John Fortis vs.

Gutierrez Hermanos
G.R. No. L-2484 April 11, 1906

Doctrine:
1. General rule: receipt by a person of share of profits of business is prima facie evidence that he is a partner; Exception: profit was for payment as wages of
employee.
2. Articles of partnership prevail as to the division of profits among partners.
3. It is the net profit, after all expenses (including salary of employee) have been deducted that is shared between partners.

Facts:
Fortis (plaintiff), an employee of Gutierrez and Hermanos (defendants) from 1900-1902, brought this action to recover a balance due him as salary for the year 1902. He alleged
that he was entitled, as salary, to 5% of the net profits of the business of defendants for said year. The complaint also contained a cause of action for the sum of 600 pesos, money
expended by him for the defendants during the year 1903.

The court ruled in favour of Fortis and found that the 5% net profits for 1902 amounted to 26,378.68 Mexican Pesos (MP), but plaintiff had received on account of such salary only
MP 12,811.75. Thus it ordered the defendants to pay Fortis the reduced sum of MP 13,025.40.

Issue/s:
Whether defendants were correct to argue that Fortis is a co-partner

Held:
No. The judgment of the court below was affirmed. Case was remanded to the lower court for execution.

Ratio:
First, it was a mere contract of employment. The plaintiff had neither voice nor vote in the management of the affairs of the company.

Second, the articles of partnership between the defendants provided that the profits should be divided among the partners named in a certain proportion, and the contract made
between the plaintiff and the then manager of the defendant partnership did not in any way vary or modify this provision of the articles of partnership.

The profits of the business could not be determined until all of the expenses had been paid. A part of the expenses to be paid for the year 1902 was the salary of the plaintiff. That
salary had to be deducted before the net profits of the business, which were to be divided among the partners, could be ascertained. It was necessary to determine what the profits
of the business were after paying all of the expenses except his, in order to determine what the salary of the plaintiff was. But such determination does not arrive at the net profits
of the business yet. It was only made for the purpose of fixing the basis upon which his compensation should be determined.
ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO. 48 PHIL 556

FACTS
Albaladejo y Cia is a limited partnership, which was engaged in the buying and selling of coprain Legaspi, and in the conduct of a general mercantile business.Visayan Refining
Co. [PRC’s successor] was engaged in operating its extensive plant for the manufacture of coconut oil.
On August 1918, Albaladejo made a contract with the Visayan Refining, wherein they agreed that VRC will buy for a period of 1 year all the copra that Albaladejo purchased in
Albay. It was also agreed upon that during the continuance of the contract, VRC will not appoint any other agent for the purchase of copra in Legaspi, nor buy copra from any
vendor in the same place. In addition, VRC would provide transportation for the copra delivered to it by Albaladejo. At the end of said year, both parties found themselves satisfied
with the existing arrangement, and they continued by tacit consent to govern their future relations by the same agreement. On July 9, 1920, VRC closed down its factory at Opon
and withdrew from the copra market. After VRC ceased to buy copra, the copra supplies already purchased by Albaladejo were gradually shipped out and accepted by the VRC,
and in the course of the next 8-10 months, the accounts between the two parties were liquidated. The last account rendered by VRC to Albaladejoshowed a balance of P288 in
favor of VRC. Albaladejo addressed a letter to the PRC (which had now succeeded to the rights and liabilities of VRC), expressing its approval of said account. Albaladejo filed a
complaint against PRC,seeking to recover P110k,the allegedamount that Albaladejo spent in maintaining and extending its organization. Albaladejo alleges that such maintenance
and extension was made at the express request of PRC. On the other hand, PRCcontends that the contract between them created the relation of principal and agent; therefore, the
principal should indemnify the agent for damages incurring in carrying out the agency.The lower court ruled in favor of Albaladejo, but granted only 30% of the amount prayed
for, in view of the fact that Albaladejo’s transactions in copra amounted in the past to only about 30% of the total business it transacted.

ISSUE & HOLDING

Whether or not the contract is one of agency. NO

RATIO
The relation between the parties was not that of principal and agent in so far as relates to the purchase of copra by Albaladejo. WhileVRC made Albaladejo one of its instruments
for the collection of copra,in making its purchases from the producers,Albaladejo was buying upon its own account.When Albaladejo turned over the copra to VRC, a second sale
was effected.
In the contract, it is declared that during the continuance of theagreement,VRC would not appoint any other agent for the purchase of copra in Legaspi; and this gives rise
indirectly to the inference that Albaladejo was considered its buying agent. However, the use of this term in one clause of the contract cannot dominate the real nature of the
agreement as revealed in other clauses, no less than in the caption of the agreement itself. This designation was used for convenience. The title to all of the copra purchased by
Albaladejo remained in it until it was delivered by way of subsequent sale to VRC.
Lastly, the letters from VRC to Albaladejo that the Court quoted did not indicate anything to the effect that VRC is liable for the such expenses incurred by Albaladejo, as the
letters only noted the dire condition of VRC’s copra business, as well as its hopes to enter the market on a more extensive scale [which was unfortunately unrealized].
Perez vs Luzon Surety 38 OG 1213

Doctrine: A Principal is obligated to give compensation to the broker/agent who is the proximate cause of the deal/contract. The compensation being referred here is the
commission of the agent as a result of his services to the principal.

Constante de Castro vs CA 384 SCRA 607

Doctrine: When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency, each obligor may be compelled to pay the
entire obligation.12 The agent may recover the whole compensation from any one of the co-principals. If there are two or more principals, each has the same obligation to
compensate the agent for his services as they are held to be solidarily liable to the agent.

Sta Romana vs Imperio 15 SCRA 625

Doctrine: A principal may in some cases act as a vendor through his agent. In these cases, he is obligated to reimburse to the vendee, in the event of eviction, the value of the
thing sold at the time of the eviction even if it be of a greater or lesser price of the sale.

Syjuco vs Syjuco G.R. No. 13471

Doctrine: Whenever an agent enters into a contract under his own name, the principal is not bound by what the agent does or contracts thereby not being liable. However, the
exception to this general rule is when the thing being dealt with belongs to the principal. In this instance, the contract is deemed to have been entered by the principal and the third
person. As a result of this, the principal assumes all rights, obligations and liabilities that arise from the contract made by the agent with third persons.
PNB vs Aguedo G.R. No. 39037
Doctrine: When an agent negotiates a loan in his own name and executes a promissory note under his personal signature without express authority from his principal, giving as
security therefor real estate belonging to the latter, also in his own name and not in the name and in representation of said principal, the obligation so contracted by him is personal
and is not binding upon the af oresaid principal.

Keeler vs Rodriguez G.R. No. 19001

Doctrine: Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not
only the fact of the agency but the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.

BA Finance vs CA G.R. No. 94566

Doctrine: It is a settled rule that persons dealing with an assumed agent, whether the assumed agency be a general or special one are bound at their peril, if they would hold the
principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish
it. Hence, the burden is on respondent bank to satisfactorily prove that the credit administrator with whom they transacted acted within the authority given to him by his principal,
petitioner corporation.
Also, Guaranty is not presumed, it must be expressed and cannot be extended beyond its specified limits.

NAPOCOR vs National Merchandising G.R. No. L-33819

Doctrine: The rule that a person dealing with an agent must inquire into the limits of the agent's authority does not apply where the agent is being held directly responsible for
taking chances in exceeding its authority meaning the agent is acting in his own name.
Apex Minig vs Southeast Mindanao G.R. No. 152613
Doctrine: The concept of agency is distinct from assignment—in agency, the agent acts not on his own but on behalf of his principal, while in assignment, there is total transfer or
relinquishment of right by the assignor to the assignee.

Bacaltos vs CA G.R. NO. 114091

Doctrine: Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable
with knowledge of the agent’s authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in
case either is controverted, the burden of proof is upon them to establish it.

Del Rosario vs Abad G.R. No. L-10881

Doctrine: The power of attorney executed by the homesteader in favor of defendant did not create an agency with interest nor did it clothe the agency with irrevocable character. A
mere statement in the power of attorney that it is coupled With interest is not enough. In what does such interest consist must be stated in the power of attorney.