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Digest Bus Org

E. AWAD, plaintiffappellant, vs. FILMA MERCANTILE CO., INC., defendantappellee.

FACTS:
Early in the month of September, 1924, the plaintiff, doing business in the Philippine
Islands under the name of E. Awad & Co., delivered certain merchandise of the invoice
value of P11,140 to Chua Lioc, a merchant operating under the name of Hang Chua Co.
in Manila, said merchandise to be sold on commission by Chua Lioc. Representing
himself as being the owner of the merchandise, Chua Lioc, on September 8, 1924, sold
it to the defendant for the sum of P12,155.60. He owed the Philippine Manufacturing
Co., the sum of P3,480, which the defendant agreed to pay, and was also indebted to
the defendant itself in the sum of P2,017.98. The total amount of the two debts,
P5,497.98, was deducted from the purchase price, leaving a balance of P6,657.52
which the defendant promised to pay to Chua Lioc on or before October 9, 1924. The
merchandise so purchased on September 9, was delivered to the defendant, who
immediately offered it for sale. Three days later D. J. Awad, the representative of the
plaintiff in the Philippine Islands; having ascertained that the goods entrusted to Chua
Lioc was being offered for sale by the defendant, obtained authorization from Chua Lioc
to collect the sum of P11,707 from said defendant and informed the latter's treasurer of
the facts above set forth. On September 15, D. J. Awad, in behalf of E. Awad & Co.,
wrote a letter to the defendant corporation advising it that, inasmuch as the
merchandise belonged to E. Awad & Co., the purchase price should be paid to them, to
which letter, the defendant, on September 18, 1924, responded that since the
transaction was with Chua, they can only make the payment to Chua.

ISSUE: WON defendant is liable to plaintiff.

HELD: No. The law applicable to the case is well settled. Article 246 of the Code of
Commerce reads as follows: When the agent transacts business in his own name, it
shall not be necessary for him to state who is the principal and he shall be directly
liable, as if the business were for his own account, to the persons with whom he
transacts the same, said persons not having any right of action against the principal, nor
the latter against the former, the liabilities of the principal and of the agent to each other
always being reserved. The rule laid down in the article quoted is contrary to the general
rule in the United States as to purchases of merchandise from agents with undisclosed
principal, but it has been followed in a number of cases and is the law in its jurisdiction.
(Pastells & Regordosa vs. Hollman & Co., 2 Phil., 235; Castle Bros., Wolf & Sons vs.
GoJuno, & Phil., 144; Lim Tiu vs. Ruiz y Rementeria, 15 Phil., 367.) But the appellant
points out several circumstances which, in his opinion, indicate that the
defendantappellee was aware of the condition under which the merchandise was
entrusted to the agent Chua Lioc and therefore did not purchase the goods in good
faith. This, if true, would, of course, lead to a decision of the case in favor of the plaintiff,
but there is, in our opinion, nothing conclusive about the circumstances referred to and
they are not sufficient to overcome the presumption of good faith
BORDADOR V LUZ

FACTS:

Petitioners were engaged in the business of purchase and sale of jewelry and
respondent Brigida Luz, also known as Aida Luz, was their regular customer.

On several occasions, respondent Deganos, brother of Luz, received several pieces of


gold and jewelry from petitioners amounting to P382, 816. These items and their prices
were indicated in seventeen receipts covering the same. 11 of the receipts stated that
they were received for a certain Aquino, a niece of Deganos, and the remaining 6
receipts indicated that they were received for Luz.

Deganos was supposed to sell the items at a profit and thereafter remit the proceeds
and return the unsold items to Bordador. Deganos remitted only the sum of P53, 207.
He neither paid the balance of the sales proceeds, nor did he return any unsold item to
petitioners.

The total of his unpaid account to Bordador, including interest, reached the sum of
P725, 463.98. Petitioners eventually filed a complaint in the barangay court against
Deganos to recover said amount.

In the barangay proceedings, Luz, who was not impleaded in the caes, appeared as a
witness for Deganos and ultimately, she and her husband, together with Deganos
signed a compromise agreement with petitioners.

In that compromise agreement, Deganos obligated himself to pay petitioners, on


installment basis , the balance of his account plus interest thereon. However, he failed
to comply with his aforestated undertakings.
Petitioners instituted a complaint for recovery of sum of money and damages, with an
application for preliminary attachment against Deganos and Luz.

Deganos and Luz was also charged with estafa

During the trial of the civil cae, petitioners claimed that Deganos acted as agent of Luz
when received the subject items of jewelry, and because he failed to pay for the same,
Luz, as principal, and her spouse are solidarily liable with him

Trial court ruled that only Deganos was liable to Bordador for the amount and damages
claimed. It held that while Luz did have transactions with petitioners in the past, the
items involved were already paid for and all that Luz owed Bordador was the sum or
P21, 483 representing interest on the principal account which she had previously paid
for.

CA affirmed TCs decision

ISSUE:

W/N Luz are liable to petitioners for the latters claim for money and damages in the
sum of P725,463.98, plus interests and attorneys fees, despite the fact that the
evidence does not show that they signed any of the subject receipts or authorized
Deganos to receive the items of jewelry on their behalf

RULING: No

Evidence does not support the theory of Bordador that Deganos was an agent of Luz
and that the latter should consequently be held solidarily liable with Deganos in his
obligation to petitioners.
The basis for agency is representation. Here, there is no showing that Luz consented to
the acts of Deganos or authorized him to act on her behalf, much less with respect to
the particular transactions involved.

It was grossly and inexcusably negligent of petitioner to entrust to Deganos, not once or
twice but on at least six occasions as evidenced by 6 receipts, several pieces of jewelry
of substantial value without requiring a written authorization from his alleged principal.

A person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent.

Records show that neither an express nor an implied agency was proven to have
existed between Deganos and Luz. Evidently, Bordador who were negligent in their
transactions with Deganos cannot seek relief from the effects of their negligence by
conjuring a supposed agency relation between the two respondents where no evidence
supports such claim

ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE MOTOREN


WERKEAKTIENGESELLSCHAFT (BMW), respondents. January 22, 1997Mendoza, J.Facts:1.Alfred
Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila."2.Bayerische Motoren
Werke Aktiengesellschaft (BMW) is a nonresident foreign corporationexisting under the laws of the former
Federal Republic of Germany, with principal office atMunich, Germany.3.In 1963, Hahn executed in
favor of BMW a Deed of Assignment with Special Power of Attorney which essentially, makes Hahn
as the exclusive dealer of BMW in the Philippines.Moreover, it stated there that Hahn and BMW shall
continue business relations as has beenusual in the past without a formal contract."4.In 1993, BMW and
Columbia Motors Corp (CMC) had a meeting which would grant CMCexclusive dealership of
BMW cars.5.Hahn was informed later that BMW was dissatisfied with how it carrying its business.However,
BMW expressed willingness to continue business relations with the petitioner onthe basis of a "standard BMW
importer" contract, otherwise, it said, if this was notacceptable to petitioner, BMW would have no alternative
but to terminate petitioner'sexclusive dealership effective June 30, 1993.6.Hahn protested alleging that such
termination is a breach of the Deed of Assignment. Hahninsisted that as long as the assignment of its trademark
and device subsisted, he remainedBMW's exclusive dealer in the Philippines because the assignment was made
inconsideration of the exclusive dealership.7.BMW, however, went on to terminate its dealership with
Hahn.8.Hahn filed a complaint for specific performance and damages in the RTC. RTC issued a
writpreliminary injunction.9.BMW appealed to the CA. CA reversed on the ground that Hahn is not an agent of
BMW andthat BMW is not doing business in the Phils. By virtue of the latter, the writ of
preliminaryinjunction should not have been issued since RTC did not have jurisdiction over it.Issues1.W/N
Hahn is agent or a distributor (or broker) in the Philippines of BMW.

He is an agent.2.W/N BMW is doing business here in the Philippines.

YESHeld/Ratio:1.There is nothing to support the appellate court's finding that Hahn solicited orders alone
andfor his own account and without "interference from, let alone direction of, BMW. To thecontrary, Hahn
claimed he took orders for BMW cars and transmitted them to BMW.
Uponreceipt of the orders, BMW fixed the down payment and pricing charges, notifiedHahn of the scheduled production month
for the orders, and reconfirmed theorders bysigning and returning to Hahn the acceptance sheets. Payment wasmade bythe buyer
directlyto BMW. Title to cars purchased passed directlyto thebuyer and Hahn never paid for the purchase price of BMW cars
sold in thePhilippines. Hahn was credited with a commission equal to 14% of the purchaseprice upon the invoicing of a
vehicle order by BMW.
Upon confirmation in writing thatthe vehicles had been registered in the Philippines and serviced by him, Hahn
received anadditional 3% of the full purchase price. Hahn performed after-sale services, including,warranty
services, for which he received reimbursement from BMW. All orders were oninvoices and forms of BMW.

BMW periodically inspected the service centers to see to it that BMW standards weremaintained. Indeed, it
would seem from BMW's letter to Hahn that it was for Hahn's allegedfailure to maintain BMW standards that
BMW was terminating Hahn's dealership. The fact that Hahn invested his own money to put up these
service centers and showroomsdoes not necessarily prove that he is not an agent of BMW. For as already
noted, there arefacts in the record which suggest that BMW exercised control over Hahn's activities as adealer
and made regular inspections of Hahn's premises to enforce compliance with BMWstandards and
specifications. This was proven by a letter.

These allegations were admitted by BMW.

This arrangement shows an agency.2.Hahn and BMW had a Representative Agreement or a


Licensing Agreement. Thisarrangement is whereby a domestic corporation, by virtue of which the latter
was appointed"exclusive representative" in the Philippines for a stipulated commission. Pursuant to
thesecontracts, the domestic corporation sold products exported by the foreign corporation andput up a service
center for the products sold locally. This Court held that these actsconstituted doing business in the Philippines.
The arrangement showed that the foreigncorporation's purpose was to penetrate the Philippine market and
establish its presence inthe Philippines.In addition, BMW held out private respondent Hahn as its exclusive
distributor in thePhilippines, even as it announced in the Asian region that Hahn was the "official BMW
agent"in the Philippines

ANUEL B. TAN, GREGG M. TECSON and ALEXANDER SALDAA,


petitioners, vs.
EDUARDO R. GULLAS and NORMA S. GULLAS,
respondents.
G.R. No. 143978 December 3, 2002Facts:
Respondents, were the registered owners of a parcel of land, they executed aspecial power of
attorney authorizing petitioners Tan, a licensed real estate broker, and hisassociates Tecson and
Saldaa, to negotiate for the sale of the land, at a commission of 3% of thegross price. Tan
contacted the Sisters of Mary of Banneaux, Inc. (hereafter, Sisters of Mary), areligious
organization interested in acquiring a property. The Sisters, who had already seen andinspected
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 the 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, andother 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; thenegotiator between other
parties, never acting in his own name but in the name of those whoemployed him. x x x a broker
is one whose occupation is to bring the parties together, in mattersof trade, commerce or
navigation." The petitioners were responsible for the introduction of therepresentatives of the
Sisters of Mary to respondent.(2) There was no dispute as to the role that petitioners played in
the transaction. "Anagent 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 iseventually made." Clearly, therefore, petitioners, as brokers, should be entitled to
thecommission whether or not the sale of the property subject matter of the contract was
concludedthrough their efforts

FACTS:

On January 24, 1911, plaintiff Andres Quiroga and J. Parsons (to whose rights and obligations
the present defendant Parsons Hardware Co. later subrogated itself) entered into a contract,
where it was stated among others that Quiroga grants in favor of Parsons the exclusive rights to
sell his beds in the Visayan Islands under some conditions. One of the said conditions provided
that Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in
all the towns of the Archipelago where there are no exclusive agents, and shall immediately
report such action to Mr. Quiroga for his approval while another one passed on to Parsons the
obligation to order by the dozen and in no other manner the beds from Quiroga.

Alleging that the Parsons was his agent for the sale of his beds in Iloilo, Quiroga filed a
complaint against the former for violating the following obligations implied in what he
contended to be a contract of commercial agency: not to sell the beds at higher prices than
those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to
keep the beds on public exhibition, and to pay for the advertisement expenses for the same;
and to order the beds by the dozen and in no other manner.

ISSUE:

Is the defendant, by reason of the contract, a purchaser or an agent of the plaintiff for the sale
of the latters beds in Iloilo?

COURT RULING:

The Supreme Court declared 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 law.

In order to classify a contract, due regard must be given to its essential clauses. In the contract
in question, what was essential, as constituting its cause and subject matter, is that the plaintiff
was to furnish the defendant with the beds which the latter might order, at the price stipulated,
and that the defendant was to pay the price in the manner stipulated. There was the obligation
on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their
price. These features exclude the legal conception of an agency or order to sell whereby the
mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing to a third person, and if he does not
succeed in selling it, he returns it.

Philippine National Bank v. Sta. Maria, 29 SCRA 303

Concept:

Art. 1207. The concurrence of two or more creditors or of two or more debtors in one
and the same obligation does not imply that each one of the former has a right to
demand, or that each one of the latter is bound to render, entire compliance with the
prestation. There is a solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity

Facts:
Special power of the attorney to mortgage real estate is limited to such authority
and does not bind the grantor personally to other obligations contracted by the grantee
The sugar crop loans were obtained by Maximo from the plaintiff bank under the
power of the attorney, executed in his favor by his brothers and sisters to mortgage a
16-odd hectare parcel of land, jointly owned by all of them
Valeriana the sister of Maximo, alone also executed in favor of her brother
Maximo a special power of attorney to borrow money and mortgage any real estate
owned by her.
Maximo applied for two separate crop loans with the PNB, one in the amount of
P15,000 but only P13,216.11 was extended by the PNB and the other for P23,000 but
only P12,427.57 was extended by the PNB
As security for the two loans, Maximo executed it in his own name in favor of
PNB two chattel mortgages, guaranteed by the surety bonds for the full authorized
amounts of loans executed by the Associated Insurance & Surety Co., Inc.
Plaintiff Bank filed the case on February 10,1961 against Defendant Maximo Sta.
Maria and his six brothers and sisters and the Associated Insurancs & Suret Co., Inc.
for the collection of unpaid balances of two sugar crop loans
The Trial Court rendered judgement in favor of the PNB
Maximo did not appeal but his siblings appealed and contended that they had
given their brother Maximo the authority to borrow money but only to mortgage the real
estate jointly owned by them and that if they are liable, the liability should not go beyond
the value of the property which9 they had authorized to be given as security of the loans
obtained by Maximo. They further contended that they did not benefit whatsoever from
the loans.

Issue: W/N the siblings are only liable for the value of the land?

Held:
Yes, except for Valeriana who issued a separate Special Power of Attorney
authorizing Maximo to borrow money.
In Bank of P. I. v. De Coster, "where in an instrumentpowers and duties are
specified and defined, that all of such powers and duties are limited andconfined to
thosewhich are specified and defined, and all other powers andduties are excluded.
In De Villa vs. Fabricante, where the power of attorneygiven to the husband by
the wife was limited to a grant of authority to mortgage a parcel of land titled in the
wife'sname, the wife may not be held liable for the payment of the mortgage debt
contracted by the husband, as theauthority to mortgage does not carry with it the
authorityto contract obligation.
Maximo and Valeriana are the only ones liable for the loans and that the other
siblings liability only correspond to real estate mortgage and the foreclosure and sale of
mortgage.
Maximos argument that "a mortgage is simply anaccessory contract, and that to
effect the mortgage, aloan has to be secured" falls, far short of the mark.Maximo had
indeed, secured the loan on his own accountand the defendants-appellants had
authorized him tomortgage their respective undivided shares of the realproperty jointly
owned by them as security for the loan.But that was the extent of their authority land
consequentliability, to have the real property answer for the loan incase of non-
payment.
The outcome might be different if there had been anexpress ratification of the
loans by defendants-appellantsor if it had been shown that they had been benefited
bythe crop loans so as to put them in estoppel.
Under the Art. 1207, Valeriana is only jointly liable with Maximo

DOMINION INSURANCE CORPORATION vs. COURT OF APPEALS, RODOLFO S.


GUEVARRA, and FERNANDO AUSTRIA

FACTS:
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance
Corp. (Dominion) for the amount advanced by Guevarra in his capacity as manager of defendant
to satisfy certain claims filed by defendants client.

The pre-trial was always postponed, and during one of the pre-trial conference dominion failed
to arrive therefore the court declared them to be in default. Dominion filed several Motions to
Lift Order of Default but was always denied by the court. The RTC rendered its decision making
Dominion liable to repay Guevarra for the sum advanced and other damages and fees. Dominion
appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.

HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word
special the contents of the document was actually a general agency. A general power permits
the agent to do all acts for which the law does not require a special power and the contents in the
document did not require a special power of attorney.
Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion

The payment of claims is not an act of administration which requires a special power of
attorney before Guevarra could settle the insurance claims of the insured.

Also Guevarra was instructed that the payment for the insured must come from the revolving
fund or collection in his possession, Gueverra should not have paid the insured through his own
capacity. Under 1918 of civil code an agent who acted in contravention of the principals
instruction the principal will not be liable for the expenses incurred by the agent.

(b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his right
to recover may be justified under the article 1236 of the civil code.[1] Thus Guevarra must be
reimbursed but only to the extent that Dominion has benefited without interest or demand for
damages.

Victoria Milling Co., Inc. v. CA and Consolidated Sugar Corporation


G.R. No. 117356 June 19, 2000Quisumbing, J.
FACTS:

St. Therese Merchandising regularly bought sugar from Victorias Milling Co., Inc. In the course
of their dealings, Victorias Milling issued several Shipping List/Delivery Receipts (SLDRs) to
St. ThereseMerchandising as proof of purchases. Among these was SLDR No. 1214M which
covers 25,000 bagsof sugar. Each bag contained 50 kilograms and priced at P638.00 per bag.
The transaction it coveredwas a direct sale.

On October 25, 1989, St. Therese Merchandising sold to Consolidated Sugar Corp. its rights in
SLDRNo. 1214M for P14,750,000.00. Consolidated Sugar Corp. issued checks in payment. That
same day,C o ns ol i d at e d S u ga r C o rp . w rot e Vi ct or i a s Mi l l i n g t hat i t h ad b e en
aut ho ri z ed b y S t . T he r es e Merchandising to withdraw the sugar covered by SLDR No. 1214M.

Consolidated Sugar Corp. surrendered SLDR No. 1214M to Victorias Millings NAWACO
warehouseand was allowed to withdraw sugar. However, after 2,000 bags had been released,
Victorias Millingrefused to allow further withdrawals of sugar against SLDR No. 1214M
because, according to it, St. Therese Merchandising had already withdrawn all the sugar covered by the
cleared checks.

ISSUE:
WON the contract was one of agency or sale
HELD:

Sale.

Vi ct o ri as Mi l l i n g he avi l y r el i e s u po n S t . Th e r es e Me r ch a ndi si n gs l et t e r of
aut ho ri t y a l l o wi n g Consolidated Sugar Corp. to withdraw sugar against SLDR No. 1214M to
show that the latter was St. Therese Merchandisings agent. The pertinent portion of said
letter reads: This is to authorizeConsolidated Sugar Corporation or its representative to withdraw for
and in our behalf (stress supplied)the refined sugar covered by Shipping List/Delivery Receipt =
Refined Sugar (SDR) No. 1214 datedOctober 16, 1989 in the total quantity of 25, 000 bags.

Art. 1868. By the contract of agency a person binds himself to render some service or to do
somethingin representation or on behalf of another, with the consent or authority of the latter.

The basis of agency is representation. On the part of the principal, there must be an actual intention toappoint
or an intention naturally inferable from his words or actions; and on the part of the
agent,there must be an intention to accept the appointment and act on it, and in the absence of
such intent,there is generally no agency. One factor which most clearly distinguishes
agency from other legalconcepts is control; one person - the agent - agrees to act under the
control or direction of another -the principal.

Vi ct o ri as Mi l l i n g f a i l e d t o s u ffi c i e nt l y est a bl i s h t h e ex i st e nc e o f an a ge n c y
r el at i o n be t w e enC o nsol i d at ed S u ga r C o rp . an d S t . Th e re s e Me r ch an di si n g.
Th e f ac t al on e t h at i t (S t . Th e r es e Merchandising) had authorized withdrawal of sugar by
Consolidated Sugar Corp. for and in our (St. Therese Merchandisings) behalf should not
be eyed as pointing to the existence of an agencyrelation. Further, Consolidated Sugar
Corp. has shown that the 25,000 bags of sugar covered by theSLDR No. 1214M were sold and
transferred by St. Therese Merchandising to it. A conclusion that therewas a valid sale and
transfer to Consolidated Sugar Corp. may, therefore, be made thus capacitatingConsolidated
Sugar Corp. to sue in its own name, without need of joining its imputed principal
St. Therese Merchandising as co-plaintiff.

Consolidated Sugar Corp. was a buyer of the SLDFR form, and not an agent of STM. Consolidated
SugarCorp. was not subject to St. Therese Merchandisings control. That no agency
was meant to beestablished by the Consolidated Sugar Corp. and STM is clearly shown by
Consolidated Sugar Corp.scommunication to petitioner that SLDR No. 1214M had been sold
and endorsed to it.27 The use of the words sold and endorsed means that St. Therese
Merchandising and Consolidated Sugar Corp.intended a contract of sale, and not an agency.

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