said ELEVEN MILLION PESOS (P11,000,000.00) shall bedeemed, for internal audit purposes, as the owners account in the Sto. Nino PROJECT. Any part of any income of the PRINCIPAL from the STO. NINO MINE, which is left with the Sto. Nino PROJECT,shall be added to such owners account.5. Whenever the MANAGERS shall deem it necessary and convenient in connection with theMANAGEMENT of the STO. NINO MINE, they may transfer their own funds or property to the Sto. NinoPROJECT, in accordance with the following arrangements:(a) The properties shall be appraised and, together with the cash, shall be carried by the Sto.Nino PROJECT as a special fund to be known as the MANAGERS account.(b) The total of the MANAGERS account shall not exceed P11,000,000.00, except with priorapproval of the PRINCIPAL; provided, however, that if the compensation of the MANAGERS as hereinprovided cannot be paid in cash from the Sto. Nino PROJECT, the amount not so paid in cash shall beadded to the MANAGERS account.(c) The cash and property shall not thereafter be withdrawn from the Sto. Nino PROJECT untiltermination of this Agency.(d) The MANAGERS account shall not accrue interest. Since it is the desire of the PRINCIPAL toextend to the MANAGERS the benefit of subsequent appreciation of property, upon a projectedtermination of this Agency, the ratio which the MANAGERS account has to the owners account willbe determined, and the corresponding proportion of the entire assets of the STO. NINO MINE,excluding the claims, shall be transferred to the MANAGERS, except that such transferred assetsshall not include mine development, roads, buildings, and similar property which will be valueless, orof slight value, to the MANAGERS. The MANAGERS can, on the other hand, require at their optionthat property originally transferred by them to the Sto. Nino PROJECT be re-transferred to them. Untilsuch assets are transferred to the MANAGERS, this Agency shall remain subsisting.x x x x12. The compensation of the MANAGER shall be fifty per cent (50%) of the net profit of the Sto.Nino PROJECT before income tax. It is understood that the MANAGERS shall pay income tax on theircompensation, while the PRINCIPAL shall pay income tax on the net profit of the Sto. Nino PROJECTafter deduction therefrom of the MANAG ERS compensation. Philex Mining made advances of cash and property in accordance with paragraph 5 of theagreement. However, the mine suffered continuing losses over the years which resulted to PhilexMinings withdrawal as manager of the mine and in the eventual cessation of mine operations. The parties executed a Compromise with Dation in Payment wherein Baguio Gold admitted anindebtedness to petitioner in the amount of P179,394,000.00 and agreed to pay the same in threesegments by first assigning Baguio Golds tangible assets to Philex Mining, transferring to the latterBaguio Golds equitable title in its Philodrill assets and finally settling the remaining liability throughproperties that Baguio Gold may acquire in the future. The parties executed an Amendment to Compromise with Dation in Payment where the partiesdetermined that Baguio Golds indebtedness to petitioner actually amounted to P259,137,245.00,which sum included liabilities of Baguio Gold to other creditors that petitioner had assumed asguarantor. These liabilities pertained to long-term loans amounting to US$11,000,000.00 contracted by Baguio Gold from the Bank of America NT & SA and Citibank N.A. This time, Baguio Goldundertook to pay petitioner in two segments by first assigning its tangible assets forP127,838,051.00 and then transferring its equitable title in its Philodrill assets for P16,302,426.00. The parties then ascertained that Baguio Gold had a remaining outstanding indebtedness topetitioner in the amount of P114,996,768.00.

Philex Mining wrote off in its 1982 books of account the remaining outstanding indebtedness of Baguio Gold by charging P112,136,000.00 to allowances and reserves that were set up in 1981 andP2,860,768.00 to the 1982 operations. In its 1982 annual income tax return, Philex Mining deducted from its gross income the amount of P112,136,000.00 as loss on settlement of receivables from Baguio Gold against reserves andallowances. However, the BIR disallowed the amount as deduction for bad debt and assessedpetitioner a deficiency income tax of P62,811,161.39. Philex Mining protested before the BIR arguingthat the deduction must be allowed since all requisites for a bad debt deduction were satisfied, towit: (a) there was a valid and existing debt; (b) the debt was ascertained to be worthless; and (c) itwas charged off within the taxable year when it was determined to be worthless. BIR deniedpetitioners protest. It held that the alleged debt was not ascertained to be worthless since BaguioGold remained existing and had not filed a petition for bankruptcy; and that the deduction did notconsist of a valid and subsisting debt considering that, under the management contract, petitionerwas to be paid 50% of the projects net profit. ISSUE: WON the parties entered into a contract of agency coupled with an interest which is notrevocable at will HELD: No. An examination of the Power of Attorney reveals that a partnership or joint venture wasindeed intended by the parties. In an agency coupled with interest, it is the agency that cannot be revoked or withdrawn by theprincipal due to an interest of a third party that depends upon it, or the mutual interest of bothprincipal and agent. In this case, the non-revocation or non-withdrawal under paragraph 5(c) appliesto the advances made by petitioner who is supposedly the agent and not the principal under thecontract. Thus, it cannot be inferred from the stipulation that the parties relation under theagreement is one of agency coupled with an interest and not a partnership. Neither can paragraph 16 of the agreement be taken as an indication that the relationship of theparties was one of agency and not a partnership. Although the said provision states that thisAgency shall be irrevocable while any obligation of the PRINCIPAL in favo r of the MANAGERS isoutstanding, inclusive of the MANAGERS account, it does not necessarily follow that the partiesentered into an agency contract coupled with an interest that cannot be withdrawn by Baguio Gold. The main object of the Power of Attorney was not to confer a power in favor of petitioner tocontract with third persons on behalf of Baguio Gold but to create a business relationship betweenpetitioner and Baguio Gold, in which the former was to manage and operate the latters minethrough the parties mutual contribution of material resources and industry. The essence of anagency, even one that is coupled with interest, is the agents ability to represent his principal andbring about business relations between the latter and third persons. The strongest indication that petitioner was a partner in the Sto. Nino Mine is the fact that it wouldreceive 50% of the net profits as compensation under paragraph 12 of the agreement. Theentirety of the parties contractual stipulations simply leads to no other conclusion than thatpetitioners compensation is actually its share in the income of the joint venture. Article 1769 (4) of the Civil Code explicitly provides that the receipt by a person of a share in the profits of a businessis prima facie evidence that he is a partner in the business. 10. Chemphil Export v. Court of Appeals, 251 SCRA 217 (1995), Kapunan

Dynetics, Inc. and Antonio M. Garcia filed a complaint for declaratory relief and/or injunctionagainst the PISO, BPI, LBP, PCIB and RCBC or the consortium with the Regional Trial Courtseeking judicial declaration, construction and interpretation of the validity of the suretyagreement that Dynetics and Garcia had entered into with the consortium and to perpetuallyenjoin the latter from claiming, collecting and enforcing any purported obligations whichDynetics and Garcia might have undertaken in said agreement.The consortium filed their respective answers with counterclaims alleging that the suretyagreement in question was valid and binding and that Dynetics and Garcia were

liable under theterms of the said agreement. A notice of garnishment covering Garcia's shares in CIP/Chemphil (including the disputedshares) was served on Chemphil through its then President. The notice of garnishment was dulyannotated in the stock and transfer books of Chemphil on the same date.The trial court denied the application of Dynetics and Garcia for preliminary injunction andinstead granted the consortium's prayer for a consolidated writ of preliminary attachment.Hence, after the consortium had filed the required bond, a writ of attachment was issued andvarious real and personal properties of Dynetics and Garcia were garnished, including thedisputed shares. This garnishment, however, was not annotated in Chemphil's stock andtransfer book. The Court holds that the CONSORTIUM has admitted that the writ of attachment/garnishmentissued on the shares of stock belonging to plaintiff Antonio M. Garcia was not annotated andregistered in the stock and transfer books of CHEMPHIL. On the other hand, the prior attachment issued in favor of SBTC against the same CHEMPHIL shares of Antonio M. Garcia,was duly registered and annotated in the stock and transfer books of CHEMPHIL. Issue: Whether or not the attachment of shares of stock, in order to bind third persons, must berecorded in the stock and transfer book of the corporation. Held: The Court of Appeals agreed with the consortium's position that the attachment of shares of stock in a corporation need not be recorded in the corporation's stock and transfer book in order to bind third persons.Section 7(d), Rule 57 of the Rules of Court was complied with by theconsortium (through the Sheriff of the trial court) when the notice of garnishment over theChemphil shares of Garcia was served on the president of Chemphil. Indeed, to bind thirdpersons, no law requires that an attachment of shares of stock be recorded in the stock andtransfer book of a corporation.Therefore, ruled the Court of Appeals, the attachment made over the Chemphil shares in thename of Garcia was made in accordance with law and the lien created thereby remained validand subsisting at the time Garcia sold those shares to FCI (predecessor-in-interest of appelleeCEIC) in 1988. A secretary's major function is to assist his or her superior. He/she is in effect an extension of the latter. Obviously, as such, one of her duties is to receive letters and notices for and in behalf of her superior, as in the case at bench. The notice of garnishment was addressed to and wasactually received by Chemphil's president through his secretary who formally received it for him.Thus, in one case, we ruled that the secretary of the president may be considered an "agent"of the corporation and held that service of summons on him is binding on the corporation.Moreover, the service and receipt of the notice of garnishment was duly acknowledged andconfirmed by the corporate secretary of Chemphil, Rolando Navarro and his successor AvelinoCruz through their respective certifications.We rule, therefore, that there was substantialcompliance with Sec. 7 (d), Rule 57 of the Rules of Court. 11. Shoppers Paradise Realty v. Roque, 419 SCRA 93 (2004), Vitug

the trial court and held to be invalid the two documents. It concluded that Shoppers was not a lessee in good faith, having had prior knowledge of the donation in favor of Roque, and that such actual knowledge had the effect of registration insofar as Shoppers was concerned. Basis was the testimony of Veredigno Atienza during cross-examination. Shoppers argues that thepresumption of good faith it enjoys has not been overturned by the testimonial evidence, and that, in any event, Roque is barred by laches and estoppel from denying the contracts. ISSUE & HOLDING WON the two documents are binding upon Efren Roque. HELD: NO RATIO During their negotiation, Shoppers, was apprised of the fact that the property actually belonged to Efren Roque In addition, it was not shown that Dr. Roque had been an authorized agent of Efren. In a contract of agency, the agent acts in representation or in behalf of another with the consent of the latter. NCC 1878 expresses that a special power of attorney is necessary to lease any real property to another person for more than one year. The lease of real property for more than one year is considered not merely an act of administration but an act of strict dominion or of ownership. A special power of attorney is thus necessary for its execution through an agent. Efren not guilty of laches Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it. Efren learned of the contracts only in February 1994 after the death of his father, and in the same year, during November, he assailed the validity of the agreements. Efren not estopped from repudiating the contracts The essential elements of estoppels in pais, in relation to the party sought to be estopped, are 1. A clear conduct amounting to false representation or concealment of material facts or, at least, calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert 2. An intent or, at least, an expectation, that this conduct shall influence, or be acted upon by, the other party 3. The knowledge, actual or constructive, by him of the real facts. With respect to the party claiming the estoppel, the conditions he must satisfy are: 1. Lack of knowledge or of the means of knowledge of the truth as to the facts in question 2. Reliance, in good faith, upon the conduct or statements of the party to be stopped 3. Action or inaction based thereon of such character as to change his position or status calculated to cause him injury or prejudice. It has not been shown that Efren intended to conceal the actual facts concerning the property; More importantly, Shoppers has been shown not to be totally unaware of the real ownership of the subject property. 12. Nielson & Co., Inc. v. Lepanto Consolidated Mining Co., 26 SCRA 540, 546-547 (1968), Zaldivar An operating agreement was executed before World War II (on 30 January 1937) between Nielson & Co. Inc. and the Lepanto Consolidated Mining Co. whereby the former operated and managed the mining properties owned by the latter for a management fee

On 23 Dec 1993, Shoppers Paradise [Shoppers] , represented by its president, Veredigno Atienza, entered into a 25 year lease with Dr. Felipe Roque over a 2,036 sqm. parcel of land in Quezon City. Shoppers issued to Dr. Roque a check for P250k by way of reservation payment. Shoppers and Dr. Roque likewise entered into a memorandum of agreement for the construction, development and operation of a commercial building complex on the property. Shoppers issued a check for another P250k downpayment to Dr. Roque. The contract of lease and the memorandum of agreement were to be annotated within 60 days from 23 Dec 1993, but the annotations were never made because of Dr. Roques untimely demise. Shoppers was constrained to deal with Efren Roque, Dr. Roques son, but the negotiations broke down due to some disagreements. In a letter, Roque advised Shoppers to desist from any attempt to enforce the two documents. In 1994, Roque filed a case for annulment of the contract of lease and the memorandum of agreement. He alleged that he had long been the absolute owner of the subject property by virtue of a deed of donation inter vivos executed in his favor by his parents in 1978, and that the late Dr. Roque had no authority to enter into the assailed agreements with Shoppers. The trial court dismissed Roques complaint, saying that the registration of a deed of donation is important in binding third persons. CA reversed the decision of

of P2,500.00 a month and a 10% participation in the net profits resulting from the operation of the mining properties, for a period of 5 years. In 1940, a dispute arose regarding the computation of the 10% share of Nielson in the profits. The Board of Directors of Lepanto, realizing that the mechanics of the contract was unfair to Nielson, authorized its President to enter into an agreement with Nielson modifying the pertinent provision of the contract effective 1 January 1940 in such a way that Nielson shall receive (1) 10% of the dividends declared and paid, when and as paid, during the period of the contract and at the end of each year, (2) 10% of any depletion reserve that may be set up, and (3) 10% of any amount expended during the year out of surplus earnings for capital account. In the latter part of 1941, the parties agreed to renew the contract for another period of 5 years, but in the meantime, the Pacific War broke out in December 1941. In January 1942 operation of the mining properties was disrupted on account of the war. In February 1942, the mill, power plant, supplies on hand, equipment, concentrates on hand and mines, were destroyed upon orders of the United States Army, to prevent their utilization by the invading Japanese Army. The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and who were ousted from the mining properties only in August 1945. After the mining properties were liberated from the Japanese forces, LEPANTO took possession thereof and embarked in rebuilding and reconstructing the mines and mill; setting up new organization; clearing the mill site; repairing the mines; erecting staff quarters and bodegas and repairing existing structures; installing new machinery and equipment; repairing roads and maintaining the same; salvaging equipment and storing the same within the bodegas; doing police work necessary to take care of the materials and equipment recovered; repairing and renewing the water system; and retimbering. The rehabilitation and reconstruction of the mine and mill was not completed until 1948. On 26 June 1948 the mines resumed operation under the exclusive management of LEPANTO. Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement arose between NIELSON and LEPANTO over the status of the operating contract which as renewed expired in 1947. Under the terms thereof, the management contract shall remain in suspense in case fortuitous event or force majeure, such as war or civil commotion, adversely affects the work of mining and milling. On 6 February 1958, NIELSON brought an action against LEPANTO before the Court of First Instance of Manila to recover certain sums of money representing damages allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract entered into between them on 30 January 1937, including attorney's fees and costs. LEPANTO in its answer denied the material allegations of the complaint and set up certain special defenses, among them, prescription and laches, as bars against the institution of the action. After trial, the court a quo rendered a decision dismissing the complaint with costs. The court stated that it did not find sufficient evidence to establish LEPANTO's counterclaim and so it likewise dismissed the same. NIELSON appealed. The Supreme Court reversed the decision of the trial court and enter in lieu thereof another, ordering Lepanto to pay Nielson (1) 10% share of cash dividends of December, 1941 in the amount of P17,500.00, with legal interest thereon from the date of the filing of the complaint; (2) management fee for January, 1942 in the amount of P2,500.00, with legal interest thereon from the date of the filing of the complaint; (3) management fees for the sixtymonth period of extension of the management contract, amounting to P150,000.00, with legal interest from the date of the filing of the complaint; (4) 10% share in the cash dividends during the period of extension of the management contract, amounting to P1,400,000.00, with legal interest thereon from the date of the filing of the complaint; (5) 10% of the depletion reserve set up during the period of extension, amounting to P53,928.88, with legal interest thereon from the date of the filing of the complaint; (6) 10% of the expenses for capital account during the period of extension, amounting to P694,364.76, with legal interest thereon from the date of the filing of the complaint; (7) to issue and deliver to Nielson and Co. Inc. shares of stock of Lepanto Consolidated Mining Co. at par value equivalent to the total of Nielson's 10% share in the stock dividends declared on November 28, 1949 and August 22, 1950, together with all cash and stock dividends, if any, as may have been declared and issued subsequent to November 28, 1949 and August 22, 1950, as fruits that accrued to said shares; provided that if sufficient shares of stock of Lepanto's are not available to satisfy this judgment, Lepanto shall pay Nielson an amount in cash equivalent to the market value of said shares at the time of default, that is, all shares of stock that should have been delivered to Nielson before the filing of the complaint must be paid at their market value as of the date of the filing of the complaint; and all shares, if any, that should have been delivered after the filing of the complaint at the market value of the shares at the time Lepanto disposed of all its

available shares, for it is only then that Lepanto placed itself in condition of not being able to perform its obligation; (8) the sum of P50,000.00 as attorney's fees; and (9) the costs. Lepanto seeks the reconsideration of the decision rendered on 17 December 1966. Issue: Whether the management contract is a contract of agency or a contract of lease of services. Held: Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the contract of agency, one person binds himself to render some service or do something for the account or at the request of another." Article 1544, defining contract of lease of service, provides that "In a lease of work or services, one of the parties binds himself to make or construct something or to render a service to the other for a price certain." In both agency and lease of services one of the parties binds himself to render some service to the other party. Agency, however, is distinguished from lease of work or services in that the basis of agency is representation, while in the lease of work or services the basis is employment. The lessor of services does not represent his employer, while the agent represents his principal. Further, agency is a preparatory contract, as agency "does not stop with the agency because the purpose is to enter into other contracts." The most characteristic feature of an agency relationship is the agent's power to bring about business relations between his principal and third persons. "The agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties). Lease of services contemplate only material (non-juridical) acts." Herein, the principal and paramount undertaking of Nielson under the management contract was the operation and development of the mine and the operation of the mill. All the other undertakings mentioned in the contract are necessary or incidental to the principal undertaking these other undertakings being dependent upon the work on the development of the mine and the operation of the mill. In the performance of this principal undertaking Nielson was not in any way executing juridical acts for Lepanto, destined to create, modify or extinguish business relations between Lepanto and third persons. In other words, in performing its principal undertaking Nielson was not acting as an agent of Lepanto, in the sense that the term agent is interpreted under the law of agency, but as one who was performing material acts for an employer, for a compensation. It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase, or sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was to act only as an intermediary, not as an agent. Further, from the statements in the annual report for 1936, and from the provision of paragraph XI of the Management contract, that the employment by Lepanto of Nielson to operate and manage its mines was principally in consideration of the know-how and technical services that Nielson offered Lepanto. The contract thus entered into pursuant to the offer made by Nielson and accepted by Lepanto was a "detailed operating contract". It was not a contract of agency. Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated the management contract because it had lost its trust and confidence in Nielson. 13. Shell Co. v. Firemens Insurance of Newark, 100 Phil. 757 (1957), Padilla.

o A car belonging to Salvador SISON was brought to a gasoline andservice station somewhere in Manila, owned by the SHELL Companyof the Philippine Islands, Limited, but operated by Porfirio DE LAFUENTE, for the purpose of having said car washed and greased fora consideration of P8.00 o Said car was insured against loss or damage by Firemen's InsuranceCompany of Newark, New Jersey, and Commercial CasualtyInsurance Company jointly for the sum of P10,000 o The job of washing and greasing was undertaken by DE LA FUENTEthrough his two employees a greaseman and a helper/washer. Toperform the job, the car was carefully and centrally placed on theplatform of a hydraulic lifter before raising up said platform to aheight of about 5 feet and then the servicing job was started o After more than one hour of washing and greasing, the job wasabout to be completed except for an ungreased portion underneaththe vehicle which could not be reached by the greaseman. So, thelifter was lowered a little by the greaseman and while doing so, thecar for unknown reason accidentally fell and suffered substantialdamage

o SISON forthwith brought the matter to his insurers attention. The insurance companies after due inspection paid the sum of P1,651.38 for the damaged cars repair. SISON, for his part made assignmentsof his rights to recover damages in favor of the Firemen's Insurance Company and the Commercial Casualty Insurance Company hence,the instant case for the recovery of the total amount of the damagefrom SHELL and DE LA FUENTE on the ground of negligence o CFI dismissed the complaint. Insurance Companies appealed. The Court of Appeals reversed the CFIs judgment and sentenced SHELL and DE LA FUENTE to pay the amount sought to be recovered, pluslegal interest and costs o The CA ruled that DE LA FUENTE is SHELLs agent; hence, asprincipal, it is liable for his agents breach of undertaking o SHELL now comes to the SC on appeal questioning the aforesaid CA decision, raising the following ISSUE: WON DE LA FUENTE is really SHELLs agent? Isnt he more of an independent contractor? HELD: DE LA FUENTE is SHELLs agent. The operator of a gasoline station is an agent of the oil company. He cannot be considered as an independent contractor by reason of SHELLs extensive control and supervision over his tasks. The assailed CA decision is affirmed RATIO: o DE LA FUENTE owed his position to SHELL which could remove himor terminate his services at any time. He merely undertook to exclusively sell SHELLs products at the station he operates. For this purpose, he was placed in possession of all the equipments needed to operate it, including the hydraulic lifter from which SISONs automobile fell o But it must be noted that these equipments were delivered to DE LAFUENTE merely on loan basis. SHELL still took charge of its care andmaintenance. It supervised DE LA FUENTE and conducted periodicinspection of the gasoline and service station o Moreover, SHELL did not leave the fixing of price for gasoline to DELA FUENTE; on the other hand, SHELL had complete control thereof;and it had supervision over DE LA FUENTE in the operation of the station and in the sale of its products therein o In fine, the gasoline and service station really belonged to SHELL. It bore its tradename and the operator DE LA FUENTE merely sold theproducts of SHELL there o Considering the abovelisted, in no wise can it be said that DE LAFUENTE is an independent contractor of SHELL. The extensive control and supervision that SHELL exercises over DE LA FUENTEmilitate heavily against this contention. On the contrary, such circumstances show the existence of agency between them o The existence of agency between SHELL and DE LA FUENTE is alsoevidenced by a receipt issued by SHELL and signed by DE LAFUENTE, acknowledging the delivery of equipments for the gasstation in question and an official from of the inventory of said equipment containing DE LA FUENTEs signature above the words: "Agent's signature" RE: Liability of Principal for Agents breach of undertaking o As the CA correctly ruled, the fall of SISONs car from the hydraulic lift was the result of some unforeseen shortcoming of the mechanism itself. As the servicing job on SISONs car was accepted by DE LA FUENTE in the normal and ordinary conduct of his business as operator of SHELLs service station, and that the defective hydraulic lift caused the fall of the car, he is liable therefor. SHELL, his principal, is also liable as DE LA FUENTE acted within the representative authority granted him as SHELLs agent. As the act of the agent acting within the scope of his authority is the act of the principal, the breach of the undertaking by the agent is onefor which the principal is answerable. Moreover, SHELL undertook to "answer and see to it that theequipments are in good running order and usable condition."Obviously, SHELL failed to make a thorough check

up of the hydrauliclifter. Hence, it was also negligent in that aspect to which it must answer, as the faulty lifter was the cause of the fall of the SISONs car. 14. Dela Cruz v. Northern Theatrical Enterprises, 95 Phil 739 (1954), Montemayor Northern Theatrical Enterprises Inc - operated a movie house in Laoag, Ilocos Norte. Domingo De La Cruz special guard of Northern whose duties were to guard the main entrance, to maintain peace and order and to report the commission of disorders within premises. He carried a revolver. Martin wanted to crash the gate or entrance of the movie house.Infuriated by the refusal of De la Cruz to let him in without first providing himself with a ticket, Martin attacked him with a bolo.De la Cruz defendant himself as best he could until he wascornered, at which moment to save himself he shot Martin,resulting in the latter's death. De la Cruz was charged with homicide. After a re-investigationconducted by the Provincial Fiscal the latter filed a motion todismiss the complaint, which was granted by the court De la Cruz was again accused of the same crime of homicide. Aftertrial, he was finally acquitted of the charge. In both criminal cases De la Cruz employed a lawyer to defendhim. He demanded from his former employer reimbursement of his expenses but was refused, after which he filed the present action against the movie corporation and the three members of itsboard of directors, to recover not only the amounts he had paidhis lawyers but also moral damages said to have been suffered Northern asked for the dismissal of the complaint CFI of Ilocos Norte, after rejecting the theory of De la Cruz that hewas an agent of Northern and that as such agent he was entitledto reimbursement of the expenses incurred by him in connectionwith the agency (Arts. 1709-1729 of the old Civil Code), foundthat De La Cruz had no cause of action and dismissed thecomplaint without costs. ISSUE: 1.WON the relationship was that of principal and agent. 2. Whether an employee or servant who in line of duty and while inthe performance of the task assigned to him, performs an act which eventually results in his incurring in expenses, caused not directly by his master or employer or his fellow servants or byreason of his performance of his duty, but rather by a third partyor stranger not in the employ of his employer, may recover saiddamages against his employer. 15. Santos v. Buenconsejo, 14 SCRA 407 (1965), Concepcion {VERY SHORT FULL TEXT} Lot- originally owned in common by Anatolio Buenconsejo (1/2) and Lorenzo and Santiago Bon (1/2) Anatolios rights, interests and participation over the portion of the said lot was transferred and conveyed to Atty. Tecla San Andres Ziga awardee in an auction sale (decision in juvenile delinquency and domestic relations court) By virtue of Certificate of redemption- rights, interests, claim and/or participation of Atty Ziga were transferred and conveyed to petitioner (Santos) in his capacity as attorney-infact of the children of Anatolio It would appear that petitioner Santos had redeemed the aforementioned share of Anatolio , upon the authority of a special power of attorney (SPA) executed in his favor by the children of Anatolio Santos now claims to have acquired the share of Anatolio in the said lot caused a subdivision plan- he wants said to segregate his allegedshare in the lot and a TCT issued in his name

ISSUE: WON Santos can claim ownership over the said portion of the lot HELD: NO Said SPA athorized him to act on behalf of the children of Anatolio, hence, it could not have possibly vested in him any property right inhis own name Children of Anatolio had no authotity to execute said power of attorney, because Anatolio is still alive, in fact he opposed the petition of Santos Assuming SPA-valid, Santos could have acquired no more than the share pro-indiviso of Anatolio so that he cannot, without the conformityof the other co-owners, or a judicial decree of partition, adjudicate to himself in fee simple a determinate portion of said Lot 16. CIR v. Cadwallader Pacific Company, G.R. No. L-18297, 29 November 1966, Sanchez Cadwallader, a domestic corporation engaged in trade of different kinds of goods, has a US branch office, which serves as its buying office. (It buys goods in the US from different manufacturers or distributors and delivers them to Philippine Customers.) Its AOI provides that its primary purpose is "[T]o buy, manufacture, produce, or otherwise sell, import, export, trade and deal in general merchandise, goods, wares, food products and commodities of every kind and description," and, as one of its' secondary purposes, "to act as financial, commercial, general agent or factor of, or to undertake management of any person, partnership, corporation, or association carrying on any transaction or negotiation or any business of manufacturing or dealing in all kinds of goods, wares, merchandise, food products and commodities of every kind and description, and, while acting as such agent, factor or manager, to perform such acts, enter into such obligations and carry on such transactions as shall tend to promote the interests that the corporation shall represent." In its transactions with local customers, Cadwallader executes a written contract in Manila which typically states, among others, that the terms shall be [thru an] Irrevocable Letter of Credit in favor of the SELLER [Cadwallader US Branch] for the above total amount The contracts as executed in Manila is forwarded to the California branch which procures the goods described therein, ships them direct to the buyer on its own invoice. Title to the goods passes from the seller to the buyer from the time goods are shipped in California. The merchandise is shipped, travels and is insured for the account and risk of the buyer. Taxes and duties are also for the buyer's account. The CIR issued Tax Assessments against Cadwallader, fixed and percentage taxes on commercial brokers, arguing that it brought about sales or purchases of merchandise between its local customers in the Philippines and its branch office at Arcadia, California, or through its intervention brought about proposed buyers and foreign sellers together by executing the contract in the Philippines between the buyers and the petitioner. The CIR anchored its assessment on the Tax Code then in effect, which states that Commercial broker" includes all persons, other than importers, manufacturers, producer, or bona fide employees, who, for compensation or profit, sell or bring about mill or purchases of merchandise for other persons, or bring proposed buyers and sellers together, or negotiate freights or other business for owners of vessels, or other means of transportation, or for the shippers, or consignors or consignees of freight carried by vessels or other means of transportation. The term includes commission merchants. FACTS AND CIRCUMSTANCES THAT BELIE BROKERAGE 1. 2. 3. 4. 5. 6. 7. The contract through and through names Cadwallader as the seller, the customer its buyer. The irrevocable letters of credit are drawn by the buyer in favor of the seller not of anybody else. No payment is made by the local customer to any manufacturer or supplier abroad. Cadwallader exclusively owns the price paid by the customer. Cadwallader is not accountable to the manufacturer or supplier for the amount represented by the letters of credit. The California branch office buys the goods ordered. The list of goods sold and prices charged is sent by the California branch, as shipper, direct to the buyer.

8. 9. 10.

11.

In the invoice, the "shipper" is Cadwallader's US branch, not the manufacturer or supplier. The invoice bears the certification by the California branch as to "the person from whom the same [merchandise] was purchased No privity of contract exists between Cadwallader's buyer and the foreign manufacturer or supplier. In fact, nowhere in the transaction do we find any mention of a foreign manufacturer or supplier who is unknown to the buyer. Cadwallader assumes the risk of non-payment by the buyer; the latter is responsible to Cadwallader alone for its failure to comply with the contract.

ISSUE1: Does Cadwallader act as an agent or broker of US suppliers in selling goods to Manila buyers? HELD1: NO In this factual environment, Cadwallader is not a commercial broker. Instead it acts for its own benefit. Jurisprudence"[I]n all the cases, under all and varying form of expression, the fundamental and correct doctrine is, that the duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made. (Danon vs. Brimo & Co., 42 Phil. 133, 139, quoting Sibbald vs. Bethlehem Iron Co., 38 Am. Rep. 441; reiterated in Rocha vs. Prats & Co., 43 Phil. 397, 399. In Reyes, et al. vs. Mosqueda, et al., 99 Phil. 241, 245, citing from Danon, supra, the language employed is: "The broker must be the efficient agent or the procuring cause of the sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as a broker." See also: Behn Meyer & Co., Ltd. vs. Nolting & Garcia, 35 Phil. 274, 279-280, where a broker is defined as "an agent employed to make bargains and contracts between other persons, in matters of trade, commerce or navigation for a compensation commonly brokerage." See likewise: Republic vs. Litton & Co., et al., 94 Phil. 52, 63.) In case of suit, the buyer's action is direct against Cadwallader and the latter's, against the former. Cadwallader does not act as negotiator or middleman to close a deal between one person and another, does not work or contract in the name of another. ISSUE2 (Side Issue - Tax): If Cadwallader is not a Commercial Broker, is it a Commercial Agent? HELD2: NO. A commission merchant differs from a broker in that he may buy and sell in his own name without disclosing his principal, while the broker can only buy or sell in the name of his principal." <BOS> 17. Valera v. Velasco,51 Phil. 695 (1928), Villa-Real

Valera appointed Velasco as his attorney-in-fact, with authority to manage his property [ Usufruct of a real property in Manila], by virtue of [two] powers of attorney. Velasco presented the final account of his administration for March 1923, and it appears that there is a P3k~ balance in Valeras favor. The liquidation of accounts revealed that Valera owed Velasco P1,100. They had a misunderstanding, so Velasco sued Valera, and the former won. A writ of execution was issued, and the sheriff levied upon Valeras right of usufruct Valera sold his right of redemption for P200 to one Eduardo Hernandez. Hernandez conveyed the same right of redemption back to Valera some months later. One Salvador Vallejo, who had an execution upon a judgment against Valera, levied upon said right of redemption, which was sold by the sheriff at public auction to Vallejo for P250 and was adjudicated to him. Later, Vallejo transferred said right of redemption to Velasco, so the latter had the title to the right of usufruct to the property. ISSUES WON the complaint is equivalent to an express renunciation of the agency. YES WON Velascos [agent] purchase of Valeras [principal] right of usufruct at public auction is valid and legal. YES since he ceased ipso facto to be an agent by virtue of his suing Valera Pertinent provisions NCC 1732.

Agency is terminated: 1. By revocation; 2. By the withdrawal of the agent; 3. By the death, interdiction, bankruptcy, or insolvency of the principal or of the agent. NCC 1736. An agent may withdraw from the agency by giving notice to the principal. Should the latter suffer any damage through the withdrawal, the agent must indemnify him therefore, unless the agent's reason for his withdrawal should be the impossibility of continuing to act as such without serious detriment to himself. RATIO 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. The events that transpired more than prove the breach of the juridical relation between them. 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, Valera could not have understood otherwise than that Velasco renounced the agency. In order to terminate their relations by virtue of the agency, Velasco, as agent, rendered his final account on March 31, 1923 to Valera, as principal .Jurisprudence De la Pea vs. Hidalgo Although the agent in his [aforementioned] letter did not use the words "renouncing the agency," yet such words, were undoubtedly so understood and accepted by the principal, because of the lapse of nearly nine years up to the time of the latter's death, without his having interrogated either the renouncing agent, disapproving what he had done, or the person who substituted the latter.