Obligations of the Agent (Arts. 1884 to 1909).faye.

Cases:
1. Phil. National Bank vs. Manila Surety & Fidelity Co., Inc. 14 SCRA 776

FACTS:
PRINCIPAL:ATACO- to Adams & Taguba Corporation-SUPPLIES/SELLS asphalt to Bureau of Public
Works(BPW) under a purchase order.

AGENT: PHILIPPINE NATIONAL BANK (OPENED A LETTER of CREDIT (letter of credit is a letter from
a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the
event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or
remaining amount of the purchase.) to Edington oil refinery -This is where ATACO bought the asphalt to be
supplied sa BPW.

Manila Surety & Fidelity Co- is the surety who guaranteed ATACO’s purchase of the asphalt up to P 75,000.00.

PURPOSE OF AGENCY: PHILIPPINE NATIONAL BANK is appointed by ATACO to collect and to receive
the payments to be made by BPW to ATACO.

The conditions of this assignment are as follows:

1. The same shall remain irrevocable until the said credit accomodation is fully liquidated.
2. The PHILIPPINE NATIONAL BANK is hereby appointed as our Attorney-in-Fact for us and in
our name, place and stead, to collect and to receive the payments to be made by virtue of the
aforesaid Purchase Order, with full power and authority to execute and deliver on our behalf,
receipt for all payments made to it; to endorse for deposit or encashment checks, money order and
treasury warrants which said Bank may receive, and to apply said payments to the settlement of
said credit accommodation.
This power of attorney shall also remain irrevocable until our total indebtedness to the said Bank
have been fully liquidated.
CONFLICT:

After ATACO delivered the asphalt to BPW. The agent-Bank regularly collected from BPW, from April 21,
1948 to November 18, 1948, P106,382.01. Thereafter, for unexplained reasons, the Bank ceased to collect, until in
1952 its investigators found that more moneys were payable to ATACO from the Public Works office, because the
latter had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of
P311,230.41.

The Court of Appeals found the Bank to have been negligent in having stopped collecting from the Bureau of
Public Works the moneys falling due in favor of the principal debtor, ATACO before the debt was fully collected,
thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety, and held that
the Bank's negligence resulted in exoneration of respondent Manila Surety & Fidelity Company.

This holding is now assailed by the Bank. It contends the power of attorney obtained from ATACO was merely
in additional security in its favor, and that it was the duty of the surety, and not that of the creditor, owed see to it that
the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any, sum
from the principal debtor.

Issue: whether the bank owed duty of active diligence/what is the diligence required of an agent?

Ruling:
The bank is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable
for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884).

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

2. Ramos vs. Caoibes, 94 Phil. 440

FACTS

PRINCIPAL- Concepcion Ramos Dipusoy

AGENT- Mr. Benigno A. Caoibes
PURPOSE OF AGENCY: in a document marked as “ANNEX A” Dipusoy authorized Caoibes to collect any amount
due the PRINCIPAL from the Philippine War Damage Commission, regarding HIS claim filed for HIS properties that
were lost during the last war in Balayan, Batangas, to cash checks, warrants and to sign receipts, vouchers, documents
which shall be necessary to the said purpose.

CONFLICT:
There are 2 documents executed “annex a”-SPA and “Annex B” an affidavit where Concepcion said:

in case payment of any amount or amounts collected from the Philippine War Damage Commission, my
nephew and at the same time attorney-in-fact, shall give my sister Teopista Vda. de Basa one-half (1/2), of
the corresponding amount and the other half (1/2) shall be given to my nephew and niece Mr. and Mrs.
Benigno A. Caoibes.

a year before she died the Principal, filed a claim to the war damages commission, wherein she had the check payable
to her be changed to her attorney in fact caoibes. the principal died and left a will that ordered her properties given to
her children. when caoibes claimed the check for ₱501.2 he had it encashed for himself. He says that the DOCUMENT
“ANNEX B” is a deed of donation and he is entitled to half of it.

Issue:
What is the obligation of the agent after the death of the principal?

Ruling:

Where an agent makes use of his power of attorney after the death of his principal, the agent has the obligation to
deliver the amount collected by him by virtue of said power to the administratrix of the estate of his principal.

Annex A is only a power of attorney. Caoibes, as agent, had the obligation to deliver the amount collected by virtue
of said power to his principal, Concepcion, or, after her death, to the administratrix of her estate, Consolación. There
is absolutely no cession of rights made in favor of Caoibes in Annex "A", and under Article 1711 of the old Civil
Code (which was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless
the agent is a professional agent. There is no proof that Caoibes was such. Furthermore, according to Article 1732 of
said Code, an agency is terminated, among other causes, by the death of the principal or of the agent. When Caoibes
made use of the power of attorney, his principal, Concepcion, was already dead.

Annex "B", the alleged document of donation, is not a donation of real but of personal property and is governed by
article 632 of the old Civil Code, and did not follow the formal requisite of acceptance in the same document thus
cannot be given efficacy.

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 3. Gutierrez Hermanos vs. Oria Hermanos, 30 Phil. 491

FACTS☹ honestly wala ko kasabot sa case kay ill written and archaic ang speech structure sa naghimo sa
decision.
PRINCIPAL- Oria Hermanos & Co. Firm (OH)
AGENT- Gutierrez Hermanos Firm (GH)
PURPOSE OF AGENCY: that GH, as a commission agent, bound itself to buy and sell certain merchandise for the
defendant like 65,119.66 piculs of copra, 70,420 bales of hemp, and 5,176.03 piculs of loose hemp to Gutierrez
Hermanos for sale on commission.

CONFLICT:

OH claims that GH had set higher prices than the price actually paid, thereby defrauding OH. For this reason, OH
prayed that GH be ordered to render an account of its transactions as such commission agent. From a mutual current
account between GH and OH, there remained a balance standing against OH.

GH had opportunely sent to OH an abstract of the current account which showed said balance for which the OH is
liable.

Issue: Whether or not OH is liable to GH for its unsettled account?

Ruling:

YES. When an agent, in executing the orders and commissions of his principal, carries out the instructions he has
received from his principal, and does not appear to have exceeded his authority or to have acted with negligence,
deceit, or fraud, he cannot be held responsible for the failure of his principal to accomplish the object of the agency.

Since it was not proven that the prices of the goods were overstated, thereby defrauding OH, OH cannot escape the
liability of paying GH for performing the task given to it, following from their principal-agent relationship.

Although OH cannot be held liable for the value of the invoices not duly proved by GH, if the records show
that OH had received the goods consigned to it under invoices and the only defect was that excessive prices
were charged and certain amounts were unduly debited, it would not be just, that for said failure on the part
of GH to prove all of the invoices, OH would deny liability to pay for the goods received by it, after deducting
from the price the excess and the quantities for which it was not liable.

From this it follows that the first report of the referee cannot be the proper basis for the definite settlement of this
case, and it is necessary to determine the amount for which the defendant would be liable to pay in view of the
evidence adduced.

Considering the facts above set forth and the evidence furnished by the record, we arrived at the conclusion that the
defendant firm is only entitled to a reduction of the sum of P37,063.57 from the amount of P147,204.28 adjudged in
favor of the plaintiff firm in the previous decision of this court under date of March 30, 1915. For this reason, OH is
found liable to pay GH the remaining balance of P110,140.71 and the interest thereon at the rate of 8 %t per annum
from June 30, 1909, to the date of payment.

4. Domingo vs. Domingo, 42 SCRA 131

FACTS
PRINCIPAL- Vicente Domingo;
AGENT- Gregorio Domingo;
SUB AGENT-Teofilo Purisima, HIS PRINCIPAL IS Gregorio;
PURPOSE OF AGENCY- AGENT IS INSTITUTED AS a real estate broker,WITH the exclusive agency to sell
PRINCIPAL’S lot With a commission of 5% on the total price, if the property is sold by Vicente or by anyone else

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during the 30-day duration of the agency or if the property is sold by Vicente within three months from the termination
of the agency to a purchaser to whom it was submitted by Gregorio during the continuance of the agency with notice
to Vicente. The said agency contract was in triplicate, one copy was given to Vicente, while the original and another
copy were retained by Gregorio.

PURPOSE OF SUB-AGENCY- Gregorio authorized Teofilo P. Purisima to look for a buyer, promising him one-
half of the 5% commission.

CONFLICT: Teofilo Purisima INTRODUCED Oscar de Leon a prospective buyer TO GREGORIO. The price of
the lot was supposed to be 2 Pesos per square meter but he gave a counter offer of ₱1.2 per square meter. He persuaded
the AGENT to convince the principal to agree to his offer, and in return he will gift him ₱1000. The principal was
convinced by the agent. UPON DEMAND OF THE PRINCIPAL, Oscar de Leon issued to him a check in the amount
of P1,000.00 as earnest money, after which Vicente advanced to Gregorio the sum of P300.00.

Issue: 1. WON the AGENT is still entitled to the commission? (2) whether Vicente or Gregorio should be liable
directly to the intervenor Teofilo Purisima for the latter's share in the expected commission of Gregorio by reason of
the sale

Ruling:
1. No. the agent was in breach of trust reposed to him by the principal.
the duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal. 1
Consequently, the decisive legal provisions are in found Articles 1891 and 1909 of the New Civil Code.

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he
may have received by virtue of the agency, even though it may not be owing to the principal.
Every stipulation exempting the agent from the obligation to render an account shall be void.
xxx xxx xxx
Art. 1909. The agent is responsible not only for fraud but also for negligence, which shall be judged with more less
rigor by the courts, according to whether the agency was or was not for a compensation.
Article 1891 of the New Civil Code amends Article 17 of the old Spanish Civil Code which provides that:
Art. 1720. Every agent is bound to give an account of his transaction and to pay to the principal whatever he may have
received by virtue of the agency, even though what he has received is not due to the principal.

The aforecited provisions demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent,
the real estate broker in this case, to his principal, the vendor. The law imposes upon the agent the absolute obligation
to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant
to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from
such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This
is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as of the
strictest justice.

In the case at bar, defendant-appellee Gregorio Domingo as the broker, received a gift or propina in the amount of
One Thousand Pesos (P1,000.00) from the prospective buyer Oscar de Leon, without the knowledge and consent of
his principal, herein petitioner-appellant Vicente Domingo. His acceptance of said substantial monetary gift corrupted
his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial
advance of Three Hundred Pesos (P300.00) on his commission. As a consequence, instead of exerting his best to
persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, the
broker, herein defendant-appellee Gregorio Domingo, succeeded in persuading his principal to accept the counter-
offer of the prospective buyer to purchase the property at P1.20 per square meter or One Hundred Nine Thousand
Pesos (P109,000.00) in round figure for the lot of 88,477 square meters, which is very much lower the the price of
P2.00 per square meter or One Hundred Seventy-Six Thousand Nine Hundred Fifty-Four Pesos (P176,954.00) for said
lot originally offered by his principal.

The duty embodied in Article 1891 of the New Civil Code will not apply if the agent or broker acted only as a
middleman with the task of merely bringing together the vendor and vendee, who themselves thereafter will negotiate
on the terms and conditions of the transaction. Neither would the rule apply if the agent or broker had informed the

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principal of the gift or bonus or profit he received from the purchaser and his principal did not object therto. 11 Herein
defendant-appellee Gregorio Domingo was not merely a middleman of the petitioner-appellant Vicente Domingo and
the buyer Oscar de Leon. He was the broker and agent of said petitioner-appellant only. And therein petitioner-
appellant was not aware of the gift of One Thousand Pesos (P1,000.00) received by Gregorio Domingo from the
prospective buyer; much less did he consent to his agent's accepting such a gift.

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

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

5. U.S. vs. Reyes, 36 Phil. 791

FACTS
PRINCIPAL- R. B. Blackman – A SURVEYOR
AGENT- Domingo Reyes-A COLLECTOR
PURPOSE OF AGENCY- to collect certain amounts due from twelve individuals for Blackman's work in
connection with the survey of their lands.
CONFLICT: The total amount to be collected by Reyes was P860. He only succeeded in collecting P540. He delivered
to Blackman P368. He retained the balance, or P172.

It was merely an oral agreement between Blackman and Reyes. Blackman claims that he agreed to pay Reyes a
commission of 10 per cent. Reyes claims that he was to receive a commission of 20 per cent. BLACKMAN
CHARGED REYES OF ESTAFA.

Issue: Does the agent have a right to retain the money stipulated as commission?

Ruling: No. In the first place, in view of the discrepancy in the evidence we are not disposed to set up our judgment
as superior to that of the trial court. In the second place, conceding that Reyes was to receive 20 per cent, this, unless
some contrary and express stipulation was included, would not entitle him in advance to 20 per cent of the amount
actually collected. In the third place, the right to receive a commission of either 10 or 20 per cent did not make to hold
out any sum he chose. (Campbell vs. The State [1878], 35 Ohio St., 70.) In the fourth place, under the oral contract
Reyes was an agent who was bound to pay to the principal all that he had received by virtue of the agency. (Civil
Code, article 1720; U. S. vs. Kiene [1907], 7 Phil. Rep., 736.) And, lastly, since for all practical purposes, the agency
was terminated, the agent was under the obligation to turn over to the principal the amount collected, minus his
commission on that amount. (U. S. vs. Schneer [1907], 7 Phil. Rep., 523.)