Académique Documents
Professionnel Documents
Culture Documents
INC.vs.
PEDRO L. LINSANGAN First Issue. Yes. By the contract of agency, a person
FACTS: binds himself to render some service or to do something
in representation or on behalf of another, with the
Florencia Baluyot offered Atty. Pedro L. Linsangan a lot consent or authority of the latter. As properly found both
called Garden State at the Holy Cross Memorial Park by the trial court and the Court of Appeals, Baluyot was
owned by petitioner (MMPCI). According to Baluyot, a authorized to solicit and remit to MMPCI offers to
former owner of a memorial lot under Contract No. purchase interment spaces obtained on forms provided
25012 was no longer interested in acquiring the lot and by MMPCI. The terms of the offer to purchase,
had opted to sell his rights subject to reimbursement of therefore, are contained in such forms and, when
the amounts he already paid. The contract was for signed by the buyer and an authorized officer of MMPCI,
P95,000.00. Baluyot reassured Atty. Linsangan that becomes binding on both parties.
once reimbursement is made to the former buyer, the
contract would be transferred to him. Second Issue. No. While there is no more question as
to the agency relationship between Baluyot and
Atty. Linsangan agreed and gave Baluyot P35,295.00 MMPCI, there is no indication that MMPCI let the public,
representing the amount to be reimbursed to the original or specifically, Atty. Linsangan to believe that Baluyot
buyer and to complete the down payment to had the authority to alter the standard contracts of the
MMPCI. Baluyot issued handwritten and typewritten company. Neither is there any showing that prior to
receipts for these payments. Contract No. 28660 has a signing Contract No. 28660, MMPCI had any
listed price of P132,250.00. Atty. Linsangan objected to knowledge of Baluyot's commitment to Atty. Linsangan.
the new contract price, as the same was not the amount Even assuming that Atty. Linsangan was misled by
previously agreed upon. To convince Atty. Linsangan, MMPCI's actuations, he still cannot invoke the principle
Baluyot executed a document confirming that while the of estoppel, as he was clearly negligent in his dealings
contract price is P132,250.00, Atty. Linsangan would with Baluyot, and could have easily determined, had he
pay only the original price of P95,000.00. only been cautious and prudent, whether said agent
was clothed with the authority to change the terms of
Later on, Baluyot verbally advised Atty. Linsangan that the principal's written contract.
Contract No. 28660 was cancelled for reasons the latter
could not explain. For the alleged failure of MMPCI and
Baluyot to conform to their agreement, Atty. Linsangan To repeat, the acts of the agent beyond the scope of his
filed a Complaint for Breach of Contract and Damages authority do not bind the principal unless the latter
against the former. ratifies the same. It also bears emphasis that when the
third person knows that the agent was acting beyond his
MMPCI alleged that Contract No. 28660 was cancelled power or authority, the principal cannot be held liable for
conformably with the terms of the contract because of the acts of the agent. If the said third person was aware
non-payment of arrearages. MMPCI stated that Baluyot of such limits of authority, he is to blame and is not
was not an agent but an independent contractor, and as entitled to recover damages from the agent, unless the
such was not authorized to represent MMPCI or to use latter undertook to secure the principal's ratification.
its name except as to the extent expressly stated in the
Agency Manager Agreement. Moreover, MMPCI was ORIENT AIR SERVCES AND HOTEL
not aware of the arrangements entered into by Atty. REPRESENTATIVES V C
Linsangan and Baluyot, as it in fact received a down FACTS:
payment and monthly installments as indicated in the American Airlines, inc, an air carrier offering passenger
contract. and air cargo transportation in the Phils, and Orient Air
Services and Hotel Representatives entered into a
The trial court held MMPCI and Baluyot jointly and General Sales Agency Agreement whereby the former
severally liable. The Court of Appeals affirmed the authorized the latter to act as its exclusive general sales
decision of the trial court. agent within the Phils for the sale of air passenger
transportation
ISSUES: Some of the pertinent provisions are:
Orient Air Services shall perform these services:
1. Whether or not there was a contract of agency a. solict and promote passenger traffic for the services
between Baluyot and MMPCI? of American and if necessary, employ staff competen
2. Whether or not MMPCI should be liable for Baluyot’s and sufficient to do so
act? b. provide and maintain a suitable area in its place of
business to be used exclusively for the transaction of
HELD: the business of American
c. arrange for distribution of American’s timetables, Agreement. Consequently, any ambiguity in this
tariffs and promotional material to sales agents nad the “contract of adhesion” is to be taken “contra
general public in the assigned territory proferentem” –construed against the party who cause
d. service and supervise sales agents in the assigned the ambiguity and could have avoided it by the exercise
territory including if required by American the control of of a little more care.
remittances and commissions retained
e. hold out a passenger reservation facility to sales SEVILLA v. CA
agents and general public in the assigned territory G.R. Nos. L-41182-3; April 15, 1988
Alleging that Orient Air had reneged on its obligations Ponente: J. Sarmiento
under the Agreement by failing to remit the net proceeds
of sale in the amount of US $ 254,400, American Air by FACTS:
itself undertook the collection of the proceeds of tickets
sold originally by Orient Air and terminated forthwith the On Oct. 19, 1960, the Tourist World Service, Inc. leased
Agreement an office at Mabini St., Manila for the former's use as a
American Air instituted suit against Orient Air for branch office. When the branch office was opened, the
Accounting with Preliminary Attachment or same was run by the herein appellant Lina O. Sevilla
Garnishment, Mandatory Injunction and Restraining payable to Tourist World Service Inc. by any airline for
Order averring the basis for the termination of the any fare brought in on the efforts of Mrs. Lina Sevilla,
Agreement as well as Orient Air’s previous record of 4% was to go to Lina Sevilla and 3% was to be withheld
failures “to promptly settle past outstanding refunds of by the Tourist World Service, Inc.
which there were available funds in the possession of
the Orient Air to the damage and prejudice of American On or about November 24, 1961, the Tourist World
Air Service, Inc. appears to have been informed that Lina
TC ruled in favor of Orient Air to which the Intermediate Sevilla was connected with a rival firm, the Philippine
Appelalate Court (now CA) affirmed TC’s decision with Travel Bureau, and, since the branch office was anyhow
modifications with respect to monetary awards granted. losing, the Tourist World Service considered closing
ISSUE: W/N Orient Air is entitled to the 3% overriding down its office.
commission
RULING: Yes This was firmed up by two resolutions of the board of
It is a well settled principle that in the interpretation of a directors of Tourist World Service, Inc. dated Dec. 2,
contract, the entirety thereof must be taken into 1961, the first abolishing the office of the manager and
consideration to ascertain the meaning of its provisions. vice-president of the Tourist World Service, Inc., Ermita
The various stipulations in the contract must be read Branch, and the second, authorizing the corporate
together to give effect to all secretary to receive the properties of the Tourist World
Service then located at the said branch office. It further
The Agreement, when interpreted in accordance with appears that on Jan. 3, 1962, the contract with the
the foregoing principles, entitles Orient Air to the 3% appellees for the use of the Branch Office premises was
overriding commission based on total revenue or as terminated and while the effectivity thereof was Jan. 31,
referred to by the parties, “total flown revenues”. 1962, the appellees no longer used it. As a matter of
fact appellants used it since Nov. 1961. Because of this,
As the designated General Sales Agent of American Air, and to comply with the mandate of the Tourist World
Orient Air was responsible for the promotion and Service, the corporate secretary Gabino Canilao went
marketing of American Air’s services for air passenger over to the branch office, and, finding the premises
transportation and the solicitation of sales therefor. In locked, and, being unable to contact Lina Sevilla, he
return for such efforts and services, Orient Air was to be padlocked the premises on June 4, 1962 to protect the
paid commissions of 2 kinds: first, a sales agency interests of the Tourist World Service.
commission, ranging from 7 to 8% of tariff fares and
charges from sales by Orient Air when made on When neither the appellant Lina Sevilla nor any of her
American Air ticket stock; and second, an overriding employees could enter the locked premises, a
commission of 3% of tariff fares and charges for all sales complaint was filed by the herein appellants against the
of passenger transportation over American Air services. appellees with a prayer for the issuance of mandatory
The second type of commissions would accrue for sales preliminary injunction. Both appellees answered with
of American Air services made not on its ticket stocket counterclaims. For apparent lack of interest of the
but on the ticket stock of other air carriers sold by such parties therein, the trial court ordered the dismissal of
carriers or other authorized ticketing facilities or travel the case without prejudice.
agents.
In addition, it is clear from the records that American Air ISSUE:
was the party responsible for the preparation of the
Whether the act of Tourist World Service in abolishing requests for price quotations of desired machinery or
its Ermita branch proper equipment;
In the case at bar, Sevilla solicited airline fares, but she "(4) United States manufacturer or supplier ships the
did so for and on behalf of her principal, Tourist World goods to Philippine buyer and collects from the U.S.
Service, Inc. As compensation, she received 4% of the correspondent of the local bank where the letter of credit
proceeds in the concept of commissions. And as we was opened, payment of the goods;
said, Sevilla herself, based on her letter of November
28, 1961, presumed her principal's authority as owner "(5) United States manufacturer or supplier credits the
of the business undertaking. We are convinced, petitioner for commission. (CTA rec., pp. 70-73.)
considering the circumstances and from the respondent "(2) as distributor of United States manufacturers
Court's recital of facts, that the parties had and/or suppliers, its (petitioner's) transactions or
contemplated a principal-agent relationship, rather than activities are outlined as follows:
a joint management or a partnership.
"(1) Philippine buyer ascertains from petitioner
But unlike simple grants of a power of attorney, the whether or not a certain machinery or equipment which
agency that we hereby declare to be compatible with the the said buyer desires to purchase is available from the
intent of the parties, cannot be revoked at will. The U.S. manufacturers or suppliers for whom petitioner
reason is that it is one coupled with an interest, the acts as distributor and, if available, requests for price
agency having been created for the mutual interest of quotation of the desired machinery or equipment;
the agent and the principal. Accordingly, the revocation
complained of should entitle the petitioner, Lina Sevilla, "(2) Petitioner furnishes the Philippine buyer with price
to damages quotation based on price list f.o.b. factory which is
furnished petitioner and fixed by the United States
G.R. No. L-25653 manufacturer or supplier;
The following partial stipulation of facts outlines the two "(5) Petitioner prepares the purchase instructions in
different modes of business operation of private accordance with the purchase order of the Philippine
respondent (petitioner in the CTA): buyer and forwards the same to its agent in the United
States;
"(1) as sales representative of certain United States
manufacturers and/or suppliers, petitioner's "(6) The said agent procures the goods from the U.S.
transactions or activities are outlined as follows: manufacturer or supplier;
"(1) Philippine buyer ascertains from petitioner "(7) United States manufacturer or supplier invoices
whether or not a certain machinery or equipment it goods for petitioner's agent in San Francisco, California;
desires to buy is available from the U.S. manufacturers
or suppliers represented by the former and, if available, "(8) Petitioner's agent prepares sales invoice of the
petitioner and ships the goods to the Philippine buyer." petitioner's transactions which gave rise to the income
(CTA rec., pp. 70-73.) in question indicates the status of petitioner as an
It appears that during the tax period in question, independent dealer and not as a commercial
respondent taxpayer realized an income of broker. Petitioner's contracts with several U.S.
P630,635.62 from both its activities as sales manufacturers indubitably show that it acted as an
representative and as distributor of American independent dealer. Pertinent portions of these
manufacturers/suppliers and paid thereon P37,837.94 contracts read:
as broker's percentage tax on the assumption that the
income consisted entirely of commissions. Later Joy Manufacturing Company
however respondent sought a partial refund of
P21,620.36 on the ground that of the total income of "1. Subject to the terms and conditions hereinafter set
P630,635.62, P360,339.35 was not broker's forth, the Company grants to the Distributor the
commission but simply overprice or profit (plus exclusive right to purchase for resale the following listed
exchange income on overprice) realized from ordinary articles and machines. x x x x, manufactured or sold by
sales of machineries and equipment it had purchased the Company within the territory indicated hereinafter."
from American companies. (Underscoring supplied; Distributor's Contract, CTA
rec., p. 78.)
After the request for refund had been denied by the Briggs & Straton Corporation
Bureau of Internal Revenue, the taxpayer appealed to
the Court of Tax Appeals from which it obtained as "'Distributor' is an individual or firm under agreement
aforesaid a favorable judgment, which is now assailed. with Briggs & Straton Corporation, whose principal
business is the resale of products or commodities at
The single issue posed in this petition for review is wholesale to Dealers, etc., x x x x. Distributor shall not
whether the P360,339.35 earned by respondent act as the agent for the Company under this agreement,
taxpayer in its capacity "as distributor" of American nor shall Distributor have any right or power hereunder
machineries and equipment should be considered to act for or to bind the company in any respect or to
as commission subject to commercial broker's tax pledge its credit. x x x x." (Underscoring supplied;
under the Tax Code orprofit from sales which is not Distributor Agreement, CTA rec., p. 83.)
subject thereto.
The merit of respondent's stand is clear on the face of The Jeffrey Manufacturing Company
the appealed decision -
"The purpose of this agreement is to effect through the
"Petitioner (taxpayer) contends that it is not a Representative a wider sales outlet for the
commercial broker within the definition provided in Manufacturer's products. This is to be accomplished by
Section 194(t) of the Revenue Code, which reads: the Representative purchasing certain products,
hereinafter listed, and produced by the Manufacturer,
"(t) 'Commercial broker' includes all persons, other than for resale, and diligently promoting their sale in the
importers, manufacturer, producers, or bona fide Representative's territory." (Italics supplied; Export
employees, who, for compensation or profit, sell or bring Representative Agreement, CTA rec., 85.)
about sales or purchases of merchandise for other
persons, or bring proposed buyers and sellers together, Toledo Scale Corporation
or negotiate freights or other business for owners of
vessels, or other means of transportation, or for the (a) To sell only to the Distributor Toledo Machines
skippers, or consignors or consignees of freight carried "II. for use in the Distributor's territory, except the
by vessels or other means of transportation. The term following machines. x x x
includes commission merchants."
"One of the purposes of petitioner corporation, as stated The responsibility of the Company for
in its articles of incorporation, is to 'make and enter into merchandise ordered by the Distributor x x x shall
all kinds of contracts, agreements, and obligation with end with its delivery f.o.b. factory, all risks of fire,
any persons, corporation or corporations, or other "IV. loss or damage after the shipment has been
associations for the purchasing, acquiring, selling, or delivered f.o.b. factory or while in possession of
otherwise disposing of goods, wares, and merchandise any transportation company x x x, shall be borne
of all kinds, either as principal or agent, upon by the Distributor.
commission, consignment, or indent orders.' (BIR rec.,
pp. 43-48.) Petitioner is, therefore, authorized to act (h) x x x It is expressly the intention of the parties
either as principal or agent in the transaction of its "V. hereto that the Distributor's status is that of an
business. However, the evidence of record regarding independent contractor." (Underscoring supplied;
Export Distributor's Sales Agreement, CTA rec.,
pp. 90-93.) SO ORDERED.
"Respondent cites the agreement of petitioner with the
Toledo Scale Corporation (CTA rec., pp. 90-93.), which KER AND CO, LTD V. LINGAD
authorizes petitioner to solicit sales of' certain products
of the latter corporation, as an indication of FACTS:
brokerage. But respondent merely quoted that portion Ker and Co, Ltd. was assessed by then Commissioner
wherein petitioner is authorized to act as agent or of Internal Revenue Domingo the sum of P 20,272.33
representative but did not mention petitioner's equal as the commercial broker’s percentage tax, surcharge
authority to act as distributor or independent dealer with and compromise penalty.
respect to the same corporation.
There was a request on the part of Ker for the
"A perusal of the records of the case at bar equally cancellation of such assessment which request was
yields the conclusion that petitioner, through its agent, turned down
M.S. Smith in San Francisco, California, U.S.A. (BIR
rec., pp. 49-50), was the purchaser and owner of the As a result, it filed a petition for review with Court of Tax
machineries it sent to the Philippine buyers. This Appeals
conclusion is established by the fact that when
petitioner received purchase orders from local buyers CTA: Ker taxable except as to the compromise penalty
and there was no stock available, it sent the orders to of P500, the amount due from it being fixed at
its agent in California and required the latter 'to P19,772.33
purchase from x x x x' the U.S. manufacturers or
suppliers the items called for in the purchase orders Such liability arose from a contract of Ker with the
(See BIR rec., pp. 63, 79, 98, 111 & 124.) Petitioner was United States Rubber International. The former being
in turn paid through the letters of credit opened by the referred to as the distributor and the latter specifically
Philippine buyers with local banks in favor of agent M.S. designated as the company
Smith. (See BIR rec., pp. 59-128.)
The contract was to apply to transactions between the
"The facts (1) that petitioner shouldered the losses former and Ker, as distributor from July 1, 1948 to
resulting from some of the transactions in questions continue in force until terminated by either party giving
(See BIR rec., pp. 21-22); (2) that if petitioner had no to the other 60 days’ notice
stock available in the Philippines, it forwarded the
purchase order to its agent in California who procured The shipments would cover products for “consumption
the machineries from U.S. manufacturers (BIR rec., in Cebu, Bohol, Leyte Samar, Jolo, Negros Oriental and
Exh. "1", pp. 53-56); and (3) that the U.S. Manufacturers Mindanao except province of Davao, Ker as distributor
invoiced the goods to petitioner's agent in California being precluded from disposing such products
who prepared the sales invoice and shipped the goods elsewhere than in the above places unless written
to the Philippine buyers (See CTA rec., Stifacts, pp. 70- consent would first be obtained from the company
73) negate agency."
In effect, the instant petition controverts the factual Ker as distributor is required to exert every effort to have
findings of the court a quo. It is well settled that in the shipment of the products in the maximum quantity
passing upon petitions for review of the decisions of the and to promote in every way the sale sale thereof.
Court of Tax Appeals, this Court is generally confined to
questions of law. The findings of fact of said Court are Crucial stipulation: The company shall from time to time
not to be disturbed unless clearly shown to be consign to Ker and Ker will receive, accept and/hold
unsupported by substantial evidence. (Rules of Court, upon consignment the products specified under the
Rule 44, Section 2. Republic Act 1125, Sections 18- terms of this agreement in such quantities as in the
19.) Substantial evidence has been construed to mean judgment of company may be necessary
not necessarily preponderant proof as is required in
ordinary civil action, but such kind of "relevant evidence It is further agreed that this agreement does not
as a reasonable man might accept as adequate in constitute Ker the agent or legal representative of the
support of a conclusion." (De Lamera vs. Court of company for any purpose whatsoever
Agrarian Relations, et al., 17 SCRA 368.) There is no
circumstance of record indicating that the findings of the ISSUE:
lower court are not supported by substantial evidence. W/N the relationship thus created is one of vendor and
vendee (contract of sale) or of broker and principal
WHEREFORE, the appealed decision is affirmed. (contract of agency)
RULING: reserve that may be set up, and (3) 10% of any amount
Broker and principal- contract of agency expended during the year out of surplus earnings for
capital account. In the latter part of 1941, the parties
By taking the contractual stipulations as a whole and not agreed to renew the contract for another period of 5
just the disclaimer, it would seem that the contract years, but in the meantime, the Pacific War broke out in
between them is a contract of agency December 1941. In January 1942 operation of the
mining properties was disrupted on account of the war.
The CTA, in considering such stipulations provided in In February 1942, the mill, power plant, supplies on
the contract, concluded that all these circumstances are hand, equipment, concentrates on hand and mines,
irreconcilably antagonistic to the idea of an independent were destroyed upon orders of the United States Army,
merchant to prevent their utilization by the invading Japanese
Army.
CTA: upon analysis of the whole, together with actual
conduct of the parties thereto, that the relationship The Japanese forces thereafter occupied the mining
between them is one of brokerage or agency properties, operated the mines during the continuance
of the war, and who were ousted from the mining
National Internal Revenue Code: defined Commercial properties only in August 1945. After the mining
broker as all persons, other than importer, properties were liberated from the Japanese forces,
manufacturers, producers or bona fide employees who, LEPANTO took possession thereof and embarked in
for compensation or profit, sell or bring about sales or rebuilding and reconstructing the mines and mill; setting
purchase of merchandise for other persons or bring up new organization; clearing the mill site; repairing the
proposed buyers and sellers together and also includes mines; erecting staff quarters and bodegas and
commission merchants such as Ker in this case repairing existing structures; installing new machinery
and equipment; repairing roads and maintaining the
The mere disclaimer in a contract that an entity like Ker same; salvaging equipment and storing the same within
is not “the agent or legal representative for any purpose the bodegas; doing police work necessary to take care
whatsoever” does not suffice to yield the conclusion that of the materials and equipment recovered; repairing and
it is an independent merchant if the control over the renewing the water system; and retimbering. The
goods for resale of goods consigned is pervasive in rehabilitation and reconstruction of the mine and mill
character was not completed until 1948. On 26 June 1948 the
mines resumed operation under the exclusive
Thus, SC rejected Ker’s petition to reverse decision of management of LEPANTO. Shortly after the mines
CTA were liberated from the Japanese invaders in 1945, a
disagreement arose between NIELSON and LEPANTO
over the status of the operating contract which as
Nielson & Co. Inc. vs. Lepanto Consolidated Mining renewed expired in 1947. Under the terms thereof, the
Co. management contract shall remain in suspense in case
[GR L-21601, 28 December 1968] fortuitous event or force majeure, such as war or civil
commotion, adversely affects the work of mining and
Facts: [GR L-21601, 17 December 1966; Zaldivar (J): 6 milling. On 6 February 1958, NIELSON brought an
concur, 2 took no part] An operating agreement was action against LEPANTO before the Court of First
executed before World War II (on 30 January 1937) Instance of Manila to recover certain sums of money
between Nielson & Co. Inc. and the Lepanto representing damages allegedly suffered by the former
Consolidated Mining Co. whereby the former operated in view of the refusal of the latter to comply with the
and managed the mining properties owned by the latter terms of a management contract entered into between
for a management fee of P2,500.00 a month and a 10% them on 30 January 1937, including attorney's fees and
participation in the net profits resulting from the costs. LEPANTO in its answer denied the material
operation of the mining properties, for a period of 5 allegations of the complaint and set up certain special
years. In 1940, a dispute arose regarding the defenses, among them, prescription and laches, as bars
computation of the 10% share of Nielson in the profits. against the institution of the action.
The Board of Directors of Lepanto, realizing that the
mechanics of the contract was unfair to Nielson, After trial, the court a quo rendered a decision
authorized its President to enter into an agreement with dismissing the complaint with costs. The court stated
Nielson modifying the pertinent provision of the contract that it did not find sufficient evidence to establish
effective 1 January 1940 in such a way that Nielson LEPANTO's counterclaim and so it likewise dismissed
shall receive (1) 10% of the dividends declared and the same. NIELSON appealed. The Supreme Court
paid, when and as paid, during the period of the contract reversed the decision of the trial court and enter in lieu
and at the end of each year, (2) 10% of any depletion thereof another, ordering Lepanto to pay Nielson (1)
10% share of cash dividends of December, 1941 in the party. Agency, however, is distinguished from lease of
amount of P17,500.00, with legal interest thereon from work or services in that the basis of agency is
the date of the filing of the complaint; (2) management representation, while in the lease of work or services the
fee for January, 1942 in the amount of P2,500.00, with basis is employment. The lessor of services does not
legal interest thereon from the date of the filing of the represent his employer, while the agent represents his
complaint; (3) management fees for the sixty-month principal. Further, agency is a preparatory contract, as
period of extension of the management contract, agency "does not stop with the agency because the
amounting to P150,000.00, with legal interest from the purpose is to enter into other contracts." The most
date of the filing of the complaint; (4) 10% share in the characteristic feature of an agency relationship is the
cash dividends during the period of extension of the agent's power to bring about business relations
management contract, amounting to P1,400,000.00, between his principal and third persons. "The agent is
with legal interest thereon from the date of the filing of destined to execute juridical acts (creation, modification
the complaint; (5) 10% of the depletion reserve set up or extinction of relations with third parties). Lease of
during the period of extension, amounting to services contemplate only material (non-juridical) acts."
P53,928.88, with legal interest thereon from the date of Herein, the principal and paramount undertaking of
the filing of the complaint; (6) 10% of the expenses for Nielson under the management contract was the
capital account during the period of extension, operation and development of the mine and the
amounting to P694,364.76, with legal interest thereon operation of the mill. All the other undertakings
from the date of the filing of the complaint; (7) to issue mentioned in the contract are necessary or incidental to
and deliver to Nielson and Co. Inc. shares of stock of the principal undertaking — these other undertakings
Lepanto Consolidated Mining Co. at par value being dependent upon the work on the development of
equivalent to the total of Nielson's 10% share in the the mine and the operation of the mill. In the
stock dividends declared on November 28, 1949 and performance of this principal undertaking Nielson was
August 22, 1950, together with all cash and stock not in any way executing juridical acts for Lepanto,
dividends, if any, as may have been declared and destined to create, modify or extinguish business
issued subsequent to November 28, 1949 and August relations between Lepanto and third persons. In other
22, 1950, as fruits that accrued to said shares; provided words, in performing its principal undertaking Nielson
that if sufficient shares of stock of Lepanto's are not was not acting as an agent of Lepanto, in the sense that
available to satisfy this judgment, Lepanto shall pay the term agent is interpreted under the law of agency,
Nielson an amount in cash equivalent to the market but as one who was performing material acts for an
value of said shares at the time of default, that is, all employer, for a compensation. It is true that the
shares of stock that should have been delivered to management contract provides that Nielson would also
Nielson before the filing of the complaint must be paid act as purchasing agent of supplies and enter into
at their market value as of the date of the filing of the contracts regarding the sale of mineral, but the contract
complaint; and all shares, if any, that should have been also provides that Nielson could not make any
delivered after the filing of the complaint at the market purchase, or sell the minerals, without the prior approval
value of the shares at the time Lepanto disposed of all of Lepanto. It is clear, therefore, that even in these
its available shares, for it is only then that Lepanto cases Nielson could not execute juridical acts which
placed itself in condition of not being able to perform its would bind Lepanto without first securing the approval
obligation; (8) the sum of P50,000.00 as attorney's fees; of Lepanto. Nielson, then, was to act only as an
and (9) the costs. intermediary, not as an agent. Further, from the
statements in the annual report for 1936, and from the
Lepanto seeks the reconsideration of the decision provision of paragraph XI of the Management contract,
rendered on 17 December 1966. that the employment by Lepanto of Nielson to operate
and manage its mines was principally in consideration
Issue: Whether the management contract is a contract of the know-how and technical services that Nielson
of agency or a contract of lease of services. offered Lepanto. The contract thus entered into
pursuant to the offer made by Nielson and accepted by
Held: Article 1709 of the Old Civil Code, defining Lepanto was a "detailed operating contract". It was not
contract of agency, provides that "By the contract of a contract of agency. Nowhere in the record is it shown
agency, one person binds himself to render some that Lepanto considered Nielson as its agent and that
service or do something for the account or at the request Lepanto terminated the management contract because
of another." Article 1544, defining contract of lease of it had lost its trust and confidence in Nielson.
service, provides that "In a lease of work or services,
one of the parties binds himself to make or construct Africa vs Caltex
something or to render a service to the other for a price
certain." In both agency and lease of services one of the In March 1948, in Rizal Avenue, Manila, a tank truck
parties binds himself to render some service to the other was hosing gasoline into the underground storage of
Caltex. Apparently, a fire broke out from the gasoline following properties to wit, 1 house and lot; at Calle San
station and the fire spread and burned several houses Luis; another house and lot at Calle Cortada; another
including the house of Spouses Bernabe and Soledad house and lot at Calle San Luis, and a fenced lot on the
Africa. Allegedly, someone (a passerby) threw a same street, all of the district of Ermita, and another
cigarette while gasoline was being transferred which house and lot at Calle Looban de Paco, belonging to his
caused the fire. But there was no evidence presented to principal, De la Pena y Gomiz, according to the power
prove this theory and no other explanation can be had of attorey executed in his favor
as to the real reason for the fire. Apparently also, Caltex
and the branch owner (Mateo Boquiren) failed to install Hidalgo, as such agent, collected the rents and income
a concrete firewall to contain fire if in case one happens. from said properties, amounting to P50, 244, which
ISSUE: Whether or not Caltex and Boquiren are liable sum, collected in partial amounts and on different dates,
to pay for damages. he should have deposited, in accordance with the verbal
HELD: Yes. This is pursuant to the application on the agreement between the deceased and himself in the
principle of res ipsa loquitur (“the transaction speaks for general treasury of the Spanish Government at an
itself”) which states: “where the thing which caused interest of 5% per annum, which interest on accrual was
injury, without fault of the injured person, is under the likewise to be deposited in order that it also might bear
exclusive control of the defendant and the injury is such interest; that Hidalgo did not remit or pay to Gomiz,
as in the ordinary course of things does not occur if he during his lifetime, nor to any representative of the said
having such control use proper care, it affords Gomiz, the sum aforestated nor any part thereof with
reasonable evidence, in the absence of the explanation, the sole exception of P1,289.03, nor has he deposited
that the injury arose from defendant’s want of care.” The the unpaid balance of said sum in the treasury,
gasoline station, with all its appliances, equipment and according to agreement, wherefore he has become
employees, was under the control of Caltex and liable to his principal and to the administrator for the said
Boquiren. A fire occurred therein and spread to and sum, together with its interest amounting to P72,548.24
burned the neighboring houses. The persons who knew
or could have known how the fire started were Boquiren, The court ruled in favor of De la Pena and said that
Caltex and their employees, but they gave no Hidalgo, as administrator of the estate of deceased
explanation thereof whatsoever. It is a fair and Gomiz, actually owed De la Pena
reasonable inference that the incident happened
because of want of care. ISSUE: W/N Hidalgo is considered an agent of Gomiz
Note that ordinarily, he who charges negligence shall and as such must reimburse present administrator, De
prove it. However, res ipsa loquitur is the exception la Pena
because the burden of proof is shifted to the party
charged of negligence as the latter is the one who had RULING: No
exclusive control of the thing that caused the injury Gomiz, before embarking for Spain, executed before a
complained of. notary a power of attorney in favor of Hidalgo as his
agent and that he should represent him and administer
DE LA PENA V HIDALGO various properties he owned and possessed in Manila.