G. ACCOUNTING- ART. 1891
This gift of One Thousand Pesos (P1,000.00) was not
DOMINGO VS DOMINGO
DOCTRINE: An agent who takes a secret profit in the
nature of a bonus, gratuity or personal benefit from the
vendee, without revealing the same to his principal, the
vendor, is guilty of a breach of his loyalty to the principal
and forfeits his right to collect the commission from his
principal, even if the principal does not suffer any injury
by reason of such breach of fidelity, or that he obtained
better results or that the agency is a gratuitous one, or
that usage or custom allows it; because the rule is to
prevent the possibility of any wrong, not to remedy or
repair an actual damage.
FACTS:
In a document Exhibit "A" executed on June 2, 1956,
Vicente M. Domingo granted Gregorio Domingo, a real
estate broker, the exclusive agency to sell his lot No. 883
of Piedad Estate with an area of about 88,477 square
meters at the rate of P2.00 per square meter (or for
P176,954.00) with a commission of 5% on the total price,
if the property is sold by Vicente or by anyone else during
the 30-day duration of the agency or if the property is sold
by Vicente within three months from the termination of
the agency to apurchaser to whom it was submitted by
Gregorio during the continuance of the agency with notice
to Vicente.
On June 3, 1956, Gregorio authorized the intervenor
Teofilo P. Purisima to look for a buyer, promising him
one-half of the 5% commission.
Thereafter, Teofilo Purisima introduced Oscar de Leon to
Gregorio as a prospective buyer.
After several conferences between Gregorio and Oscar de
Leon, the latter raised his offer to P109,000.00 on June
20, 1956 as evidenced by Exhibit "C", to which Vicente
agreed by signing Exhibit "C".
Upon demand of Vicente, Oscar de Leon issued to him a
check in the amount of P1,000.00 as earnest money, after
which Vicente advanced to Gregorio the sum of P300.00.
Oscar de Leon confirmed his former offer to pay for the
property at P1.20 per square meter in another letter,
Exhibit "D". Subsequently, Vicente asked for an
additional amount of P1,000.00 as earnest money, which
Oscar de Leon promised to deliver to him.
Pursuant to his promise to Gregorio, Oscar gave him as a
gift or propina the sum of One Thousand Pesos
(P1,000.00) for succeeding in persuading Vicente to sell
his lot at P1.20 per square meter or a total in round figure
of One Hundred Nine Thousand Pesos (P109,000.00).
disclosed by Gregorio to Vicente
When Oscar did not see him after several weeks, Gregorio
sensed something fishy. So, he went to Vicente and read
a portion of Exhibit "A" marked habit "A-1" to the effect
that Vicente was still committed to pay him 5%
commission, if the sale is consummated within three
months after the expiration of the 30-day period of the
exclusive agency in his favor from the execution of the
agency contract on June 2, 1956 to a purchaser brought by
Gregorio to Vicente during the said 30-day period.
Upon thus learning that Vicente sold his property to the
same buyer, Oscar de Leon and his wife, he demanded in
writting payment of his commission on the sale price of
One Hundred Nine Thousand Pesos (P109,000.00),
Exhibit "H". He also conferred with Oscar de Leon, who
told him that Vicente went to him and asked him to
eliminate Gregorio in the transaction and that he would
sell his property to him for One Hundred Four Thousand
Pesos (P104,000.0 In Vicente's reply to Gregorio's letter,
Exhibit "H", Vicente stated that Gregorio is not entitled to
the 5% commission because he sold the property not to
Gregorio's buyer, Oscar de Leon, but to another buyer,
Amparo Diaz, wife of Oscar de Leon.
ISSUE: Whether the failure on the part of Gregorio to
disclose to Vicente the payment to him by Oscar de Leon
of the amount of One Thousand Pesos (P1,000.00) as gift
or "propina" for having persuaded Vicente to reduce the
purchase price from P2.00 to P1.20 per square meter, so
constitutes fraud as to cause a forfeiture of his
commission on the sale price
RULING:
The duties and liabilities of a broker to his employer are
essentially those which an agent owes to his principal.
Consequently, the decisive legal provisions are in found
Articles 1891 and 1909 of the New Civil Code.
Art. 1891. Every agent is bound to render an account of
his transactions and to deliver to the principal whatever
he may have received by virtue of the agency, even
though it may not be owing to the principal.
Every stipulation exempting the agent from the obligation
to render an account shall be void.
xxx xxx xxx
Art. 1909. The agent is responsible not only for fraud but
also for negligence, which shall be judged with more less
rigor by the courts, according to whether the agency was round figure for the lot of 88,477 square meters, which is
or was not for a compensation. very much lower the the price of P2.00 per square meter
or One Hundred Seventy-Six Thousand Nine Hundred
The aforecited provisions demand the utmost good faith,
Fifty-Four Pesos (P176,954.00) for said lot originally
fidelity, honesty, candor and fairness on the part of the
offered by his principal.
agent, the real estate broker in this case, to his principal,
the vendor. The law imposes upon the agent the absolute
obligation to make a full disclosure or complete account
to his principal of all his transactions and other material
facts relevant to the agency, so much so that the law as
amended does not countenance any stipulation exempting
the agent from such an obligation and considers such an
exemption as void. The duty of an agent is likened to that
of a trustee. This is not a technical or arbitrary rule but a
rule founded on the highest and truest principle of
morality as well as of the strictest justice.
Hence, an agent who takes a secret profit in the nature of
a bonus, gratuity or personal benefit from the vendee,
without revealing the same to his principal, the vendor, is
guilty of a breach of his loyalty to the principal and
forfeits his right to collect the commission from his
principal, even if the principal does not suffer any injury
by reason of such breach of fidelity, or that he obtained
better results or that the agency is a gratuitous one, or that
usage or custom allows it; because the rule is to prevent
the possibility of any wrong, not to remedy or repair an
actual damage. By taking such profit or bonus or gift or
propina from the vendee, the agent thereby assumes a
position wholly inconsistent with that of being an agent
for hisprincipal, who has a right to treat him, insofar as his
commission is concerned, as if no agency had existed. The
fact that the principal may have been benefited by the
valuable services of the said agent does not exculpate the
agent who has only himself to blame for such a result by
reason of his treachery or perfidy.
In the case at bar, defendant-appellee Gregorio Domingo
as the broker, received a gift or propina in the amount of
One Thousand Pesos (P1,000.00) from the prospective
buyer Oscar de Leon, without the knowledge and consent
of his principal, herein petitioner-appellant Vicente
Domingo. His acceptance of said substantial monetary
gift corrupted his duty to serve the interests only of his
principal and undermined his loyalty to his principal, who
gave him partial advance of Three Hundred Pesos
(P300.00) on his commission. As a consequence, instead
of exerting his best to persuade his prospective buyer to
purchase the property on the most advantageous terms
desired by his principal, the broker, herein defendant-
appellee Gregorio Domingo, succeeded in persuading his
principal to accept the counter-offer of the prospective
buyer to purchase the property at P1.20 per square meter
or One Hundred Nine Thousand Pesos (P109,000.00) in
H. SUB-AGENT- ARTS. 1892-1893
BALTAZAR VS OMBUDSMAN
DOCTRINE: An agent cannot further delegate his RULING:
agency to another. A re-delegation of the agency would
No, Faustino Mercado cannot delegate his agency to his
be detrimental to the principal as the second agent has no
nephew Antonio Baltazar.
privity of contract with the former.
Petitioner asserts that he is duly authorized by Faustino
FACTS:
Mercado to institute the suit and presented a Special
Paciencia Regala owns a seven (7)-hectare fishpond
Power of Attorney (SPA) from Faustino Mercado.
located at Sasmuan, Pampanga. Her Attorney-in-Fact
However, such SPA is unavailing for petitioner. For one,
Faustino R. Mercado leased the fishpond for PhP
petitioners principal, Faustino Mercado, is an agent
230,000.00 to Eduardo Lapid for a three (3)-year
himself and as such cannot further delegate his agency to
period. Lessee Eduardo Lapid in turn sub-leased the
another. Otherwise put, an agent cannot delegate to
fishpond to Rafael Lopez for PhP 50,000.00 during the
another the same agency. The legal maxim potestas
last seven (7) months of the original lease. Respondent
delegata non delegare potest; a power once delegated
Ernesto Salenga was hired by Eduardo Lapid as fishpond
cannot be re-delegated, while applied primarily in
watchman (bante-encargado). In the sub-lease, Rafael
political law to the exercise of legislative power, is a
Lopez rehired respondent Salenga.
principle of agency. For another, a re-delegation of the
Meanwhile, on March 11, 1993, respondent Salenga, agency would be detrimental to the principal as the second
through a certain Francis Lagman, sent his January 28, agent has no privity of contract with the former. In the
1993 demand letter to Rafael Lopez and Lourdes Lapid instant case, petitioner has no privity of contract with
for unpaid salaries and non-payment of the 10% share in Paciencia Regala, owner of the fishpond and principal of
the harvest. Faustino Mercado.
On June 5, 1993, sub-lessee Rafael Lopez wrote a letter Moreover, while the Civil Code under Article
to respondent Salenga informing the latter that for the last 1892 allows the agent to appoint a substitute, such is not
two (2) months of the sub-lease, he had given the rights the situation in the instant case. The SPA clearly delegates
over the fishpond to Mario Palad and Ambit Perez for PhP the agency to petitioner to pursue the case and not merely
20,000.00. This prompted respondent Salenga to file a as a substitute. Besides, it is clear in the aforecited Article
Complaint before the Provincial Agrarian Reform that what is allowed is a substitute and not a delegation of
Adjudication Board (PARAB). the agency.
On November 24, 1994, pending resolution of the Clearly, petitioner is neither a real party in interest with
agrarian case, the instant case was instituted by petitioner regard to the agrarian case, nor is he a real party in interest
Antonio Baltazar, an alleged nephew of Faustino in the criminal proceedings conducted by the
Mercado, through a Complaint-Affidavit against private Ombudsman as elevated to the Sandiganbayan. He is not
respondents before the Office of the Ombudsman. a party who will be benefited or injured by the results of
both cases.
Petitioner charged private respondents of conspiracy
through the issuance of the TRO in allowing respondent
Salenga to retain possession of the fishpond, operate it,
harvest the produce, and keep the sales under the
safekeeping of other private respondents
Petitioner asserts that he is duly authorized by Faustino
Mercado to institute the suit and presented a Special
Power of Attorney (SPA) from Faustino Mercado.
ISSUE:
Whether Faustino Mercado can delegate his agency to his
nephew Antonio Baltazar
L. LIABILITY OF AGENT FOR IMPROPER ACTS- ISSUE: W/N the plaintiff has cause of action against the
ART. 1897 manager
ZIALCITA-YUSECO VS. SIMMONS RULING: NO.
DOCTRINE: The agent is not liable for any improper This argument is without merit, because in the defendant's
acts so long as he acted within the scope of his authority. answer he specifically alleged:
The cause of action is against the principal and not the
That plaintiff has no cause of action against
agent.
defendant; that the action instituted by her against
FACTS: defendant (is) unwarranted; . .."
Hortensia Zialcita was employed by the National City Now, then, does plaintiff have the right to compel the
Bank of New York, a foreign banking corporation doing manager of the National City Bank to pay damages by
business in the Philippines, under a contract of reason of her separation? She does not rebut the court's
employment, signed by her, including the following reasoning that defendant merely acted as agent of the
clause: Bank, and that her remedy, if any, is to sue such Bank.
Indeed such reasoning is in line with well-known
I understand that I am being hired as a single female
principles of agency. According to the complaint itself, in
employee. In the event of my marriage you may terminate
requiring her to sign the contract, defendant acted as
this employment in which case I shall be entitled to no
manager of the Bank, and in requiring her resignation he
other benefits except my salary through the last day on
also acted as manager of the Bank. There is no allegation
which I worked.
that he exceeded his power as manager or that his
Because she intended to marry soon, and pursuant to the actuation was repudiated by his principal, the Bank.
above stipulation, plaintiff filed on July 7, 1952, her Consequently any claim for damages supposedly
written resignation-which was accepted-effective August resulting from his acts as manager should be directed
15, 1952. On July 13, 1952 she married her co-plaintiff; against his principal, the Bank-not against him personally.
and on August 18, 1952 she commenced, in the Manila
"The agent who acts as such is not personally liable to the
court of first instance, this suit against William Simmons,
party with whom he contracts, unless he expressly binds
the general manager of the National City Bank of New
himself or exceeds the limits of his authority . . ..""The
York asserting that said defendant "urged by his distorted
principal must comply with all the obligations which the
notion of a new policy" in the said bank "as manager
agent may have contracted within the scope of his
thereof, forced the herein plaintiff to sign" the above letter
authority." (Arts. 1897 and 1910 New Civil Code.)
of resignation "in implementation of the aforementioned
immoral and illegal agreement in the contract of Of course it is not necessary to cite authorities to conclude
employment." She demanded that said defendant be that the defendant as manager had authority to contract
ordered to pay her damages totalling P15,000. plaintiff's services for the corporation and to accept or
require her resignation.
For answer the defendant averred that: (a) plaintiff signed
the contract voluntarily, (b) the above condition of
employment was valid, and (c) before marriage plaintiff
resigned her position; and asserting she had no cause of
action against him; he asked for damages.
The case was heard; and on March 31, 1953 the
Honorable Alejandro Panlilio, Judge, entered judgment
absolving the defendant for the reason that the plaintiff
had signed the contract voluntarily and clause in question
was a valid condition of employment not repugnant to
public policy. His Honor furthermore opined that plaintiff
had no cause of action "taking into consideration the
undeniable fact that said plaintiff was not employed by
the defendant William Simmons, but by the National City
Bank of New York, of which said defendant happened to
be the general manager.
M. EXCESS OF AUTHORITY AND
RATIFICATION- ARTS. 1898, 1901
CERVANTES VS CA
DOCTRINE: The acts of an agent beyond the scope of
his authority do not bind the principal, unless the latter
ratifies the same expressly or impliedly. Furthermore,
when the third person knows that the agent was acting
beyond his power or authority, the principal cannot be
held liable for the acts of the agent.
FACTS:
PAL issued to Cervantes a round trip ticket for Manila-
Honolulu-Los Angeles-Honolulu-Manila. This ticket
expressly provide an expiry date of 1 year from issuance
or until March 27, 1990.
The ticket was issued in compliance w/ a Compromise
Agreement entered between PAL & Cervantes in 2
previous suits between them.
On March 3, 1990, $ days before the expiry date,
Cervantes used it. Upon his arrival to LA, on the same
day, he immediately booked his LA-Manila return ticket
w/ PAL office which was confirmed for April 2, 1990
flight.
Cervantes learned that the same PAL plane would make a
stop-over in San Francisco and because he would be in
San Francisco on April 2, 1990, he made arrangements w/
PAL for him to board the flight in San Francisco instead
of boarding it in LA.
When Cervantes checked in at PAL counter in San
Francisco he was not allowed to board. PAL personnel
made a notation on his ticket “TICKET NOT
ACCEPTED DUE TO EXPIRATION OF VALIDITY”.
Aggrieved, Cervantes filed a complaint for damages for
Breach of Contract of Carriage. The RTC dismissed the
complaint w/c was upheld by the CA.
ISSUE: W/N the act of the PAL agents in confirming the
ticket of Cervantes extended the period of validity.
RULING: NO.
The plane ticket itself provides that it is not valid after
March 27, 1990. It is also stipulated in paragraph 8 of the
Conditions of Contract that 8. This ticket is good for
carriage for one year from date of issue, except as
otherwise provided in this ticket, in carrier's tariffs,
conditions of carriage, or related regulations. The fare for
carriage hereunder is subject to change prior to
commencement of carriage. Carrier may refuse
transportation if the applicable fare has not been paid. 6
In the case of Lufthansa vs. Court of Appeals, the SC held
that the "ticket constitute the contract between the parties.
It is axiomatic that when the terms are clear and leave no
doubt as to the intention of the contracting parties,
contracts are to be interpreted according to their literal
meaning."
In his effort to evade this inevitable conclusion, petitioner
theorized that the confirmation by the PAL's agents in Los
Angeles and San Francisco changed the compromise
agreement between the parties.
As aptly by the appellate court:
. . . on March 23, 1990, he was aware of the risk that his
ticket could expire, as it did, before he returned to the
Philippines.'
The 2 personnel from PAL did not have an authority to
extend the validity of the ticket. Cervantes knew this from
the start when he called up the Legal Department of
appellee in the Philippines before he left for the United
States of America. He had first hand knowledge that the
ticket in question would expire on March 27, 1990 and
that to secure an extension, he would have to file a written
request for extension at the PAL's office in the
Philippines. ). Despite this knowledge, he persisted to use
the ticket in question."
Since the PAL agents are not privy to the said Agreement
and Cervantes knew that a written request to the legal
counsel of PAL was necessary, he cannot use what the
PAL agents did to his advantage. The said agents,
according to the Court of Appeals, acted without
authority when they confirmed the flights of the
petitioner.
Under Article 1898 of the New Civil Code, the acts of an
agent beyond the scope of his authority do not bind the
principal, unless the latter ratifies the same expressly or
impliedly. Furthermore, when the third person (herein
petitioner) knows that the agent was acting beyond his
power or authority, the principal cannot be held liable for
the acts of the agent. If the said third person is aware of
such limits of authority, he is to blame, and is not entitled
to recover damages from the agent, unless the latter
undertook to secure the principal's ratification.
O. SCOPE OF AGENT’S AUTHORITY TO THIRD Eugenio opportunity to object or cross-examine Estrada.
PERSON- ART. 1900 The other points of Estrada (and Pepsi) were all invalid
since Estrada was nowhere to be found and Pepsi failed to
EUGENIO VS CA comply with the pertinent rules for the admission of the
DOCTRINE: As far as third persons are concerned, an evidence by which it sought to prove its contentions.
act is deemed to have been performed within the scope of Pepsi therefore was unable to rebut the aforestated
the agent’s authority, if such is within the terms of the presumptions in favor of valid payment by petitioners,
power of attorney, as written, even if the agent has in fact
In relation to Agency: Assuming in this case that Pepsi
exceeded the limits of his authority according to the
never received the amounts reflected in the TPR's, Pepsi
understanding between the principal and his agent.
still failed to prove that Estrada (its duly authorized agent)
FACTS: did not receive the amounts. In so far as Eugenio is
concerned, their obligation is extinguished when they
Nora Eugenio was a dealer of Pepsi. She had one store in paid Estrada using Pepsi's official receipt. The substantive
Marikina but had a regular charge account in Q.C. And law is that payment shall be made to the person in whose
Muntinlupa. Her husband Alfredo used to be a route favor the obligation has been constituted, or his successor
manager for Pepsi in its Q.C. Plant. Pepsi filed a in interest, or any person authorized to receive it.
complaint for a sum of money against Eugenio spouses.
since according to them the spouses (1) had an *TPR: Trade Provisional Receipts are bound and given in
outstanding balance since it purchased and received on booklets to the company sales representatives, under
credit various products from both its Q.C. and Muntinlupa proper acknowledgement by them and with a record of the
plant and (2) had an unpaid obligation for the loaned distribution thereof. After every transaction, when a
“empties” from Pepsi. They contend that the total collection is made the customer is given by the sales
outstanding account was P94,651.xx. Eugenio's in their representative a copy of the TPR, that is, the triplicate
defense presented four Trade Provisional Receipts (TPR) copy or customer's copy, properly filled up to reflect the
allegedly issued to and received by them from Pepsi's completed transactions. All unused TPR's,as well as the
Route Manager (Malate Warehouse) Jovencio Estrada collections made, are turned over by the sales
showing that they paid a total sum of P80,500.xx. They representative to the appropriate company officer.
also claim that the signature of Nora Eugenio in a Sales
Invoice (85366) for the amount of P5,631.xx which was
included in the computation of their debt was falsified.
Therefore, without these errors, petitioner contend that (1)
they do not have any outstanding debt, and (2) it is Pepsi
who owes them P3,546.02. RTC found in favor of Pepsi.
CA affirmed the decision.
ISSUE: W/N the amounts in the TPR should be credited
in favor of the spouses.
RULING:
CA decision is annulled and set-aside. Pepsi is ordered to
pay Eugenio.
Background: Eugenio submitted the TPR's to Atty.
Rosario (Pepsi's lawyer). Thereafter, Rosario ordered
Daniel Azurin (asst.personnel manager) to conduct an
investigation to verify the claim of the petitioners.
According to Azurin, Estrada denied that he issued and
signed the TPR's. Azurin testified to this in Court
(However, Estrada never did. He failed to appear and was
never found. Therefore, his testimony- as told by Azurin-
is barred by the Hearsay Evidence Rule). Furthermore, the
“investigation” conducted was really more of an
interview without any safeguards and did not give