The essence of agency is that the agent renders service to the Principal

The act of an agent is the act of Principal

VICENTE SY JUCO AND CIPRIANA VIARDO,

Plaintiffs-Appellants,
G. R. No. 13471
January 12, 1920
-versusSANTIAGO V. SY JUCO,
Defendant-Appellant.
DECISION
AVANCEA, J:

In 1902 the defendant was appointed by the plaintiffs-administrator of their

property and acted as such until June 30, 1916, when his authority was
cancelled. The plaintiffs are defendant's father and mother who allege that
during his administration, the defendant acquired the property claimed in the
Complaint in his capacity as plaintiffs' administrator with their money and for
their benefit. After hearing the case the trial court rendered his decision, the
dispositive part of which is the following:
"Wherefore, the court gives judgment for the plaintiffs and orders:
"1. That the defendant return to the plaintiffs the launch Malabon, in
question, and execute all the necessary documents and instruments for such
delivery and the registration in the records of the Custom House of said
launch
as
plaintiffs'
property;
"2. That the defendant return to the plaintiffs the casco No. 2584, or pay to
them the value thereof which has been fixed at the sum of P3,000, and
should the return of said casco be made, execute all the necessary

instruments and documents for its registration in plaintiffs' name at the

Custom
House;
and
"3. That the defendant return to the plaintiffs the automobile No. 2060 and
execute the necessary instruments and documents for its registration at the
Bureau of Public Works. And judgment is hereby given for the defendant
absolving
him
from
the
complaint
so
far
concerns:
"1. The rendition of accounts of his administration of plaintiffs' property;
"2.

The

return

of

the

casco

"3.

The

return

of

the

typewriting

"4.

The

return

of

the

house

occupied

by

No.

the

2545;
machine;

defendant;

and

"5. The return of the price of the piano in question."

Both

parties

appealed

from

this

judgment.

In this instance, defendant assigns three errors alleged to have been

committed by the lower court in connection with the three items of the
dispositive part of the judgment unfavorable to him. We are of the opinion
that the evidence sufficiently justifies the judgment against the defendant.
Regarding the launch Malabon, it appears that in July, 1914, the defendant
bought it in his own name from the Pacific Commercial Co., and afterwards,
registered it at the Custom House. But this does not necessarily show that
the defendant bought it for himself and with his own money, as he claims.
This transaction was within the agency which he had received from the
plaintiffs. The fact that he has acted in his own name may be only, as we
believe it was, a violation of the agency on his part. As the plaintiffs' counsel
truly say, the question is not in whose favor the document of sale of the
launch is executed nor in whose name same was registered, but with whose
money was said launch bought. The plaintiffs' testimony that it was bought
with their money and for them is supported by the fact that, immediately
after its purchase, the launch had to be repaired at their expense, although
said expense was collected from the defendant. If the launch was not bought
for the plaintiffs and with their money, it is not explained why they had to
pay
for
its
repairs.
The defendant invokes the Decision of this Court in the case of Martinez vs.
Martinez [1 Phil. Rep., 647], which We do not believe is applicable to the

present case. In said case, Martinez, Jr., bought a vessel in his own name
and in his name registered it at the Custom House. This Court then said that
although the funds with which the vessel was bought belonged to Martinez
Sr., Martinez Jr. is its sole and exclusive owner. But in said case the relation
of principal and agent, which exists between the plaintiffs and the defendant
in the present case, did not exist between Martinez, Sr., and Martinez, Jr. By
this agency the plaintiffs herein clothed the defendant with their
representation in order to purchase the launch in question. However, the
defendant acted without this representation and bought the launch in his
own name thereby violating the agency. If the result of this transaction
should be that the defendant has acquired for himself the ownership of the
launch, it would be equivalent to sanctioning this violation and accepting its
consequences. But not only must the consequences of the violation of this
agency not be accepted, but the effects of the agency itself must be sought.
If the defendant contracted the obligation to buy the launch for the plaintiffs
and in their representation, by virtue of the agency, notwithstanding the fact
that he bought it in his own name, he is obliged to transfer to the plaintiffs
the rights he received from the vendor, and the plaintiffs are entitled to be
subrogated
in
these
rights.
There is another point of view leading Us to the same conclusion. From the
rule established in Article 1717 of the Civil Code that when an agent acts in
his own name, the principal shall have no right of action against the person
with whom the agent has contracted, cases involving things belonging to the
principal are excepted. According to this exception [when things belonging to
the principal are dealt with] the agent is bound to the principal although he
does not assume the character of such agent and appears acting on his own
name [Decision of the Supreme Court of Spain, May 1, 1900]. This means
that in the case of this exception the agent's apparent representation yields
to the principal's true representation and that, in reality and in effect, the
contract must be considered as entered into between the principal and the
third person; and, consequently, if the obligations belong to the former, to
him alone must also belong the rights arising from the contract. The money
with which the launch was bought having come from the plaintiff, the
exception established in Article 1717 is applicable to the instant case.
Concerning the casco No. 2584, the defendant admits it was constructed by
the plaintiff himself in the latter's ship-yard. Defendant's allegation that it
was constructed at his instance and with his money is not supported by the
evidence. In fact the only proof presented to support this allegation is his
own testimony contradicted, on the one hand, by the plaintiffs' testimony
and, on the other hand, rebutted by the fact that, on the date this casco was
constructed, he did not have sufficient money with which to pay the expense

of

its

construction.

As to the automobile No. 2060, there is sufficient evidence to show that its
price was paid with plaintiffs' money. Defendant's adverse allegation that it
was paid with his own money is not supported by the evidence. The
circumstances under which, he says, this payment has been made, in order
to show that it was made with his own money, rather indicate the contrary.
He presented in evidence his check-book wherein it appears that on March
24, 1916, he issued a check for P300 and on the 27th of same month
another for P400 and he says that the first installment was paid with said
checks. But it results that, in order to issue the check for P300 on March 24
of that year, he had to deposit P310 on that same day; and in order to issue
the other check for P400 on the 27th of the same month, he deposited P390
on that same day. It was necessary for the defendant to make these
deposits for on those dates he had not sufficient money in the bank for
which he could issue those checks. But, in order to pay for the price of the
automobile, he could have made these payments directly with the money he
deposited without the necessity of depositing and withdrawing it on the
same day. If this action shows something, it shows defendant's preconceived
purpose of making it appear that he made the payment with his own funds
deposited
in
the
bank.
The plaintiffs, in turn, assign in this instance the following three
alleged to have been committed by the lower court:
"1. The court erred in not declaring that the plaintiffs did not sell
defendant the casco No. 2545 and that they were its owners until
sunk
in
June,

errors
to the
it was
1916.

"2. The court erred in absolving the defendant from his obligation to render
an account of his administration to the plaintiffs, and to pay to the latter the
amount
of
the
balance
due
in
their
favor.
"3. The court erred in not condemning the defendant to pay to the plaintiffs
the value of the woods, windows and doors taken from their lumber-yard by
the defendant and used in the construction of the house on calle Real of the
barrio of La Concepcion, municipality of Malabon, Rizal."
Concerning the casco No. 2545, the lower court refrained from making any
declaration about its ownership in view of the fact that this casco had been
leased and was sunk while in the lessee's hands before the complaint in this
case was filed. The lower court, therefore, considered it unnecessary to pass
upon this point. We agree with the plaintiffs that the trial court should have
made a pronouncement upon this casco. The lessee may be responsible in

damages for its loss, and it is of interest to the litigants in this case that it be
determined who is the owner of said casco that may enforce this
responsibility
of
the
lessee.
Upon an examination of the evidence relative to this casco, We find that it
belonged to the plaintiffs and that the latter sold it afterwards to the
defendant by means of a public instrument. Notwithstanding plaintiffs'
allegation that when they signed this instrument they were deceived,
believing it not to be an instrument of sale in favor of the defendant,
nevertheless, they have not adduced sufficient proof of such deceit which
would destroy the presumption of truth which a public document carries with
it. Attorney Sevilla, who acted as the notary in the execution of this
instrument, testifying as a witness in the case, said that he never verified
any document without first inquiring whether the parties knew its content.
Our conclusion is that this casco was lawfully sold to the defendant by the
plaintiffs.
Concerning the wood, windows and doors given by the plaintiffs to the
defendant and used in the construction of the latter's house on Calle Real of
the Barrio of La Concepcion of the Municipality of Malabon, Rizal, we find
correct the trial Court's decision that they were given to the defendant as his
and
his
wife's
property.
Concerning the rendition of accounts which the plaintiffs require of the
defendant, We likewise find correct the trial court's decision absolving the
latter from this petition, for it appears, from the plaintiffs' own evidence,
that the defendant used to render accounts of his agency after each
transaction,
to
the
plaintiffs'
satisfaction.
From the foregoing considerations, We affirm the judgment appealed from in
all its parts except in so far as the casco No. 2545 is concerned, and as to
this, We declare that, it having been sold by the plaintiffs to the defendant,
the latter is absolved. No special findings as to costs. So ordered.

Authority to sell does not carry with it authority to sell on credit

GREEN VALLEY V. IAC
Principle:
In an agency to sell, the agent is liable to pay the principal for goods sold by
the agent without the principals consent. The commission agent cannot

without the express or implied consent of the principal, sell on credit. Should
he do so, the principal may demand from him payment in cash, but the
commission agent shall be entitled to any benefit, which may result from
such sale.

FACTS: In 1969, GREEN VALEY POULTRY AND ALLIED PRODUCTS entered into
a letter agreement with SQUIBB & SONS PHILIPPINE CORPORATION. The
details of the agreement state that Green Valley will be the nonexclusive
distributor of the products of Squibb Veterinary Products. As its distributor
Green Valley is entitled to 10% discount on Squibbs whole sale price and
catalogue price. Green Valley is also limited to selling Squibbs products to
central and northern Luzon. Payment for purchases from Squibb will be due
60 days from date of invoice, etc. For goods delivered to Green Valley but
unpaid, Squibb filed a suit to collect. Squibb argues that their relationship
with Green Valley is a mere contract of sale as evidenced by the stipulation
that Green Valley was obligated to pay for the goods received upon the
expiration of the 60-day credit period. Green Valley counters that the
relationship between itself and Squibb is that of an agency to sell.
ISSUE: W/N Green Valley is an agent of Squibb.
RULING: Whether viewed as an agency to sell or as a contract of sale GREEN
VALLEY is liable to Squibb for the unpaid products. If it is a contract of sale
then the Green Valley is liable by just merely enforcing the clear words of the
contract. If it is an agency then Green Valley is liable because it sold on
credit without authority from its principal. The Civil Code says: Art. 1905
The commission agent cannot without the express or implied consent of the
principal, sell on credit. Should he do so, the principal may demand from him
payment in cash, but the commission agent shall be entitled to any interest
or benefit, which may result from such sale.

Breach of Loyalty
Domingo vs Domingo L-30573 October 29, 1971

Adsjfdslfjdfldjfd;ffjwfGR No. L-30573 | Oct. 29, 1971| Makasiar |Petition for Review of
CA Decision
1
Petitioners:

Vicente Domingo represented byhis 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 a bonus, 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 a gratuitous 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 he received
from his principal Facts:

Vicente Domingo granted toGregorio Domingo, a real estate broker,

thee x c l u s i v e a g e n c y t o s e l l h i s L o t N o . 8 8 3 , Piedad Estate in a document.
Said lot has anarea of 88,477 sq. m.

According to the document, said lotm u s t b e s o l d f o r P 2 p e r s q . m . G r e g o r i o

i s entitled to 5% commission on the total priceif the property is sold:

by Vicente or by anyone elseduring the 30-day duration of the agencyor

b y V i c e n t e w i t h i n 3 m o n t h s f r o m the termination of the agency to

apurchaser to whom it was submitted
byG r e g o r i o d u r i n g t h e e f f e c t i v i t y o f t h e agency with notice to Vicente.This
contract is in triplicate with the originaland another copy being retained byGregorio.
The last copy was given toVicente.

Subsequently, Gregorio authorizedTeofilo Purisima to look for a buyer

withoutnotifying Vicente. Gregorio promised Teofilo of the 5% commission.

Teofilo introduced Oscar de Leon toGregorio as a porspective buyer

I n h i s r e p l y, V i c e n t e s t a t e d t h a t Gregorio is not entitled to the

5%commission because he sold the propertynot to Gregorio's buyer, Oscar de
Leon, butto another buyer, Amparo Diaz, wife of Oscar de Leon.

CA: exclusive agency contract isgenuine. The sale of the lot to

A m p a r o d e Leon is practically a sale to Oscar.
Issue:
WON Gregorios act of accepting the gift
o r p r o p i n a f r o m O s c a r c o n s t i t u t e s a f r a u d w h i c h would cause the forfeiture
of his 5% commission[
YES
]
Ratio:

G r e g o r i o D o m i n g o a s t h e b r o k e r, received a gift or
propina
from theprospective buyer Oscar de Leon, withoutthe knowledge and consent of
his principal,Vicente Domingo.
His acceptance of saidsubstantial monetary gift corrupted hisduty to serve the
interests only of hisprincipal and undermined his loyalty tohis principal
, who gave him partialadvance of P3000 on his commission. As aconsequence,
instead of exerting his best topersuade his prospective buyer to purchasethe
property on the most advantageousterms desired by his principal,
GregorioDomingo, succeeded in persuading hisprincipal to accept the counteroffer of theprospective buyer to purchase the propertyat P1.20 per sq. m.

T h e d u t i e s a n d l i a b i l i t i e s o f a broker to his employer are essentiallythose

which an agent owes to hisprincipal.

A n a g e n t w h o t a k e s a s e c r e t profit in the nature of a bonus,

gratuityo r p e r s o n a l b e n e f i t f r o m t h e v e n d e e , without revealing the same to
hisp r i n c i p a l , t h e v e n d o r , i s g u i l t y o f a b r e a c h o f h i s
loyalty to the
p r i n c i p a l a n d f o r f e i t s h i s r i g h t t o c o l l e c t t h e commission from his
principal, even if the principal does not suffer any injuryby reason of such breach of
fidelity, orthat he obtained better results or thatthe agency is a gratuitous one,
or thatusage or custom allows it.

Rationale: prevent the possibility of a n y w r o n g n o t t o r e m e d y o r r e p a i r

a n actual damage

agent thereby assumes a positionwholly inconsistent with that of being anagent for
hisprincipal, who has a right totreat him, insofar as his commission isconcerned,
as if no agency had existed
themselves thereafter will negotiate on theterms and conditions of the transaction

agent or broker had informed thep r i n c i p a l o f t h e g i f t

o r b o n u s o r p r o f i t h e received from the purchaser and hisprincipal did not object
Teofilo Purisimas entitlement to his share in the 5% commission

Teofilo can only recover fromGregorio his share of whatever

amountsGregorio Domingo received by virtue of thetransaction as his sub-agency
contract waswith Gregorio Domingo alone and not with Vicente Domingo, who was
not even awareof such sub-agency.

Since Gregorio already received

at o t a l o f P 1 , 3 0 0 f r o m O s c a r a n d V i c e n t e , P650 of which should be paid
by Gregorio toTeofilo.
Dispositive:
CA decision reversed
The fact that the principal
mayh a v e b e e n b e n e f i t e d b y t h e v a l u a b l e s e r v i c e s o f t h e s a i d a g e n t
d o e s n o t exculpate the agent who has onlyh i m s e l f t o b l a m e f o r s u c h a
r e s u l t b y reason of his treachery or perfidy.

As a necessary consequence of such breach of trust, Gregorio Domingom u s t

f o r f e i t h i s r i g h t t o t h e c o m m i s s i o n a n d m u s t r e t u r n t h e p a r t of
the commission he received from hisprincipal.
Decisive Provisions

Article 1891
2
and 1909
3
CC

The modification contained in thefirst paragraph

Article 1891
c o n s i s t s i n changing the phrase "to pay" to "to
deliver",w h i c h l a t t e r t e r m i s m o r e c o m p r e h e n s i v e than the former. Paragraph
2 of Article 1891i s a n e w a d d i t i o n d e s i g n e d t o s t r e s s t h e highest
loyalty that is required to an agent condemning as void any
stipulatione x e m p t i n g t h e a g e n t f r o m t h e d u t y a n d liability imposed on
him in paragraph onethereof.

Article 1909
demand the utmostg o o d f a i t h , f i d e l i t y, h o n e s t y, c a n d o r a n d fairness on
the part of the agent, the realestate broker in this case, to his principal, the
vendor. The law imposes upon the agentthe absolute obligation to make a
fulldisclosure or complete account to
hisp r i n c i p a l o f a l l h i s t r a n s a c t i o n s a n d o t h e r m a t e r i a l f a c t s r e l e v a n t t o

t h e a g e n c y, s o much so that the law as amended does notcountenance any

stipulation exempting theagent from such an obligation and considerssuch an
exemption as void. The duty of anagent is likened to that of a trustee. This
isnot a technical or arbitrary rule but a rule founded on the highest and truest
principleof morality as well as of the strictest justice.
Situations where the duty mandated by Art 1891 does not apply

a g e n t o r b r o k e r a c t e d o n l y a s a middleman with the task of merely

bringingtogether the vendor and vendee, who
2
Every agent is bound to render an account of histransactions and to deliver to the
principal whatever he mayhave received by virtue of the agency, even though it may notbe owing
to the principal.Every stipulation exempting the agent from the obligation torender an
account shall be void.
3
The agent is responsible not only for fraud, but also for negligence, which shall
be judged with more or less rigor bythe courts, according to whether the agency was or
was notfor a compensation

AEN BANC
G.R. No. L-37207

December 6, 1932

JULIAN T. AGUNA, Plaintiff-Appellant, vs. ANTONIO LARENA, judicial

administrator of the intestate estate of the deceased Mariano
Larena, Defendant-Appellee.
Ramirez & Ortigas for appellant.
Cardenas & Casal for appellee.
OSTRAND, J.:
This action is brought to recover the sum of P29,600 on two cause against
the administrator of the estate of the deceased Mariano
Larena.chanroblesvirtualawlibrary chanrobles virtual law library
Upon his first cause of action, the plaintiff claims the sum of P9,600, the
alleged value of the services rendered by him to said deceased as his agent
in charge of the deceased's houses situated in Manila. Under the second

cause of action the plaintiff alleges that one of the buildings belonging to the
deceased and described in his complaint was built by him with the consent of
the deceased, and for that reason he is entitled to recover the sum
disbursed by him in its construction, amounting to
P20,000.chanroblesvirtualawlibrary chanrobles virtual law library
From the evidence it appears undisputed that from February, 1922, to
February, 1930, the plaintiff rendered services to the deceased, consisting in
the collection of the rents due from the tenants occupying the deceased's
houses in Manila and attending to the repair of said houses when necessary.
He also took any such steps as were necessary to enforce the payment of
rents and all that was required to protect the interests of the deceased in
connection with said houses. The evidence also shows that during the time
the plaintiff rendered his services, he did not receive any compensation. It
is, however, a fact admitted that during said period the plaintiff occupied a
house belonging to the deceased without paying any rent at
all.chanroblesvirtualawlibrary chanrobles virtual law library
As to the building whose value is claimed by the plaintiff, the record shows
that said building was really erected on a parcel of land belonging to the
deceased on Calle Victoria, Manila, and that the expenses for materials and
labor in the construction thereof were paid by the appellant, the construction
having begun in 1926 and terminated in 1928, but the ownership of the
money interested in the building is in
question.chanroblesvirtualawlibrary chanrobles virtual law library
Upon the first cause the plaintiff-appellant insists that, the services having
been rendered, an obligation to compensate them must necessarily arise.
The trial court held that the compensation for the services of the plaintiff
was the gratuitous use and occupation of some of the houses of the
deceased by the plaintiff and his family. This conclusion is correct. if it were
true that the plaintiff and the deceased had an understanding to the effect
that the plaintiff was to receive compensation aside from the use and
occupation of the houses of the deceased, it cannot be explained how the
plaintiff could have rendered services as he did for eight years without
receiving and claiming any compensation from the
deceased.chanroblesvirtualawlibrary chanrobles virtual law library
As to the second cause, the evidence presented by the plaintiff is his own
testimony, that of his witnesses, and several documents, consisting of
municipal permit, checks, vouchers, and invoices. The testimony of the
plaintiff's witnesses, the persons who sold the materials and furnished the
labor, proves a few unimportant facts, and as to the ownership of the money
thus invested, there is only the testimony of the plaintiff-appellant, who said

that it all belonged to him and that his understanding with the deceased was
that the latter would get the rents of the house, and, upon his death, he
would bequeath it to the plaintiff, but unfortunately, he died intestate. This
testimony, however, was objected to on the ground that it is prohibited by
section 383, paragraph 7, of the Code of Civil Procedure, which provides that
the party to an action against an executor or administrator cannot testify on
any fact that took place before the death of the person against whose estate
the claim is presented. The lower court admitted this testimony but did not
believe it. And certainly it cannot be believed, even assuming it to be
admissible, in view of the circumstances appearing undisputed in the record,
namely, the fact that the plaintiff-appellant did not have any source of
income that could produce him such a large sum of money as that invested
in the construction of the house; and the fact that the deceased had more
than the necessary amount to build the
house.chanroblesvirtualawlibrary chanrobles virtual law library
But above all, the facts appearing from Exhibit 40 are conclusive against the
claim of the plaintiff-appellant. Exhibit 40 is a book of accounts containing
several items purporting to have been advanced by the deceased to the
plaintiff-appellant for the construction of the house. The plaintiff admitted
that the first two lines constituting the heading of the account on the first
page were written by himself. Said two lines say: "Dinero Tomado a Don
Mariano Larena para la nueva casa." Appellant further admits that the first
entry in Exhibit 40 was made by him and that the sum of P3,200 mentioned
in the third entry was received by him. It is to be noted that the first entry is
dated February 1, 1926, and the last is under the date of December 31,
1927. The other entries are admitted by the plaintiff-appellant to have been
made by the deceased. Finally the appellant admitted in cross-examination
that this book, Exhibit 40, was his and that whenever he received money
from the deceased, he handed it to the deceased in order that the latter
might enter what he had received. The total of the items contained in this
book is P17, 834.72, which is almost the amount invested in the construction
of the building. Furthermore, the items entered in Exhibit 40, appear in
Exhibit 41 as withdrawn by the deceased from his account with the Monte de
Piedad, and a corresponding entry appears in Exhibit 43 showing a deposit
made by the plaintiff in his current account with the Philippine National
Bank. From all of this it is clear that the money invested in the construction
of the building in question did not belong to the
plaintiff.chanroblesvirtualawlibrary chanrobles virtual law library
The appealed judgment is affirmed, with the costs against the appellant. So
ordered.chanroblesvirtualawlibrary chanrobles virtual law library

Street, Malcolm, Villa-Real, Abad Santos, Hull, Vickers, Imperial and

Butte, JJ., concur.

SSSS