19.

JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee

G.R. No. L-12191

October 14, 1918

Facts:

Jose Cangco was an employee of Manila Railroad Company. He lived in the pueblo of San Mateo, in the
province of Rizal, which is located upon the line of the defendant railroad company; and in coming daily by
train to the company’s office in the city of Manila where he worked, he used a pass, supplied by the company,
which entitled him to ride upon the company’s trains free of charge.

During his ride in the train he arose from his seat and makes his way to the exit while the train is still moving.
Jose Cangco step down into the cement platform but unfortunately step in to a sack of watermelon, fell down
and rolled under the platform and was drawn under the moving car which resulting to his arm to be crashed
and lacerated. He was rushed to the hospital and sued the company and the employee who put the sack of
watermelon in the platform.

The plaintiff contends that there is negligence on the part of the defendant for letting the sacks of watermelon
be placed at the edge of platform that may cause serious accident. His action was based upon the negligence
of the servants and employees of the defendant in placing the sacks of melons upon the platform and leaving
them so placed as to be a menace to the security of passenger alighting from the company's trains.

The defendant answered that the plaintiff failed to use due caution in alighting from the train and did not wait
for the train to come into a full stop before leaving the same. Moreover, the plaintiff must prove the negligence
of the defendant’s employees or agents to bind the defendant.

The trial court ruled in favor of the defendant railroad company. It ruled that the plaintiff failed to use due
caution in alighting from train and therefore precluded from recovering.

The plaintiff appealed.

Issue:

Whether or not the negligence of the defendant’s employees or agents arising from culpa contractual binds
the defendant?

Ruling:

It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and
that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of
that contract by reason of the failure of defendant to exercise due care in its performance. That is to say, its
liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive responsibility
for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof
of the exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not applicable
to obligations arising ex contractu, but only to extra-contractual obligations — or to use the technical form of
expression, that article relates only to culpa aquiliana and not to culpa contractual.

The Court reversed the judgment of the trial court and declared that in culpa contractual, the negligence of
the defendant’s employees or agents will definitely bind the defendant.
20.

GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner

vs.
THE INTERMEDIATE APPELLATE COURT and E.R. SQUIBB & SONS PHILIPPINE
CORPORATION, respondents.

G.R. No. L-49395

December 26, 1984

Facts:

Squibb and Green Valley entered into a letter agreement which provides that 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 with the following stipulations.

xxx

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.

xxx

For goods delivered to Green Valley but unpaid, Squibb filed suit to collect. The trial court as
aforesaid gave judgment in favor of Squibb which was affirmed by the Court of Appeals.

Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never
purchased goods from Squibb; that the goods received were on consignment only with the obligation
to turn over the proceeds, less its commission, or to return the goods if not sold, and since it had
sold the goods but had not been able to collect from the purchasers thereof, the action was
premature.

Upon the other hand, Squibb claimed that the contract was one of sale so that Green Valley was
obligated to pay for the goods received upon the expiration of the 60-day credit period.

Issue:

Whether or not Green Valley as an agent of Squibb is liable for nonpayment of the latter’s products?

Ruling:

Whether viewed as an agency to sell or as a contract of sale, the liability of Green Valley is
indubitable.

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 of the Civil Code provides that 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.
21.

WOODCHILD HOLDINGS, INC., Petitioner,

vs.

ROXAS ELECTRIC AND CONSTRUCTION COMPANY, INC., Respondent.

G.R. NO. 140667

August 12, 2004

Facts:

The respondent was the owner of two parcel of land. The respondent’s Board of Directors approved
a resolution authorizing the corporation, through its president, Roberto B. Roxas, to sell one parcel
of land only. The petitioner, on the other hand, wanted to buy the lot on which it planned to construct
its warehouse building, and a portion of the adjoining lot, so that its 45-foot container van would be
able to readily enter or leave the property. Roxas indicated his acceptance of the offer on page 2 of
the deed.

The deed has the following stipulations: The Vendor agree, as it hereby agrees and binds itself to
give Vendee the beneficial use of and a right of way from Sumulong Highway to the property herein
conveyed consists of 25 square meters wide to be used as the latter's egress from and ingress to
and an additional 25 square meters in the corner of Lot No. 491-A-3-B-1 (the other parcel of land),
as turning and/or maneuvering area for Vendee's vehicles.

Roxas died years thereafter, the WHI demanded that the RECCI sell a portion of Lot No. 491-A-3-
B-1 covered by TCT No. 78085 for its beneficial use pursuant to the absolute Deed of Sale, within
72 hours from notice thereof, otherwise the appropriate action would be filed against it. RECCI
rejected the demand of WHI.

The respondent claimed that the previous President was not authorized by the corporation for the
right of way and the sale of a portion of the other parcel of land.

On the other hand, the petitioner contends that by the act of the respondent in retaining the payment
of the land, it already ratified the act of the President Roxas.

Issue:

Whether or not the previous President of the respondent corporation has no authority to enter into
stipulations for the right of way and sale of a portion of the other land with the petitioner?

Ruling:

The Supreme Court ruled for the respondent. A corporation is a juridical person separate and distinct
from its stockholders or members. Accordingly, the property of the corporation is not the property of
its stockholders or members and may not be sold by the stockholders or members without express
authorization from the corporation's board of directors.

Generally, the acts of the corporate officers within the scope of their authority are binding on the
corporation. However, under Article 1910 of the New Civil Code, acts done by such officers beyond
the scope of their authority cannot bind the corporation unless it has ratified such acts expressly or
tacitly, or is estopped from denying them:
Art. 1910. The principal must comply with all the obligations which the agent may have contracted
within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except
when he ratifies it expressly or tacitly.

Thus, contracts entered into by corporate officers beyond the scope of authority are unenforceable
against the corporation unless ratified by the corporation

Evidently, Roxas was not specifically authorized under the said resolution to grant a right of way in
favor of the petitioner on a portion of Lot No. 491-A-3-B-1 or to agree to sell to the petitioner a portion
thereof.