Metropolitan Bank & Trust Company vs Court of Appeals
Without notice to third parties
Philippine Fish Marketing Authority drawn and purportedly signed by its General Manager 38 treasury
warrants amounting to P1,755,228.37.
Around January 1979, Eduardo Gomez opened an account with Golden Savings and deposited said 38
treasury warrants for a period of 2 months. Six of these warrants are payable to Gomez while 32 of these
were subsequently endorsed by Gloria Castillo (Cashier of Golden Savings) between 25 June 1979 and
16 July 1979 while these were deposited on Golden Savings’ savings account in Metrobank. The
deposited accounts were sent for clearing which forwarded to the Bureau of Treasury for special clearing.
For more than 2 weeks after the deposit, Gloria went to Metrobank to ask whether the warrants had been
cleared but was told to wait. Later, Metrobank decided to allow Golden Savings to withdraw after repeated
inquiry. Series of withdrawals was made on July 9, July 13, and July 16 1979.
On 21 July 1979, Metrobank informed Golden Savings that 32 warrants had been dishonored by the
Bureau of Treasury on 19 July 1979. Metrobank demanded Golden Savings the amount withdrawn but
the demand was rejected.
Metrobank sued Golden Savings in the Regional Trial Court which rendered a judgment in favor of the
Golden Savings. Metrobank filed a motion for reconsideration.
On 4 November 1986, the lower Court modified a part of its decision which is still in favor of Golden
Savings. Metrobank filed a petition for review.
Defenses of Metrobank:
1. That the Golden Savings should have exercised more care in checking the personal circumstances.
2. That Metrobank was acting only as a collecting agent for Golden Savings and give it the right to charge
back to the depositors’ account any amount previously credited whether or not such item is returned.
Ratio decidendi:
1. It was Gomez who was entrusting the warrants, not the Golden Savings which was extending him a loan;
moreover, the treasury warrants were subject to clearing which is pending that the depositor could not
withdraw its proceeds yet.
There was no question of Gomez’s identity or of the genuineness of his signature as checked by Golden
Savings. It is clear that Golden Savings acted with due care and diligence and cannot be faulted for the
withdrawals it allowed Gomez to make.
2. In stressing that it was acting only as a collecting agent for Golden Savings, Metrobank seems to
suggest that as a mere agent, it cannot be liable to the principal. This is not exactly true. On the contrary,
Article 1909 of the Civil Code of the Philippines clearly provides:
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.
VII. Obligations of agent to third parties.
A. Agent acting withing scope of authority 1883,1897,1899
B. Agent acting outside scope of authority – 1897,1898,1911
a. With notice to third parties
b.
Phil. National Bank vs. Agudelo y Gonzaga
When an agent negotiates a loan in his personal capacity and executes a promissory note under his own
signature, without express authority from his principal, giving as security therefor real estate belonging to
the letter, also in his own name and not in the name and representation of the said principal, the obligation
do constructed by him is personal and does not bind his aforesaid principal.
Facts
1. The defendant Mauro A. Garrucho’s sister, Amparo A. Garrucho, and aunt, Paz Agudelo y Gonzaga,
executed a Special Power of Attorney in his favour, authorizing him to sell, alienate and mortgage in the
manner and form he might deem convenient several of their (his sister’s and aunt’s) real properties,
though no without mention that he may use these properties to secure his own personal obligations.
2. Mauro then used some of these properties to secure his obligations with the plaintiff in the amounts of
P6,000 and P16,000.
3. These obligations were later novated with Mauro issuing a promissory note in favour of the bank for
21,000. 4. In the meanwhile, Amparo sold her property (which Mauro had mortgaged to the plaintiff) to
Paz.
Issue Whether or not Paz is liable for the obligations of Mauro to the plaintiff as her properties were used
to secure said obligations.
Held The court held that Paz is not liable. Ratio 1. Nowhere in the mortgage deeds was it mentioned that
Mauro obtained the loans on behalf of his aunt or sister which means that he was acting in his personal
capacity. 2. In the same mortgage deeds, Mauro appointed the plaintiff as attorney-in-fact allowing it to
enter into the subject properties in violation of the legal principle of "delegata potestas delegare non
potest" (a delegated power cannot be delegated). 3. The promissory note issued by Mauro in the amount
of P16,000 was done without express authority from his sister or aunt. 4. Mauro’s act of mortgaging the
said properties to secure his own personal obligations were not provided for in the Special Powers of
Attorney granted to him, meaning he was acting in excess of his authority. 5. The case at bar is not an
exception under Article 1717 of the Civil Code as Mauro Mauro A. Garrucho was not authorized to execute
promissory notes even in the name of his principal Paz Agudelo y Gonzaga, nor to constitute a mortgage
on her real properties to secure such promissory notes. 6. Paz’s liability is only limited to the lien and not
to the principal obligation secured by the mortgage acknowledged by her to have been constituted on
said lot No. 878 of the cadastral survey of Murcia, Occidental Negros. Such liability is not direct but a
subsidiary one. 7. The plaintiff failed to appeal the absolution of the defendants by the lower court.
Philippine Products vs. Primateria Societe Anonyme
Primateria Zurich is foreign corporation without a license to transact business in the Philippines. PZ
transacted with Philippine Products Company thru Baylin (agent of PZ) for the buying of copra and the
shipping of the copra to other countries was done thru Baylin and Primateria Phils. as agents of PZ. PZ
was held liable for the amount but its agents were absolved. PPC argues that PZ’s agents are liable to
him because under 1897, an agent who acts as such is not personally liable to the party with whom he
contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such
party sufficient notice of his powers. SC held that PPC can’t recover from both PZ as the principal and its
agents. There is also no proof that, as agents, they exceeded the limits of their authority. It should be PZ,
the principal, who should be the one to raise the point, but they never did. At any rate, the article does not
hold that in cases of excess of authority, both the agent and the principal are liable to the other contracting
party.
FACTS:
 Defendant Primateria Societe Anonyme Pour Le Commerce Exterieur [PZ]is a foreign juridical
entity from Zurich, Switzerland.
 It was then engaged in "Transactions in international trade with agricultural products, particularly
in oils, fats and oil-seeds and related products."
 1951-PZ, through defendant Alexander B. Baylin, entered into an agreement with plaintiff
Philippine Products Company [PPC], whereby the latter undertook to buy copra in the
Philippines for the account of PZ, during "a tentative experimental period of one month from
date." The contract was renewed by mutual agreement up to 1953.
 PPC caused the shipment of copra to foreign countries, pursuant to instructions from PZ, thru
Primateria (Phil.) Inc [PP] acting by defendant Alexander G. Baylin and Jose M. Crame, (officers
of PP)
 Alexander G. Baylin and Primateria Philippines acted as the duly authorized agents of Primateria
Zurich in the Philippines
o Baylin acted indiscriminately in these transactions in the dual capacities of agent of
the Zurich firm and executive vice-president of PP, which also acted as agent of
PZ. It
 Primateria Zurich had no license to transact business in the Philippines
 the total amount due to PPC, was P33,009.71. PPC filed action to recover the sum
 Lower court held PZ liable to the plaintiff for the sums of P31,009.71, but absolved PP, Alexander
G. Baylin, and Jose M. Crame from any and all liability.
 PPC: Primateria Zurich is a foreign corporation within the meaning of Sections 68 1 and 692 of
the Corporation Law, and since it has transacted business in the Philippines without the
necessary license, as required by said provisions, its agents here are personally liable for
contracts made in its behalf.
Issues + Ruling
Whether defendant Primateria Zurich may be considered a foreign corporation within the meaning
of Sections 68 and 69 of the Corporation Law
 the Primateria Zurich was not duly proven to be a foreign corporation; nor that a societe
anonyme ("sociedad anomima") is a corporation; and that failing such proof, the societe cannot
be deemed to fall within the prescription of Section 68 of the Corporation Law. We agree with the
said court's conclusion. In fact, our corporation law recognized the difference
between sociedades anonimas and corporations.
Whether its agents may be held personally liable on contracts made in the name of the entity with
third persons in the Philippines.
 SC cannot see how PPC could recover from both the principal (Primateria Zurich) and its agents.
It has been given judgment against the principal for the whole amount
1Section 68 of the Corporation Law states: "No foreign corporation or corporation formed, organized, or
existing under any laws other than those of the Philippines shall be permitted to transact business in the
Philippines, until after it shall have obtained a license for that purpose from the Securities and Exchange
Commission ..
 . It asked for such judgment, and did not appeal from it. It clearly stated that its appeal concerned
the other three defendants.
 PPC: appellees as agents of Primateria Zurich are liable to it under Art. 1897 of the NCC
Art. 1897. The agent who acts as such is not personally liable to the party with whom he
contracts, unless he expressly binds himself or exceeds the limits of his authority without giving
such party sufficient notice of his powers.
 SC: no proof that, as agents, they exceeded the limits of their authority.
o It should be PZ, the principal, who should be the one to raise the point, but
they never did
o At any rate, the article does not hold that in cases of excess of
authority, both the agent and the principal are liable to the other contracting
party.
whether the agent of a foreign corporation doing business, but not licensed here is personally
liable for contracts made by him in the name of such corporation.
 No necessity to dispense issue but SC still said that such foreign corporation may be sued here
And obviously, liability of the agent is necessarily premised on the inability to sue the principal or
non-liability of such principal. In the absence of express legislation, of course.
Disposition: the appealed judgment is affirmed
C. Agents Acting on his own name; exception - 1883
NAPOCOR vs. National Merchandising Corp
FACTS:
Plaintiff-appellant National Power Corporation (NPC) and defendant- appellant National Merchandising
Corporation (NAMERCO), the Philippine representative of New York-based International Commodities
Corporation, executed a contract of sale of sulfur with a stipulation for liquidated damages in case of
breach.
Defendant-appellant Domestic Insurance Company executed a performance bond in favor of NPC to
guarantee the seller's obligation. In entering into the contract, Namerco, however, did not disclose to NPC
that Namerco's principal, in a cabled instruction, stated that the sale was subject to availability of a
steamer, and contrary to its principal's instruction, Namerco agreed that non-availability of a steamer was
not a justification for non-payment of liquidated damages.
The New York supplier was not able to deliver the sulfur due to its inability to secure shipping space.
Consequently, the Government Corporate Counsel rescinded the contract of sale due to the supplier's
non-performance of its obligations, and demanded payment of liquidated damages from both Namerco
2Section 69, "any officer or agent of the corporation or any person transacting business for any foreign
corporation not having the license prescribed shall be punished by imprisonment for etc
and the surety. Thereafter, NPC sued for recovery of the stipulated liquidated damages. After trial, the
Court of First Instance rendered judgment ordering defendants-appellants to pay solidarity to the NPC
reduced liquidated damages with interest.
ISSUE:
Whether NaMerCo exceeded their authority
HELD:
Yes, NaMerCo exceeded their authority.
The Supreme Court held that before the contract of sale was signed Namerco was already aware that its
principal was having difficulties in booking shipping space.
It is being enforced against the agent because article 1897 implies that the agent who acts in excess of
his authority is personally liable to the party with whom he contracted.
Moreover, the rule is complemented by article 1898 of the Civil Code which provides that "if the agent
contracts in the name of the principal, exceeding the scope of his authority, and the principal does not
ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the
powers granted by the principal".
Namerco never disclosed to the Napocor the cabled or written instructions of its principal. For that reason
and because Namerco exceeded the limits of its authority, it virtually acted in its own name and not as
agent and it is, therefore, bound by the contract of sale which, however, is not enforceable against its
principal.
CERVANTES vs. CA
Facts:
On March 27, 1989, the private respondent, Philippines Air Lines, Inc. (PAL), issued to the herein
petitioner, Nicholas Cervantes (Cervantes), a round trip plane ticket for Manila-Honolulu-Los Angeles-
Honolulu-Manila, which ticket expressly provided an expiry of date of one year from issuance, i.e., until
March 27, 1990.
On March 23, 1990, four days before the expiry date of subject ticket, the petitioner used it. Upon
his arrival in Los Angeles on the same day, he immediately booked his Los Angeles-Manila return ticket
with the PAL office, and it was confirmed for the April 2, 1990 flight. On April 2, 1990 when petitioner tried
to board the plane, he was denied by PAL for the reason that the said ticket had expired. As a result
petitioner filed a complaint against PAL.
The trial court dismissed the complaint and upon appeal to the CA, the dismissal was affirmed
and hence this appeal.
Issue:
Whether or not the act of the PAL agents in confirming subject ticket extended the period of
validity of petitioners ticket
Held:
The Court ruled in favor of PAL. The court held that the ticket issued by PAL constituted the
contract between the parties. It was clear and undisputed as to the expiration date of the ticket. The main
issue is whether the validity became extended by the act of the PAL agents. The court ruled in the
negative.
Under Article 1898[11] of the New Civil Code, the acts of an agent beyond the scope of his authority do
not bind the principal, unless the latter ratifies the same expressly or impliedly. Furthermore, when the
third person (herein petitioner) knows that the agent was acting beyond his power or authority, the
principal cannot be held liable for the acts of the agent. If the said third person is aware of such limits of
authority, he is to blame, and is not entitled to recover damages from the agent, unless the latter undertook
to secure the principals ratification.
From appellants own testimony, it is clear that he knew from the start that said agents had no
authority to extend the validity of the tickets. He himself testified that he was informed by the Legal
Department of PAL before he left the Philippines that to secure an extension, he would have to file a
written request at the PAL’s office. Despite this knowledge, he still persisted to use the ticket in question.
Since the PAL agents are not privy to the said Agreement and petitioner knew that a written request
to the legal counsel of PAL was necessary, he cannot use what the PAL agents did to his advantage. The
said agents, according to the Court of Appeals,[10] acted without authority when they confirmed the flights
of the petitioner.
GOLD STAR MINING vs. LIM-JIMENEZ
Gold Star Mining Co., Inc., petitioner Marta Lim-Jimena, et al., as legal heirs of the deceased Victor
Jimena, and Jose Hidalgo, respondents
FACTS: In 1937, Ananias Isaac Lincallo bound himself in writing to turn to Victor Jimena half of the
proceeds from all mining claims that he would purchase with the money to be advanced by the latter. This
agreement was later on modified to include in the equal sharing agreement not only the proceeds from
several mining claims, but also the lands constituting the same, and so as to bing thereby their “heirs,
assigns, or legal representatives.”
Eventually, the mining rights over parts of the claims were assigned by Lincallo to Gold Star Mining Co.,
Inc., while others were assigned to Marinduque Iron Mines Agents. Meanwhile, Jimena repeatedly
apprised both mining corporations of his interests over the mining claims so assigned and/or leased by
Lincallo. However, both corporations ignored his demands. Jimena also demanded Lincallo for the
payment of the P5,800 he gave Lincallo as money to purchase the mining claims and the lands, but to no
avail. Lincallo did not only fail to settle his accounts with Jimena, he even transferred about majority of
his share in the royalties due from Gold Star to Gregorio Tolentino, a salaried employee.
Hence, on Sept. 2, 1954, Jimena filed a suit against Lincallo for recovery of his advances and his one-
half share in the royalties, and impleaded Gold Star and Marinduque Iron Mines, as well as Tolentino,
later on as defendants. Two weeks later, the trial court issued a writ of preliminary injunction, preventing
both mining companies from paying royalties during the pendency of the case to Lincallo, his assigns or
legal representatives. Despite of such injunction, Gold Star still paid P30,691.92 to Lincallo and Tolentino
(claiming that a writ of prelimary attachment filed by Jimena supposedly superseded the injunction, but
the condition to such attachment - the filing of a bond - was not fulfilled, so it cannot be said that the
injunction was superseded).
Jimena and Tolentino died successively during the pendency of the case in the trial court and were,
accordingly, substituted by their respective widows and children.
CFI decided in favor of Victor Jimena’s heirs, declaring among others that they be entitled to half of the
shares of the royalties of Lincallo in his contracts with Gold Star, Marinduque Iron Mines and Alejandro
Marquez, that both mining companies pay directly to the former half of the shares of the royalties until
said contracts were terminated, that Lincallo pay the heirs the capital Victor Jimena gave him to purchase
the mining claims and the latter’s shares with interest, and that Gold Star Mining Co., Inc. pay them the
sum of P30,691.92 solidarily with Ananias Isaac Lincallo for violation of an injunction.
The defendants appealed to the CA, which affirmed CFI Manila’s decision.
LEGAL ISSUES:
1. WON the CA erred in finding that the Jimenas have a cause of action against Gold Star Mining Co., as
there is no privity of contract between Gold Star and Jimena.
2. WON the CA erred in condemning Gold Star to pay the sum of P30,691.92 for violation of an allegedly
non-existent injunction.
JUDGMENT: Affirmed. RATIO DECIDENDI:
1. NO. The existence of a common subject-matter supplies the juridical link. Jimena repeatedly made
demands upon God Star for the payment of his ½ share of the royalties, but all in vain, so he was forced
to implead Gold Star for having refused to recognize his right. Furthermore, under such conditions wherein
Jimena was repeatedly denied of his interests, Jimena has an action against Gold Star, pursuant to Art.
1883, NCC, which provides that the principal may sue the person with whom the agent dealt with in his
(agent’s) own name, when the transaction ‘involves things belonging to the principal.’
2. NO. Said award is not so much a penalty against petitioner as a decree of restitution. Said sum to be
paid by the company to Jimena is “to be imputed to Lincallo’s liability under this judgment”. CA thus left
the way open for Gold Star to recover later the whole amount from Lincallo.
HARTFORD BEAUMONT, assignee of W. Borck, Plaintiff-Appellee, v. MAURO PRIETO, BENITO
LEGARDA; JR., and BENITO VALDES as administrator of the estate of Benito Legarda, deceased,
and BENITO VALDES, Defendants-Appellants
FACTS: Defendant Benito Legarda was one of the owners of fee simple of the Nagtajan Hacienda, while
defendant Benito Valdes was his attorney-in-fact and acted as such by virtue of a power of attorney duly
executed under notarial seal & presented in the office of the register of deeds. On 4 December 1911,
Valdes sent Borck the following letter:
MANILA, December 4, 1911.
Mr. W. BORCK,
Real Estate Agent,
Manila, P.I.
SIR: In compliance with your request I herewith give you an option for three months to buy the
property of Mr. Benito Legarda known as the Nagtahan Hacienda, situated in the district of Sampaloc,
Manila, and consisting of about, 1,993,000 sq. meters of land, for the price of its assessed government
valuation.
B. VALDES.
On 19 January 1912 (offer/option still stood), Borck, in writing, accepted the terms of the offer and
requested of Valdes to be allowed to inspect the property, titles, and other documents pertaining to the
property, and offered to pay the defendant immediately as soon as a reasonable examination could be
made of said documents. Defendants, however, refused to deliver to him the documents and to execute
any instrument of conveyance in his favor. Plaintiff avers that, by reason of such refusal, he incurred great
expense and suffered great losses. He filed a complaint (first against Valdes, later amended to include
Legarda) praying that defendants be ordered to execute a public instrument in his favor evidencing the
contract/obligation, to convey in absolute sale to him the property (specific performance), to render an
account of rents & profits collected from 19 January (accounting), & damages in case of impossibility of
specific performance.
While this complaint was not yet amended, the defendant Valdes filed a demurrer, on the grounds that
there was a misjoinder of parties on account of the erroneous inclusion therein of the defendant
Valdes, that the complaint did not set forth fact that constituted a cause of action against said defendant,
and that it was ambiguous, unintelligible and vague. This demurrer was overruled on April 11, 1912. The
defendant Benito Legarda also interposed a demurrer to the amended complaint on the grounds that the
facts therein set forth did not constitute a right of action against him. This demurrer was likewise overruled
on June 26, 1912.
Meanwhile, on 22 June 1912, ruling on a petition made in voluntary insolvency proceedings brought by
Borck, and in view of the agreement entered into in said proceedings by all of the latter's creditors, ordered
that the plaintiff Borck be substituted in the instant proceedings by Hartford Beaumont, as the
trustee appointed therein and representative of the said plaintiff's creditors, the assignee of his rights,
in said proceedings.
CFI decided in favor of Borck: Instrument constituted a contract by which the principal defendant
undertook to convey to the plaintiff the property; plaintiff entitle to specific performance and net income;
ordered to execute & deliver to plaintiff good & sufficient conveyance, free of all encumbrance, of the
property.
Plaintiff's cause of action is based on the failure of Valdes, as the agent/attorney-in-fact of Legarda, to
perform the obligation contracted by Valdes to sell to Borck the property belonging to Legarda. He seeks
to require fulfillment of the said obligation and to secure payment of a proper indemnity for damages
because of failure to timely comply.
(Note: Remember that Valdes signed the letter to Borck in his own name (thereby appearing that he acted
in his own name), altough Borck knew that Valdes was Legarda's agent or attoney-in-fact.)
ISSUES:
1) W/N Borck has a cause of action against Legarda, the principal
Held: YES. Although, according to article 1717 of the Civil Code (now Article 1883) when the agent acts
in his own name he is not personally liable to the person with whom he enters into a contract when things
belonging to the principal are the object thereof, yet such third person has a right of action not only against
the principal but also against the agent, when the rights and obligations which are the subject-matter of
the litigation cannot be legally and juridically determined without hearing both of them
In this case, the Court treated the notarized power of attorney registered in the register of deeds as
constuting prima facie proof of the fact that Benito Valdes is the attorney-in-fact of Benito Legarda, and
that he is vested with the powers specified therein, on account of Legarda's not having denied under oath
the genuiness and due execution of the said document, it was therefore incumbent upon Legarda himself
to prove that he had not executed the said power of attorney in Valdes' favor and that he had not conferred
upon him, by virtue thereof, the powers therein mentioned
2) W/N there existed between them an option contract
Held: NO. The instrument showed nothing more than a continuing offer for three months, taking note the
absence of cause or consideration.
While there was a meeting of minds with regard to the stipulations made in the document, there is no
showing of any cause or consideration, which omission operates as a bar to holding that the stipulations
constitute a contract of option.
In order that such an offer, or proposal, or promise on the part of Valdes, to sell the said hacienda might
be converted into a binding contract for him and for Borck, it was necessary that the latter should have
accepted the offer, by making use of the right thereby granted him, within the period stipulated, and paying
the price agreed upon in that document.
Referring particularly to the sale of real estate, there is in fact practically no difference between a contract
of option to purchase land and an offer or promise to sell it. In both cases the purchaser has the right to
decide whether he will buy the land, and that right becomes a contract when it is exercised, or, what
amounts to the same thing, when use is made of the option, or when the offer or promise to sell the
property is accepted in conformity with the terms and conditions specified in such option, offer, or promise.
An option for the purchase of a real estate is merely a right of election to purchase which when exercised,
by comes a contract.
3) W/N the withdrawal of the defendants of their offer was valid
Held: NO. Though it had been proven that the withdrawal of the offer was made in the month of December
1911, or before 17 January 1912, as stated by Valdes' counsel in his brief, such a fact could not be a bar
to, or annul the acceptance by the plaintiff Borck, of said offer on any date prior to the expiration of the
three months fixed (4 March 1912, because the offer or promise to sell therein contained was not made
without period or limitation whatever (in which case Valdes might have withdrawn it and the latter have
accepted it at nay time until it was withdrawn) but for three months, that is, for a specific period of time;
and, as the plaintiff Borck had a right to accept the offer during that period, it was Valdes' corresponding
duty not to withdraw the offer during the same period. Therefore the withdrawal of the offer claimed to
have been made by this defendant was null and void.
4) W/N there was a perfected and binding contract (from which Borck may be entitled to damages)
Held: NO. The proposal or offer of sale made by the defendant Valdes to the plaintiff Borck, or the option
of purchase granted by the former to the latter was not converted into a perfect and binding contract, and
that as Valdes did not assent to the modification introduced by Borck in the offer of sale made by this
defendant in regard to one of its terms, to with, the form of payment, the said offer became null and void.
Consequently, Borck has no right to demand of the defendant Valdes and of the latter's principal, the
other defendant, Legarda the fulfillment of that offer, nor, therefore, any indemnity whatever for such
nonfulfillment.
The letter of 4 December 1911 contained merely an offer of sale or a proposal of sale effective during the
period of three months counting from the said date. Such proposal or offer was an expression of the will
only of the defendant Valdes, manifested to the plaintiff Borck. In order that such a proposal might have
the force of a contract, it was necessary that the plaintiff Borck's will should have been expressed in
harmony with all the terms of the said proposal.
As there can be no contract without the concurrence, among others, of the requisites of consent of the
parties and cause or consideration of the obligation created, in order that a proposition or offer for sale
may acquire the character of a contract it is necessary that there appear the expression of the will of the
offeror and that of the offeree and the consent of both as well as the fact that there was a cause or
consideration for the obligation which is the object of what was agreed upon.
IX. Obligations of principal to agent
A. Advance/reimburse – 1912, 1914,1918
B. Idemnify – 1913
C. Solidary liability – 1915, 1916
D. Compensation – 1875
MACONDRAY vs. Sellner
FACTS:
Macondray & Co. bought a parcel of land from Sellner. The land was flooded by high tides, and
Macondray became dissatisfied with its purchase. It then requested Sellner, after the final transfer
was made,to find another buyer because the land was unsuited for use as a coal-yard, the purpose
for which it had been purchased.
It was expressly understood that Macondray was willing to sell the land for P17,175 and that
Sellner would receive as commission for securing a purchaser anything over that amount he could
get.
Sellner found a purchaser, Antonio Barretto, who was willing to buy the land for P18892.5o.
Macondray executed a formal deed of conveyance which, together with the certificate of title,
was delivered to Sellner with the understanding that the latter would consummate the sale, deliver
the title to the buyer and receive the purchase price.
Barretto asked that he be given time to examine the title deed. if he found it satisfactory, he
would accept the land and give Barretto the check for the amount of the purchase price.
Because Barretto had to go to Tayabas for a business trip and was delayed by a typhoon,
Macondray advised Sellner that he must consummate the sale upon Barretto’s return to Manila.
When he got back, Barretto told Sellner that he would pay the purchase price in a day or two if
he found the documents satisfactory.
Monday morning - Young (person from Macondray) formally notified Sellner that the deal would
be off if purchase price was not paid before 5pm of that afternoon.
Sellner received the check from Barretto on Wednesday morning. He immediately turned over
the amount of P17175 to Macondray, but mAcondray’s manager refused to accept the check and
iled this action, claiming that the sale had been “cancelled” when the purchase price was not
received on Monday afternoon. There was a letter regarding the cancellation.
ISSUE/HELD: WON Macondray is entitled to damages from Sellner for selling the land to BArretto
for and on behalf of MAcondray after Sellner’s authority had been revoked? No.
RATIO: (copy-paste)
From the very nature of the transaction it was understood that the purchaser should have a
reasonable time in which to examine the deed of transfer and the other documents of title, and
that defendant exercising an authority impliedly if not expressly conferred upon him, gave the
purchaser a reasonable time in which to satisfy himself as to the legality and correctness of the
documents of title. That the company through its manager Young, acquiesced in and ratified what
had been done by defendant in this regard when, with full knowledge of all the facts, Young
advised the defendant, during Barretto's absence in Tayabas, that the deal must be closed up
without delay on Barretto's return to Manila.
No reason appears, nor had any reason been assigned for the demand by the plaintiff company
for the delivery of the purchase price at the hour specified under threat in the event of failure to
make payment at that hour it would decline to carry out the agreement, other than that the manager
of the plaintiff company had been annoyed by the delays which occurred during the earlier stage
of the negotiations, and had changed his mind as to the desirability of making the sale at the price
agreed upon, either because he believed that he could get a better price elsewhere, or that the
land was worth more to his company than the price he had agreed to take for it.
The commission agreed upon was all over P17,175 which the defendant could secure from the
property, and it is clear that allowing the defendant this commission, and offsetting it against the
unpaid balance of the market value of the land, the plaintiff company is not entitled to a money
judgment against defendant. (kasi dapat yung damages Is yung actual market value daw)
We do not mean to question the general doctrine as to the power of a principal to revoke the
authority of his agent at will, in the absence of a contract fixing the duration of the agency (subject,
however, to some well defined exceptions). Our ruling is that at the time fixed by the manager of
the plaintiff company for the termination of the negotiations, the defendant real estate agent had
already earned the commissions agreed upon, and could not be deprived thereof by the arbitrary
action of the plaintiff company in declining to execute the contract of sale for some reason
personal to itself.
The business of a real estate broker or agent, generally, is only to find a purchaser, and the
settled rule as stated by the courts is that, in the absence of an express contract between the
broker and his principal, the implication generally is that the broker becomes entitled to the usual
commissions whenever he brings to his principal a party who is able and willing to take the
property and enter into a valid contract upon the terms then named by the principal, although the
particulars may be arranged and the matter negotiated and completed between the principal and
the purchaser directly. (Lunney vs Harley)
The rights of a real estate broker to be protected against the arbitrary revocation of his agency,
without remuneration for services rendered in finding a suitable purchaser prior to the revocation,
are clearly and forcefully stated in the following citation form the opinion in the case of Blumenthal
vs. Goodall (89 Cal., 251).
The only reasons assigned for the sudden and arbitrary demand for the payment of the purchase
price which was made with the manifest hope that it would defeat the agent's deal with Barretto,
are that the plaintiff company's manager had become satisfied that the land was worth more than
he had agreed to accept for it; and that he was piqued and annoyed at the delays which marked
the earlier stages of the negotiations.
Time does not appear to have been of the essence of the contract. The agreement to sell was
made without any express stipulation as to the time within which the purchase price was to be
paid.
Under all the circumstances surrounding the transaction in the case at bar, as they appear from
the evidence of record, we have no hesitation in holding that the plaintiff company's letter of
September 2, 1912 demanding payment before five o'clock of the afternoon of that day, under
penalty of the cancellation of its agreement to sell, was an arbitrary unreasonable attempt to deny
to the purchaser the reasonable opportunity to inspect the documents of title, to which he was
entitled by virtue of the express agreement
of the plaintiff company's agent before any attempt was made to revoke his agency. It follows that
Barretto's right to enforce the agreement to sell was in no wise affected by the attempt of the
plaintiff company to "cancel" the agreement; and that the plaintiff company suffered no damage
by the consummation of the agreement by the acceptance of the stipulated purchase price by the
defendant real estate agent.
DANON vs. BRIMO & Co.
FACTS:
Antonio A. Brimo, manager of BRIMO & CO, in a conversation with Julio DANON, informed the latter
that he (BRIMO) desired to sell his factory, the Holland American Oil Co., for the sum of P1.2M
BRIMO agreed and promised to pay DANON a commission of 5% of the stipulated price provided the
latter could sell said factory for that amount. No definite period of time was fixed within which DANON
should effect the sale
Meanwhile, another broker, a certain SELLNER, was also negotiating the sale of the same factory for
BRIMO. The records are not clear but it appears that DANON was aware that he was not alone as broker.
The records seem to point that DANON exerted earnest effort to forestall his competitor by being the first
to find a purchaser and effect the sale
In time, DANON found a willing purchaser. It appears that after having the conversation with BRIMO,
DANON went to see Mauro PRIETO, president of the STA ANA Oil Mill, and offered to sell to him BRIMO’s
property at P1.2M
STA ANA was at that time in need of such a factory. As such, PRIETO, its president, eagerly expressed
interest in DANON’s offer. PRIETO immediately sought to ascertain whether BRIMO really wanted to sell
said factory, and after getting such confirmation from BRIMO, sought also to inspect the factory (which
he did)
PRIETO then set for an appointment with BRIMO to perfect the negotiation. However, such appointment
never pushed through because at that time, the other broker, SELLNER, had already found a purchaser
for the same property who ultimately bought it for P1.3M
DANON filed the instant case to recover the sum of P60,000, alleged to be the value of services
rendered by him to BRIMO as a broker
DANON claimed that as compensation for his services, a commission of 5% on the said sum of P1.2M
(P60,000) was promised to him by BRIMO if the sale was consummated OR even if he should merely find
a purchaser ready, able and willing to buy said factory for the stipulated price
DANON averred that BRIMO refused to sell the said factory without any justifiable motive or reason
and without having previously notifying DANON of its desistance or variation in the price and terms of the
sale
To that complaint the BRIMO interposed a general denial
The trial court ruled in favor of DANON and ordered BRIMO to pay the sum prayed for plus costs –
hence this petition by BRIMO
ISSUE: WON DANON is entitled to recover the sum of P60,000 as compensation for his “services” HELD:
NO. The judgment appealed from is hereby revoked and BRIMO is hereby absolved from all liability under
the DANON’s complaint
RATIO:
Note that DANON's action here is not one for damages for breach of contract; it is an action to recover
"the reasonable value" of services rendered. Hence, to determine whether DANON is entitled to recover
the commission agreed upon, the pivotal question to be resolved is whether DANON had performed all
that was required of him under his contract with BRIMO
As can be gleaned from the facts, the most that can be said as to what DANON had accomplished is
that he had found a person (STA ANA Oil Mill) who MIGHT have bought the subject factory had BRIMO
not sold it to someone else
However, even this point is dubious as the evidence does not show that the STA ANA had definitely
decided to buy the property in question at the price of P1.2M. The board of directors of STA ANA had not
resolved to purchase said property; and even if its president, PRIETO, could legally make the purchase
without board authorization, yet PRIETO himself did not pretend that he had definitely agreed to buy the
factory on behalf of his corporation at the price stated
It must be emphasized the DANON himself (in his complaint and testimony in open court) admitted that
BRIMO agreed to pay him a commission of 5% provided he could sell the factory at P1.2M
Sanchez vs. Medicard Phil. Inc.
FACTS:
Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special corporate agent and they
gave him a commission based on the "cash brought in." In 1988, through petitioner's efforts, Medicard
and Unilab executed a Health Care Program Contract. Unilab paid Medicard P4,148,005.00 representing
the premium for one (1) year. Medicard then handed petitioner 18% of said amount or P746,640.90
representing his commission. Again, through petitioner's initiative, the agency contract between Medicard
and Unilab was renewed for another year. Prior to the expiration of the renewed contract, Medicard
proposed an increase of the premium which Unilab rejected "for the reason that it was too high,". In a
letter dated October 3, 1990, Unilab confirmed its decision not to renew the health program. Meanwhile,
in order not to prejudice its personnel by the termination of their health insurance, Unilab negotiated with
Dr. Montoya and other officers of Medicard, to discuss new ways in order to continue the insurance
coverage. Under the new scheme, Unilab shall pay Medicard only the amount corresponding to the actual
hospitalization expenses incurred by each personnel plus 15% service fee. Medicard did not give
petitioner any commission under the new scheme. Aggrieved, Petitioner demanded from Medicard
payment of P338,000.00 as his commission plus damages, but the latter refused to heed his demand.
ISSUE:
whether or not the contract of agency has been revoked by Medicard, hence, petitioner is not entitled to
a commission.
HELD:
Yes the Contract of Agency has been revoked, thus the petitioner is not entitled to any commission. It is
dictum that in order for an agent to be entitled to a commission, he must be the procuring cause of the
sale, which simply means that the measures employed by him and the efforts he exerted must result in a
sale. Based on the facts, it may be recalled that through petitioner's efforts, Medicard was able to enter
into a Contract with Unilab, two times, However before the expiration of the renewed contract, Unilab
rejected the proposal. Medicard then requested petitioner to reduce his commission should the contract
be renewed on its third year, but he was obstinate. It is clear that since petitioner refused to reduce his
commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner.
Such revocation is authorized by Article 1924 of the Civil Code which provides: "The agency is revoked if
the principal directly manages the business entrusted to the agent, dealing directly with third persons."
Moreover, as found by the lower courts, petitioner did not render services to Medicard, his principal, to
entitle him to a commission. There is no indication from the records that he exerted any effort in order that
Unilab and Medicard, after the expiration of the Health Care Program Contract, can renew it for the third
time. In fact, his refusal to reduce his commission constrained Medicard to negotiate directly with Unilab.
We find no reason in law or in equity to rule that he is entitled to a commission.
INFANTE vs. CUNANAN
Quick facts: Principal terminated agency after referral of a buyer, allegedly because of change of mind,
but subsequently transacted directly with the proposed buyer
FACTS:
Consejo Infante (owner of the lands) contracted the services of Jose Cunanan and Juan Mijares,
plaintiff herein, to sell the above-mentioned property for a price of P30,000 subject to the condition that
the purchaser would assume the mortgage existing thereon in the favor of the Rehabilitation Finance
Corporation.
She agreed to pay them a commission of 5 per cent on the purchase price plus whatever overprice
they may obtain for the property.
Plaintiffs found one Pio S. Noche who was willing to buy the property under the terms agreed upon with
defendant, but when they introduced him to defendant, the latter informed them that she was no longer
interested in selling the property and succeeded in making them sign a document stating therein that the
written authority she had given them was already can-celled.
defendant dealt directly with Pio S. Noche selling to him the property for P31,000.
Upon learning this transaction, plaintiffs demanded from defendant the payment of their commission,
but she refused and so they brought the present action.
Argument of petitioner: authority has already been withdrawn on November 30, 1948 when, by the
voluntary act of respondents, they executed a document stating that said authority shall be considered
cancelled and without any effect, so that when petitioner sold the property to Pio S. Noche on December
20, 1948, she was already free from her commitment with respondents and, therefore, was not in duty
bound to pay them any commission for the transaction.
Argument of respondents: while they agreed to cancel the written authority given to them, they did so
merely upon the verbal assurance given by petitioner that, should the property be sold to their own buyer,
Pio S. Noche, they would be given the commission agreed upon.
ISSUE: WON respondents are entitled to the commission originally agreed upon
HELD: Yes RATIO: That petitioner had changed her mind even if respondents had found a buyer who
was willing to close the deal, is a matter that would not give rise to a legal consequence if respondents
agree to call off the transaction in deference to the request of the petitioner. But the situation varies if one
of the parties takes advantage of the benevolence of the other and acts in a manner that would promote
his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned
without ac-cording to the party prejudiced the reward which is due him.
Petitioner took advantage of the services rendered by respondents, but believing that she could evade
payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation
Exhibit 1. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape
payment of the commission agreed upon
PRATS vs. CA
FACTS:
Private defendant Alfonso Doronilla was the registered owner of 300 hectares of land located in
Montalban Rizal.
Doronilla has been trying to sell the said land for a time.
On July 3, 1967, Doronilla offered to sell the land to the Social Security System (SSS) at 4 pesos per
square meter.
July 17, 1967, SSS replied, asking if there was any possibility if the price could be reduced to 3.25
pesos per square meter.
 July 19, 1967, Doronilla replied saying that he was amenable to the decrease in price and would sell at
3.25.
Aug. 10, 1967, SSS replied that it would study the sale, and would reply after it finishes its studies.
Feb. 14, 1968, Doronilla granted plaintiff Prats an exclusive option and authority in writing to negotiate
the sale of the said property. The option would last for 60 days and will be automatically extended until
said negotiations os terminated, but not more than 15 days.
Feb 19, 1968, In view of his exclusive option, Prats asked Doronilla if he could take immediate steps to
withdraw any and all papers pertaining to the property offered to the SSS
Feb 20, 1968, Doronilla wrote a letter to SSS requesting for the return of all papers concerning the
property.
Feb. 27, 1968, SSS replies, asking for a meeting with Doronilla on Mar 4, 1968
Feb.28 1968, Doronilla replies to SSS, saying that Prats has the exclusive option and authority to
negotiate the sale, thus SSS will have to communicate directly with Prats.
April 18, 1968, Doronilla extended Prats exclusive option and authority to expire May 18, 1968.
May 6, 1968, Prats made a formal letter to SSS offering the said lot for 6 pesos per square meter.
May 17, 1968, Doronilla recieves a telegram from the SSS, saying that the SSS was considering the
purchase of the land.
May 18, 1968, the exclusive option was extended for 15 days, as per the option agreement that the
option shall be extended if there were negotiations.
May 18, 1968, Prats writes again to SSS offering the same land for 4.50 pesos per square meter.
May 30, 1968. Prats writes to Doronilla, stating that the SSS had agreed to buy the said land and that
the SSS would contact Doronilla.
June 6, 1968, Doronilla writes to prats saying that he had not received any written offer from the SSS,
and reminding Prats that the exclusive authority had already expired on June 3, 1968.
June 19, 1968. Doronilla offers the land to SSS at 4 pesos.
June 25, 1968, SSS makes a counter-offer of 3.25
June 30, 1968, Doronilla executes the deed of sale to the SSS
September 17, 1968, Prats demands 1.38 million as his fee for professional services as previously
agreed upon in the exclusive option and authority to negotiate.
ISSUE: WON Prats is entitled to the 1.38 million for the prefessional services rendered.
HELD: No he is not entitled to 1.38 million, the exclusive option to negotiate had alrady elapsed when
Doronilla and SSS perfected their sale.
RATIO:
Thou Prats argues that he was instrumental in bringing the two parties together, it can be seen from
the facts that Doronilla and SSS were already talking even before Prats became the agent of Doronilla.
However, the court notes that Prats had diligently taken steps to bring back together Doronilla and SSS.
He had the two parties meet in various luncheons, he communicated with the Office of the Presidential
Housing Commission, wrote follow up letters to the SSS. Thus the Court grates in equity the sum of
100,000 pesos by way of compensation for Prats' efforts and assistance in the transaction.
MANOTOK BROTHERS, INC. VS. COURT OF APPEALS
FACTS:
The petitioner in this case is the owner of a parcel of land and building which was leased to the City of
Manila and was used by Claro M. Recto High school.
Respondent here, Salvador Saligumba was the agent of the petitioner who negotiated with the city for
the sale of the said property.
Accordingly as such, he was given letters of authority that allowed him to negotiate the property at a
price not less than 425k
He was to get a 5% commission from the said sale
His authority was extended several times, the last one lasting for 180 days from November 16, 1987,
also it was at this time that petitioner allowed the sale to be consummated for the amount of 410k.
However, it was only on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of
P410,816.00 for the purchase of the property which private respondent was authorized to sell.
Said ordinance however, was signed by the City Mayor only on May 17, 1968, one hundred eighty three
(183) days after the last letter of authorization.
On January 14, 1969, the parties signed the deed of sale of the subject property. The initial payment
of P200,000.00 having been made, the purchase price was fully satisfied with a second payment on April
8, 1969 by a check in the amount of P210,816.00.
Respondent now asks that the 5% commission be paid to him in the amount of P20,554.50.
But petitioners refused to pay up, arguing that:
(1) Private respondent would be entitled to a commission only if the sale was consummated and the
price paid within the period given in the respective letters of authority;
(2) Private respondent was not the person responsible for the negotiation and consummation of the
sale; instead it was Filomeno E. Huelgas, the PTA president for 1967-1968 of the Claro M. Recto High
School.
Petitioner presented as its witnesses Filomeno Huelgas and the petitioner's President, Rufino Manotok.
Huelgas testified to the effect that after being inducted as PTA president in August, 1967 he followed
up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17,
1968
He also said that he came to know Rufino Manotok only in August, 1968, at which meeting the latter
told him that he would be given a "gratification" in the amount of P20,000.00 if the sale was expedited.
Petitioner’s contention that as a broker, private respondent's job is to bring together the parties to a
transaction.
Accordingly, if the broker does not succeed in bringing the minds of the purchaser and the vendor to
an agreement with respect to the sale, he is not entitled to a commission.
The Court ruled in favor of the respondent, with the CA affirming the RTC decision. Hence the appeal
ISSUE: is the private respondent entitled to the 5% commission? -> Yes
RULING:
Court says: it is to be noted that the ordinance was approved on April 26, 1968 when private
respondent's authorization was still in force.
Moreover, the approval by the City Mayor came only three days after the expiration of private
respondent's authority.
It is also worth emphasizing that from the records, the only party given a written authority by
petitioner to negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent.
When there is a close, proximate and causal connection between the agent's efforts and labor
and the principal's sale of his property, the agent is entitled to a commission.
Private respondent is the efficient procuring cause for without his efforts, the municipality would not
have anything to pass and the Mayor would not have anything to approve.
The SC agrees with respondent Court that the City of Manila ultimately became the purchaser of
petitioner's property mainly through the efforts of private respondent.
Disposition: Decision of the RTC is affirmed.
UNILAND RESOURCES vs. DBP
Uniland Resources is a private corporation engaged in real estate brokerage and licensed as such (p. 2,
Rec.), while [respondent] DBP, as we all know [sic], is a government corporation engaged in finance and
banking in a proprietary capacity.
Two been previously mortgaged by Marinduque Mining Corp., to Caltex, and the mortgage in favor of
DBP was entered on their titles as a second mortgage. Due to an unpaid loan from Marinduque Mining
Corp., DBP was able to foreclose two lots.
The account of the Marinduque Miming Corp., with the DBP was later transferred to the Assets
Privatization Trust (APT) pursuant to Proclamation [No.] 50.
For failure of the Marinduque Mining Corp. to pay its obligations to Caltex, the latter foreclosed its
mortgage on the aforesaid two lots. APT, on the other hand, to recover its investment on the Marinduque
Account, offered for sale to the public through DBP its right of redemption on said two lots by public
bidding. The bidding guidelines set by DBP provided that any bid to purchase either of the two lots would
be considered only should there be two bids or a bid; for the two items which, when combined, would fully
cover the sale of the two lots in question.
The aforesaid bidding was held with only one bidder, the Counsel Realty Corp. [an affiliate of Glaxo,
Philippines, the client of petitioner], which offered a bid only for the warehouse lot in the amount of
P23,900,000.00. Said bid was thus rejected by DBP.
Notwithstanding that there was no bidder for the office building lot, the DBP approved the sale of the
warehouse lot to Clarges Realty Corp; proper documentation of the sale was made. As for the office
building lot, it was later sold by DBP in a negotiated sale to the Bank of P.I. as trustee for the "Perpetual
Care Fund of the Manila Memorial Park" for P17,460,000.00, and proper documentation of the sale was
made on November 17, 1987. The DBP admittedly paid the (five percent) broker's fee on this sale to the
DBP Management Corporation, which acted as broker for said negotiated sale.
Petitioner wrote two letters asking for the payment of its broker's fee in instrumenting the sale of its (DBP's)
warehouse lot to Clarges Realty Corp. The claim was referred to the Bidding Committee issued a decision
denying petitioner's claim. Hence, the instant case filed by petitioner to recover from DBP the aforesaid
broker's fee.
RTC ruled to pay petitioner P1,203,500. CA reversed.
Issue: W/N petitioner is entitled to a commission
HELD: NO.
It is obvious that petitioner was never able to secure the required accreditation from respondent DBP to
transact business on behalf of the latter. The letters sent by petitioner to the higher officers of the DBP
and the APT are merely indicative of petitioner's desire to secure such accreditation. At best these
missives are self-serving; the most that they prove is that they were sent by petitioner and received by
respondent DBP, which clearly never agreed to be bound thereto. As declared by the trial court even
when it found in favor of petitioner, there was no express reply from the DBP or the APT as to the
accreditation sought by petitioner. 12 From the very beginning, therefore, petitioner was aware that it had
no express authority from DBP to find buyers of its properties.
In its reply submitted pursuant to the resolution requiring the same, 13 petitioner also invokes Article 1869
of the new Civil Code 14 in contending that an implied agency existed. Petitioner argues that it "should
have been stopped, disauthorized and outrightly prevented from dealing the 12,355 sq. m. (with
warehouse) [sic] by the DBP from the inception." 15 On the contrary, these steps were never necessary.
In the course of petitioner's dealings with the DBP, it was always made clear to petitioner that only
accredited brokers may look for buyers on behalf of respondent DBP. This is not a situation wherein a
third party was prejudiced by the refusal of respondent DBP to recognize petitioner as its broker. The
controversy is only between the DBP and petitioner, to whom it was emphasized in no uncertain terms
that the arrangement sought did not exist. Article 1869, therefore, has no room for operation in this case.
Petitioner would also disparage the formality of accreditation as merely a mechanical act, which requires
not much discretion, as long as a person or entity looks for a buyer [and] initiate or promote [sic] the
interests of the seller." 16 Being engaged in business, petitioner should do better to adopt the opposite
attitude and appreciate that formalities, such as the need for accreditation, result from the evolution of
sound business practices for the protection and benefit of all parties concerned. They are designed and
adopted specifically to prevent the occurrence of situations similar to that obtaining in this case.
Petitioner, however, also invokes equity considerations, and in equity, the Court recognizes the efforts of
petitioner in bringing together respondent DBP and an interested and financially-able buyer. While not
actively involved in the actual bidding and transfer of ownership of the warehouse property, petitioner may
be said to have initiated, albeit without proper authority, the transaction that eventually took place. The
Court is also aware that respondent DBP was able to realize a substantial profit from the sale of its two
properties. While purely circumstantial, there is sufficient reason to believe that the DBP became more
confident to venture and redeem the properties from the APT due to the presence of a ready and willing
buyer, as communicated and assured by petitioner.
It was petitioner who advised Glaxo, Philippines of the availability of the warehouse property and aroused
its interest over the same. Through petitioner, respondent DBP was directly informed of the existence of
an interested buyer. Petitioner's persistence in communicating with respondent DBP reinforced the
seriousness of the offer. This piece of information no doubt had a bearing on the subsequent decisions
made by respondent DBP as regards the disposition of its properties.
SC awarded P100,000.00 to petitioner based on equity. 0
CONSTANTE AMOR DE CASTRO VS CA
FACTS:
Private respondent Artigo sued petitioners Constante and Amor De Castro to collect the unpaid
balance of his broker’s commission from the De Castros.
The appellants, De Castros, were co-owners of 4 lots in Cubao, Quezon City. The appellee,
Artigo, was authorized by appellants to act as real estate broker in the sale of these properties for the
amount of P23,000,000.00, 5% of which will be given to the agent as commission. Appellee first found
the Times Transit Corporation and 2 lots were sold. In return, he received P48,893.76 as commission.
Appellee apparently felt short changed because according to him, his total commission should
be P352,500.00 which is 5% of the agreed price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the 2 lots and that it was he who introduced the buyer to appellants and unceasingly
facilitated the negotiation which ultimately led to the consummation of the sale. Hence, he sued to collect
the balance of P303,606.24 after having received P48,893.76 in advance.
Appellants argued that appellee is selfishly asking for more than what he truly deserved as
commission to the prejudice of other agents who were more instrumental to the consummation of the
sale and that there were more or less 18 others who took active efforts.
 The De Castros argued that Artigo’s complaint should have been dismissed for failure to implead
all the co owners of the 2 lots. . The De Castros contend that failure to implead such indispensable parties
is fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid with funds co-
owned by the four co-owners.
It was shown also that Constante Amor De Castro signed the authorization of Artigo as owner
and representative of the co-owners.

ISSUE:
Whether or not the complaint merits dismissal for failure to implead other co-owners as
indispensable parties

HELD:
No. The De Castros’ contentions are devoid of legal basis. The CA explained that it is not
necessary to implead the co-owners since the action is exclusively based on a contract of agency between
Artigo and Constante. The rule on mandatory joinder of indispensable parties is not applicable to the
instant case.
Constante signed the note as owner and as representative of the other co-owners. Under this
note, a contract of agency was clearly constituted between Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constante’s individual or representative capacity, or both, the De Castros
cannot seek the dismissal of the case for failure to implead the other co-owners as indispensable parties.
The De Castros admit that the other co-owners are solidarily liable under the contract of agency, citing
Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against the De Castros’ theory that
the other co-owners should be impleaded as indispensable parties.
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals
in a contract of agency, each obligor may be compelled to pay the entire obligation. The agent may
recover the whole compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary
debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected.