TOPIC: AGENT IS CRIMINALLY LIABLE FOR CRIME
DBP deducted the
COMMITTED IN THE PURSUIT OF AGENCY
Eurotech vs. Cuison
GR No. 167552
April 23, 2007
FACTS:
Petitioner is engaged in business of importation
and distribution of various European industrial
equipment for customers in the Philippines. One
of its customers Impact System Sales owned by
respondent Erwin Cuizon and its sales manager
is respondent Edwin Cuizon. Petitioner sold to
Impact Systems a sludge pump but refused to
deliver the same because respondents did not
fully settle their indebtedness to petitioner. On
June 1995, respondent Edwin and petitioner
executed a Deed of Assignment wherein
respondent assigned receivables to petitioner
for the delivery of the sludge pump. Unknown to
the petitioner, respondent still collected the
receivables despite the Assignment. Petitioner
filed an action against the respondents.
ISSUE:
Whether or not Edwin Cuizon is personally liable
in the indebtedness of the company
Held:
No. Article 1897 provides that an agent who acts
as such is not personally liable to party with
whom he contracts except when (1) he expressly
binds himself to the obligation and (2) when he
exceeded his authority. The Deed of Assignment
clearly states that respondent Edwin Cuizon
signed as the sales manager of Impact Systems.
DBP vs CA
449 SCRA 57
FACTS: Juan B. Dans, 76 years of age, together
with his family, applied for a loan worth Php 500,
000 at the Development Bank of the Philipppines
on May 1987. The loan was approved by the
bank dated August 4, 1987 but in the reduced
amount of Php 300, 000. Mr. Dans was advised
by DBP to obtain a mortgage redemption
insurance at DBP MRI pool.
amount to be paid for MRI Premium that is
worth Php 1476.00. The insurance of Mr. Dans,
less the DBP service fee of 10%, was credited by
DBP to the savings account of DBP MRI-Pool.
Accordingly, the DBP MRI Pool was advised of
the credit.
On September 3, 1987, Mr. Dans died of
cardiac arrest. DBP MRI notified DBP was not
eligible for the coverage of insurance for he was
beyond the maximum age of 60. The wife,
Candida, filed a complaint to the Regional Trial
Court Branch I Basilan against DBP and DBP MRI
pool for ‘Collection of Sum of Money with
Damages’. Prior to that, DBP offered the
administratrix (Mrs. Dans) a refund of the MRI
payment but she refused for insisting that the
family of the deceased must receive the amount
equivalent of the loan. DBP also offered and ex
gratia for settlement worth Php 30, 000. Mrs.
Dans refused to take the offer. The decision of
the RTC rendered in favor of the family of the
deceased and against DBP. However, DBP
appealed to the court.
ISSUE: Whether or not the DBP MRI Pool should
be held liable on the ground that the contract
was already perfected.
HELD: No. DBP MRI Pool is not liable. Though the
power to approve the insurance is lodged to the
pool, the DBP MRI Pool did not approve the
application of the deceased. There was no
perfected contract between the insurance pool
and Mr. Dans.
DBP was wearing two legal hats: as a
lender and insurance agent. As an insurance
agent, DBP made believed that the family
already fulfilled the requirements for the said
insurance although DBP had a full knowledge
that the application would never be approved.
DBP acted beyond the scope of its authority for
accepting applications for MRI. If the third
person who contracted is unaware of the
authority conferred by the principal on the agent
and he has been deceived, the latter is liable for
damages. The limits of the agency carries with it
the implication that a deception was
perpetrated—Articles 19-21 come into play.
However, DBP is not entitled to
compensate the family of the deceased with the
entire value of the insurance policy. Speculative
damages are too remote to be included in the
cost of damages. Mr. Dans is entitled only to
moral damages. Such damages do not need a
proof of pecuniary loss for assessment. The court
granted only moral damages (Php 50, 000) plus
attorney fees’s (Php 10, 000) and the
reimbursement of the MRI fees with legal
interest from the date of the filing of the
complaint until fully paid.
People vs. Chowdury
325 SCRA 572
February 15, 2000
Facts
Bulu Chowdury was charged with the crime of
illegal recruitment in large scale by recruiting
Estrella B. Calleja, Melvin C. Miranda and Aser S.
Sasis for employment in Korea. Evidence shows
that accused –appellant interviewed private
complainant in 1994 at Craftrade’s office, and
required them to submit requirements such as
passport, NBI clearance, ID pictures, medical
certificate and birth certificate. Chowdury also
required them to pay placements fee for a
certain amount. At that time, he was an
interviewer of Craftrade which was operating
under temporary authority given by POEA
pending the renewal of license. He was charged
based on the fact that he was not registered with
the POEA as employee of Craftrade and he is not
in his personal capacity, licensed to recruit
overseas workers. The complainants also
averred that during their applications for
employment for abroad, the license of Craftrade
was already expired.
For his defense Chowdury testified that he
worked as interviewer at Craftrade from 1990
until 1994. His primary duty was to interview job
applicants for abroad. As a mere employee, he
only followed the instructions given by his
superiors, Mr. Emmanuel Geslani, the agency's
President and General Manager, and Mr.
UtkalChowdury, the agency's Managing
Director.
The trial Court found Chowdury huilty beyond
reasonable doubt of the crime of illegal
recruitment in large scale.
Issue: Whether or not accused-appellant
knowingly and intentionally participated in the
commission of the crime charged.
Held
No. The elements of illegal recruitment
in large scale are:
(1) The accused undertook any recruitment
activity defined under Article 13 (b) or any
prohibited practice enumerated under Article 34
of the Labor Code;
(2) He did not have the license or authority to
lawfully engage in the recruitment and
placement of workers; and
(3) He committed the same against three or
more persons, individually or as a group.
The last paragraph of Section 6 of
Republic Act (RA) 804219 states who shall be
held liable for the offense, thus: “The persons
criminally liable for the above offenses are the
principals, accomplices and accessories. In case
of juridical persons, the officers having control,
management or direction of their business shall
be liable.”
An employee of a company or
corporation engaged in illegal recruitment may
be held liable as principal, together with his
employer, if it is shown that he actively and
consciously participated in illegal recruitment.
The culpability of the employee therefore hinges
on his knowledge of the offense and his active
participation in its commission. Where it is
shown that the employee was merely acting
under the direction of his superiors and was
unaware that his acts constituted a crime, he
may not be held criminally liable for an act done
for and in behalf of his employer.
In this case, Chowdury merely performed his
tasks under the supervision of its president and
managing director. The prosecution failed to
show that the accused-appellant is conscious
and has an active participation in the
commission of the crime of illegal recruitment.
Moreover, accused-appellant was not aware of
Craftrade's failure to register his name with the
POEA and the prosecution failed to prove that he
actively engaged in recruitment despite this
knowledge. The obligation to register its
personnel with the POEA belongs to the officers
of the agency. A mere employee of the agency
cannot be expected to know the legal
requirements for its operation. The accused-
appellant carried out his duties as interviewer of
Craftrade believing that the agency was duly
licensed by the POEA and he, in turn, was duly
authorized by his agency to deal with the
applicants in its behalf. Accused-appellant in fact
confined his actions to his job description. He
merely interviewed the applicants and informed
them of the requirements for deployment but he
never received money from them. Chowdury did
not knowingly and intentionally participated in
the commission of illegal recruitment being
merely performing his task and unaware of
illegality of recruitment.
TOPIC: Commission Agent CANNOT SELL on
credit without principal’s consent (Art. 1905).
Otherwise: Considered as Cash Sales
Green Valley vs. IAC
133 SCRA 697
1984
FACTS:
SUMMARY: Green Valley Poulty and E.R.
Squibb & Sons entered into a letter agreement.
The details of the agreement state that Green
Valley will be the nonexclusive distributor of the
products of Squibb Veterinary Products. Squibb
filed a suit to collect for goods delivered to Green
Valley but unpaid. The trial court and CA ruled in
favor of E.R. Squibb, holding that the agreement
was a sales contract. The Court upheld the ruling
of the TC and CA, but it discussed that even if the
contract is an agency to sell, Green Valley will be
liable to E.R. Squibb because in such contract, the
agent is liable to pay the principal for goods sold
by the agent without the principal’s consent.
DOCTRINE: In an agency to sell, the agent is
liable to pay the principal for goods sold by the
agent without the principal’s consent. The
commission agent cannot without the express or
implied consent of the principal, sell on credit.
Should he do so, the principal may demand from
him payment in cash, but the commission agent
shall be entitled to any interest or benefit, which
may result from such sale.
FACTS:
 On November 3, 1969, Squibb and Green
Valley entered into a letter agreement,
which stipulates the following: (see notes for
full letter)
o E.R. Squibb & Sons Phil Corp. appoints
Green Valley Poultry as a non-exclusive
distributor for Squibb Veterinary
Products, as recommended by Dr.
Leoncio Rebong Jr. and Dr. J.G. Cruz,
Animal Health Division Sales Supervisor.
o As a distributor, Green Valley is entitled
to a discounts
o Green Valley Poultry will distribute only
for the Central Luzon and Northern
Luzon including Cagayan Valley areas.
o Squibb will not allow any transfer or
stocks in the said areas covered by
Squibb’s other appointed Distributors.
o The maximum discount that Green
Poultry can give to their direct and
turnover accounts will not go beyond
10%
o Payment for purchases from Squibb will
be due 60 days from date of invoice, etc.
 Squibb filed a suit to collect for good
delivered to Green Valley but unpaid.
 Trial court and CA ruled in favor of Squibb
o Ruled that the agreement between the
parties was a sales contract.
RULING: Petition is dismissed
Whether Green Valley is liable to Squibb – YES
Whether Green Valley is an agent of Squibb –
NO (Court did not answer categorically but it
upheld the ruling of CA)
 PETITIONER’S ARGUMENTS:
o The contract is an agency to sell; hence,
it is not liable to Squibb
 RESPONDENT’S ARGUMENTS:
o Its relationship with Green Valley is a
mere contract of sale as evidenced by
the stipulation that Green Valley was
obligated to pay for the goods received
upon the expiration of the 60-day credit
period.
COURT
 We do not have to categorize the contract.
Whether viewed as an agency to sell or as a
contract of sale, Green Valley is liable.
 If it is a contract of sale then the Green Valley
is liable by just merely enforcing the clear
words of the contract.
 Adopting Green Valley’s theory that the
contract is an agency to sell, it is liable
because it sold on credit without authority
from its principal.
 Art. 1905. The commission agent cannot,
without the express or implied consent of
the principal, sell on credit. Should he do so,
the principal may demand from him
payment in cash, but the commission agent
shall be entitled to any interest or benefit,
which may result from such sale.
NOTES:
Letter Agreement:
E.R. Squibb & Sons Philippine Corporation is
pleased to appoint Green Valley Poultry & Allied
Products, Inc. as a non-exclusive distributor for
Squibb Veterinary Products, as recommended by
Dr. Leoncio D. Rebong, Jr. and Dr. J.G. Cruz,
Animal Health Division Sales Supervisor.
As a distributor, Green Valley Poultry & Allied
Products, Inc. wig be entitled to a discount as
follows:
Feed Store Price (Catalogue)
Less 10% - Wholesale Price
Less 10% - Distributor Price
There are exceptions to the above price
structure. At present, these are:
1. Afsillin Improved — 40 lbs. bag
The distributor commission for this product size
is 8% off P120.00
2. Narrow — Spectrum Injectible Antibiotics
These products are subject to price fluctuations.
Therefore, they are invoiced at net price per vial.
3. Deals and Special Offers are not subject to the
above distributor price structure. A 5%
distributor commission is allowed when the
distributor furnishes copies for each sale of a
complete deal or special offer to a feedstore,
drugstore or other type of account.
Deals and Special Offers purchased for resale at
regular price invoiced at net deal or special offer
price.
Prices are subject to change without notice.
Squibb will endeavor to advise you promptly of
any price changes. However, prices in effect at
the tune orders are received by Squibb Order
Department will apply in all instances.
Green Valley Poultry & Allied Products, Inc. win
distribute only for the Central Luzon and
Northern Luzon including Cagayan Valley areas.
We will not allow any transfer or stocks from
Central Luzon and Northern Luzon including
Cagayan Valley to other parts of Luzon, Visayas
or Mindanao which are covered by our other
appointed Distributors. In line with this, you will
follow strictly our stipulations that the maximum
discount you can give to your direct and turnover
accounts will not go beyond 10%.
It is understood that Green Valley Poultry and
Allied Products, Inc. will accept turn-over orders
from Squibb representatives for delivery to
customers in your area. If for credit or other valid
reasons a turn-over order is not served, the
Squibb representative will be notified within 48
hours and hold why the order will not be served.
It is understood that Green Valley Poultry &
Allied Products, Inc. will put up a bond of
P20,000.00 from a mutually acceptable bonding
company.
Payment for Purchases of Squibb Products will
be due 60 days from date of invoice or the
nearest business day thereto. No payment win
be accepted in the form of post-dated checks.
Payment by check must be on current dating.
It is mutually agreed that this non-exclusive
distribution agreement can be terminated by
either Green Valley Poultry & Allied Products,
Inc. or Squibb Philippines on 30 days notice.
I trust that the above terms and conditions will
be met with your approval and that the
distributor arrangement will be one of mutual
satisfaction.
If you are agreeable, please sign the enclosed
three (3) extra copies of this letter and return
them to this Office at your earliest convenience.
Thank you for your interest and support of the
products of E.R. Squibb & Sons Philippines
Corporation.

TOPIC: Principal not bound to contracts done

outside of agent’s authority (Art. 1898 & 1910).

PNB vs. Agudelo

GR No. 39037
October 30, 1933

FACTS: