G.R. No.

L-38816

November 3, 1933

INSULAR DRUG CO., INC., plaintiff-appellee, vs.THE PHILIPPINE NATIONAL BANK, ET AL., defendants. THE PHILIPPINE NATIONAL BANK, appellant. MALCOLM, J.: FACTS The Insular Drug Co., Inc., is a Philippine corporation with offices in the City of Manila. U.E. Foerster was formerly a salesman of drug company for the Islands of Panay and Negros. Foerster also acted as a collector for the company. He was instructed to take the checks which came to his hands for the drug company to the Iloilo branch of the Chartered Bank of India, Australia and China and deposit the amounts to the credit of the drug company. Instead, Foerster deposited checks, including those of Juan Llorente, Dolores Salcedo, Estanislao Salcedo, and a fourth party, with the Iloilo branch of the Philippine National Bank. The checks were in that bank placed in the personal account of Foerster. Some of the checks were drawn against the Bank of PNB. After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel Padilla, Manager." The indorsement on the checks took various forms, some being "Insular Drug Company, Inc., By: (Sgd.) U. Foerster, Agent. (Sgd.) U. Foerster" other being "Insular Drug Co., Inc., By: (Sgd.) Carmen E. de Foerster, Agent (Sgd.) Carmen E. de Foerster"; others "Insular Drug Co., Inc., By: (Sgd.) Carmen E. de Foerster, Carmen E. de Froster"; others "(Sgd.) Carmen E. de Foerster, (Sgd.) Carmen E. de Foerster"; one (Sgd.) U. Foerster. (Sgd.) U. Foerster"; others; "Insular Drug Co., Inc., Carmen E. de Foerster, By: (Sgd.) V. Bacaldo," etc. In this connection it should be explained that Carmen E. de Foerster was his stenographer. As a consequence of the indorsements on checks the amounts therein stated were subsequently withdrawn by U. E., Foerster and Carmen E. de Foerster. Eventually the Manila office of the drug company investigated the transactions of Foerster. Upon the discovery of anomalies, Foerster committed suicide. But there is no evidence showing that the bank knew that Foerster was misappropriating the funds of his principal. The Insular Drug Company claims that it never received the face value of 132 checks here in the question covering a total of P18,285.92.

the bank has not done so. Much more could be said about this case, but it suffices to state in conclusion that bank will have to stand the loss occasioned by the negligence of its agents. The bank argues that the drug company was never defrauded at all. While the evidence on the extent of the loss suffered by the drug company is not nearly as clear as it should be, it is a sufficient answer to state that no such special defense was relied upon by the bank in the trial court. The drug company saw fit to stand on the proposition that checks drawn in its favor were improperly and illegally cashed by the bank for Foerster and placed in his personal account, thus making it possible for Foerster to defraud the drug company, and the bank did not try to go back of this proposition. The next point relied upon by the bank, to the effect that Foerster had implied authority to indorse all checks made out in the name of the Insular Drug Co., Inc., has even less force. Not only did the bank permit Foerster to indorse checks and then place them to his personal account, but it went farther and permitted Foerster's wife and clerk to indorse the checks. The right of an agent to indorse commercial paper is a very responsible power and will not be lightly inferred. A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment. Any person taking checks made payable to a corporation, which can act only by agent does so at his peril, and must same by the consequences if the agent who indorses the same is without authority. It is sufficient to state that no trust fund was involved; that the fact that bank acted in good faith does not relieve it from responsibility; that no proof was adduced, admitting that Foerster had right to indorse the checks, indicative of right of his wife and clerk to do the same , and that the checks drawn on the Bank of the Philippine Islands can not be differentiated from those drawn on the Philippine National Bank because of the indorsement by the latter.

THE MUNICIPAL COUNCIL OF ILOILO, plaintiff and appellee, VS. JOSE EVANGELISTA ET AL., defendants and appellees. TAN ONG SZE VDA. DE TAN TOCO, appellant. November 17, 1930 PRINCIPAL: TAN TOCO (wife of Jose Arroyo) ATTY-IN-FACT: TAN BOON TIONG SCOPE OF AUTHORITY: to employ and contract for the services of lawyers 1. 2. Tan Ong Sze Vda. de Tan Toco sought to recover from the Municipality of Iloilo the value of a strip of land which was taken by the Municipality to widen a public street; CFI entitled Tan Toco to recover P42,966.40, representing the value of said strip of land, from the Municipality. This was affirmed by SC. Case was remanded to the court of origin, and the judgment became final and executory. Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of Jose Ma. Arroyo's intestate estate, filed a claim in the same case for professional services rendered by him, which the court, acting with the consent of the Tan Toco, fixed at 15 per cent of the amount of the judgment .

ISSUE: WON the bank can be held liable HELD: YES This is a case where 132 checks made out in the name of the Insular Drug Co., Inc., were brought to the branch office of the Philippine National Bank in Iloilo by Foerster, a salesman of the drug company, Foerster's wife, and Foerster's clerk. The bank could tell by the checks themselves that the money belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his clerk. When the bank credited those checks to the personal account of Foerster and permitted Foerster and his wife to make withdrawals without there being made authority from the drug company to do so, the bank made itself responsible to the drug company for the amounts represented by the checks. The bank could relieve itself from responsibility by pleading and proving that after the money was withdrawn from the bank it passed to the drug company which thus suffered no loss, but

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At the hearing on said claim, the claimants appeared: Antero Soriano appeared claiming the amount of the judgment had been assigned to him (by atty-in-fact Tan Boon Tiong), which he in turn assigned to Mauricio Cruz & Co., Inc. After hearing all the adverse claims on the amount of the judgment, the court ordered : a. that the attorney's lien in the amount of 15 per cent of the judgment, be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the administratrix of the deceased Jose Ma. Arroyo, and b. directed the municipality of Iloilo to file an action of interpleading against the adverse claimants, the Philippine National Bank, Antero Soriano, Mauricio Cruz & Co., Jose Evangelista, and Jose Arroyo, as was done, the case being filed in the Court of First Instance of Iloilo as civil case No. 7702. CFI: a. declaring valid and binding the deed of assignment of the credit executed by Tan Toco's widow, through her attorney-in-fact Tan Buntiong, in favor of the late Antero Soriano; likewise the assignment executed by the latter during his lifetime in favor of the defendant Mauricio Cruz & Co., Inc., and b. the Municipality was also ordered to pay the said Mauricio, Cruz & Co., Inc., the balance of P30,966.40 and ordered to deposit said sum in a local bank, at the disposal of the aforesaid Mauricio Cruz & Co., Inc., the municipal treasurer of Iloilo, paid the late Antero Soriano the amount of P6,000 in part payment of the judgment mentioned above, assigned to him by Tan Boon Tiong, acting as attorney-in-fact of the appellant herein, Tan Ong Sze Vda. de Tan Toco. In pursuance of the resolution of the court below ordering that the attorney's lien in the amount of 15 per cent of the judgment be recorded in favor of Attorney Jose Evangelista, in his own behalf and as counsel for the late Jose Ma. Arroyo, the said clerk of court delivered on the same date to said Attorney Jose Evangelista the said amount of P6,000. With these two payments ( for Atty. Soriano and Atty. Evangelista) of P6,000 each making a total of P12,000, the judgment for P42,966.44 against the municipality of Iloilo was reduced to P30,966.40, which was adjudicated by said court to Mauricio Cruz & Co.

defend suits brought against her. This power necessarily implies the authority to pay for the professional services thus engaged. In the present case, the assignment made by Tan Boon Tiong, as attorney-in-fact for the appellant, in favor of Attorney Antero Soriano for professional services rendered in other cases in the interests of the appellant and her coheirs, was that credit which she had against the municipality of Iloilo, and such assignment was equivalent to the payment of the amount of said credit to Antero Soriano for professional services.

RATIO: (1) That an agent or attorney-in-fact empowered to pay the debts of the principal, and to employ lawyers to defend the latter's interests, is impliedly empowered to pay the lawyer's fees for services rendered in the interests of said principal, and may satisfy, them by an assignment of a judgment rendered in favor of said principal; (2) that when a person appoints two attorneysin-fact independently, the consent of the one will not be required to validate the acts of the other unless that appears positively to have been the principal's intention; and (3). that the assignment of the amount of a judgment made by a person to his attorney, who has not taken any part in the case wherein said judgment was rendered, made in payment of professional services, in other cases, does not contravene the prohibition of article 1459, case 5, of the Civil Code. NOTE: aside from Tan Boon Tiong, there is another atty-in-fact: Tan Montano. The court said that: the failure of the other attorney-in-fact to consent to the deed of assignment, the latter being also authorized to pay, in the name and behalf of the principal, all her debts and the liens and encumbrances on her property, the very fact that different letters of attorney were given to each of these two representatives shows that it was not the principal's intention that they should act jointly in order to make their acts valid. Furthermore, the Principal Tan Toco was aware of that assignment and she not only did not repudiate it, but she continued employing Attorney Antero Soriano to represent her in court. DOMINGO v. DOMINGO

ISSUE: WON Tan Boon Tiong, as attorney-in-fact of the appellant, was empowered by his principal to make an assignment of credits, rights, and interests, in payment of debts for professional services rendered by lawyers. (WON assignment made to Atty. Soriano is VALID) HELD: YES. in paragraph VI of the power of attorney, Tan Boon Tiong is authorized to employ and contract for the services of lawyers upon such conditions as he may deem convenient, to take charge of any actions necessary or expedient for the interests of his principal, and to Quick Summary:

42 SCRA 131

Vicente (Seller) contracts Gregorio to be his broker and agrees to share 5% commission when Gregorio is able to sell the lot. The suggested price is PhP2.00/sqm for the lot. Gregorio subhires Purisma, promising half the commission if he is able to secure a buyer. Purisma presents Oscar de Leon who proceeds to agree to buy the lot at the price of PhP1.20/sqm as Gregorio negotiated with Vicente for a lower price. This he did and was able to secure a secret profit or propina of PhP1,000.00 allegedly for reducing the price.

agency with notice to Vicente. The said agency contract was in triplicate, one copy was given to Vicente, while the original and another copy were retained by Gregorio.

On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer, promising him one-half of the 5% commission.

Later, Oscar de Leon proceeds to buy the lot but in the name of his wife, Amparo Diaz. Vicente excludes Gregorio from the transaction and refuses to pay commission (he tore their original contract of agency) even if it was stipulated in their agreement that he is still accountable to Gregorio for the commission if sale commenced with 3 months after termination of agency contract.

Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective buyer.

Article 1891 applies. It is the duty of the agent to account for and to deliver to the principal all money and property which may have come into his hands or his subagent. This he did not do. He withheld the PhP1,000.00 gift from Vicente, who did not even know about this. SC held that Gregorio has forfeited his share in the commission for breach of loyalty. His acceptance of said substantial monetary gift (the propina) corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial advance of Three Hundred Pesos (P300.00) on his commission. Instead of securing the highest price for the lot for his principal, he ended up bargaining with him at the expense of the seller.

After several conferences between Gregorio and Oscar de Leon, the latter raised his offer to P109,000.00 on June 20, 1956 , to which Vicente agreed by signing. Upon demand of Vicente, Oscar de Leon issued to him a check in the amount of P1,000.00 as earnest money, after which Vicente advanced to Gregorio the sum of P300.00. Oscar de Leon confirmed his former offer to pay for the property at P1.20 per square meter in another letter. Subsequently, Vicente asked for an additional amount of P1,000.00 as earnest money, which Oscar de Leon promised to deliver to him. Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the sum of One Thousand Pesos (P1,000.00) for succeeding in persuading Vicente to sell his lot at P1.20 per square meter or a total in round figure of One Hundred Nine Thousand Pesos (P109,000.00). This gift of One Thousand Pesos (P1,000.00) was not disclosed by Gregorio to Vicente. Neither did Oscar pay Vicente the additional amount of One Thousand Pesos (P1,000.00) by way of earnest money. In the deed of sale was not executed on August 1, 1956 as stipulated in Exhibit "C" nor on August 15, 1956 as extended by Vicente, Oscar told Gregorio that he did not receive his money from his brother in the United States, for which reason he was giving up the negotiation including the amount of One Thousand Pesos (P1,000.00) given as earnest money to Vicente and the One Thousand Pesos (P1,000.00) given to Gregorio as propina or gift.

FACTS: When Oscar did not see him after several weeks, Gregorio sensed something fishy. So, he went to Vicente and read a portion of Exhibit "A" marked habit "A-1" to the effect that Vicente was still committed to pay him 5% commission, if the sale is consummated within three months after the expiration of the 30-day period of the exclusive agency in his favor from the execution of the agency contract on June 2, 1956 to a purchaser brought by Gregorio to Vicente during the said 30-day period. Vicente grabbed the original of Exhibit "A" and tore it to pieces. Gregorio held his peace, not wanting to antagonize Vicente further, because he had still duplicate of Exhibit "A". From his meeting with Vicente, Gregorio proceeded to the office of the Register of Deeds of Quezon City, where he discovered Exhibit "G' deed of sale executed on September 17, 1956 by Amparo Diaz, wife of Oscar de Leon, over their house and

In a document, Vicente M. Domingo granted Gregorio Domingo, a real estate broker, the exclusive agency to sell his lot No. 883 of Piedad Estate with an area of about 88,477 square meters at the rate of P2.00 per square meter (or for P176,954.00) with a commission of 5% on the total price, if the property is sold by Vicente or by anyone else during the 30-day duration of the agency or if the property is sold by Vicente within three months from the termination of the agency to apurchaser to whom it was submitted by Gregorio during the continuance of the

lot No. 40 Denver Street, Cubao, Quezon City, in favor Vicente as down payment by Oscar de Leon on the purchase price of Vicente's lot No. 883 of Piedad Estate. Upon thus learning that Vicente sold his property to the same buyer, Oscar de Leon and his wife, he demanded in writting payment of his commission on the sale price of One Hundred Nine Thousand Pesos (P109,000.00), Exhibit "H". He also conferred with Oscar de Leon, who 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 One Hundred Four Thousand Pesos (P104,000.0 In Vicente's reply to Gregorio's letter, Exhibit "H", 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.

de Leon, without the knowledge and consent of his principal, herein petitioner-appellant Vicente Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial advance of Three Hundred Pesos (P300.00) on his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, the broker, herein defendant-appellee Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the property at P1.20 per square meter or One Hundred Nine Thousand Pesos (P109,000.00) in round figure for the lot of 88,477 square meters, which is very much lower the the price of P2.00 per square meter or One Hundred Seventy-Six Thousand Nine Hundred Fifty-Four Pesos (P176,954.00) for said lot originally offered by his principal. The duty embodied in Article 1891 of the New Civil Code will not apply if the agent or broker acted only as a middleman with the task of merely bringing together the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of the transaction. Neither would the rule apply if the agent or broker had informed the principal of the gift or 11 bonus or profit he received from the purchaser and his principal did not object therto. Herein defendant-appellee Gregorio Domingo was not merely a middleman of the petitionerappellant Vicente Domingo and the buyer Oscar de Leon. He was the broker and agent of said petitioner-appellant only. And therein petitioner-appellant was not aware of the gift of One Thousand Pesos (P1,000.00) received by Gregorio Domingo from the prospective buyer; much less did he consent to his agent's accepting such a gift.

The Court of Appeals found from the evidence that Exhibit "A", the exclusive agency contract, is genuine; that Amparo Diaz, the vendee, being the wife of Oscar de Leon the sale by Vicente of his property is practically a sale to Oscar de Leon since husband and wife have common or identical interests; that Gregorio and intervenor Teofilo Purisima were the efficient cause in the consummation of the sale in favor of the spouses Oscar de Leon and Amparo Diaz; that Oscar de Leon paid Gregorio the sum of One Thousand Pesos (P1,000.00) as "propina" or gift and not as additional earnest money to be given to the plaintiff, because Exhibit "66", Vicente's letter addressed to Oscar de Leon with respect to the additional earnest money, does not appear to have been answered by Oscar de Leon and therefore there is no writing or document supporting Oscar de Leon's testimony that he paid an additional earnest money of One Thousand Pesos (P1,000.00) to Gregorio for delivery to Vicente, unlike the first amount of One Thousand Pesos (P1,000.00) paid by Oscar de Leon to Vicente as earnest money, evidenced by the letter Exhibit "4"; and that Vicente did not even mention such additional earnest money in his two replies Exhibits "I" and "J" to Gregorio's letter of demand of the 5% commission.

ISSUE: (1) whether the failure on the part of Gregorio to disclose to Vicente the payment to him by Oscar de Leon of the amount of One Thousand Pesos (P1,000.00) as gift or "propina" for having persuaded Vicente to reduce the purchase price from P2.00 to P1.20 per square meter, so constitutes fraud as to cause a forfeiture of his commission on the sale price.

The fact that the buyer appearing in the deed of sale is Amparo Diaz, the wife of Oscar de Leon, does not materially alter the situation; because the transaction, to be valid, must necessarily be with the consent of the husband Oscar de Leon, who is the administrator of their conjugal assets including their house and lot at No. 40 Denver Street, Cubao, Quezon City, which were given as part of and constituted the down payment on, the purchase price of herein petitioner-appellant's lot No. 883 of Piedad Estate. Hence, both in law and in fact, it was still Oscar de Leon who was the buyer.

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

HELD: In the case at bar, defendant-appellee Gregorio Domingo as the broker, received a gift or propina in the amount of One Thousand Pesos (P1,000.00) from the prospective buyer Oscar Teofilo Purisima, the sub-agent of Gregorio Domingo, can only recover from Gregorio Domingo his one-half share of whatever amounts Gregorio Domingo received by virtue of the

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

Summary: The natural child and sole heir filed suit to recover property of the deceased father consisting of 4 parcels of land which was registered in the name of the brother/administrator. The court ruled for the daughter as the agent or any person occupying fiduciary relations is utterly disabled from acquiring for his own benefit the property committed to his custody for management.

Facts: Because Gregorio Domingo's clearly unfounded complaint caused Vicente Domingo mental anguish and serious anxiety as well as wounded feelings, petitioner-appellant Vicente Domingo should be awarded moral damages in the reasonable amount of One Thousand Pesos (P1,000.00) attorney's fees in the reasonable amount of One Thousand Pesos (P1,000.00), considering that this case has been pending for the last fifteen (15) years from its filing on October 3, 1956. Melecio Severino died on May 25, 1915. Some 428 hectares of land were recorded in the Mortgage Law Register in his name in 1901 by virtue of possessory information proceedings instituted by his brother Agapito Severino in his behalf. During his lifetime, the land was worked by defendant Guillermo Severino as administrator. Guillermo continued to occupy the land and in 1916, a survey was conducted and Guillermos lawyer, Roque Hofilena claimed the lots for his client and succeeded in having the title decreed in favor of Guillermo. The alleged natural daughter and sole heir of one Melecio Severino, Fabiola Severino filed an action to compel Guillermo Severino to convey to her 4 parcels of land or to pay her in default, Php800,000 in damages for wrongfully causing said land to be registered in his own name. Felicitas Villanueva, in her capacity as administratrix of the estate also filed a complaint in intervention claiming same relief except that for the conveyance to be made to the estate of Melecio instead of to Fabiola Severino. Guillermo Severino denied the charge and averred that since he was already awarded the title, it has become res judicata and cannot be disturbed. The lower court recognized Fabiola as the acknowledged natural daughter of Melecio and ordered the defendant to convey 428 hectares of land to the intervenor as administratrix of the estate.

WHEREFORE, the judgment is hereby rendered, reversing the decision of the Court of Appeals and directing defendant-appellee Gregorio Domingo: (1) to pay to the heirs of Vicente Domingo the sum of One Thousand Pesos (P1,000.00) as moral damages and One Thousand Pesos (P1,000.00) as attorney's fees; (2) to pay Teofilo Purisima the sum of Six Hundred Fifty Pesos (P650.00); and (3) to pay the costs.

Severino v. Severino 44 Phil. 343 (1923)

Issue: Plaintiff & Appellee: Fabiola Severino (natural child) Defendant & Appellant: Guillermo Severino (brother and administrator) Intervenor & Appellee: Felicitas Villanueva (administratrix of the estate) 1. 2. Whether or not the registration of land under the name of the administrator was valid was there fraud involved? Side Issue: Did the defendants title has become res judicata to the case? Did the trial court err in acknowledging Fabiola as the natural child of Melecio in same proceeding?

Ostrand, J.

Held: 1. NO. That Guillermo came into possession of the property as the agent of the deceased Melecio in the administration of the property cannot be successfully disputed. He stated under oath in the case of Montelibano vs. Severino that from

1902 up to 1913, he had been continuously in charge as encargado or administrator, and that the Melecios possession was peaceful, continuous and exclusive. The relations of an agent to his principal are fiduciary and it is an old rule that in regard to property forming the subject matter of the agency, he is stopped from acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he cannot be allowed to create in himself an interest in opposition to that of his principal or cestui que trust. This is substantially in harmony with the principles of the Civil Law and American cases: In Gilbert vs. Hewetson , a receiver, trustee, attorney, agent or any other person occupying fiduciary relations respecting property or persons, is utterly disabled from acquiring for his own benefit the property committed to his custody for management. No fraud is needed to be shown. In Massie vs. Watts, the agent cannot hold the land under an entry for himself otherwise than as trustee for his principal. As will be seen, an agent is not only stopped from denying his principals title to the property, but he is also disabled from acquiring interests therein adverse to those of his principal during the term of the agency.

Facts: PNB had opened a letter of credit and advanced thereon $120,000 to Edgington Oil Refinery for 8,000 tons of hot asphalt, where 2,000 tons of this (worth P279,000) were released and delivered to Adams & Taguba Corp. (ATACO) under a trust receipt guaranteed by Manila Surety & Fidelity Co. up to the amount of P75,000. To pay for the asphalt, ATACO constituted the Bank its assignee and attorney-in-fact to receive and collect from the Bureau of Public Works the amount aforesaid out of funds payable to the assignor under Purchase Order No. 71947. This assignment stipulated the conditions that: 1. The same shall remain irrevocable until the said credit accomodation is fully liquidated. 2. The PNB is hereby appointed as our Attorney-in-Fact for us and in our name, place and stead, to collect and to receive the payments to be made by virtue of the aforesaid Purchase Order, with full power and authority to execute and deliver on our behalf, receipt for all payments made to it; to endorse for deposit or encashment checks, money order and treasury warrants which said Bank may receive, and to apply said payments to the settlement of said credit accommodation. This power of attorney shall also remain irrevocable until our total indebtedness to the said Bank have been fully liquidated.

2.

On res judicata: NO. Turning to the Land Registration Act, there is no indication of an intention to cut off, through the issuance of a decree of registration, equitable rights or remedies. Section 70 and 102 of the Act provides otherwise.

On the acknowledgement of Fabiola as natural child: YES. The trial court err in making a declaration in the present case as to the recognition of Fabiola Severino as the natural child of Melecio Severino. The question of the status of Fabiola and her right to share in the inheritance may, upon notice to all interested parties, be determined in the probate proceedings for the settlement of the estate of the deceased.

ATACO delivered to the Bureau of Public Works, and the latter accepted, asphalt to the total value of P431,466.52. Of this amount the Bank regularly collected, from April 21, 1948 to November 18, 1948, P106,382.01. Thereafter, for unexplained reasons, the Bank ceased to collect, until in 1952 its investigators found that more moneys were payable to ATACO from the Public Works office, because the latter had allowed mother creditor to collect funds due to ATACO under the same purchase order to a total of P311,230.41. Its demands on ATACO and Manila Surety having been refused, PNB sued both in the CFI of Manila to recover the balance of P158,563.18 as of February 15, 1950. CFI: in favor of PNB and ordered ATACO and Manila Surety to pay the bank P174,462.34 as of Feb. 1956 minus P8K which Manila Surety paid, provided that the latter shall not pay more than P75K; that ATACO and Pedro Taguba, jointly and severally, to pay Manila Surety what it would have to pay. Only PNB appealed. CA: reversed CFI as to Manila Suretys liability, holding that: PNB had been negligent in having stopped collecting from the Bureau of Public Works the moneys falling due in favor of ATACO, from and after November 18, 1948, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety, and PNBs negligence resulted in exoneration of respondent Manila Surety.

Judgment of the trial court is in accordance with the facts and the law. The right of Fabiola Severino to establish in the probate proceedings her status as a recognized natural child is reserved. Judgment affirmed with instructions. -----------------------------------------------------------------------------------------------------PNB vs. MANILA SURETY and FIDELITY CO., INC., CA REYES, J.B.L., J.:

PNB: The power of attorney obtained from ATACO was merely in additional security in its favor, and that it was the duty of the surety, and not that of the creditor, to see to it that the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any, sum from the principal debtor. ISSUE: WON PNB was diligent in collecting from the Bureau of Public Works. HELD: NO. CA did not hold the Bank answerable for negligence in failing to collect from the principal debtor but for its neglect in collecting the sums due to the debtor from the Bureau of Public Works, contrary to its duty as holder of an exclusive and irrevocable power of attorney to make such collections, since an agent is required to act with the care of a good father of a family (Civ. Code, Art. 1887) and becomes liable for the damages which the principal may suffer through his non-performance (Civ. Code, Art. 1884). Certainly, Manila Surety could not expect that the Bank would diligently perform its duty under its power of attorney, but because they could not have collected from the Bureau even if they had attempted to do so. It must not be forgotten that the Bank's power to collect was expressly made irrevocable, so that the Bureau of Public Works could very well refuse to make payments to the principal debtor itself, and a fortiori reject any demands by the surety. Even if the assignment with power of attorney from the principal debtor were considered as mere additional security, by allowing the assigned funds to be exhausted without notifying the surety, the Bank deprived the former of any possibility of recoursing against that security. The Bank thereby exonerated the surety, pursuant to: ART. 2080. The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor they cannot be subrogated to the rights, mortgages and preferences of the latter. The appellant points out to its letter of demand addressed to the Bureau of Public Works, on May 5, 1949, and its letter to ATACO, informing the debtor that as of its date, October 1949, its outstanding balance was P156,374.83. But it has no bearing on the issue whether the Bank has exercised due diligence in collecting from the Bureau of Public Works, since the letter was addressed to ATACO, and the funds were to come from elsewhere. As to the letter of demand on the Public Works office, it does not appear that any reply thereto was made; nor that the demand was pressed, nor that the debtor or the surety were ever apprised that payment was not being made. Because of the Bank's inactivity the other creditors were enabled to collect P173,870.31, when the balance due to PNB was only P158,563.18. Even if the Court of Appeals erred on the second reason it advanced in support of the decision now under appeal, because the rules on application of payments, giving preference to secured obligations are only operative in cases where there are several distinct debts, and not where there is only one that is partially secured, the error is of no importance, since the principal reason based on the Bank's negligence furnishes adequate support to the decision of the Court of Appeals that the surety was thereby released.

Affirmed. GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner vs. THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB & SONS PHILIPPINE CORPORATION, respondents. ABAD SANTOS, J.: On November 3, 1969, Squibb and Green Valley entered into a letter agreement the text of which reads as follows: E.R. Squibb & Sons Philippine Corporation is pleased to appoint Green Valley Poultry & Allied Products, Inc. as a non-exclusive distributor for Squibb Veterinary Products, as recommended by Dr. Leoncio D. Rebong, Jr. and Dr. J.G. Cruz, Animal Health Division Sales Supervisor. As a distributor, Green Valley Poultry & Allied Products, Inc. wig be entitled to a discount as follows: Feed Store Price (Catalogue) Less 10% Wholesale Price Less 10% Distributor Price There are exceptions to the above price structure. At present, these are: 1. Afsillin Improved 40 lbs. bag The distributor commission for this product size is 8% off P120.00 2. Narrow Spectrum Injectible Antibiotics These products are subject to price fluctuations. Therefore, they are invoiced at net price per vial. 3. Deals and Special Offers are not subject to the above distributor price structure. A 5% distributor commission is allowed when the distributor furnishes copies for each sale of a complete deal or special offer to a feedstore, drugstore or other type of account. Deals and Special Offers purchased for resale at regular price invoiced at net deal or special offer price. Prices are subject to change without notice. Squibb will endeavor to advise you promptly of any price changes. However, prices in effect at the tune orders are received by Squibb Order Department will apply in all instances. Green Valley Poultry & Allied Products, Inc. win distribute only for the Central Luzon and Northern Luzon including Cagayan Valley areas. We will not allow any transfer or stocks from Central Luzon and Northern Luzon including Cagayan Valley to other parts of Luzon, Visayas or Mindanao which are covered by our other appointed Distributors. In line with this, you will follow strictly our stipulations that the maximum discount you can give to your direct and turnover accounts will not go beyond 10%. It is understood that Green Valley Poultry and Allied Products, Inc. will accept turn-over orders from Squibb representatives for delivery to customers in your area. If for credit or other valid reasons a turn-over

order is not served, the Squibb representative will be notified within 48 hours and hold why the order will not be served. It is understood that Green Valley Poultry & Allied Products, Inc. will put up a bond of P20,000.00 from a mutually acceptable bonding company. Payment for Purchases of Squibb Products will be due 60 days from date of invoice or the nearest business day thereto. No payment win be accepted in the form of post-dated checks. Payment by check must be on current dating. It is mutually agreed that this non-exclusive distribution agreement can be terminated by either Green Valley Poultry & Allied Products, Inc. or Squibb Philippines on 30 days notice. I trust that the above terms and conditions will be met with your approval and that the distributor arrangement will be one of mutual satisfaction. If you are agreeable, please sign the enclosed three (3) extra copies of this letter and return them to this Office at your earliest convenience. Thank you for your interest and support of the products of E.R. Squibb & Sons Philippines Corporation. Since goods delivered to Green Valley were unpaid, Squibb filed suit to collect. The trial court gave judgment in favor of Squibb which was affirmed by the Court of Appeals. Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never purchased goods from Squibb; that the goods received were on consignment only with the obligation to turn over the proceeds, less its commission, or to return the goods if not sold, and since it had sold the goods but had not been able to collect from the purchasers thereof, the action was premature. Squibb claimed that the contract was one of sale so that Green Valley was obligated to pay for the goods received upon the expiration of the 60-day credit period. Both TC and CA upheld the claim of Squibb that the agreement between the parties was a sales contract. We do not have to categorize the contract. Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is indubitable. Adopting Green Valley's theory that the contract is an agency to sell, it is liable because it sold on credit without authority from its principal. The Civil Code has a provision exactly in point. It reads: 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. WHEREFORE, the petition is hereby dismissed; the judgment of the defunct Court of Appeals is affirmed with costs against the petitioner. SMITH, BELL & CO. V SOTELO MATTI ROMUALDEZ; 1922

NATURE APPEAL from a judgement of the CFI of Manila

PRINCIPAL: intervenor Maanila Oil Refining and By-products Agent: SOTELO FACTS - August, 1918: Plaintiff Corporation Smith, Bell & Co., and defendant Sotelo entered into contract: - Plaintiff obligated itself to sell (and the defendant to purchase) 1) 2 steel tanks, to be shipped from New York and delivered at Manila within 3 or 4 months; 2) 2 expellers to be shipped from San Francisco in the month of September, 1918, or as soon as possible; 3) 2 electric motors to be delivered Approximate delivery within ninety days. This is not guaranteed. - tanks arrived at Manila April 27, 1919 - expellers arrived October 26, 1918 - motors arrived Feb. 27, 1919. -The plaintiff corporation notified Sotelo of the arrival of these goods, but Sotelo refused to receive them and to pay the prices stipulated. - The court below absolved the defendants from the complaint insofar as the tanks and electric motors were concerned, but rendered judgment against them for the expellers, ordering them to receive the aforesaid expellers and pay the plaintiff the price of the said goods - both parties appeal

Petitioners' Claim - petitioner immediately notified the defendant Sotelo of the arrival of the goods - defendant refused to receive and pay the price - expellers and motors in good conditions

Defendant Sotelo and Intervenor Manila Oil: - denied the allegations as to: a. the shipment and arrival of the goods, b. the notification to Mr. Sotelo, c. the latter's refusal to receive them and pay their price, d. and the good condition of the expellers and the motors - alleged as special defense:

a.

Sotelo made the contracts in question as manager of the intervenor, the Manila Oil Refining and ByProducts Co. which fact was known to the plaintiff, and b. that "it was only in May, 1919, that it notified the intervenor that said tanks had arrived, the motors and the expellers having arrived incomplete and long after the date stipulated." - As a counterclaim or set-off, they also allege that, as a consequence of the plaintiff's delay in making delivery of the goods, which the intervenor intended to use in the manufacture of cocoanut oil, the intervenor suffered damages ISSUE#1: WON, under the contracts entered into and the circumstances established in the record, the plaintiff has fulfilled, in due time, its obligation to bring the goods in question to Manila

ISSUE#2 2. WON the intervenor Manila Oil has right of action

Held: No. Ratio When an agent acts in his own name, the principal shall have no right of action against the persons with whom the agent has contracted. Reasoning When the agent transacts business in his own name, it shall not be necessary to state who is the principal and he shall be directly liable, as if the business were for his own account. (Code of Com., art 246) Agent signed the contracts in his individual capacity and his own name, therefore, he is bound by them rd Undisclosed principal has no right of action against the 3 party

HELD 1. Yes. The plaintiff has not been guilty of any delay in the fulfillment of its obligation, and it could not have incurred any of the liabilities mentioned by the intervenor in its counterclaim. Ratio When no definite date has been fixed for the delivery of goods, the obligor shall not be held guilty of delay in the fulfillment of its obligation if it delivers the goods within a reasonable time. Reasoning

Disposition the judgment appealed from is modified, and the defendant sentenced to accept and receive from the plaintiff the tanks, expellers, motors, and to pay the plaintiff the sum of P96,000, with legal interest, and the costs of both instances. Rural Bank of Bombon v CA G.R. No. 95703 | August 3, 1992 Quick Summary:

- The obligation is regarded as conditional: the term which the parties attempted to fix is so uncertain that one cannot tell just whether those articles could be brought to Manila or not. *They were executed at the time of the world war when there existed rigid restrictions on the export from the US of articles like the machinery in question, and transportation was difficult. - When the delivery is subject to the fulfillment of a condition dependent on the will of third persons who could in no way be compelled to fulfill the condition (like in this case), the obligor will be deemed to have sufficiently performed his part of the obligation, if he has done all that was in his power, even if the condition has not been fulfilled in reality- and he has the right to demand performance of the contract by the other party. - In such cases, delivery must be made within reasonable time. - What is reasonable time? to be determined by the circumstances attending the particular transaction, such as the character of the goods, the purpose for which they are intended, the ability of the seller to produce the goods if they are to be manufactured, the facilities available for transportation, and the distance the goods must be carried, and the usual course of business in the particular trade.

Ederlinda Gallardo transacted with Rufino Aquino, contracting him to be her agent and providing him with a Special Power of Attorney authorizing him to mortgage her property in her behalf for the purpose of securing loans from banks. She provided him with the TCT to the property as well. Rufino Aquino secured a loan from Rural Bank of Bombon for the amount of PhP350,000.00 as principal and chargeable with a 14% interest per annum. In the contract of mortgage, he represented himself to be the attorney-in-fact of Gallardo, but proceeded to sign his name as mortgagor. He even got his wife to sign the documents as wife of mortgagor. Gallardo, upon knowing of the transaction, went to court to secure the annulment of such contract since she was allegedly surprised to find out that her property was already mortgaged and correspondence regarding the contract of mortgage were not being sent to her, and instead sent to the address of Aquino, who has since disappeared from Bulacan and now resides in Camarines Sur. Further, the mortgage was secured to pay off personal loans of Aquino and to establish his personal fishpond business. RTC issued a TRO restraining Rural Bank of Bombon to foreclose the mortgage. In his Answer, Aquino alleged that Gallardo owed him money and it was already the responsibility of Aquino to take care of payments due. RTC ruled in favor of Aquino and Bank of Bombon.

CA reversed the ruling of the RTC and held that the Deal of Real Estate Mortgage was not valid. It not binding on the principal Gallardo since it was executed not in her name as principal but in the personal capacity of the Aquino spouses. Issue: WON the Deed of Real Estate Mortgage executed by Rufino S. Aquino as attorney-in-fact of Ederlinda Gallardo in favor of the Rural Bank of Bombon is valid. Held: No. Aquino signed the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication that he was signing for and in behalf of the property owner, Ederlinda Gallardo. He bound himself alone in his personal capacity as a debtor of the petitioner Bank and not as the agent or attorney-in-fact of Gallardo. Ratio: It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal. (Philippine Sugar Estates Development Co. vs. Poizat) Bank cannot rely on Article 1883 to bind the principal Gallardo. It is not applicable to the case at bar. Article 1883 states in such case the agent is the one directly bound in favor of the person with whom he has transacted, as if the transaction was his own, except when the contract involves things belonging to the principal. There is no principle of law by which a person can become liable on a real mortgage which she never executed either in person or by attorney in fact. Here, Aquino acted purportedly as an agent of Gallardo, but actually acted in his personal capacity. Involved herein are properties titled in the name of respondent Gallardo against which the Bank proposes to foreclose the mortgage constituted by an agent (Aquino) acting in his personal capacity. Sy-Juco and Viardo vs. Sy-Juco 40 Phil. 1920 (1920)

Avancena, J.

Facts: 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. It is alleged by the plaintiffs, who are defendants parents that the defendant acquired the property claimed in his capacity as administrator with their money and for their benefit. The properties include the launch Malabon, casco Nos. 2584 and 2545, automobile No. 2060, typewriting machine, house and piano. The trial court ordered the defendant to return the properties and the rendition of accounts of his administration.

Issue: Whether or not the purchase of the properties under the administrators name was valid?

Held: NO. From the rule established in Article 1717 of the Civil Code, 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 belonging to 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 in his own name. The money with which the launch and the other properties were brought having come from the plaintiff, the exception established in this article is applicable. The case of Martinez vs. Martinez is not applicable as in that case, the relation of principal and agent, which exists between the plaintiffs and the defendant, did not exist. Regarding the launch Malabon, it appears that the defendant bought it in his own name from the Pacific Commercial Co., and registered it to the Custom House, not with his money, but within the agency which he had received from the plaintiffs. It was bought using the plaintiffs money and immediately after the purchase, the launch had to be repaired at their expense. 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 it was bought 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.

Plaintiffs and Appellants: Vicente Sy-Juco & Cipriana Viardo Defendant and Appellant: Santiago V. Sy-Juco

Regarding the casco 2584, the defendants claim that it was constructed at his instance in the plaintiffs shipyard is rebutted by the fact that on the date this casco was constructed, he did not have sufficient money with which to pay the exoense of its construction. As to the automobile 2060, there is sufficient evidence to show that the price was paid using plaintiffs money. In order to pay and issue the checks, the defendant had to deposit for them on those same days as he didnt have sufficient money in the bank. Regarding casco No. 2545, the fact that it was leased and was sunk still makes it necessary to make a pronouncement of ownership to enforce liability of the lessee. The court finds that it belonged to the plaintiff and that the latter sold it afterwards to the defendants by way of public instrument. Regarding the wood, windows and doors for the construction of the house, it it was found that they were given to the defendant as his property. Concerning the rendition of accounts, the defendant is absolved for it appears that he used to render accounts of his agency after each transaction. Judgment affirmed. G.R. No. 75640 April 5, 1990 NATIONAL FOOD AUTHORITY vs. IAC, SUPERIOR SHIPPING CORPORATION PARAS, J.: On September 6, 1979 Gil Medalla, as commission agent of the plaintiff Superior Shipping Corporation (SSC), entered into a contract for hire of ship known as "MV Sea Runner" with defendant National Grains Authority (now NFA), where Medalla obligated to transport on the said ship 8,550 sacks of rice belonging to NFA from the port of San Jose, Occidental Mindoro, to Malabon, Metro Manila. Upon completion of the delivery of rice at its destination, SSC wrote a letter requesting NFA that it be allowed to collect the P93,538.70 indicated in its statement of account which included a claim for freightage, demurrage and stevedoring charges. SSC wrote again NFA, this time specifically requesting that the payment for freightage and other charges be made to it and not to defendant Medalla because SSG was the owner of the vessel "MV Sea Runner". NFA informed SSG that it could not grant its request because the contract to transport the rice was entered into by NFA and Medalla who did not disclose that he was acting as a mere agent of SSG. Thereupon on November 19, 1979, NFA paid Medalla P25,974.90 for freight services in connection with the shipment.

SSG wrote Medalla demanding that he turn over to the former the P27,000 paid to him by NFA. Medalla, however, "ignored the demand." Plaintiff filed the instant complaint. Defendant-appellant NFA admitted that it entered into a contract with Medalla whereby SSGs vessel transported NFAs 8,550 sacks of rice from San Jose, Mindoro to Manila and paid Medalla P27,000 for freightage. TC: in favor of SSG. Medalla and NFA are solidarily liable for freightage in the amount of P25,974.90 plus attorneys fees. IAC: TC affirmed. ISSUE: WON the instant case falls within the exception of the general rule provided for in Art. 1883 of the NCC. NFA: not liable under the exception to the rule (Art. 1883) since it had no knowledge of the fact of agency between SSG and Medalla when the contract was entered into between them. An undisclosed principal cannot maintain an action upon a contract made by his agent unless such principal was disclosed in such contract. One who deals with an agent acquires no right against the undisclosed principal. HELD: NO. Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provision of this article shall be understood to be without prejudice to the actions between the principal and agent. Consequently, when things belonging to the principal (in this case, Superior Shipping Corporation) are dealt with, the agent is bound to the principal although he does not assume the character of such agent and appears acting in his own name. In other words, 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. Corollarily, if the principal can be obliged to perform his duties under the contract, then it can also demand the enforcement of its rights arising from the contract. AFFIRMED.

GOLD STAR MINING CO., INC., petitioner, vs. MARTA LIM-JIMENA, CARLOS JIMENA, GLORIA JIMENA, AURORA JIMENA, JAIME JIMENA, DANTE JIMENA, JORGE JIMENA, JOYCE JIMENA, as legal heirs of the deceased VICTOR JIMENA, and JOSE HIDALGO, respondents. REYES, J.B.L., J.: FACTS In 1937, Ananias Isaac Lincallo bound himself in writing to turn to Victor Jimena one-half (1/2) 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 (in a 1939 notarial instrument duly registered with the Register of Deeds of Marinduque in his capacity as mining recorder) so as to include in the equal sharing arrangement not only of the proceeds from several mining claims, which by that time had already been purchased by Lincallo with various sums totalling P5,800.00 supplied by Jimena, but also the lands constituting the same, and so as to bind thereby their "heirs, assigns, or legal representatives." Apparently, the mining rights over part of the claims were assigned by Lincallo to Gold Star Mining Co., Inc., sometime before World War Il because in 1950 the corporation paid him P5,000 in consideration of, and as a quitclaim for, pre-war royalties. On several occasions thereafter, the mining claims in question were made subject-matter of contracts entered into by Lincallo in his own name and for his benefit alone without the slightest intimation of Jimena's interests over the same. On 19 September 1951, Lincallo and one Alejandro Marquez, as separate owners of particular mining claims, entered into an agreement with Gold Star Mining Co., Inc., the assignee thereof, regarding allotment to Lincallo of 45% of the royalties due from the corporation. Four months later, Lincallo, Marquez and Congressman Panfilo Manguerra, again as owners, leased certain mining claims to Jacob Cabarrus, who, in turn, transferred to Marinduque Iron Mines Agents, Inc., his rights under the lease contract. By virtue of still another contract executed by these lessors on 29 February 1952, 43% of the royalties due from Marinduque Iron Mines Agents, Inc., were agreed upon to be paid to Lincallo. As early as August, 1939 and down to September, 1952, Jimena repeatedly apprised Gold Star Mining Co., Inc., and Marinduque Iron Mines Agents, Inc., of his interests over the mining claims so assigned and/or leased by Lincallo and, accordingly, demanded recognition and payment of his one-half share in all the royalties, allocated and paid and, thereafter, to be paid to the latter. Both corporations, however, ignored Jimena's demands. Payment of the P5,800 advanced for the purchase of the mining claims, as well as the one-half share in the royalties paid by the two corporations, were also repeatedly demanded by Jimena from Lincallo. Acknowledging Jimena's contractual claim, Lincallo off and on promised to settle his obligations. And on 14 July 1952, Lincallo promised for the last time, to settle everything on or before the 30th day of the same month. Lincallo, however, did not only fail to settle his accounts with Jimena but transferred on 16 August 1952, a month after he promised to pay Jimena, 35 of his 45% share in the royalties due from Gold Star Mining Co., Inc., to one Gregorio Tolentino, a salaried employee, for an alleged consideration of P10,000.00. Jimena commenced a suit against Lincallo for recovery of his advances and his one-half share in the royalties. Gold Star Mining Co., Inc., and Marinduque Iron Mines, Inc., together with Tolentino, were later joined as defendants.

The TC issued, upon petition of Jimena, a writ of preliminary injunction restraining Gold Star Mining Co., Inc., and Marinduque Iron Mines Agents, Inc., from paying royalties during the pendency of the case to Lincallo, his assigns or legal representatives. Despite the injunction, Gold Star Mining Co., Inc., was found out to have paid P30, 691.92 to Lincallo and Tolentino. Said corporation claimed later on (on appeal) that the injunction had been superseded and/or dissolved on 25 May 1955 by the trial court's grant of Jimena's petition for a writ of preliminary attachment "to supersede the writ of preliminary injunction previously issued." But as the grant was conditioned upon filing of a bond to be approved by the trial court, no writ of attachment was issued because the bond offered by Jimena was disapproved. 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. TC: rendered decision in favor of Jimena From this judgment, all four defendants, namely, Lincallo, the widow and children of Tolentino, and the two corporations, appealed to the CA. CA: the Court of Appeals handed down a decision sustaining in its entirety that of the trial court. Petitioner Gold Star Mining Co., Inc., argues that the CAs decision finding that respondents Jimenas have a cause of action against it, and condemning it to pay the sum of P30,691.92 for violation of an allegedly non-existent injunction, are reversible errors. Reasons: As to respondents Jimena's cause of action, the same does not allegedly appear in the complaint filed against petitioner corporation. And as to the P30,691.92 penalty for violation of the injunction, the same can not allegedly be imposed because (1) the sum of P30,691.92 was not prayed for, (2) the injunction in question had already been superseded and/or dissolved by the trial court's grant of Jimena's petition for writ of preliminary attachment; and (3) the corporation was never charged, heard, nor found guilty in accordance with, and pursuant to, the provisions, of Rule 64 of the (Old) Rules of Court.

ISSUE: won Jimenas have a cause of action against Gold Star SC: YES We are of the same opinion with the Court of Appeals that respondents Jimenas have a cause of action against petitioner corporation and that the latter's joinder as one of the defendants before the trial court is fitting and proper. CA: There first assigned error is the Trial Court erred in not dismissing this instant action as "there is no privity of contract between Gold Star and Jimena." This contention is without merit. The situation at bar is similar to the status of the first and second mortgagees of a duly registered real estate mortgage. While there exists no privity of contract between them, yet the common subject-matter supplies the juridical link. Borrowing the Spanish maxim cited by Jimena's counsel, "el deudor de mi deudor es deudor mio," this legal maxim finds sanction in Article 1177, new Civil Code which provides that "creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter (debtor) for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them (1111)."

. . . it can be said that Lincallo, in transferring the mining claims to Gold Star (without disclosing that Jimena was a co-owner although Gold Star had knowledge of the fact as shown by the proofs heretofore mentioned) acted as Jimena's agent with respect to Jimena's share of the claims. Under such conditions, Jimena has an action against Gold Star, pursuant to Article 1883, New Civil Code, 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." As counsel for Jimena has correctly contended, "the remedy of garnishment suggested by Gold Star is utterly inadequate for the enforcement of Jimena's right against Lincallo because Jimena wanted an accounting and wanted to receive directly his share of the royalties from Gold Star. That recourse is not open to Jimena unless Gold Star is made a party in this action." Considering that no writ of preliminary attachment was issued by the trial court, the condition for its issuance not having been met by Jimena, nothing can be said to have superseded the writ of preliminary injunction in question. The preliminary injunction was, therefore, subsisting and evidently violated by petitioner corporation when it paid the sum of P30,691.92 to Lincallo and Tolentino. By sentencing Gold Star Mining Co., Inc., to pay, for the account of Lincallo, the sum aforesaid, the court merely endeavoured to prevent its award from being rendered pro tanto nugatory and ineffective, and thus make it conformable to law and justice. That the questioned award was not intended to be a penalty against appellant Gold Star Mining Co., Inc., is shown by the provision in the judgment that the P30,691.92 to be paid by it to Jimena is "to be imputed to Lincallo's liability under this judgment." The court thus left the way open for Gold Star Mining Co., Inc., to recover later the whole amount from Lincallo, whether by direct action against him or by deducting it from the royalties that may fall due under his 1951 contract with appellant. 2.

b.

3.

4.

5. 6.

7. 8.

CA decision affirmed. Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro, Angeles, Fernando and Capistrano, JJ., concur. Zaldivar, J., is on leave.

He was also authorized to mortgage the house fr the purpose of securing the payment of any amount advanced to his wife, Dolores Orozco, who, inasmuch as the property had been acquired with funds belonging to the conjugal partnership, was a necessary party to its sale or encumbrance. On the 21st of January, 1890, Enrique Grupe and Dolores Orozco obtained a loan from the Gonzalo Tuason secured by a mortgage on the property referred to in the power of attorney. In the caption of the instrument evidencing the debt it is stated that Grupe and Dolores Orozco appeared as the parties of the first part and Gonzalo Tuason, the plaintiff, as the party of the second part; that Grupe acted for himself and also in behalf of Juan Vargas by virtue of the power granted him by the latter, and that Dolores Orozco appeared merely for the purpose of complying with the requirement contained in the power of attorney. This instrument was duly recorded in the Registry of Property, and it appears therefrom that Enrique Grupe (as attorney in fact for Vargas) received from the Gonzalo a loan of 2,200 pesos and delivered the same to the Orozco; That to secure its payment of the loan, Grupe mortgaged the property of his principal with Orozco's consent as required in the power of attorney. Grupe also received 1,300 pesos. This amount he borrowed for his own use. (The recoverv of this sum not being involved in this action, it will not be necessary to refer to it in this decision. The complaint refers only to the 2,200 pesos delivered to the defendant under the terms of the agreement.) Tuazon instituted this action against Orozco for recovery of the P2200 loan. Orozco: denies having received this sum. She claims that the instrument is evidence of a debt personally incurred by Enrique Grupe for his own benefit, and not incurred for the benefit of his principal, Vargas, as alleged in the complaint. As a matter of fact, Grupe, by the terms of the agreement, bound himself personally to pay the debt.

GONZALO TUASON, plaintiff and appellee, vs. DOLORES OROZCO, defendant and appellant. February 10, 1906 Mapa,J;

ISSUE#1: WON mortgage was valid given the fact that the proceeds of the loan was delivered not by the creditor (Tuazon). HELD: YES. The fact that the defendant received the money from her husband's agent and not from the creditor does not affect the validity of the mortgage in view of the conditions contained in the power of attorney under which the mortgage was created. Nowhere does it appear in this power that the money was to be delivered to her by the creditor himself and not through the agent or any other person. The important thing was that she should have received the money. This we think is fully established by the record.

PRINCIPAL: Juan Vargas AGENT: Enrique Grupe 1. SCOPE OF AUTHORITY: Juan de Vargas executed a power of attorney to Enrique Grupe, authorizing him, among other things: a. to dispose of all his property, and particularly of a certain house and lot known as No. 24 Calle Nueva, Malate, in the city of Manila, for the price at which it was actually sold.

ISSUE#2: WON Orozco, wife of the principal and who took part in the execution of the mortgage be held liable given the fact that the agent Gruspe bound himself personally to pay the debt. HELD: YES. A debt incurred by the agent is binding directly upon the principal, provided the former acted, as in the present case, within the scope of his authority. (Art. 1727 of the Civil Code.) The fact that the agent has also bound himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. The individual liability of the agent constitutes in the present case a further security in favor of the creditor and does not affect or preclude the liability of the principal. In the present case the latter's liability was further guaranteed by a mortgage upon his property. The law does not provide that the agent can not bind himself personally to the fulfillment of an obligation incurred by him in the name and on behalf of his principal. On the contrary, it provides that such act on the part of an agent would be valid. (Art. 1725 of the Civil Code.)

The New York supplier was not able to deliver the sulfur before January 15, 1957, which was the deadline for the delivery as it was not able to secure shipping space. NPCs fertilizer had to shut down from January 20 to January 26 because of this and no fertilizer was produced. According to NPCs counsel, non-availability of bottom or vessel is not a fortuitious event and demanded for liquidated damages from date of deadline (January 15, 1957) up to May 9, 1957, which was the date NPC rescinded the contract of sale stating that time was of the essence. Similar demand was made on Domestic Insurance Company as its surety. The total of liquidated damages amounted to PhP360,572.80. The Contract of Sale explicitly excludes non-availability of bottom or vessel as reason to exempt seller from payment of liquidated damages. Namercos offer is even more explicit as it guarantees the availability of bottom or vessel. RTC concluded that Namerco acted beyond the bounds of its authority because it violated its principals cabled instructions which among others includes that the sale is subject to availability of steamer. Issue: Is Namerco liable to pay liquidated damages to NPC? Held: Yes. Under Article 1397, the agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notices of his powers is personally liable to such party.

-The above mortgage being valid and having been duly recorded in the Register of Property, directly subjects the property thus encumbered, whoever its possessor may be, to the fulfillment of the obligation for the security of which it was created. (Art. 1876 of the Civil Code and art. 105 of the Mortgage Law.). -it is practically of no importance whether or not Enrique Grupe bound himself personally to pay the debt in question. Be this as it may and assuming that Vargas, though principal-in the agency, was not the principal debtor, the right in rem arising from the mortgage would have justified the creditor in bringing his action directly against the property encumbered had he chosen to foreclose the mortgage rather than to sue Grupe, the alleged principal debtor. This would be true irrespective of the personal liability incurred by Grupe. The result would be practically the same even though it were admitted that appellant's contention is correct. -

Ratio: Even before the contract of sale was signed, Namerco was already aware that its principal was having difficulties in booking shipping space and yet it proceeded to do so despite warnings because the company did not want to forfeit Namercos bidders bond in the sum of PhP45,100.00. Namerco never disclosed to the NPC the cabled or written instructions of its principal. The contract of sale was even expressly repudiated by the principal since Namerco took chances and acted in its own name. Namerco cannot hide behind Article 1403 which provides that a contract entered into in the name of another person by one who has acted beyond his powers is unenforceable. This is because the unenforceability of contract being referred to is against the principal, and not the agent. For agents such as Namerco, it is Article 1897 that applies. Thus, it should be held liable for liquidated damages. Other details: Damages reduced to only PHP45,100.00 instead of the original amount since the liquidated damages as computed per contract would have amounted to 80% of the purchase price and as an equitable consideration since Namerco employed persistent efforts to charter steam and failure to secure shipping space is not attributable to its fault or negligence. Dominion Insurance Corp. vs. CA

National Power Corp. v National Merchandising Corporation October 23, 1982 | G.R. No. L-33819 and L-33897 Facts: NPC and Namerco, as representatives of International Commodities Corporations (New York), executed a contract for the purchase by the NPC of 4,000 long tons of crude sulfur for its Maria Cristina fertilizer plant for the price of 450,716.00. The agreement was that upon receipt of the letter of credit by the seller, it would deliver the sulfur at Iligan City within 60 days. Else, the seller and its surety would be liable to pay liquidated damages at the rate of two-fifth of the one percent of the full contract price for the first thirty days of default and four-fifth of one percent for everyday thereafter until complete delivery is made.

376 SCRA 239 (2002)

1. 2.

Whether Guevarra acted within his authority as agent for Dominion; and Whether Guevarra is entitled to reimbursement of amounts he paid out of his personal money in settling the claims of several insured.

Pardo, J. Held: 1. Petitioner: Respondent: Dominion Insurance Corporation Rodolfo S. Guevarra and Fernando Austria, CA No. A perusal of the Special Power of Attorney would show show that petitioner (represented by third-party defendant Austria) and respondent Guevarra intended to enter into a principal-agent relationship. Despite the word special in the title of the document, the contents reveal that what was constituted was actually a general agency. The terms of the agreement read: That we, FIRST CONTINENTAL ASSURANCE COMPANY, INC.,17 a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, xxx represented by the undersigned as Regional Manager, xxx do hereby appoint RSG Guevarra Insurance Services represented by Mr. Rodolfo Guevarra xxx to be our Agency Manager in San Fdo., for our place and stead, to do and perform the following acts and things: 1. To conduct, sign, manager (sic), carry on and transact Bonding and Insurance business as usually pertain to a Agency Office, or FIRE, MARINE, MOTOR CAR, PERSONAL ACCIDENT, and BONDING with the right, upon our prior written consent, to appoint agents and sub-agents. 2. To accept, underwrite and subscribed (sic) cover notes or Policies of Insurance and Bonds for and on our behalf. 3. To demand, sue, for (sic) collect, deposit, enforce payment, deliver and transfer for and receive and give effectual receipts and discharge for all money to which the FIRST CONTINENTAL ASSURANCE COMPANY, INC.,18 may hereafter become due, owing payable or transferable to said Corporation by reason of or in connection with the above-mentioned appointment. 4. To receive notices, summons, and legal processes for and in behalf of the FIRST CONTINENTAL ASSURANCE COMPANY, INC., in connection with actions and all legal proceedings against the said Corporation.

Summary: The Insurance agent advanced payment for the claims of the companys insured. He sought to recover from the corporation. The court held that since the agent acted beyond the instructions of his principal to make payment only from the revolving fund or collection, he is not entitled to reimbursement. But to prevent unjust enrichment, Article 1236 was applied, the agent may demand for reimbursement so far as the principal was benefited.

Facts: Rodolfo S. Guevarra filed a case for a sum of money against Dominion Insurance Corporation to recover Php156,473.90 which he claimed to have advanced in his capacity as manager of defendant to satisfy certain claims filed by defendants clients. The defendant denied any liability to plaintiff and asserted a counterclaim for P249,672.53, representing premiums that plaintiff allegedly failed to remit. Dominion also filed a third-party complaint against Fernando Austria, who, at the time relevant to the case, was its Regional Manager for Central Luzon area. Pre-trial conferences were set for 9 times from Oct. 18, 1991 to April 6, 1992 but were postponed. On May 22, 1992, another pre-trial was held but counsel of Dominion failed to appear, and sent a handwritten note asking for postponement. The court declared Dominion in default. It also denied the Motion to Lift Order of Default. The trial court rendered judgment in favor of Guevarra and ordered Dominion to pay him Php156,473.90. The Court of Appeals affirmed the decision of the trial court.

Issues:

The agency comprises all the business of the principal,20 but, couched in general terms, it is limited only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special power. Thus, the acts enumerated in or similar to those

enumerated in the Special Power of Attorney do not require a special power of attorney. Article 1878, Civil Code, enumerates the instances when a special power of attorney is required. The pertinent portion that applies to this case provides that:

Article 1236, second paragraph, Civil Code, provides: Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

Article 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; (15) Any other act of strict dominion.

Thus, to the extent that the obligation of the petitioner has been extinguished, respondent Guevarra may demand for reimbursement from his principal. To rule otherwise would result in unjust enrichment of petitioner.

Guevarras authority to settle claims is embodied in the Memorandum of Management Agreement which enumerates Guevarras duties and responsibilities as agency manager

The decision of the Court of Appeals is modified. Dominion Insurance is ordered to pay Guevarra the amount of P112, 672.11 representing the total amount advanced by the latter in the payment of the claims of the petitioners clients. Petition denied, Judgment modified. NICHOLAS Y. CERVANTES, Petitioner, vs. COURT OF APPEALS AND THE PHILIPPINE AIR LINES, INC., respondent. PURISIMA, J.: FACTS On March 27, 1989,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. The issuance of the said plane ticket was in compliance with a Compromise Agreement entered into between the contending parties in two previous suits before the RTC in Surigao City. 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. c Upon learning that the same PAL plane would make a stop-over in San Francisco, and considering that he would be there on April 2, 1990, petitioner made arrangements with PAL for him to board the flight in San Francisco instead of boarding in Los Angeles. On April 2, 1990, when the petitioner checked in at the PAL counter in San Francisco, he was not allowed to board. The PAL personnel concerned marked the following notation on his ticket: TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY. C Aggrieved, petitioner Cervantes filed a Complaint for Damages, for breach of contract of carriage the RTC of Surigao del Norte in Surigao City. But the said complaint was dismissed for lack of merit. Petitioner appealed to the Court of Appeals, which upheld the dismissal of the caseary ISSUES Whether or not the act of the PAL agents in confirming subject ticket extended the period of validity of petitioners ticket; (2) HELD:

1. You are hereby given authority to settle and dispose of all motor car 2.
claims in the amount of Php5,000 with prior approval of the Regional Office. Full authority is given you on TPPI claims settlement.

The authority to pay also limits Guevarras authority to pay which states that the payment shall come from the revolving fund collection.

2.

No reimbursement but to prevent unjust enrichment, general rule on Oblicon is used. Having deviated from the instructions of the principal, the expenses that respondent Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from petitioner Dominion. This conclusion is in accord with Article 1918, Civil Code. However, while the law on agency prohibits respondent Guevarra from obtaining reimbursement, his right to recover may still be justified under the general law on obligations and contracts.

The plane ticket itself provides that it is not valid after March 27, 1990. It is also stipulated in paragraph 8 of the Conditions of Contract as follows: "8. This ticket is good for carriage for one year from date of issue, except as otherwise provided in this ticket, in carriers tariffs, conditions of carriage, or related regulations. The fare for carriage hereunder is subject to change prior to commencement of carriage. Carrier may refuse transportation if the applicable fare has not been paid. In his effort to evade this inevitable conclusion, petitioner theorized that the confirmation by the PALs agents in Los Angeles and San Francisco changed the compromise agreement between the parties. The 2 employees did not extend the validity of the ticket. Both had no authority to do so. Appellant knew this from the very start when he called up the Legal Department of appellee in the Philippines before he left for the United States of America. He had first hand knowledge that the ticket in question would expire on March 27,1990 and that to secure an extension, he would have to file a written request for extension at the PALs office in the Philippines. Despite this knowledge, appellant persisted to use the ticket in question.ry It can be gleaned that the petitioner was fully aware that there was a need to send a letter to the legal counsel of PAL for the extension of the period of validity of his ticket. 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, acted without authority when they confirmed the flights of the petitioner. Under Article 1898 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 Petitioner stresses that the alleged lack of authority of the PAL employees was neither raised in the answer nor in the motion to dismiss. But records show that the question of whether there was authority on the part of the PAL employees was acted upon by the trial court when Nicholas Cervantes was presented as a witness and the depositions of the PAL employees, Georgina M. Reyes and Ruth Villanueva, were presented. The admission by Cervantes that he was told by PALs legal counsel that he had to submit a letter requesting for an extension of the validity of subject tickets was tantamount to knowledge on his part that the PAL employees had no authority to extend the validity of subject tickets and only PALs legal counsel was authorized to do so. However, notwithstanding PALs failure to raise the defense of lack of authority of the said PAL agents in its answer or in a motion to dismiss, the omission was cured since the said issue was litigated upon, as shown by the testimony of the petitioner in the course of trial. Rule 10, Section 5 of the 1997 Rules of Civil Procedure provides that when evidence is presented by one party, with the express or implied consent of the adverse party, as to issues not alleged in the pleadings, judgment may be rendered validly as regards the said issue, which shall be treated as if they have been raised in the pleadings. There is implied consent to the evidence thus presented when the adverse party fails to object thereto.

WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals dated July 25, 1995 AFFIRMED in toto. No pronouncement as to costs. c