DOMINGO vs.

DOMINGO Petitioners:Vicente Domingo represented by his heirs

Respondents:Gregorio Domingo [VicenteDomingos agent & broker]
Intervenor:Teofilo Purisima [GregorioDomingos sub-agent]
Quick Summary:Facts: Gregorio Domingo, Vicente Domingos broker andagent,
received P1,000 from Oscar de Leon as gift or propina.Oscar gave him said amount
after Gregorio succeeded inpersuading Vicente to accept his offer to buy the lot
for P1.20instead of P2.
Held:An agent who takes a secret profit in the nature of abonus, gratuity or
personal benefit from the vendee, withoutrevealing the same to his principal, the
vendor, is guilty of abreach of his loyalty to the principal and forfeits his right
tocollect the commission from his principal, even if the principaldoes not suffer any
injury by reason of such breach of fidelity,or that he obtained better results or that
the agency is agratuitous one, or that usage or custom allows it. The fact
thatthe principal may have been benefited by the valuableservices of the said
agent does not exculpate the agent whohas only himself to blame for such a result
by reason of histreachery or perfidy. As a necessary consequence of suchbreach of
trust, Gregorio Domingo must forfeit his right to thecommission and must return the
part of the commission hereceived from his principal.
Facts: Vicente Domingo granted to Gregorio Domingo, a real estate broker,
the exclusive agency to sell his Lot No. 883,Piedad Estate in a document. Said
lot has anarea of 88,477 sq. m.
According to the document, said lot must be sold for P2 per sq. m. Gregorio is
entitled to 5% commission on the total price if the property is sold:
o by Vicente or by anyone else during the 30-day duration of the
agency or
o by Vicente within 3 months from the termination of the agency to a
purchaser
to
whom
it
was
submitted
by
Gregorio during the effectivity of the agency with notice to Vicente.
Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without
notifying Vicente. Gregorio promised Teofilo of the 5% commission.
Teofilo introduced Oscar de Leon to Gregorio as a prospective buyer.
Oscar submitted a written offer which was very much lower than the P2
persq. m. price.
Vicente directed Gregorio to tell Oscar to raise his offer.
After several conferences betweenGregorio and Oscar, Oscar raised his
offer toP1.20 per sq. m. or P109,000 in total.Vicente agreed to said offer.
Upon
Vicentes
demand,
Oscarissued
a P1,000
check to him
as earnestmoney. Vicente, then, advanced P300 toGregorio.
Subsequently, Vicente asked for anadditional P1,000 as earnest money,
whichOscar promised to deliver to Vicente.
The written agreement, Exhibit C,between the parties was amended.
Oscar will vacate on or aboutSeptember 15, 1956 his house and lot at
Denver St., QC, which is part of the purchase priceLater on, it was again
amended to state thatOscar will vacate his house and lot on Dec.1, 1956
because his wife was pregnant at that time.

Oscar gave Gregorio P1,000 as agift

or
propina
for
succeeding
in
persuadingVicente to sell his lot at P1.20 per sq. m.gregorio did not disclose
said gift or propinato Vicente.
Moreover, Oscar did not pay Vicente the additional P1,000 Vicente
askedfrom him as earnest money.
The
deed
of
sale
was
not
executedsince Oscar gave up on the negotiationwhen he did not receive his
money from hisbrother in the US, which he communicatedto Gregorio.
Gregorio did not see Oscar forseveral weeks thus sensing that
somethingfishy might be going on.So, he went to Vicentes house where
heread a portion of the agreement to theeffect that Vicente was still willing to
payhim 5% commission, P5,450.
Thereafter, Gregorio went to theRegister
of
Deeds
of
QC,
where
hediscovered that a Deed of sale wasexecuted by Amparo de Leon,
Oscars wife,over their house and lot in favor of Vicente.
After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded
in writing the payment of his commission.
Gregorio also conferred with Oscar. Oscar told him that Vicente went to him
and asked him to eliminate Gregorio in the transaction and that he
would sell his property to him for P104,000.
In his reply, Vicente
stated that Gregorio
is
not
entitled
to
the
5%commission because he sold the property not to Gregorio's buyer, Oscar
de Leon, but to another buyer, Amparo Diaz, wife of Oscar de Leon.
CA: exclusive agency contract is genuine. The sale of the lot to Amparo
deLeon is practically a sale to Oscar.
Issue:WON Gregorios act of accepting the
gift
or
propina from Oscar constitutes a fraud which would cause the forfeiture of his
5% commission
YES Ratio:
Gregorio Domingo as the broker,received a gift or propina from the
prospective buyer Oscar de Leon, without the knowledge and consent of his
principal, Vicente Domingo.
His acceptance of said substantial monetary gift corrupted his duty to serve
the interests only of hisprincipal and undermined his loyalty to his principal
who gave him partial advance of P3000 on his commission. As a
consequence, instead of exerting his best to persuade his prospective buyer
to purchase the property on the most advantageous terms desired by his
principal, Gregorio Domingo, succeeded in persuading his principal to
accept the counter-offer of theprospective buyer to purchase the propertyat
P1.20 per sq. m.
The duties and liabilities of a broker to his employer are essentially those
which an agent owes to hisprincipal.
An agent who takes a secret profit in the nature of a bonus, gratuity
or personal benefit from the vendee, without revealing the same to his

principal, the vendor, is guilty of a breach of his loyalty to the principal

and forfeits his right to collect the commission from his principal,
even if the principal does not suffer any injury by reason of such
breach of fidelity, orthat he obtained better results or that the
agency is a gratuitous one, or thatusage or custom allows it.
Rationale: prevent the possibility of any wrong not to remedy or repair an
actual damage
o agent thereby assumes a position wholly inconsistent with that of
being anagent for hisprincipal, who has a right to treat him, insofar as
his commission isconcerned, as if no agency had existed
o The
fact
that
the
principal
mayhave been benefited by the valuableservices of the said agent doe
s not exculpate the agent who has only himself to blame for such a
result byreason of his treachery or perfidy.
o As a necessary consequence of such breach of trust, Gregorio Domingo
must forfeit his right to the commission and must return the part of
the commission he received from his principal.
Decisive Provisions Article 1891 2 and 1909 3 CC
o Article 1891consists in changing the phrase "to pay" to "to deliver",
which latter term is more comprehensive than the former. Paragraph 2
of Article 1891is a new addition designed to stress thehighest loyalty
that is required to an agent
condemning
as
void
any
stipulationexempting the agent from the duty andliability imposed on
him in paragraph one thereof.
o Article
1909
demand
the
utmostgood
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
hisprincipal of all his transactions and othermaterial facts relevant to t
he agency, somuch 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.
Situations where the duty mandated by Art 1891 does not apply
o agent or broker acted only as a middleman with the task of merely
bringing together
the
vendor
and
vendee,
whothemselves
thereafter will negotiate on the terms and conditions of the transaction
o agent
or
broker
had
informed
theprincipal of the
gift
or bonus or profit hereceived from the purchaser and hisprincipal
did not object
Teofilo Purisimas entitlement to his sharein the 5% commission

Teofilo can only recover fromGregorio his share of whatever

amounts Gregorio Domingo received by virtue of thetransaction as his
sub-agency contract was with Gregorio Domingo alone and not with
Vicente Domingo, who was not even aware of such sub-agency.
o Since
Gregorio
already
received
atotal of P1,300 from Oscar and Vicente,P650 of which should be paid
by Gregorio toTeofilo.
Dispositive:CA decision reversed.
o

Eurotech Industrial Technologies vs Cuizon

Facts:Edwin Cuizon, general manager of Impact Systems Sales owned by

Erwin Cuizon, bought one equipment from Petitioner Eurotech valued at Php
250,000.00, paying Php 50,000.00 as downpayment.
When the equipment arrived, petitioner refused to deliver it to the
respondent without paying the balance.
Edwin and a general manager of Eurotech signed a deed of assignment,
whereby Impact Systems assigns its outstanding receivable amounting to Php
365,000.00 to Eurotech, which delivered the equipment thereafter.
But Erwin, the proprietor, still collected the receivables despite the
assignment. After partial payments made, Eurotech made a final demand of
Php 295,000.00, excluding interest and attorney's fees.
For failure to meet the demand, Eurotech filed a complaint for sum of money,
damages, with application for preliminary attachment.
Edwin alleged that he is not a real party in interest in the case for he merely
acted as an agent of his principal, Impact Systems.
RTC dropped respondent as a party defendant of the case. The CA affirmed
the order, hence the appeal was made.

Issue:Whether or not respondent, as sales manager, is acting merely as an agent

for the sole proprietorship
Held:Respondent Edwin merely acted as an agent.
In a contract of agency, a person binds himself to render some service or to
do something in representation or on behalf of another with the latters
consent.\
The underlying principle of the contract of agency is to accomplish results by
using the services of others to do a great variety of things like selling,
buying, manufacturing, and transporting.
Its purpose is to extend the personality of the principal or the party for whom
another acts and from whom he or she derives the authority to act.
It is said that the basis of agency is representation, that is, the agent acts for
and on behalf of the principal on matters within the scope of his authority and
said acts have the same legal effect as if they were personally executed by
the principal.

By this legal fiction, the actual or real absence of the principal is converted
into his legal or juridical presence qui facit per alium facit per se.
The elements of the contract of agency are: (1) consent, express or implied,
of the parties to establish the relationship; (2) the object is the execution of a
juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself; (4) the agent acts within the scope of his
authority
In this case, the parties do not dispute the existence of the agency
relationship between respondents ERWIN as principal and EDWIN as agent.
The only cause of the present dispute is whether respondent EDWIN
exceeded his authority when he signed the Deed of Assignment thereby
binding himself personally to pay the obligations to petitioner.
Article 1897 reinforces the familiar doctrine that an agent, who acts as such,
is not personally liable to the party with whom he contracts.

The same provision, however, presents two instances when an agent becomes
personally liable to a third person: (1) When he expressly binds himself to the
obligation; and, 2) When he exceeds his authority.
In the last instance, the agent can be held liable if he does not give the third
party sufficient notice of his powers.
We hold that respondent EDWIN does not fall within any of the exceptions
contained in this provision."...the position of manager is unique in that it
presupposes the grant of broad powers with which to conduct the business of
the principal."
The powers of an agent are particularly broad in the case of one acting as a
general agent or manager; such a position presupposes a degree of
confidence reposed and investiture with liberal powers for the exercise of
judgment and discretion in transactions and concerns which are incidental or
appurtenant to the business entrusted to his care and management. In the
absence of an agreement to the contrary, a managing agent may enter into
any contracts that he deems reasonably necessary or requisite for the
protection of the interests of his principal entrusted to his management.
A real party in interest is one who "stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit."
Soriamont Steamship Agencies Inc. & Ronas v Sprint Transport Services, &
Papa
Sprint filed for a complaint for a sum of money against Soriamont and Ronas
Subject of dispute: ELA (EQUIPMENT LEASE AGREEMENT)
Sprint alleges: It entered into a lease agreement for Equipment with
Soriamont
o Sprint agreed to lease chassis units for the transport of container vans

o
o
o

Thru authorization letters, Ronas (on behalf of Soriamont and PAPA

TRUCKING SERVICES [PTS]) were able to withdraw 2 chassis units from
the container yard of Sprint.
Soriamont and Ronas failed to pay rental fees.
Sprint was subsequently informed that the equipment was LOST
Despite demands, Soriamont and Ronas failed to pay rental fees and
failed to replace equipment.

Soriamont and Ronas alleges:

o
o
o
o

It was [PTS] who withdrew the equipment.

Soriamont and Ronas filed a Third Party Complaint against [PTS], who failed
to answer and thus was declared in default
RTC
favored Sprint, held Soriamont liable
CA found that the contract contained an AUTOMATIC RENEWAL CLAUSE
Found that Soriamont authorized the withdrawal of [PTS] of the equipment.
Affirmed RTC decision

ISSUE: Whether or not PTS is an agent of Soriamont?

Soriamont is essentially challenging court findings that PTS withdrew the
equipment as an agent of Soriamont.
In effect, Soriamont is raising questions of fact which is NOT ALLOWED
Rule 45 -> only questions of law may be raised in a petition for review
Evidence shows that the preponderance of evidence supports the existence
of an agency relationship between Soriamont and PTS.
The ELA explicitly authorized Soriamont to appoint a representative who shall
withdraw and return the leased chassis units (which is PTS)
Since the ELA was not shown to be terminated, its AUTOMATIC RENEWAL
CLAUSE took effect pursuant to their contract.
The settled rule is that persons dealing with an assumed agent are bound at
their peril; and if they would hold the principal liable, they must ascertain not
only the fact of agency, but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to prove
it. Sprint has successfully discharged this burden.
Alternatively, if PTS is found to be its agent, Soriamont argues that PTS is
liable for the loss of the subject equipment, since PTS acted beyond its
authority as agent. Soriamont cites Article 1897 of the Civil Code, which
provides:
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.
The burden falls upon Soriamont to prove its affirmative allegation that PTS
acted in any manner in excess of its authority as agent, thus, resulting in the
loss of the subject equipment. To recall, the subject equipment was
withdrawn and used by PTS with the authority of Soriamont. And for PTS to
be personally liable, as agent, it is vital that Soriamont be able to prove that

PTS damaged or lost the said equipment because it acted contrary to or in

excess of the authority granted to it by Soriamont. As the Court of Appeals
and the RTC found, however, Soriamont did not adduce any evidence at all to
prove said allegation.
UY V COURT OF APPEALS
FACTS:Petitioners Uy and Roxas are agents authorized to sell eight parcels of
land by the owners thereof. By virtue of such authority, petitioners offered to
sell the lands located in Benguet to respondent NHA to be utilized and
developed as ahousing project.
On February 14, 1989, the NHA Board approved theacquisition of said lands,
at the cost of P23.87M, pursuant to which the parties executed a series of
Deeds of Absolute Sale covering the subject lands. Of theeight parcels,
however, only five were paid for by the NHA because of thereport it received
from the Land Geosciences Bureau of the DENR that theremaining area is
located at an active landslide area and therefore, not suitablefor
development into a housing project.In 1991, the NHA cancelled the sale of
the 3 parcels of land and subsequentlyoffered the amount of P1.225 million
to the landowners as daos perjuicios. On9 March 1992, petitioners filed
before the QC RTC a Complaint for Damages.The RTC rendered a decision
declaring the cancellation of the contract to bejustified. The trial court
nevertheless awarded damages to plaintiffs in the sameamount offered by
NHA to petitioners as damages. Upon appeal by petitioners,the CA held that
since there was "sufficient justifiable basis" in cancelling thesale, "it saw no
reason" for the award of damages. Hence, this petition.
ISSUES:
(1) Was there a legal basis for the rescission of the sale of the 3 parcels of land?And
granting arguendo that NHA has legal basis to rescind, does the petitionerhave the
right to claim for damages?(2) [Irrelevant] Were the petitioners allowed to lodge a
complaint as agents?
HELD:
(1) There was no rescission per se. What is involved is a
cancellation basedon the negation of the cause of the contract.(2) [Irrelevant] No.
Petitioners are not parties, heirs, assignees, or beneficiariesof a stipulation pour
autrui under the contracts of sale, they do not, undersubstantive law, possess the
right they seek to enforce.
RATIO:
(1) Petitioners confuse the cancellation of the contract by the NHA as arescission of
the contract under Art. 1191. The right of rescission or, moreaccurately, resolution,
is predicated on a breach of faith by the other party.NHA did not have the right to
rescind for the other parties to the contract, thevendors, did not commit any breach
of their obligation. The cancellation wasbased on the negation of the cause arising
from the realization that the lands,which were the object of the sale, were not
suitable for housing. Cause, whichis the essential reason for the contract, should be
distinguished from motive,which is the particular reason of a party which does not

affect the other party.In a contract of sale of a piece of land, such as in this case,
the cause of thevendor (petitioners' principals) in entering into the contract is to
obtain theprice. For the vendee, NHA, it is the acquisition of the land. The motive of
theNHA, on the other hand, is to use said lands for housing. Ordinarily, a party's
motives for entering into the contract do not affect thecontract. However,
when the motive predetermines the cause, the motive may be regarded as the
cause
. In this case, it is clear, and petitioners do not dispute, that NHA would not have
entered into the contract were the lands not suitable for housing.
In other words, the quality of the land was an impliedcondition for the NHA to enter
into the contract.
On NHAs part , therefore, the motive was the cause for its being a party to the sale.
The findings of the Land Geosciences Bureau were sufficient for the cancellation of
the sale NHA was justified in canceling the contract. The realization of the mistake
asregards the quality of the land resulted in the negation of the motive/causethus
rendering the contract inexistent. Article 1318 of the Civil Codeenumerates the
essential requisites of a contract: (1) Consent of the parties; (2)Subject matter; and
(3) Cause of the obligation which is established. Therefore,assuming that petitioners
are parties, assignees or beneficiaries to the contract of sale, they would not be
entitled to any award of damages.
MANILA MEMORIAL PARK CEMETERY, INC.vs.PEDRO L. LINSANGAN
FACTS:Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at
the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a
former owner of a memorial lot under Contract No. 25012 was no longer interested
in acquiring the lot and had opted to sell his rights subject to reimbursement of the
amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty.
Linsangan that once reimbursement is made to the former buyer, the contract
would be transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be
reimbursed to the original buyer and to complete the down payment to
MMPCI. Baluyot issued handwritten and typewritten receipts for these payments.
Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to
the new contract price, as the same was not the amount previously agreed upon. To
convince Atty. Linsangan, Baluyot executed a document confirming that while the
contract price is P132,250.00, Atty. Linsangan would pay only the original price of
P95,000.00.
Later on, Baluyot verbally advised Atty. Linsangan that 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 filed a Complaint for
Breach of Contract and Damages against the former.
MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms
of the contract because of non-payment of arrearages. MMPCI stated that Baluyot
was not an agent but an independent contractor, and as such was not authorized to
represent MMPCI or to use its name except as to the extent expressly stated in the
Agency Manager Agreement. Moreover, MMPCI was not aware of the arrangements
entered into by Atty. Linsangan and Baluyot, as it in fact received a down payment
and monthly installments as indicated in the contract.

The trial court held MMPCI and Baluyot jointly and severally liable. The Court of
Appeals affirmed the decision of the trial court.
ISSUES:1. Whether or not there was a contract of agency between Baluyot and
MMPCI?
2. Whether or not MMPCI should be liable for Baluyots act?
HELD:First Issue. Yes. By the contract of agency, a person binds himself to render
some service or to do something in representation or on behalf of another, with the
consent or authority of the latter. As properly found both by the trial court and the
Court of Appeals, Baluyot was authorized to solicit and remit to MMPCI offers to
purchase interment spaces obtained on forms provided by MMPCI. The terms of the
offer to purchase, therefore, are contained in such forms and, when signed by the
buyer and an authorized officer of MMPCI, becomes binding on both parties.
Second Issue. No. While there is no more question as to the agency relationship
between Baluyot and MMPCI, there is no indication that MMPCI let the public, or
specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the
standard contracts of the company. Neither is there any showing that prior to
signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment to
Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's
actuations, he still cannot invoke the principle of estoppel, as he was clearly
negligent in his dealings with Baluyot, and could have easily determined, had he
only been cautious and prudent, whether said agent was clothed with the authority
to change the terms of the principal's written contract.
To repeat, the acts of the agent beyond the scope of his authority do not bind the
principal unless the latter ratifies the same. It also bears emphasis that when the
third person 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 was
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 principal's
ratification.