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Sevilla v. CA (REG) !

An agency that has been created for mutual interest, of the agent and the
1998 principal cannot be revoked at will. Sevilla is abona fide travel agent herself, and
as such, she had acquired an interest in the business entrusted to her. Moreover,
FACTS: Tourist World Service, Inc. (TWS) leased the premises belonging to Noguera she had assumed a personal obligation for the operation thereof, holding herself
for the formers use as a branch office. Petitioner Sevilla held herself solidarily liable solidarily liable for the payment of rentals. She continued the business, using her
with the party of the part for the prompt payment of the monthly rental. When the own name, after Tourist World had stopped further operations. Her interest,
branch office was opened, it was run by Sevilla payable to TWS by any airline. For obviously, is not to the commissions she earned as a result of her business
any fare brought in on the efforts of Sevilla, 4% was to go to Lina Sevilla and 3% was transactions, but one that extends to the very subject matter of the power of
to be withheld by the TWS. Sevilla was paid no salaries. She even shared in the management delegated to her.
expenses of maintaining the office, paid for the salary of an office secretary and other
sundry expenses.
Fressel v Mariano Uy Chaco Sons & Co. (ABBY)
Later Tourist World considered closing down its office because of business losses March 3, 1916
and news that Sevilla was then connected with a rival firm. Thus, an employee of Trent, J.
TWS went to the branch and padlocked its premises. Sevilla filed a complaint
claiming damages brought about by TWSs revocation of their relationship. FACTS: Merritt undertook and agreed with the defendant to build for the defendant a
costly edifice in the city of Manila at the corner of Calle Rosario and Plaza del Padre
ISSUE: Moraga. In the contract it was agreed between the parties thereto, that Uy Chaco at
1) WON Sevilla was just an employee of TWS, and as such was bound by the acts any time, upon certain contingencies, before the completion of said edifice could take
of her employer. (NO) possession of said edifice in the course of construction and of all the materials in and
2) WON Sevilla was an agent of TWS and thus entitled to damages because TWS about said premises acquired by Merritt for the construction of said edifice.Fressel
revoked such relationship. (YES) delivered to Merritt at the said edifice in the course of construction certain materials of
the value of P1,381.21Uy Chaco took possession of the incomplete edifice in course
HELD: of construction together with all the materials on said premises including the materials
1. Sevilla was not subject to control by the private respondent TWS either as to the delivered. Neither Meritt nor Uy Chaco paid for the materials even after extrajudicial
result of the enterprise or as to the means used in connection therewith. demand. The appellants insist that the above quoted allegations show that Merritt
acted as the agent of the defendant in purchasing the materials in question and that
! Under the contract of lease covering the Tourist Worlds Ermita office, she had the defendant, by taking over and using such materials, accepted and ratified the
bound herself in solidum as and for rental payments. A true employee cannot be purchase, thereby obligating itself to pay for the same.
made to part with his own money in pursuance of his employer's business, or
otherwise, assume any liability thereof. Victoria Milling v CA, supra

! Sevilla was not under the control of TWS "as to the means used." Sevilla in 1. Knowledge of agent imputed to principal
pursuing the business, obviously relied on her own gifts and capabilities.
Art. 1821. Notice t o an y partn er o f any matter r elating to p artnership affairs, and the
! She was not in the company's payroll. For her efforts, she retained 4% in knowledge of the partner acting in the particular matter, acquired while a partner or
commissions from airline bookings, the remaining 3% going to Tourist World. then present to his mind, and the knowledge of any other partner who reasonably

Unlike an employee then, who earns a fixed salary usually, she earned could and should have communicated it to the acting partner, operate as notice to or
compensation in fluctuating amounts depending on her booking successes. knowledge of the partnership, except in the case of fraud on the partnership,
committed by or with the consent of that partner.
2. Sevilla solicited airline fares, but she did so for and on behalf of her principal,
Tourist World Service, Inc. As compensation, she received 4% of the proceeds in A. Article 1869
the concept of commissions.
Art. 186 9. Agen cy may be express, or implie d from the acts of the principal, from his A car was brought to a Shell gasoline station owned by Dela Fuente for washing and greasing.
silence or lack of action, or his failure to repudiate the agency, knowing that another The car was placed on a hydraulic lifter for greasing. As some parts of the car couldnt be
person is acting on his behalf without authority. reached by the greaseman, the lifter was lowered. Unfortunately, for unknown reasons
(probably due to mechanical failure or human error), while the lifter was being lowered, the
1. Oral, express car swung and fell from the platform. Said car was insured against loss or damage by
2. Implied Firemen's Insurance Company of Newark, New Jersey, and Commercial Casualty Insurance
a. acts or conduct of principal Company jointly for the sum of P10,000. The insurance companies after paying the sum
of P1,651.38 for the damage and charging the balance of P100.00 to Salvador Sison, in
ISSUE: Fressels allegation That in pursuance of the contract between Merritt and accordance with the terms of the insurance contract, filed this action together with said
the defendant, Merritt acted as the agent for defendant in the acquisition of the Salvador Sison for the recovery of the total amount of the damage from the defendants on the
materials from plaintiffs. W/N Meritt acted as an agent for Uy Chaco and Sons ground of negligence.

Held: NO. Meritt is an independent contractor. Where one party to a contract was ISSUE:
authorized to do work according to his own method and without being subject to the
other partys control, except as to the result of the work, he is an independent WON Dela Fuente is merely an agent of Shell Co.
contractor and not an agent.
The fact that "the defendant entered into a contract with one E. Merritt, where by the
said Merritt undertook and agreed with the defendant to build for the defendant a Yes. De la Fuente was the operator of the station "by grace" of the Defendant Company which
costly edifice" shows that Merritt was authorized to do the work according to his own could and did remove him as it pleased; that all the equipments needed to operate the station
method and without being subject to the defendant's control, except as to the result of was owned by the Defendant Company which took charge of their proper care and
the work. He could purchase his materials and supplies from whom he pleased and at maintenance, despite the fact that they were loaned to him; that the Defendant company did
such prices as he desired to pay. Again, the allegations that the "plaintiffs delivered not leave the fixing of price for gasoline to De la Fuente; That the service station belonged to
the Merritt . . . . certain materials (the materials in question) of the value of P1,381.21, the company and bore its trade name and the operator sold only the products of the company;
. . . . which price Merritt agreed to pay," show that there were no contractual relations that the equipment used by the operator belonged to the company and were just loaned to the
whatever between the sellers and the defendant. The mere fact that Merritt and the operator and the company took charge of their repair and maintenance.
defendant had stipulated in their building contract that the latter could, "upon certain
contingencies," take possession of the incompleted building and all materials on the As the act of the agent or his employees acting within the scope of his authority is the act of
ground, did not change Merritt from an independent contractor to an agent. In the the principal, the breach of the undertaking by the agent is one for which the principal is
absence of a statute creating what is known as mechanics' liens, the owner of a answerable. The latter was negligent and the company must answer for the negligent act of its
building is not liable for the value of materials purchased by an independent mechanic which was the cause of the fall of the car from the hydraulic lifter.
contractor either as such owner or as the assignee of the contractor.
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CKNKLK&/O Petition for Review under Rule 45 of the ROC

-Florencia Baluyot, an Agency Manager of MMPCI, offered to Atty. Pedro Linsangan a lot at the Holy
Cross Memorial Park owned by MMPCI for P95,000. The lots former owner was not interested on the lot
This case is about an action for recovery of sum of money, based on the alleged negligence of
the defendants. anymore and so agreed to sell the lot after he has been reimbursed. Atty. Linsangan agreed to the offer,
gave Baluyot the reimbursement that would be given to the former owner and down payment that would
be paid to MMPCI, with Baluyot only handing him handwritten and typewritten receipts (not O.R.).
-However, instead of the old contract with the old owner reformed so that Atty. Linsangan would become Reasoning.Baluyot was an agent of MMPCI, having represented the interest of the latter, and having
the new owner of the lot, Baluyot offered a new contract covering the same lot. Atty. Linsangan been allowed by MMPCI to represent it in her dealings with its clients/prospective buyers.
protested, but Baluyot assured him that that Atty. Linsangan would still be paying P95,000 instead of the
P132,250 price under the new contract. Baluyot even executed a document confirming the previous 3. NO
arrangement between her and Atty. Linsangan so that even if the purchase price under the new contract Ratio. The acts of the agent beyond the scope of his authority do not bind the principal unless the latter
has increased, Atty. Linsangan would still be paying the old purchase price. Atty. Linsangan signed the ratifies the same. It also bears emphasis that when the third person knows that the agent was acting
new contract with MMPCI and tendered payment in checks in accordance with the old agreement beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said
between him and Baluyot. third person was aware of such limits of authority, he is to blame and is not entitled to recover damages
-It turns out that MMPCI was not aware of the arrangement between Baluyot and Atty. Linsangan, and from the agent, unless the latter undertook to secure the principals ratification.
that Baluyot was only authorized under her Agency Management contract tosolicitand remit to -on RATIFICATION: Ratificationin agency is the adoption or confirmation by one person of an act
MMPCI offers to purchase interment spaces belonging to and sold by MMPCI. So, even if Atty. performed on his behalf by another without authority. The substance of the doctrine is confirmation after
Linsangan had complied with the agreed payment, MMPCI cancelled the new contract for non-payment conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge
of arrearages. at the time of ratification of all the material facts and circumstances relating to the unauthorized act of the
-Atty. Linsangan filed complaint for Breach of Contract and Damages against Baluyot and MMPCI. person who assumed to act as agent. Thus, if material facts were suppressed or unknown, there can be
LC: Baluyot was an agent of MMPCI; MMPCI was estopped from denying the agency after having no valid ratification and this regardless of the purpose or lack thereof in concealing such facts and
received and encashed the checks issued by Atty. Linsangan and given it by Baluyot. regardless of the parties between whom the question of ratification may arise. Nevertheless, this
CA: affirmed LC + Baluyots authority was conferred upon her by habit and custom principle does not apply if the principals ignorance of the material facts and circumstances was willful, or
that the principal chooses to act in ignorance of the facts. However, in the absence of circumstances
ISSUES putting a reasonably prudent man on inquiry, ratification cannot be implied as against the principal who is
1. WON the SC could review the findings of fact of CA ignorant of the facts.
2. WON Baluyot was an agent of MMPCI Reasoning.Baluyot acted in excess of the authority granted to her by MMPCI. The srcinal agreement
3. WON MMPCI was bound by the contract procured by Atty. Linsangan and solicited by Baluyot between her and Atty. Linsangan was unknown to MMPCI and thus, MMPCI was not bound by their
4. WON MMPCI was estopped from denying liability to Atty. Linsangan agreement. As far as they were concerned, the contract price was P132,250 and not P95, 000. As for
the ratification, see estoppel.
1. YES 4. NO.
Ratio. There are instances when the findings of fact of the trial court and/or Court of Appeals may be Ratio. The essential elements of estoppel are (i) conduct of a party amounting to false representation
reviewed by the Supreme Court, such as (1) when the conclusion is a finding grounded entirely on or concealment of material facts or at least calculated to convey the impression that the facts are
speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (ii) intent,
impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in (iii) knowledge, actual or constructive, of the real facts.
making its findings, went beyond the issues of the case and the same is contrary to the admissions of -One who claims the benefit of an estoppel on the ground that he has been misled by the
both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the representations of another must not have been misled through his own want of reasonable care and
findings of fact are conclusions without citation of specific evidence on which they are based; (9) when circumspection.
the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by -Estoppel must be intentional and unequivocal, for when misapplied, it can easily become a most
the respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed convenient and effective means of injustice.
absence of evidence and contradicted by the evidence on record. Reasoning.There is no indication that MMPCI let the public nor Atty. Linsangan to believe that Baluyot

2. YES had the authority

to signing to alter
of the new the standard
contract, contracts
MMPCI had of the company.
any knowledge Neither
of Baluyots is there any
commitment showing
to Atty. that prior
Ratio. By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. Thus, theelements of GR No. 156262
agency are (i) consent, express or implied, of the parties to establish the relationship; (ii) the object is TITLE: Maria Tuazon, Alejandro Tuazon, Melencio Tuazon, Spouses Anastacio and
the execution of a juridical act in relation to a third person; (iii) the agent acts as a representative and not Mary Buenaventura, petitioners vs. Heirs of Bartolome Ramos, defendant
for himself; and (iv) the agent acts within the scope of his authority. NATURE OF ACTION:Petition for Review
PONENTE:Panganiban, J.
The declarations of agents alone are generally insufficient to establish the
FACTS: fact or extent of their authority. The law makes no presumption of agency;
This case arose from failure of the petitioners to pay the respondents proving its nature and extent is incumbent upon the person alleging it. The
predecessor-in-interest ( deceased Bartolome Ramos). The check in issue petitioners raise the fact of agency as an affirmative defense, yet fail to prove
was indorsed by the petitioner (Tuazon) in favor of the said predecessor. its existence.
The petitioners Leonilo and Maria (Tuazon) purchased 8,326 cavans of rice Their filing a suit against her in their own names negates their claim that they
from Bartolome Ramos. Only 4,437 cavans were paid leaving unpaid 3,889 acted as mere agents in selling the rice obtained from Bartolome Ramos.
cavans with value of P 1,211,919.00. In payment, the spouses issued
several checks. No.
The checks bounced due to insufficiency of funds. There is no privity of contract between the respondents and Santos. Maria
Tuazon indorsed the questioned checks in favor of the respondent, as
Side of the Petitioner: indorser, in case the checks were dishonored, she would pay the
Denied the purchase of rice from Bartolome and alleged that it was corresponding amount. After an instrument is dishonored by nonpayment,
Magdalena Ramos (his wife) owned and traded the merchandise. They also indorsers cease to be merely secondarily liable; they become principal
alleged that Maria Tuazon was merely Magdalenas agent. debtors whose liability becomes identical to that of the srcinal obligor.
They argued that Evangeline Santos (the one who issued the checks) was
the buyer of the rice, and the checks were merely turned over by Maria to
Bartolome, without knowing that these were not funded. They argued that DOCTRINE:
they were mere agents and should not be held answerable. In a contract of agency
, one binds oneself to render some service or to do
They alleged that Santos should be primarily liable to Ramos because she something in representation or on behalf of another, with the latters consent
was the one who had purchased the merchandise from Bartolome as or authority.
evidenced by the checks that had been drawn in her name. The following are the elements of agency:
The petitioners also alleged that their personal properties were sold because o (1) the parties consent, express or implied, to establish the
they were meeting financial difficulties and they were valued in good faith. relationship;
o (2) the object, which is the execution of a juridical act in relation to a
third person;
Side of the Defendant: o (3) the representation, by which the one who acts as an agent does
The Tuazons already knew that they had no available funds to support the so, not for oneself, but as a representative;
checks, and anticipated that they will be sued. Thus, they executed fictitious o (4) the limitation that the agent acts within the scope of his or her
sales of their properties (residential house and lot and a Toyota) authority.
As the basis of agency is representation, there must be, on the part of the
RTC Ruling:
principal, an actual intention to appoint, an intention naturally inferable from
In favor of the plaintiffs (Bartolome) and against the defendants (Tuazon),
the principals words or actions. In the same manner, there must be an
ordering the defendants to pay the plaintiffs as follows:
intention on the part of the agent to accept the appointment and act upon it.
o 1,750,050.00 + interest; 50,000.00 attorneys fees; 20,000.00 moral
Absent such mutual in tent, there is gen erally no agency.
damages; and pay the cost of suit.

CA Ruling:
-Even assuming that Atty. Linsangan was misled by MMPCIs actuations, he still cannot invoke the

Appeal is DISMISSED and the decision is AFFIRMED. principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily
ISSUES: determined, had he only been cautious and prudent, whether said agent was clothed with the authority to
1. WON Maria Tuazon was considered as an agent of Bartolome Ramos change the terms of the principals written contract.
2. Won Evangeline Santos was an indispensable party
HELD: Disposition.WHEREFORE, the instant petition is GRANTED. The Decisi on of the Court of Appeals
dated 22 June 2001 and its Resolution dated 12 December 2001 in CA- G.R. CV No. 49802, as well as
the Decision in Civil Case No. 88-1253 of the Regional Trial Court, Makati City Branch 57, are hereby
REVERSED and SET ASIDE. The Complaint in Civil Case No. 88-1253 is DISMISSED for lack of cause them, he waives his right and cannot complain for having acted thus at his own free will.
of action. No pronouncement as to costs. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and
the defendant was one of purchase and sale, and that the obligations the breach of which is
alleged as a cause of action are not imposed upon the defendant, either by agreement or by
Quiroga vs Parsons
G.R. No. L-11491

Doctrine: Contract of Agency to Sell vs Contract of Sale

Facts:On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter
an agent of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, Ker & Co., Ltd. Vs. Lingad
grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only L- 20871 April 30, 1971
stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds. Ponente: Fernando, J.
Quiroga files a case against Parsons for allegedly violating the following stipulations: not to (Ria)
sell the beds at higher prices than those of the invoices; to have an open establishment in Doctrine: Distinguish from contract of sale: the price paid in the transfer of an agreement or
Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the title is the essence of sale. If such transfer puts the transferee in the attitude of an owner and
advertisement expenses for the same; and to order the beds by the dozen and in no other makes him liable to the transferor as a debtor for an agreed price it is a contract of sale. The
manner. With the exception of the obligation on the part of the defendant to order the beds by essence of agency to sell is the delivery to an agent not as his property but as the property of
the dozen and in no other manner, none of the obligations imputed to the defendant in the two the principal who remains the owner and had the right to control sales, fix price and terms and
causes of action are expressly set forth in the contract. But the plaintiff alleged that the demand proceeds.
defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied Facts:Petitioner was assessed by then Commissioner of Internal Revenue Melencio R.
in a contract of commercial agency. The whole question, therefore, reduced itself to a Domigno the sum of 20, 272.33 as the commercial brokers percentage tax, surcharge and
determination as to whether the defendant, by reason of the contract hereinbefore transcribed, compromise penalty from July 1, 1949- December 31, 1953. Petitioner requested its
was a purchaser or an agent of the plaintiff for the sale of his beds. cancellation but such request was turned down. When the CTA reviewed it, it held the
Issue: Whether the contract is a contract of agency or of sale. petitioner liable except for compromise penalty amounting to 500. The total liability now is
Held: In order to classify a contract, due attention must be given to its essential clauses. In the 19, 772.33.
contract in question, what was essential, as constituting its cause and subject matter, is that the Such liability arose from the contract of the petitioner with United States Rubber International.
plaintiff was to furnish the defendant with the beds which the latter might order, at the price The petitioner is the distributor of the products of the said company. The shipment would
stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was cover products for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros and Mindanao
to be made at the end of sixty days, or before, at the plaintiffs request, or in cash, if the except Davao. Petitioner was precluded from selling in other those mentioned places unless
defendant so preferred, and in these last two cases an additional discount was to be allowed for they secured consent to the company. There was a stipulation in the contract whereby the said
prompt payment. These are precisely the essential features of a contract of purchase and sale. company shall from time to tome consign to the distributor and the distributor will receive,
There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the accept and or hold upon consignment the products specified under the terms of this agreement
defendant, to pay their price. T hese features exclude the legal conception of an agency or order in such quantities and in the judgment of the company may be successful in the solicitation
to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, and maintenance of business. All goods in consignment shall remain with the company until

but delivers to the principal the price he obtains from the sale of the thing to a third person, sold by petitioner but all sales made by the petitioner shall be in his name. it was further
and if he does not succeed in selling it, he returns it. By virtue of the contract between the agreed that the contract does not constitute the petitioner the agent of the company for any
plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay purpose. The petitioner did have the right to assume authority that will bind the company.
their price within the term fixed, without any other consideration and regardless as to whether However under the stipulation in the contract the distributor can only sell it within the
he had or had not sold the beds. stipulated limits, that it merely receives, accepts and holds upon consignment the products
In respect to the defendants obligation to order by the dozen, the only one expressly imposed which will remain in the custody of the company, that distributor shall promote the products,
by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders that the sales are subject to the approval of the company, that the company may ask for
which the defendant might place under other conditions; but if the plaintiff consents to fill inventory any time and that after the termination of the agreement all goods held on
consignment by petitioner for the account of the company until their disposition is provided by The letters containing Arco's acceptance of the prices for the equipment are clear in their terms
the latter. and admit no other interpretation that the prices are fixed and determinate. While the letters
Issue: Whether or not the contract between Ker & Co. and United States Rubber International state that GPS was to receive a 10% commission, this does not necessarily mean that it is an
was that of an agency? agent of Arco, as this provision is only an additional price which it bound itself to pay, and
Holding: Yes, all the circumstances are irreconcilably antagonistic to the idea of an which stipulation is not incompatible with the contract of sale. The facts and circumstances
independent merchant. Since the company retained ownership of the goods, even as it show that Arco entered into a contract of sale with GPS, the exclusive agent of Starr Piano. As
delivered possession unto the dealer for resale to customers and terms of which were subject to such, it is not duty bound to reveal the private arrangement it had with Starr Piano relative to
the companys control, the relation between t he company and the dealer is one of agency. the 25% discount. Being the exclusive agent of Starr, Arco could not have secured this
Distinguish from contract of sale: the price paid in the transfer of an agreement or title is the discount with Starr and neither is GPS willing to waive the discount for Arco. Thus, GPS is
essence of sale. If such transfer puts the transferee in the attitude of an owner and makes him not bound to reimburse Arco for any difference between the cost price and the sales price,
liable to the transferor as a debtor for an agreed price it is a contract of sale. The essence of which represents the profit realized by GPS out of the transaction.
agency to sell is the delivery to an agent not as his property but as the property of the principal
who remains the owner and had the right to control sales, fix price and terms and demand Chua Ngo v. Universal Trading Co., Inc
In Chua Ngo v. Universal Trading Co., Inc ., 87 Phil. 331 (1950), where a local
importing company was contracted to purchase from the United States
several boxes of oranges, most of which were lost in transit, the purchaser
sought to recover the advance purchased price paid, which were refused by
the local importing company on the ground that it merely imported the
GONZALO PUYAT AND SONS, INC. V ARCO AMUSEMENT COMPANY oranges as agent of the purchaser for which it could not be held liable for
their loss in transit. The Court, in reviewing the terms and conditions of the
FACTS: agreement between the parties, held that the arrangement was a sale rather
Arco Amusement was engaged in the business of operating cinematographs. Gonzalo Puyat & than a contract of agency to purchase on the following grounds: (a) no
Sons Inc (GPS) was the exclusive agent in the Philippines for the Starr Piano Company. commission was paid by the purchaser to the local importing company; (b)
Desiring to equip its cinematograph with sound reproducing devices, Arco approached GPS. the local importing company was given the option to resell the oranges if
After some negotiations, it was agreed between the parties that GPS would order sound the balance of the purchase price was not paid within 48 hours from
reproducing equipment from Starr Piano Company and that Ar co would pay GPS, in addition
notification, which clearly implies that the local importing company did in fact
to the price of the equipment, a 10% commission, plus all expenses such as freight, insurance,
sell the oranges to the purchaser; (c) the local importing company placed
etc. When GPS inquired Starr Piano the price (without discount) of the equipment, the latter
order for the oranges a lower the price agreed upon with the purchaser which
quoted such at $1,700. Being agreeable to the price (plus 10% commission plus all other
it could not properly do if indeed it were merely acting as an agent; (d) the
expenses), Arco formally authorized the order. The following year, both parties agreed for
local importing company charged the purchaser with a sales tax, showing that
another order of sound reproducing equipment on the same terms as the first at $1,600 plus
the arrangement was indeed a sale; and (e) when the losses occurred, the
10% plus all other expenses.
local importing company made claims against the insurance company in its
own name, indicating that he imported the oranges as his own products, and
Three years later, Arco discovered that the prices quoted to them by GPS with regard to their
not merely as agent of the local purchaser.
first 2 orders mentioned were not the net prices, but rather the list price, and that it had
obtained a discount from Starr Piano. Moreover, Arco alleged that the equipments were

overpriced. Thus, being its agent, GPS had to reimburse the excess amount it received from ALBERTO V. REYES, ET AL. v. RURAL BANK OF SAN MIGUEL (BULACAN), INC.ET.
AL,. G.R. No. 154499, February 27, 2004
W/N there was a contract of agency, not of sale
In a letter dated May 19,1999, addressed to then BSP Governor Singson, RBSMI embarrassments of a contrary doctrine. These official subordinates are themselves
charge the petitioner with violation of RA No. 6713 ( code of Conduct and Ethical public officers though of an inferior grade, and therefore directly liable in the cases
Standards for Public Officials and Employees). The Monetary Board (MB) of the BSP in which any public officer is liable, for their own misdeeds or defaults.
created an Ad Hoc Committee to investigate the matter. Under the Admin Code of 1987, which provides that head of a department or a
The ensuing investigation disclosed that sometime in September 1996, RBSMI, which superior officer shall not be civilly liable for the wrongful acts, omissions of duty,
had a history of major violations/exceptions dating back to 1995, underwent negligence, misfeasance of his subordinates, unless he has actually authorized by
periodic examination by the BSP. The examination team headed by Principio noted written order the specific act or misconduct complained of.
serious 20 exceptions/violations and deficiencies of RBSMI.
Through Resolution No. 96, the MB required RBSMI to submit within 15 days a !"#$ &' ()*+, )- .//0"12 3455 6(7. 89: ;<"$*"+= 44> ?@@:AB <*+C2DCE,C)$ F&0+ G)+0CH$
written explanation with respect to the findings of the examiner. It also directed ()+/)+",C)$ I)C$H J*2C$022 C$ ,#0 K#C1C//C$02 LC,#)*, " MCE0$20
the Department of Rural Banks DRB), to verify, monitor and report to the Deputy
Governor, Supervision and Examination Sector (SES) on the findings noted, until the G"E,2N #$%&%&'($) &* + ,&-&.&(' /&%&0$( 1'&(2 34*&($** 4(1$) %5$ (+6$ '7 89+5(!:+(&-+;<
same shall have been corrected. #)&=+%$ )$*.'(1$(% >:? &* + ('(!)$*&1$(% /').')+%&'( &(/').')+%$1 &( @$)6+(A< #$%&%&'($)
Meanwhile on June 13,1997, the MB approved Resolution No. 724 ordering RBSMI to $B$/4%$1 &( 7+=') '7 .)&=+%$ )$*.'(1$(% + 8C$$1 '7 D**&2(6$(% E&%5 + F.$/&+- #'E$) '7
correct the major exceptions noted within 30 days from receipt of the advice, and D%%')($A; E5&/5 /'(*%&%4%$1 .$%&%&'($) +* %5$ $B/-4*&=$ 1$+-$) '7 .)&=+%$ )$*.'(1$(% +* -'(2
to remit to the BSP the amount of P2,538,483.00 as fines and penalties for incurring
+* %5$ +**&2(6$(% '7 &%* %)+1$6+)G +(1 1$=&/$ *43*&*%$1< 9'E$=$)H (' 7')6+- /'(%)+/% E+*
deficiencies in reserves against deposit liabilities.
More than a year after, however, the RBSMI asked for a reconsideration of MB 1)+E( 3$%E$$( %5$ %E' .+)%&$*< I5$)$+7%$)H .$%&%&'($) E+* &(7')6$1 %5+% >:? E+*
+))+(2&(2 %' 2)+(% %5$ $B/-4*&=$ 1$+-$)*5&. '7 >:? /+)* +(1 .)'14/%* %' J'-463&+ :'%')*
Resolution No. 724 insofar as the imposition of fine amounting to P
J').< KJ:JL< >:? $B.)$**$1 1&**+%&*7+/%&'( E&%5 =+)&'4* +*.$/% '7 .$%&%&'($)M* 34*&($** 34%
P2,538,483.00.On January 21, 1999, the MB adopted Resolution No. 71, authorizing
('($%5$-$** +-*' $B.)$**$1 E&--&(2($** %' /'(%&(4$ 34*&($** )$-+%&'(* E&%5 .$%&%&'($) '( %5$
the conditional reversal of sixty of the dispute on the findings on reserve
3+*&* '7 + *%+(1+)1 >:? /'(%)+/% '%5$)E&*$H &7 *+&1 '77$) E+* 4(+//$.%+3-$ %' .$%&%&'($)
deficiency. Subsequently, on April 7, 1999, the MB approved the interim reversal of
%5$( >:? E'4-1 %$)6&(+%$ .$%&%&'($)M* $B/-4*&=$ 1$+-$)*5&.< #$%&%&'($) )$74*$1 >:?* '77$)
the entire amount of the penalty pending the outcome of the study on the legal
and factual basis for the imposition of the penalty. &( E5&/5 /+*$ >:? E&%51)$E &%* +-%$)(+%&=$ '77$) +(1 %$)6&(+%$1 .$%&%&'($)M* $B/-4*&=$
The above incidents, particularly the alleged brokering by Reyes and the 1$+-$)*5&.< #$%&%&'($) %5$)$7')$ 7&-$1 +( +/%&'( 7') *.$/&7&/ .$)7')6+(/$ +(1 1+6+2$* +2+&(*%
petitioners unsupported recommendation to impose a penalty of P2,538,483.00 >:? %' /'6.$- &% %' /'(%&(4$ %5$ $B/-4*&=$ 1$+-$)*5&.< >:? 6'=$1 %' 1&*6&** %5$ /+*$
for legal reserve deficiency, prompted the respondent to file the letter-complaint /'(%$(1&(2 %5+% %5$ %)&+- /'4)% 1&1 ('% +/N4&)$ O4)&*1&/%&'( '=$) &% %5)'425 %5$ *$)=&/$ '7
charging the petitioners with unprofessionalism. *466'(* '( CIP 3$/+4*$ >:? &* + 7')$&2( /').')+%&'( +(1 &* ('% 1'&(2 34*&($** &( %5$
In the Decision if March 14,2003, this Court found Deputy Governor Reyes and #5&-&..&($*< I5$ %)&+- /'4)% 1$7$))$1 %5$ )$*'-4%&'( '7 %5$ 6'%&'( 7') 1&*6&**+- 4(%&- +7%$) %)&+-
Director Domo-ong liable for violation of the standards of professionalism '( %5$ 6$)&%* 7') %5$ )$+*'( %5+% %5$ 2)'4(1* +1=+(/$1 3A >:? 1&1 ('% *$$6 &(143&%+3-$<
prescribed by RA 6713in that they used the distressed financial condition of >:? +..$+-$1 *+&1 ')1$) %' %5$ JD< I5$ JD )$*'-=$1 %5+% >:? E+* ('% 1'&(2 34*&($** &(
respondent RBSMI as the subject of a case study in one of the BSP seminars and did %5$ /'4(%)A +(1 %5$)$7')$ O4)&*1&/%&'( '=$) &% /'4-1 ('% 5+=$ 3$$( +/N4&)$1 %5)'425 %5$
the brokering of the sale of RBSMI. The Court modified the decision of the CA by *$)=&/$ '7 *466'(* '( CIP +(1 &% 1&*6&**$1 %5$ .$%&%&'(<
reducing the penalty imposed from the a fine equivalent to six monthssalary to a
fine of 2 months salary for Reyes and one month salary for Domo-ong. O22*0N ?QR >:? &* 1'&(2 34*&($** &( %5$ #5&-&..&($* *' +* %' $(+3-$ %5$ /'4)% %' +/N4&)$
The court exonerated petitioner Proncipio of the Administrative charges. The O4)&*1&/%&'( '=$) &% %5)'425 %5$ *$)=&/$ '7 *466'(* '( %5$ CIP<
exoneration is subject to RBSMIs Motion for Partial Reconsideration.

!0ODN SD TUVW $(46$)+%$* E5+% +/%* +)$ /'(*&1$)$1 +* 81'&(2 34*&($**;< F$/%&'( XK1L
Issue: Whether or not the Superior officer shall not be civilly liable for the wrongful
$(46$)+%&(2 *4/5 +/%* &(/-41$* %5$ .5)+*$ 8+..'&(%&(2 )$.)$*$(%+%&=$* ') 1&*%)&34%')* &( %5$
acts, omissions of duty, negligence or misfeasance of his subordinate officer.
#5&-&..&($*; 34% ('% E5$( %5$ )$.)$*$(%+%&=$ ') 1&*%)&34%') 8%)+(*+/%*; 34*&($** &( 5&* 'E(
(+6$ 7') 5&* 'E( +//'4(%< P( %5$ /+*$ +% 3+)H .$%&%&'($) &* .)&=+%$ )$*.'(1$(% >:?M* +2$(%
Held: The immunity of public officers from liability for nonfeasance, negligence or
+(1 ('% 6$)$-A + 3)'G$)< I5$ )$/')1 )$=$+-* %5+% .)&=+%$ )$*.'(1$(% $B$)/&*$1 /'(%)'- '=$)
omissions of duty of their official subordinate and even for the latters misfeasance
or positive wrong rests, according to MECHEM, upon obvious considerations of .$%&%&'($)M* +/%&=&%&$* +* + 1$+-$) +(1 6+1$ )$24-+) &(*.$/%&'(* '7 .$%&%&'($)M* .)$6&*$* %'
public policy, the necessities of the public service and the perplexities and $(7')/$ &%* *%+(1+)1*< F&(/$ >:? &* /'(*&1$)$1 +* 1'&(2 34*&($** &( %5$ #5&-&..&($*H %5$ %)&+-
/'4)% =+-&1-A +/N4&)$1 O4)&*1&/%&'( '=$) &% 3A =&)%4$ '7 %5$ *$)=&/$ '7 *466'(* '( %5$ CIP< eventually made." Clearly, therefore, petitioners, as brokers, should be entitled to the
,4)%5$)6')$H &% &* ('E *$%%-$1 %5+%H 7') .4).'*$* '7 5+=&(2 *466'(* *$)=$1 '( + 7')$&2( commission whether or not the sale of the property subject matter of the contract was
/').')+%&'( &( +//')1+(/$ E&%5 %5$ S4-$* '7 J'4)%H &% &* *477&/&$(% %5+% &% 3$ +--$2$1 &( %5$ concluded through their efforts.
/'6.-+&(% %5+% %5$ 7')$&2( /').')+%&'( &* 1'&(2 34*&($** &( %5$ #5&-&..&($*< I5$ /'4)% ($$1
('% 2' 3$A'(1 %5$ +--$2+%&'(* &( %5$ /'6.-+&(% &( ')1$) %' 1$%$)6&($ E5$%5$) ') ('%
&% +/N4&)$1 O4)&*1&/%&'(< F4/5 1$%$)6&(+%&'( %5+% %5$ 7')$&2( /').')+%&'( &* 1'&(2 34*&($** &(
%5$ #5&-&..&($* &* '(-A %$(%+%&=$ +(1 '(-A 7') %5$ .4).'*$ '7 $(+3-&(2 %5$ /'4)% %' +/N4&)$
O4)&*1&/%&'(< D /'(%)+)A 1$%$)6&(+%&'( 6+A 3$ 6+1$ 3+*$1 '( %5$ /'4)%M* 7&(1&(2* ') $=&1$(/$


G.R. No. 143978 December 3, 2002

Facts: Respondents, were the registered owners of a parcel of land, they executed a
special power of attorney authorizing petitioners Tan, a licensed real estate broker, and his

associates Tecson and Saldaa, to negotiate for the sale of the land, at a commission of 3% of
the gross price. Tan contacted the Sisters of Mary of Banneaux, Inc. (hereafter, Sisters of
Mary), a religious organization interested in acquiring a property. The Sisters, who had
already seen and inspected the land, found the same suitable for their purpose and expressed
their desire to buy it. However, they requested that the selling price be reduced. Respondents
agreed to sell the property to the Sisters of Mary. Petitioners went to see respondents who
refused to pay the brokers fee and alleged that another group of agents was responsible for the
sale of land to the Sisters of Mary. Petitioners filed a complaint against the defendants for
recovery of their brokers fee. They alleged that they were the efficient procuring cause in
bringing about t he sale of the, but that their efforts in consummating the sale were frustrated
by the respondents who, in evident bad faith, malice and in order to evade payment of brokers
fee, dealt directly with the buyer whom petitioners introduced to them.

Issues:(1) Whether or not the petitioners are entitled to the brokerage commission.
(2) An agent distinguished from a broker.

Rulings: (1) The records show that petitioner Tan is a licensed real estate broker,
and other petitioners his associates. "Broker" as "one who is engaged, for others, on a
commission, negotiating contracts relative to property with the custody of which he has no
concern; the negotiator between other parties, never acting in his own name but in the name of
those who employed him. x x x a broker is one whose occupation is to bring the parties
together, in matters of trade, commerce or navigation." The petitioners were responsible for
the introduction of the representatives of the Sisters of Mary to respondent.

(2) There was no dispute as to the role that petitioners played in the transaction. "An
agent receives a commission upon the successful conclusion of a sale. On the other hand, a
broker earns his pay merely by bringing the buyer and the seller together, even if no sale is