Goquilay vs. Sycip, 9 SCRA 663 , December 10, 1963REYES, J.B.L., J.:

FACTS: Tan Sin An and Antonio Goquiolay entered into a general commercial partnership which was to last for 10 years for the purpose of dealing in real-estate. The agreement lodged upon Tan Sin An the sole management of the partnership affairs and his co – partner, Goquiolay, has no voice or participation in the management of the affairs of the co –partnership. They further agreed upon that in the event of the death of any of the partners at any time before the expiration of the term, the co –partnership shall not be dissolved but will have to be continued and the deceased partner shall be represented by his heirs or assigns in the said co –partnership. A general power of attorney (GPA) was executed by Goquiolay in favor of Tan Sin An which included buy, sell, alienate and convey properties of the partnership as well as obtain loans as he may deem advisable for the best interest of the co –partnership. With the authority of the GPA, the partnership through Tan Sin An purchased 3 parcels of land which was mortgaged to La Urbana Sociedad and another 46 parcels of land which were purchased by Tan Sin An in his individual capacity, and assumed mortgaged debt thereon. The down payment for the 46 parcels of land was advanced by Yutivo and Co. The two separate obligations were consolidated in an instrument executed by the partnership and Tan Sin An, whereby the entire 49 lots were mortgaged in favor of the Banco Hipotecario de Filipinas (as successor to La Urbana). When Tan Sin An died, his wife KongChia Pin was appointed administratix of the intestate estate of her deceased husband. Repeated demands for payment were made by Banco Hipotecario on the partnership and on Tan Sin An which was initially paid by Yutivo and Co. and Sing Yee Cuan and Co. The matter now pending is the appellant's motion for reconsideration of our main decision, wherein we have upheld the validity of the sale of the lands owned by the partnership Goquiolay & Tan Sin An, made in 1949 by the widow of the managing partner, Tan Sin An (Executed in her dual capacity as Administratrix of the husband's estate and as partner in lieu of the husband), in favor of the buyers Washington Sycip and Betty Lee.

ISSUE: W/N the consent of the other partner was necessary to perfect the sale of the partnershipproperties to Sycip and Betty – NO.

HELD: Strangers dealing with a partnership have the right to assume, in the absence of restrictive clauses in the co – partnership agreement, that every general partner has the power to bind the partnership and has the requisite authority from his co – partners. However, consonant with the articles of co –partnership providing for the continuation of

the firm notwithstanding the death of one of the partners, the heir of the deceased, by never repudiating or refusing to be bound under said provision, became individual partner with Goquiolay upon Tan’s demise. By allowing Kong Chai Pin to retain control of the partnership properties from 1942 to 1949, Goquiolay is estopped from denying her legal representation of the partnership, with the power to bind it with proper contracts. By authorizing the widow of the managing partner to manage partnership property (which a limited partner could not be authorized to do), the other general partner recognized her as a general partner, and is now in estoppel to deny her position as a general partner, with authority.

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES v. COURT OF APPEALS and AMERICAN AIR-LINES INCORPORATED197 SCRA 645 May 29, 1991 PADILLA, J.:

FACTS:American Airlines, Inc. (American Air), an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air Services and Hotel Representatives (Orient Air), entered into a General Sales Agency Agreement (Agreement), whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. In the agreement, Orient Air shall remit in United States dollars to American the ticket stock or exchange orders, less commissions to which Orient Air Services is entitled, not less frequently than semi-monthly. On the other hand, American will pay Orient Air Services commission on transportation sold by Orient Air Services or its sub-agents. Thereafter, American alleged that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net proceeds of sales for the months of January to March 1981 in the amount of US $254,400.40, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement in accordance with paragraph 13 which authorize the termination of the thereof in case Orient Air is unable to transfer to the United States the funds payable by Orient Air Services to American. American Air instituted suit against Orient Air with the Court of First Instance of Manila “for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order” averring the aforesaid basis for the termination of the Agreement as well as therein defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff." 

Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to

the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions. Further, the defendant contended that the actions taken by American Air in the course of terminating the Agreement as well as the termination itself were untenable. The trial court ruled in its favor which decision was affirmed with modification by Court of Appeals. It held the termination made by the latter as affecting the GSA agreement illegal and improper and ordered the plaintiff to reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA agreement.

ISSUE:

Whether the Court of Appeals erred in ordering the reinstatement of the defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement

HELD:Yes. By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. The Agreement itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the portion of the ruling of the respondent appellate court reinstating Orient Air as general sales agent of American Air.

NARIC vs. CA et al91 SCRA 437, July 16, 1979

FERNANDEZ, J

FACTS: The National Rice and Corn Corporation (Naric) had on stock 8000 metric tons of corn which it could not dispose of due to its poor quality. Naric called for bids for the purchase of the corn and rice. But precisely because of the poor quality of the corn, a direct purchase of said corn even with the privilege of importing commodities did not attract good offers. Davao Merchandising Corporation  (Damerco) came in with its offer to act as agent in the exportation of the corn, with the agent answering for the price thereof and shouldering all expenses incidental thereto, provided it can import commodities, paying the NARIC therefor from the price it offered for the corn. Damerco was to open a domestic letter of credit, which shall be available to the NARIC drawing therefrom through sight draft without recourse. The availability of said letter or letters of credit to the NARIC was dependent upon the issuance of the export permit. The payment therefor depended on the importation of the collateral goods, that is after its arrival.The first half of the collateral goods were successfully imported. Due to the inferior quality of the corn, it had to be replaced with more acceptable stock. This caused such delay that the letters of credit expired without the NARIC being able to draw the full amount therefrom. Checks and PN were issued by DAMERCO for the purpose of securing the unpaid part of the price of the corn and as guaranty that DAMERCO will purchase the corresponding collateral goods.

But because of the change of administration in the government, barter transactions were suspended. Hence, DAMERCO was not able to import the remaining collateral goods.

NARIC instituted in the CFI of Manila against DAMERCO and Fieldmen’s Insurance Co. Inc. an action for recovery of a sum of money representing the balance of the value of corn and rice exported by DAMERCO.

The trial court rendered in favor of NARIC ordering DAMERCO and Fieldmen’s Insurance Co. Inc., to pay, jointly and severally. CA reversed the trial court’s decision and rendered a new judgement dismissing the complaint as premature and for lack of cause of action. Hence this petition for certiorari.

 ISSUE: Whether DAMERCO only acted as an agent of NARIC or is a buyer

 HELD: Yes.

Clearly from the contract between NARIC and DAMERCO: bids were previously called for by the NARIC for  the purchase of corn and rice to be exported as well as of the imported commodities that will be brought in, but said biddings did not succeed in attracting good offers. Subsequently, Damerco made an offer. Now, to be sure, the contract designates the Naric as the seller and the Damerco as the buyer. These designations, however, are merely nominal, since the contract thereafter sets forth the role of the “buyer” (Damerco)’ “as agent of the seller” in exporting the quantity and kind of corn and rice as well as in importing the collateral goods thru barter and “to pay the aforementioned collateral goods.”The contract between the NARIC and the DAMERCO is bilateral and gives rise to a reciprocal obligation. The said contract consists of two parts: (1) the exportation by the DAMERCO as agent for the NARIC of the rice and corn; and (2) the importation of collateral goods by barter on a back to back letter of credit or no-dollar remittance basis. It is evident that the DAMERCO would not have entered into the agreement were it not for the stipulation as to the importation of the collateral goods which it could purchase.

It appears that we were also misled to believe that the Damerco was buying the corn. A closer look at the pertinent provisions of the contract, however, reveals that the price as stated in the contract was given tentatively for the purpose of fixing the price in barter. It should likewise be stressed that the aforesaid exportation and importation was on a “no-dollar remittance basis”. In other words, the agent, herein defendant Damerco, was not to be paid by its foreign buyer in dollars but in commodities. Damerco could not get paid unless the commodities were imported, and Damerco was not exporting and importing on its own but as agent of the plaintiff, because it is the latter alone which could export and import on barter basis according to its charter. Thus, unless Damerco was made an agent of the plaintiff, the former could not export the corn and rice nor import at the same time the collateral goods. This was precisely the intention of the parties.He is not to be considered a buyer, who should be liable for the sum sought by NARIC because the contract itself clearly provides the Damerco was to export the rice and corn, AND TO BUY THE collateral goods. There is nothing in the contract providing unconditionally that Damerco was buying the rice and corn. To be more specific, if the agreement was just a sale of corn to Damerco, the contract need not specify that Damerco was to buy the collateral goods.

MEDRANO and IBAAN RURAL BANK vs. COURT OF APPEALS452 SCRA 77 February 18, 2005CALLEJO, SR., J.:

FACTS:Bienvenido Medrano was the Vice-Chairman of Ibaan Rural Bank. He asked Flor (a cousin), to look for a buyer of a foreclosed asset of the bank (17-hectare mango plantation with 720 trees priced at P2.2M). Dominador Lee, a Makati businessman was a client of respondent Pacita Borbon, a licensed real estate broker. Borbon relayed to her business associates and friends that she had a ready buyer for a mango orchard. Flor then advised her that her cousin-in-law owned a mango plantation which was up for sale. She told Flor to confer with Medrano and to give them a written authority to negotiate the sale of the property. Medrano issued the Letter of Authority to Borbon and Antonio to negotiate with any prospective buyer for the sale of the mango plantation. He promised Borbon to pay a commission of 5% of the total purchase price to be agreed upon by the buyer and seller.

An ocular inspection was held by Lee. Lee informed Antonio that he already purchased the property and had made a down payment ofP1M. The remaining balance of P1.2M was to be paid upon the approval of the incorporation papers of the corporation he was organizing by the SEC. According to Antonio, Lee asked her if they had already received their commission. She answered “no,” and Lee expressed surprise over this. Since the sale of the property was consummated, the respondents asked from the petitioners their commission, or 5% of the purchase price. The petitioners refused to pay and offered a measly sum of P5,000.00 each. Hence, the present action.

Medrano’s defense: Borbon and Antonio did not perform any act to consummate the sale. The petitioners pointed out that the respondents (1) did not verify the real owner of the property; (2) never saw the property in question; (3) never got in touch with the registered owner of the property; and (4) neither did they perform any act of assisting their buyer in having the property inspected and verified.

ISSUE: WON the plaintiffs are entitled to any commission for the sale of the subject property? YES

HELD:The respondents are indeed the procuring cause of the sale. If not for the respondents, Lee would not have known about the mango plantation being sold by the petitioners. The sale was consummated. The bank had profited from such transaction. It would certainly be iniquitous if the respondents would not be rewarded their commission pursuant to the letter of authority.

“Procuring cause” = the proximate cause. The term “procuring cause,” in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker – producing a purchaser ready, willing and able to buy real estate on the owner’s terms.

The evidence on record shows that the respondents were instrumental in the sale of the property to Lee. Without their intervention, no sale could have been consummated. They were the ones who set the sale of the subject land in motion. While the letter-authority issued in favor of the respondents was non-exclusive, no evidence was adduced to show that there were other persons, aside from the respondents, who informed Lee about the property for sale. When there is a close, proximate and causal connection between the broker’s efforts and the principal’s sale of his property, the broker is entitled to a commission.

In the absence of fraud, irregularity or illegality in its execution, such letter-authority serves as a contract, and is considered as the law between the parties. The clear intention is to reward the respondents for procuring a buyer for the property.

Bicol Savings and Loan Association vs. CA171 SCRA 630. March 31, 1989MELENCIO-HERRERA, J.:

FACTS:Juan de Jesus was the owner of a parcel of land in Naga City. He executed a

Special Power of Attorney in favor of Jose de Jesus, his son, wherein the latter could negotiate and mortgage the former’s property in any bank preferably in the Bicol Savings and Loan Association. By virtue of such document, Jose was able to obtain P20,000 from Bicol Savings. To secure payment, he executed a deed of mortgage wherein it was stipulated that upon the mortgagor’s failure or refusal to pay the obligation, the mortgagee may immediately foreclose the property. Juan de Jesus died and the loan obligation was not paid. As a result, Bicol Savings extrajudicially foreclosed the mortgaged property. The bank won as the highest bidder during the auction sale. Jose and the other heirs failed to redeem the property. Thereafter, they tried to negotiate with Bicol Savings but the parties did not come up to an agreement. Bicol Savings sold the property to another person. Hence, Jose filed for annulment of the foreclosure sale. The lower court dismissed the case. On appeal, the CA reversed RTC’s decision. Hence, this appeal.

ISSUE:Whether or not the extrajudicial foreclosure sale of the property was valid.

HELD:Yes. Art 1879 of the CC which states that special power to sell excludes the

power to mortgage and vice versa is inapplicable in the case. What it proscribes is a voluntary and independent contract of sale and not an auction sale resulting from extrajudicial foreclosure caused by the default of the mortgagor. The power to foreclose is not an ordinary agency but is primarily conferred upon the mortgagee for its protection. The right of the bank to foreclose is independent of the mortgage contract as it is recognized by the Rules of Court.

PURITA PAHUD VS. CA [ 597 SCRA 13, AUGUST 25, 2009 ] NACHURA, J.:

FACTS:Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246- square meter parcel of land situated in Barangay Anos, Los Baños, Laguna and covered by Original Certificate of Title . Agatona Genil and Pedro San Agustin died , left with children: respondents, Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.

Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided Shares conveying in favor of petitioners their respective shares . Eufemia also signed the deed on behalf of her four (4) other co-heirs, Only Isabelita has the Power of attorney while the other three (3) co-heirs has no written consent authorizing such sale. It was not notarized.

The Pahuds paid the accounts into the Los Baños Rural Bank where the property was mortgaged. The bank issued a release of mortgage and turned over the ownership Pahuds, the Pahuds made more payments to Eufemia and her siblings. When Eufemia and her co-heirs drafted an extra-judicialsettlement of estate to facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.

Virgilio's co-heirs filed a complaint for judicial partition of the subject property before the RTC of Calamba, Laguna.In the course of the proceedings for judicial partition, a Compromise Agreement was signed with seven (7) of theco-heirs agreeing to sell their undivided shares to Virgilio .. The compromise agreement was, however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-heirs, refused to sign the agreement because he knew of the previous sale made to the Pahuds. Eufemia acknowledged having received the payments from Virgilio. Virgilio then sold the entire property to spouses Isagani Belarmino and Leticia Ocampo

(Belarminos). The Belarminos immediately constructed a building on the subject property.

Alarmed by the ongoing construction on the lot they purchased, the Pahuds immediately confronted Eufemia who confirmed to them that Virgilio had sold the property to the Belarminos. Then the Pahuds filed a complaint in intervention in the pending case for judicial partition.

ISSUE/S:1. Whether or not the sale of the subject property by Eufemia and her co- heirs to

the Pahuds is valid and enforceable.2. Whether or not the sale by co-heirs to Virgilio is void.3. Whether or not the sale of Virgilio to Belarminos is valid.

HELD:

1. The sale made by Eufemia, Isabelita and her two brothers to the Pahuds should be valid only with respect to the authorized share of Eufemia While the sale with respect to the other portion of the lot representing the shares of Zenaida, Milagros, and Minerva, is void because Eufemia could not dispose of the interest of her co-heirs in the said lot absent any written authority from the latter, as required by law.

2. the subsequent sale made by the seven co-heirs to Virgilio was void because they no longer own the subject property which they could alienate at the time of the second transaction. You cannot give what you do not possess.

3. The sale to Bilarminos is not valid, they did not purchased the property from Virgilio in good faith. the Belarminos were fully aware that the property was registered not in the name of Virgilio.

They knew that the property was still subject of proceedings before the trial court.

INLAND REALTY INVESTMENT SERVICE, INC. vs. HON. COURT OF APPEALS, 273 SCRA 70 , June 9, 1997HERMOSISIMA, JR., J.:

FACTS:

On Sept.6, 1975, defendant corporation Ayala, Inc. through its Assistant General Manager J. Armando Eduque, granted to Land Realty, authority to sell 9,800 shares of stocks in Architect's Bldg. Inc. The terms of the sale was for P1,500.00 per share and the contract was to last for thirty days.

Inland Realty, a Company engaged in realty and brokerage, strategized its sale through sending letters to its prospective buyers. Stanford Microsystems, Inc. proposed buying the stocks but submitted a count-offer for P1,000.00/share for 9,800 shares payable in 5 years at 12% per annul interest until fully paid.

This proposal was communicated by Inland Realty to defendant corporation but the latter opposed, claiming the offer was too low and asked petitioner if the price can be adjusted according to the terms of the authority to sell. The period of the contract extended for several times. Petitioner asked for an exclusive authority and for a longer period but Eduque would not give the same. The sale was made in favor of Stanford. Later on, Inland Realty sued defendant for its brokerage fees. Defendant claims that it is not entitled because after the thirty day period expired, petitioner was no longer connected to the transaction and that it abandoned it,

ISSUE: Whether or not Inland Realty is entitled to th brokerage fees.

HELD:

No. Petitioner was not entitled to the brokerage commission of 5%. It appeared that there was no express authority given y defendant for th extension of the thirty-day period of the authority to sell. Moreover, petitioner did not do anything except submit the name of the prospective buyer, Microsystems. I did not take part in the consummation of the sale and the processing of the necessary documents. More importantly, what existed was a proposal and a counter-proposal which Dd not constitute the closing of the transaction just because it was plaintiff who solely suggested to defendants the name of Stanford as buyer, and that Inland Realty did not sell the stocks in accordance with the terms of the agreement with Ayala Co., that each stock be sold at P1,500 each.

MANOTOK BROTHERS, INC., vs. THE HONORABLE COURT OF APPEALS, 221 SCRA 224. April 7, 1993.Campos Jr., J

FACTS:

1. The petitioner is the owner of a certain parcel of land and building which were formerly leased by the City of Manila and used by the Claro M. Recto High School, at M.F. Jhocson Street, Sampaloc Manila.

2. By means of a letter dated July 5, 1966, petitioner authorized herein private respondent Salvador Saligumba to negotiate with the City of Manila the sale of the aforementioned property for not less than P425,000.00. In the same writing, petitioner agreed to pay private respondent a five percent (5%) commission in the event the sale

is finally consummated and paid.

3. The letter of authority was extended three times. The final one was on Nov. 16, 1967, giving Saligumba an extension of 180 days to finalize and consummate the sale of the property to the City of Manila for not less than P410,000.00.

4.The Municipal Board of the City of Manila eventually, on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the property which private respondent was authorized to sell. Said ordinance however, was signed by the City Mayor only on May 17, 1968, one hundred eighty three (183) days after the last letter of authorization.

5. On January 14, 1969, the parties signed the deed of sale of the subject property. The initial payment of P200,000.00 having been made, the purchase price was fully satisfied with a second payment on April 8, 1969 by a check in the amount of P210,816.00.

6. Notwithstanding the realization of the sale, private respondent never received any commission, which should have amounted to P20,554.50. This was due to the refusal of petitioner to pay private respondent said amount as the former does not recognize the latter's role as agent in the transaction, since:

a. the sale was not made within the period given in the letter of authority b. Saligumba was not the person responsible for the negotiation and

consummation of the sale but it was Filomeno Huelgas, the PTA presidence.

7. Saligumba recounted how he initiated the sale. He recounted that it first began at a meeting with Rufino Manotok at the office of Fructuoso Ancheta, principal of C.M. Recto High School. Atty. Dominador Bisbal, then president of the PTA, was also present. The meeting was set precisely to ask private respondent to negotiate the sale of the school lot and building to the City of Manila. Private respondent then went to Councilor Mariano Magsalin, the author of the Ordinance which appropriated the money for the purchase of said property, to present the project. He also went to the Assessor's Office for appraisal of the value of the property. While these transpired and his letters of authority expired, Rufino Manotok always renewed the former's authorization until the last was given, which was to remain in force until May 14, 1968. After securing the report of the appraisal committee, he went to the City Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila. The latter office approved the report and so private respondent went back to the City Mayor's Office, which thereafter indorsed the same to the Municipal Board for appropriation. Subsequently, on April 26, 1968, Ordinance No. 6603 was passed by the Municipal Board for the appropriation of the sum corresponding to the purchase price. Petitioner received the full payment of the purchase price, but private respondent did not receive a single centavo as commission.

8. Atty. Bisbal testified that Huelgas was aware of the fact the Saligumba was working on the sale but he never offered to help in the acquisition of the property.

9. The CFI remdered judgment in favor of Saligumba. This was affirmed by the CA.

ISSUE: WON Saligumba is entitled to the 5% agent’s commission

HELD: YES.

1. As enunciated in the case of Prats vs. CA, the court ruled in favor of the claimant-agent, despite the expiration of his authority.

"In equity, however, the Court notes that petitioner had diligently taken steps to bring back together respondent Doronila and the SSS,.xxx xxx xxx

The court has noted on the other hand that Doronila finally sold the property to the Social Security System at P3.25 per square meter which was the very same price counter-offered by the Social Security System and accepted by him in July, 1967 when he alone was dealing exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats' efforts somehow were instrumental in bringing them together again and finally consummating the transaction at the same price of P3.25 per square meter, although such finalization was after the expiration of Prats' extended exclusive authority.xxx xxx xxx

Under the circumstances, the Court grants in equity the sum of One hundred Thousand Pesos (P100,000.00) by way of compensation for his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his exclusive authority . . ."

From the foregoing, it follows then that private respondent herein, with more reason, should be paid his commission. While in Prats vs. Court of Appeals, the agent was not even the efficient procuring cause in bringing about the sale, unlike in the case at bar, it was still held therein that the agent was entitled to compensation. In the case at bar, private respondent is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve.

2. In an earlier case, this Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission.

We agree with respondent Court that the City of Manila ultimately became the purchaser of petitioner's property mainly through the efforts of private respondent. Without discounting the fact that when Municipal Ordinance No. 6603 was signed by the City Mayor on May 17, 1968, private respondent's authority had already expired, it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's authorization was still in force. Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's authority. It is also worth emphasizing that from the records, the only party given a written authority by petitioner

to negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent.

3. Contrary to what petitioner advances, the case of Danon vs. Brimo, on which it heavily anchors its justification for the denial of private respondent's claim, does not apply squarely to the instant petition. Claimant-agent in said case fully comprehended the possibility that he may not realize the agent's commission as he was informed that another agent was also negotiating the sale and thus, compensation will pertain to the one who finds a purchaser and eventually affects the sale. Such is not the case herein. On the contrary, private respondent pursued with his goal of seeing that the parties reach an agreement, on the belief that he alone was transacting the business with the City Government as this was what petitioner made it to appear.

4. While it may be true that Filomeno Huelgas followed up the matter with Councilor Magsalin, the author of Municipal Ordinance No. 6603 and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed — when the buyer has already agreed to the purchase and to the price for which said property is to be paid. Without the efforts of private respondent then, Mayor Villegas would have nothing to approve in the first place. It was actually private respondent's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated.

LIM vs. COURT OF APPEALS and PEOPLE254 SCRA 170, February 28, 1996HERMOSISIMA, JR., J.:

FACTS:On October 8, 1987, Rosa Lim who had come from Cebu received from private respondent Victoria Suarez the following two pieces of jewelry; one 3.35 carat diamond ring worth P169K and one bracelet worth P170K, to be sold on commission basis. The agreement was reflected in a receipt.

On December 15, 1987, Lim returned the bracelet to Suarez, but failed to return the diamond ring or to turn over the proceeds thereof if sold. As a result, private complainant, aside from making verbal demands, wrote a demand letter to petitioner asking for the return of said ring or the proceeds of the sale thereof.

Lim’s contention: She was not an agent of Suarez. In fact, she was a prospective buyer of the pieces of jewelry. She told Mrs. Suarez that she would consider buying the pieces of jewelry for her own use and that she would inform the private complainant of such decision before she goes back to Cebu. She cannot be liable for estafa since she never received the jewelries in trust or on commission basis from Vicky Suarez. The real agreement between her and the private respondent was a sale on credit with Mrs. Suarez as the owner-seller and petitioner as the buyer, as indicated by the bet that

petitioner did not sign on the blank space provided for the signature of the person receiving the jewelry but at the upper portion thereof immediately below the description of the items taken.

ISSUE:

WON the real transaction between Lim and Suarez was that of sale or that of contract of agency to sell? Contract of Agency.

HELD:

Receipt contains the following provisions:XXX I received from Vicky Suarez the following jewelries XXXXXX if I could not sell, I shall return all the jewelry within the period mentioned above; if I would be able to sell, I shall immediately deliver and account the whole proceeds of sale thereof to the owner of the jewelries at his/her residence XXX

Materiality of the location of Lim’s signature: Rosa Lim’s signature indeed appears on the upper portion of the receipt immediately below the description of the items taken. This does not have the effect of altering the terms of the transaction from a contract of agency to sell on commission basis to a contract of sale. Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.

There are some provisions of the law which require certain formalities for particular contracts. It is required for for the validity of the contract; to make the contract effective as against third parties and; for the purpose of proving the existence of the contract. A contract of agency to sell on commission basis does not belong to any of these three categories, hence it is valid and enforceable in whatever form it may be entered into. FYI: There is only one type of legal instrument where the law strictly prescribes the location of the signature – which is in notarial wills found in Article 805 NCC.

In the case before us, the parties did not execute a notarial will but a simple contract of agency to sell on commission basis, thus making the position of petitioner’s signature thereto immaterial.

Contention of Lim that Suarez authorized Nadera to receive the ring:

Suarez testified that Aurelia Nadera is highly indebted to her, so if she gave authority for Nadera to get possession of it she will be exposing herself to a high risk.

Vicente Domingo represented by his heirs vs. Gregorio  Domingo [VicenteDomingo’s agent & broker42 SCRA 131 , Oct. 29, 1971

 FACTS:In a document Exhibit "A" executed on June 2, 1956, 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 agency with notice to Vicente.

On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer, promising him one-half of the 5% commission.Thereafter, Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective buyer.

After several conferences between Gregorio and Oscar de Leon, the latter raised his offer to P109,000.00 on June 20, 1956 as evidenced by Exhibit "C", to which Vicente agreed by signing Exhibit "C".

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, Exhibit "D". 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

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. 

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.

ISSUE: 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;

HELD: The duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal. 1

Consequently, the decisive legal provisions are in found Articles 1891 and 1909 of the New Civil Code.

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.Every stipulation exempting the agent from the obligation to render an account shall be void.

xxx xxx xxx

Art. 1909. The agent is responsible not only for fraud but also for negligence, which shall be judged with more less rigor by the courts, according to whether the agency was or was not for a compensation.

The aforecited provisions demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency, so much so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as of the strictest justice. 2

Hence, an agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous

one, or that usage or custom allows it; because the rule is to prevent the possibility of any wrong, not to remedy or repair an actual damage. 3 By taking such profit or bonus or gift or propina from the vendee, the agent thereby assumes a position wholly inconsistent with that of being an agent for hisprincipal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed. The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy.

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

Phil. Health Care Providers, Inc. (MAXICARE) v. ESTRADA / CARA Services542 SCRA 616 / Jan. 28, 2008Nachura, J.

FACTS: Maxicare is a domestic corporation engaged in selling health insurance plans whose Chairman Dr. Roberto K. Macasaet, Chief Operating Officer Virgilio del Valle, and Sales/Marketing Manager Josephine Cabrera were impleaded as defendants-appellants.

 On September 15, 1990, Maxicare allegedly engaged the services of Carmela Estrada who was doing business under the name of CARA HEALTH [SERVICES] to promote and sell the prepaid group practice health care delivery program called MAXICARE Plan with the position of Independent Account Executive. Maxicare formally appointed Estrada as its “General Agent,” evidenced by a letter-agreement dated February 16, 1991. 

  Maxicare alleged that it followed a “franchising system” in dealing with its agents whereby an agent had to first secure permission from Maxicare to list a prospective company as client.  [Estrada] alleged that it did apply with Maxicare for the MERALCO account and other accounts, and in fact, its franchise to solicit corporate accounts, MERALCO account included, was renewed on February 11, 1991.

    Plaintiff-appellee Estrada submitted proposals and made representations to the officers of MERALCO regarding the MAXICARE Plan but when MERALCO decided to subscribe to the MAXICARE Plan, [Maxicare] directly negotiated with MERALCO regarding the terms and conditions of the agreement and left plaintiff-appellee Estrada out of the discussions on the terms and conditions.

On March 24, 1992, plaintiff-appellee Estrada, through counsel, demanded from Maxicare that it be paid commissions for the MERALCO account and nine (9) other accounts.  In reply, Maxicare, through counsel, denied [Estrada’s] claims for commission for the MERALCO and other accounts because Maxicare directly negotiated with MERALCO and the other accounts(,) and that no agent was given the go signal to intervene in the negotiations for the terms and conditions and the signing of the service agreement with MERALCO and the other accounts so that if ever Maxicare was indebted to Estrada, it was only for P1,555.00 and P43.l2 as commissions on the accounts of Overseas Freighters Co. and Mr. Enrique Acosta, 

After trial, the RTC found Maxicare liable for breach of contract and ordered it to pay

Estrada actual damages in the amount equivalent to 10% of P20,169,335.00,

representing her commission for the total premiums paid by Meralco to Maxicare from

the year 1991 to 1996, plus legal interest computed from the filing of the complaint on

March 18, 1993, and attorney’s fees in the amount of P100,000.00.

On appeal, the CA affirmed in toto the RTC’s decision.

ISSUES:

1.         Whether the Court of Appeals committed serious error in affirming Estrada’s entitlement to commissions for the execution of the service agreement between Meralco and Maxicare.

 2.         Corollarily, whether Estrada is entitled to commissions for the two (2) consecutive renewals of the service agreement effective on December 1, 1992[5] and December 1, 1995.

HELD:

Well-entrenched in jurisprudence is the rule that factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest degree of respect and are considered conclusive between the parties.

Contrary to Maxicare’s assertion, the trial and the appellate courts carefully considered the factual backdrop of the case as borne out by the records. Both courts were one in the conclusion that Maxicare successfully landed the Meralco account for the sale of healthcare plans only by virtue of Estrada’s involvement and participation in the negotiations.

At the very least, Estrada penetrated the Meralco market, initially closed to Maxicare, and laid the groundwork for a business relationship. The only reason Estrada was not able to participate in the collection and remittance of premium dues to Maxicare was because she was prevented from doing so by the acts of Maxicare, its officers, and employees.

 

Rural Bank of Milaor vs. Francisca Ocfemia 325 SCRA 99 February 8, 2000Panganiban, J

FACTS: Several parcels of land were mortgaged by the respondents during the lifetime of the

respondent’s grandparents to the Rural bank of Milaor as shown by the Deed of Real

Estate Mortgage and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita

Ocfemia, one of the respondents, were not able to redeem the mortgaged properties

consisting of seven parcels of land and so the mortgage was foreclosed and thereafter

ownership was transferred to the petitioner bank. Out of the seven parcels of land that

were foreclosed, five of them are in the possession of the respondents because these

five parcels of land were sold by the petitioner bank to the respondents as evidenced by

a Deed of Sale. However, the five parcels of land cannot be transferred in the name of

the parents of Merife Nino, one of the respondents, because there is a need to have the

document of sale registered. The Register of deeds, however, said that the document of

sale cannot be registered without the board resolution of the petitioner bank confirming

both the Deed of sale and the authority of the bank manager, Fe S. Tena, to enter such

transaction.

The petitioner bank refused her request for a board resolution and made many alibis.

Respondents initiated the present proceedings so that they could transfer to their

names the subject five parcel of land and subsequently mortgage said lots and to

use the loan proceeds for the medical expenses of their ailing mother.

ISSUE: May the Board of Directors of a rural banking corporation be compelled to confirm a

deed of absolute sale of real property owned by the corporation which deed of sale was

executed by the bank manager without prior authority of the board of directors of the

rural banking corporation?

HELD: YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S.

Tena to enter into binding contracts. After the execution of the Deed of Sale,

respondents occupied the properties in dispute and paid the real estate taxes. If the

bank management believed that it had title to the property, it should have taken

measured to prevent the infringement and invasion of title thereto and

possession thereof. Likewise, Tena had previously transacted business on behalf of the

bank, and the latter had acknowledged her authority. A bank is liable to innocent third

persons where representation is made in the course of its normal business by an agent

like Manager Tena even though such agent is abusing her authority. Clearly, persons

dealing with her could not be blamed for believing that she was authorized to transact

business for and on behalf of the bank.

The bank is estopped from questioning the authority of the bank to enter into contract of

sale. If a corporation knowingly permits one of its officers or any other agent to act

within the scope of an apparent authority, it holds the agent out to the public as

possessing the power to do those acts; thus, the corporation will, as against anyone

who has in good faith dealt with it through such agent, be estopped from denying the

agent’s authority.

Dominion Insurance Corp. v CA376 SCRA 239 , Feb. 6, 2002 Pardo, J.

FACTS: Rodolfo Guevarra claimed to have advanced P156, 473.90 in his capacity as a manager of Dominion Insurance Corp. to satisfy certain claims filed by the petitioner’s clients. He then instituted a complaint for sum of money against the petitioner. The petitioner denied any liability to plaintiff and asserted a counterclaim of P249,672.53, representing premium that Guevarra failed to pay.

The RTC ruled in favor of Guevarra and ordered the petitioner to pay him the sum he claims. The CA affirmed the decision of the RTC.

ISSUE: WON Guevarra acted within his authority as agent for petitioner?

HELD: NO. The Special Power of Attorney entered into by petitioner and Guevarra would show that they intended to enter into a principal-agent relationship. Despite the word “special” in the document, the contents reveal that what was constituted was actually a general agency. The agency comprises all the business of the principal but couched in general terms; hence it is limited only to acts of administration.

Thus, the general agency constituted does not warrant the payment or settlement of claims as they specifically require a Special Power of Attorney as provided by Art. 1878 of the Civil Code. But as provided by the Memorandum of Management Agreement, Guevarra was authorized to pay the claim but the payment shall come from the revolving fund or collection in his possession.

Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from Dominion in accordance with Art. 1918 of the Civil Code.

Nevertheless, under Art. 1236, to the extent that the obligation of the petitioner has been extinguished, Guevarra may demand for reimbursement from his principal.

CMS Logging Inc v. CA and D.R. Aguinaldo Corp.211 SCRA 374 ,July 10, 1992; Nocon, J.

FACTS: Petitioner CMS Logging and respondent DRACOR entered into a contract of agency whereby the former appointed the latter as its exclusive export and sales agent for all

logs that the former may produce, for a period of 5 years. Out of this agreement, DRACOR was entitled to 5% commission of the gross sales of the logs sold. CMS was then able to sell through DRACOR a total of 77,264,672 board feet of logs in Japan, from September 20, 1957 to April 4, 1962. About six months prior to the expiration of the agreement, while on a trip to Japan, CMS's president and general manager and legal counsel, discovered that DRACOR had used Shinko Trading as agent, representative or liaison officer in selling CMS's logs in Japan for which Shinko earned a commission of U.S. $1.00 per 1,000 board feet from the buyer of the logs. Under this arrangement, Shinko was able to collect a total of U.S. $77,264.67. CMS claimed that this commission paid to Shinko was in violation of the agreement and that they are entitled to this amount as part of the proceeds of the sale of the logs.

CMS contended that since DRACOR had been paid the 5% commission under the agreement, it is no longer entitled to the additional commission paid to Shinko as this tantamount to DRACOR receiving double compensation for the services it rendered. After this discovery, CMS sold and shipped logs directly to several firms in Japan without the aid or intervention of DRACOR. Petitioner then sued respondent for recovery of the commission that Shinko received as well as for damages while DRACOR counterclaimed for all the sales made by CMS to the other Japanese firms.

ISSUE:

W/N DRACOR is entitled to its commission from the sales made by CMS to Japanese firms.

HELD:

NO. The principal may revoke a contract of agency at will, and such revocation may be express, or implied, and may be availed of even if the period fixed in the contract of agency as not yet expired. As the principal has this absolute right to revoke the agency, the agent can not object thereto; neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the payment of agent's commission.

In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract of agency under Article 1924 of the Civil Code, which provides: “The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.”

Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its

commission from the proceeds of such sale and is not entitled to retain whatever moneys it may have received as its commission for said transactions. Neither would DRACOR be entitled to collect amages from CMS, since damages are generally not awarded to the agent for the revocation of the agency, and the case at bar is not one falling under the exception mentioned, which is to evade the payment of the agent's commission.

DY BUNCIO Vs. ONG GUAN CAN (ART. 1926)60 Phil. 696 ,  October 2, 1934Hull, J.

FACTS: This is a suit over a rice-mill and camarin situated at Dao, Province of Capiz. Plaintiff claims that the property belongs to its judgment debtor, Ong Guan Can, while defendants Juan Tong and Pua Giok Eng are claiming to be the owner and lessee by virtue of a deed dated July 31, 1931, by Ong Guan Can, Jr. After trial the Court of First Instance of Capiz held that the deed was invalid and that the property was subject to the execution which has been levied on said properties by the judgment creditor of the owner. Defendants Juan Tong and Pua Giok bring this appeal and insist that the deed of the 31st of July, 1931, is valid.

The first recital of the deed is that Ong Guan Can Jr., as agent of Ong Guan Can, sells the rice-mill and camarin for P13,000 and gives as his authority the power of attorney dated the 23d of May, 1928. The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the agent in his own name and without any words indicating that he was signing it for the principal. Leaving aside the irregularities of the deed and coming to the power of attorney referred to in the deed and registered therewith, it is at once seen that it is not a general power of attorney but a limited one and does not give the express power to alienate the properties in question. (Article 1713 of the Civil Code.)

ISSUES: W/N the deed of sale executed by Ong Guan Can Jr. was valid.

HELD: NO. Appellants claim that this defect is cured by Exhibit 1, which purports to be a general power of attorney given to the same agent in 1920. Article 1732 of the Civil Code is silent over the partial termination of an agency. The making and accepting of a new power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture.

The title of Ong Guan Gan not having been divested by the so-called deed of July 31, 1931, his properties are subject to attachment and execution. A special power of atty giving the son the authority to sell the principals properties is deemed revoked by a subsequent general power of atty that does not give such power to the son, and any sale effected thereafter by the son in the name of the father would be void.

Valenzuela vs. Court of Appeals191 SCRA 1 , October 19, 1990Gutierrez, Jr. J

Facts:Petitioner Valenzuela, a General Agent respondent Philamgen, was authorized to solicit and sell all kinds of non-life insurance. He had a 32.5% commission rate. From 1973 to 1975, Valenzuela solicited marine insurance from Delta Motors, Inc. in the amount of P4.4 Million from which he was entitled to a commission of 32%. However, Valenzuela did not receive his full commission which amounted to P1.6 Million from the P4.4 Million. Premium payments amounting to P1,946,886.00 were paid directly to Philamgen. Valenzuela’s commission amounted to P632,737.00.Philamgen wanted to cut Valenzuela’s commission to 50% of the amount. He declined.When Philamgen offered again, Valenzuela firmly reiterated his objection.Philamgen took drastic action against Valenzuela. They: reversed the commission due him, threatened the cancellation of policies issued by his agency, and  started to leak out news that Valenzuela has a substantial debt with Philamgen. His agency contract was terminated.The petitioners sought relief by filing the complaint against the private respondents. The trial court found that the principal cause of the termination as agent was his refusal to share his Delta commission.The court considered these acts as harassment and ordered the company to pay for the resulting damage in the value of the commission. They also ordered the company to pay 350,000 in moral damages.The company appealed. The CA ordered Valenzuela to pay the entire amount of the commission. Hence, this appeal by Valenzuela.

Issue:1. WON the agency contract is coupled with interest on the part of agent Valenzuela.2. Whether or not Philamgen can be held liable for damages due to the termination of the General Agency Agreement it entered into with the petitioners.

Held: Yes. Yes. Petition granted

1. In any event the principal's power to revoke an agency at will is so pervasive, that the Supreme Court has consistently held that termination may be effected even if the principal acts in bad faith, subject only to the principal's liability for damages. The Supreme Court accorded great weight on the trial court’s factual findings and found the cause of the conflict to be Valenzuela’s refusal to share the commission. Philamgen told

the petitioners of its desire to share the Delta Commission with them. It stated that should Delta back out from the agreement, the petitioners would be charged interests through a reduced commission after full payment by Delta.

Philamgen proposed reducing the petitioners' commissions by 50% thus giving them an agent's commission of 16.25%. The company insisted on the reduction scheme. The company pressured the agents to share the income with the threat to terminate the agency. The petitioners were also told that the Delta commissions would not be credited to their account. This continued until the agency was terminated.

Records also show that the agency is one "coupled with an interest," and, therefore, should not be freely revocable at the unilateral will of the company. The records sustain the finding that the private respondent started to covet a share of the insurance business that Valenzuela had built up, developed and nurtured. The company appropriated the entire insurance business of Valenzuela. Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums.

Under these circumstances, it is clear that Valenzuela had an interest in the continuation of the agency when it was unceremoniously terminated not only because of the commissions he procured, but also Philamgen’s stipulation liability against him for unpaid premiums. The respondents cannot state that the agency relationship between Valenzuela and Philamgen is not coupled with interest.There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but also for the mutual interest of the principal and the agent. The principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Also, if a principal violates a contractual or quasi-contractual duty which he owes his agent, the agent may as a rule bring an appropriate action for the breach of that duty.

2. Hence, if a principal acts in bad faith and with abuse of right in terminating the agency, then he is liable in damages. The Civil Code says that "every person must in the exercise of his rights and in the performance of his duties act with justice, give every one his due, and observe honesty and good faith: (Art. 19, Civil Code), and every person who, contrary to law, wilfully or negligently causes damages to another, shall indemnify the latter for the same (Art. 20, Civil Code).

Genevieve Lim v. Florencio Saban447 SCRA 232 , December 16, 2004Tinga, J.

FACTS:Eduardo Ybañez, owner of a 1,000-square meter lot in Cebu City, entered into an

Agreement and Authority to Negotiate and Sell with Florencio Saban. Under the Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot for

P200,000.00 and to mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban’s commission for the sale.

Through Saban’s efforts, Ybañez and his wife were able to sell the lot to Genevieve Lim and the spouses Benjamin and Lourdes Lim. The price of the lot as indicated in the Deed of Absolute Sale is P200,000.00. The vendees agreed to purchase the lot at the price of P600,000.00, inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the amounts of P113,257.00 for payment of taxes due on the transaction as well as P50,000.00 as broker’s commission.

Saban received checks in payment of his commission but all of them were dishonored upon presentment. Thus, he filed a complaint for collection of sum of money and damages against Ybañez and Lim. Saban alleged that Ybañez told Lim that he (Saban) was not entitled to any commission for the sale since he concealed the actual selling price of the lot from Ybañez and because he was not a licensed real estate broker.

ISSUES: (1) WON Saban is entitled to receive his commission from the sale; (2) if in the affirmative, WON it is Lim who is liable to pay Saban his sales commission

HELD: (1) Yes.The agency was not revoked since Ybañez requested that Lim make stop payment

orders for the checks payable to Saban only after the consummation of the sale. At that time, Saban had already performed his obligation as Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of Absolute Sale of the lot with Lim and the Spouses Lim.

To deprive Saban of his commission subsequent to the sale which was consummated through his efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes and other incidental expenses of the sale.

Saban’s agency was not one coupled with an interest. an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship. (See Art. 1927)

(2) Yes. It is just and proper for Lim to pay Saban the balance of P200,000.00. Furthermore, since Ybañez received a total of P230,000.00 from Lim, or an excess of P30,000.00 from his asking price of P200,000.00, Saban may claim such excess from Ybañez’s estate, if that remedy is still available, in view of the trial court’s dismissal of

Saban’s complaint as against Ybañez, with Saban’s express consent, due to the latter’s demise when the case was still pending.

Philex Mining Corporation vs. CIR 551 SCRA 428 (April 16, 2008) YNARES-SANTIAGO, J.:

FACTS: Petitioner Philex entered into an agreement with Baguio Gold Mining Corporation for the former to manage the latter’s mining claim know as the Sto. Mine. The parties’ agreement was denominated as “Power of Attorney”. The mine suffered continuing losses over the years, which resulted in petitioners’ withdrawal as manager of the mine. The parties executed a “Compromise Dation in Payment”, wherein the debt of Baguio amounted to Php. 112,136,000.00. Petitioner deducted said amount from its gross income in its annual tax income return as “loss on the settlement of receivables from Baguio Gold against reserves and allowances”. BIR disallowed the amount as deduction for bad debt. Petitioner claims that it entered a contract of agency evidenced by the “power of attorney” executed by them and the advances made by petitioners is in the nature of a loan and thus can be deducted from its gross income. Court of Tax Appeals (CTA) rejected the claim and held that it is a partnership rather than an agency. CA affirmed CTA 

ISSUE: Whether or not it is an agency. 

HELD: No. The lower courts correctly held that the “Power of Attorney” (PA) is the instrument material that is material in determining the true nature of the business relationship between petitioner and Baguio. An examination of the said PA reveals that a partnership or joint venture was indeed intended by the parties. While a corporation like the petitioner cannot generally enter into a contract of partnership unless authorized by law or its charter, it has been held that it may enter into a joint venture, which is akin to a particular partnership. The PA indicates that the parties had intended to create a PAT and establish a common fund for the purpose. They also had a joint interest in the profits of the business as shown by the 50-50 sharing of income of the mine. 

Moreover, in an agency coupled with interest, it is the agency that cannot be revoked or withdrawn by the principal due to an interest of a third party that depends upon it or the mutual interest of both principal and agent. In this case the non-revocation or non-withdrawal under the PA applies to the advances made by the petitioner who is the agent and not the principal under the contract. Thus, it cannot be inferred from the stipulation that it is an agency.

Zenaida Mendoza vs. Eduardo Paule579 SCRA 341 , February 13, 2009Ynares-Santiago, J

FACTS:Paule is the proprietor of E.M. Paule Construction and Trading (EMPCT).  On

May 24, 1999, PAULE executed a special power of attorney (SPA) authorizing Mendoza to participate in the pre-qualification and bidding of a National Irrigation Administration (NIA) project and to represent him in all transactions related thereto.

On September 29, 1999, EMPCT, through MENDOZA, participated in the bidding of the NIA-Casecnan Multi-Purpose Irrigation and Power Project (NIA-CMIPP) and was awarded Packages A-10 and B-11 which involved the construction of a road system, canal structures and drainage box culverts.

When Manuel de la Cruz that MENDOZA is in need of heavy equipment for use in the NIA project, he met up with MENDOZA in Bayuga, Muñoz, Nueva Ecija, in an apartment where the latter was holding office under an EMPCT signboard.  A series of meetings followed in said EMPCT office among CRUZ, MENDOZA and PAULE.  They later signed two Job Orders/Agreement for the lease of the latter’s heavy equipment (dump trucks for hauling purposes) to EMPCT.

 On April 27, 2000, PAULE revoked the SPA he previously issued in favor of MENDOZA; consequently, NIA refused to make payment to MENDOZA on her billings. CRUZ, therefore, could not be paid for the rent of the equipment.   Upon advice of MENDOZA, CRUZ addressed his demands for payment of lease rentals directly to NIA but the latter refused to acknowledge the same and informed CRUZ that it would be remitting payment only to EMPCT as the winning contractor for the project. Thus, CRUZ demanded from MENDOZA and/or EMPCT payment of the outstanding rentals.  

CRUZ filed Civil Case at the Regional Trial Court of Nueva Ecija, for collection of sum of money with damages and a prayer for the issuance of a writ of preliminary injunction against PAULE, COLOMA and the NIA.  PAULE in turn filed a third-party complaint against MENDOZA, who alleged that because of PAULE’s “whimsical revocation” of the SPA, she was barred from collecting payments from NIA, thus resulting in her inability to fund her checks which she had issued to suppliers of materials, equipment and labor for the project.  

ISSUE:WON the revocation of the contract of agency by Paule is valid?

HELD: There was no valid reason for PAULE to revoke MENDOZA’s SPAs. Since

MENDOZA took care of the funding and sourcing of labor, materials and equipment for the project, it is only logical that she controls the finances, which means that the SPAs issued to her were necessary for the proper performance of her role in the partnership, and to discharge the obligations she had already contracted prior to revocation.  Without the SPAs, she could not collect from NIA, because as far as it is concerned, EMPCT – and not the PAULE-MENDOZA partnership – is the entity it had contracted with.  Without these payments from NIA, there would be no source of funds to complete the project and to pay off obligations incurred.  As MENDOZA correctly argues, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

 PAULE’s revocation of the SPAs was done in evident bad faith. Admitting all throughout that his only entitlement in the partnership with MENDOZA is his 3% royalty for the use of his contractor’s license, he knew that the rest of the amounts collected from NIA was owing to MENDOZA and suppliers of materials and services, as well as the laborers. Yet, he deliberately revoked MENDOZA’s authority such that the latter could no longer collect from NIA the amounts necessary to proceed with the project and settle outstanding obligations.

From the way he conducted himself, PAULE committed a willful and deliberate breach of his contractual duty to his partner and those with whom the partnership had contracted.