Agency Case Doctrines

VII.

What are the obligations and liabilities of agents to their principals?

Austria v. CA, 39 SCRA 527 - Robbery of the jewelry deemed a fortuitous event and therefore, agent not responsible for the loss; however, in order to completely exonerate her, she should also be free of any contributory fault or negligence - Although her conduct of going home alone in the evening while carrying valuable jewelry would have been negligent per se and would not exempt her from responsibility, said rule is not applicable at the point in time that the robbery took place; criminality at that time had not reached the levels attained in the present day PNB v. Manila Surety, 14 SCRA 776 - Bank (agent) answerable for its neglect in collecting the sums due to the debtor (principal) contrary to its duty as holder of an exclusive and irrevocable PoA to make such collections since an agent is required to act with the care of a good father of a family - By allowing the assigned funds to be exhausted without notifying the surety, the Bank deprived it of any possibility of recoursing against that security; therefore, surety is not liable Domingo v. Domingo, 42 SCRA 131 - Contract of agency demands utmost good faith, fidelity, honesty, candor and fairness on the part of the agent (real estate broker); agent is obliged to make full disclosure to principal - Agent who takes a secret profit without telling the principal is guilty of breach of his loyalty and forfeits his right to collect commission from the principal Severino v. Severino, 44 Phil. 343 - Defendant came into possession of the land as agent of the deceased (principal); he had been continuously in charge and occupation of the land as administrator; he had always known that the land belonged to the principal - Since the property is the subject matter of agency, agent is estopped from acquiring or asserting a title adverse to that of the principal - Position analogous to that of a trustee and he cannot be allowed to create in himself an interest in opposition to that of the principal Green Valley Poultry v. IAC, 133 SCRA 697 - Contract may be considered as an agency to sell; therefore, agent is liable for selling on credit without authority from the principal Municipal Council of Iloilo v. Evangelista, 55 Phil. 290

VIII.

Soriano was a lawyer of Tan Toco, but he was not the lawyer in that particular case and so the assignment of credit in his favor did not violate the prohibition in an attorney-client relationship Also, one who is authorized to employ services of lawyers necessarily implies authority to pay for the lawyer’s professional services Responsibility for acts of substitutes – 1892, 1893

Del Rosario v. La Badenia, 33 Phil. 316 - Aragon was acting as a general agent since it was not shown what limitations were placed upon his powers to act for the corporation; his powers appear to have been very broad and no evidence that he acted in excess of authority in extending credit on behalf of the agency - Company was informed that the spouses were acting as sub-agents of Aragon and recognized them as such, as proven by the letters of the corp.; it was clear that the corp. did not consider them as independent merchants International Films v. Lyric Film, 63 Phil. 778 - Verbal agreement between former agent and the company was that the film would remain deposited in their safety vault under responsibility of said former agent; as sub-agent, company could show it in their theaters - Not insuring the film does not constitute fraud or negligence of the company since it received no instruction to that effect from its principal IX.

What are the obligations and liabilities of agents to third parties?

PNB v. Agudelo, 58 Phil. 655 - Nothing in the mortgage deeds to show that Garrucho (mortgagor) is agent of the owner or that he obtained the loan on behalf of the owners - It appears that Garrucho acted in his personal capacity - He executed the PNs under his own signature without authority from the principal, therefore, PNs not binding upon them - His SPA does not authorize him to constitute a mortgage to secure his personal obligations, therefore he exceeded his authority - Exception in Art. 1717 where agent contracts in his own name with things belonging to the principal binds the latter requires that agent did not exceed his authority Philippine Products v. Primateria, 15 SCRA 301 - 3rd parties can’t recover from both the principal and the agent - Art. 1897 provides that agents are personally liable in case they exceed their authority; however, such law does not hold that in cases

of excess of authority, both the principal and the agent are liable to the other contracting party NPC v. National Merchandising, 117 SCRA 789 - Agent acted beyond authority for still contracting despite principal’s prohibition - Agent who exceeds authority without giving 3rd party notice of his powers is personally liable - Unenforceability of the contract is against the principal only National Bank & Welch Fairchild, 44 Phil. 780 - One who has intervened in the making of a contract in the character of an agent cannot be permitted to intercept the thing which the principal is bound to deliver - Agent is precluded from doing act that could prevent performance on the part of his principal Tuazon v. Orosco, 5 Phil. 596 - Agent acted as such in securing the debt for his principal - To secure payment, principal’s property was mortgaged; P’s wife even took part in the execution of the mortgage - Debt incurred by agent is binding upon P provided A acted within scope of authority - The fact that A also personally bound himself does not relieve P’s liability; it was only a further security to the debt; such an act on the part of A was valid Cervantes v. CA, 304 SCRA 25 - 3rd party cannot use employees’ (agents) actions in confirming the flight after expiration o his ticket to his advantage - Agents acted outside their authority and did not bind PAL (principal) - Since 3rd party knew of such excess in authority of the agents, P can’t be held liable for their acts and 3rd party not entitled to recover damages from such agents Smith Bell v. Sotelo, 44 Phil. 874 - Agent signed the contracts in his individual capacity and his own name, therefore, he is bound by them - Undisclosed principal has no right of action against the 3rd party Rural Bank of Bombon v. CA, 212 SCRA 25 - In order to bind P on mortgage, it must be made in behalf of P; otherwise, it will bind agent only - Agent’s act of signing mortgage deed in his own name bound himself in his personal capacity as debtor - Exception in Art. 1883 not applicable

-

There is no principle of law by which one can become liable on a real estate mortgage which he never executed either in person or by attorney in fact

Sy-Juco v. Sy-Juco, 40 Phil. 634 - Property bought and registered in agent’s own name with P’s money still P’s property; transaction was within the agency; question is not in whose favor document of sale was made and registered but with whose money said property was bought - Exception in the Civil Code of agent acting in own name with things belonging to P applicable since money that was used belonged to P National Food Authority v. IAC, 184 SCRA 166 - It was undisputed that Medalla was a commission agent of the company - Art. 1883 applicable - Agent’s apparent representation yields to the principal’s true representation, therefore, contract considered to have been entered into between the principal and the 3rd party Gold Star Mining v. Lim Jimena, 25 SCRA 597 - When Lincallo (agent) transferred his mining claims to Gold Star, even without disclosing that Jimena was part owner, he acted as agent of Jimena with respect to Jimena’ share of the claims - Art. 1883 applicable - While there is no privity of contract between 3rd party (Gold Star) and principal (Jimena) in this case, the common subject matter supplies the juridical link X.

What are the obligations and liabilities of principals to agents?

Macondray v. Sellner - purchaser has a perfect right to examine the documents; it was understood that the purchaser should have a reasonable time; also, time does not appear to be of the essence to the contract - company’s letter demanding immediate payment under penalty of cancellation of the agreement was an unreasonable attempt to deny purchaser reasonable opportunity to inspect docs. - Real estate agent already earned commissions and could not be deprived thereof - Company could not lawfully terminate negotiations at the time it attempted to do so Danon v. Brim & Co., 42 Phil. 133 - All that the agent had accomplished was that he found a person who might have bought the factory

-

His services did not in any way contribute towards consummating the sale; he was not the efficient agent or procuring cause of the sale Duty of the broker is to bring the minds of the buyer and seller to an agreement for a sale Broker never entitled to commissions for unsuccessful efforts; limitation: if the efforts of the broker are rendered a failure by the fault of the employer, then the broker does not lose his commissions. Grounds: broker has done his duty to bring buyer and seller to an agreement, but it is not consummated due to seller’s fault

Rocha v. Prats, 43 Phil. 397 - Broker never succeeded in his duty to bring buyer and seller to an agreement; until that is done, his right to commission does not accrue Inland Realty v. CA, 273 SCRA 70 - Agent did not but submit the name of prospective buyer; they had nothing to show that they actively served principal’s interests - After authority to sell expired, they abandoned the sales transaction and were no longer privy to the consummation thereof - Lapse of more than 1 year a significant index of agent’s nonparticipation in critical events leading to consummation of the sale Infante v. Cunanan, 93 Phil. 691 - Agents found a buyer who was willing to purchase at the terms specified - Infante took advantage of the services rendered by the agents but tricked them to be absolved from paying commission - This cannot serve as a basis for Infante to escape payment of the commission agreed upon Prats v. CA, 81 SCRA 360 - Offer to sell was accepted after the authority had already expired - Agent was not the procuring cause in bringing about the sale ; therefore, not entitled to commission - However, the court took into consideration that the agent was responsible for bringing the buyer and seller back together (after a previous failed negotiation) and finally consummating the transaction; it is therefore entitled to P100,000 based on equity Uniland Resources v. DBP, 200 SCRA 757 - Uniland was aware thnat it hd no express authority from DBP to find buyers of its properties - It was never able to acquire accreditation to transact business on behalf of DBP - Implied agency did not exist

XI.

The court also granted P100,000 based on equity since it was Uniland who informed DBP of the interested buyer What are the obligations of principals to third parties?

Gonzalez v. Haberes, 47 Phil. 380 - The husband, in negotiating the sale of wife’s property, acted as the agent and representative of his wife - Wife accepted the benefit of the representation so she can’t escape liability for failing to comply with their obligation XIII.

How is agency extinguished?

Barreto v. Sta. Maria, 26 Phil. 440 - Agent made his intent to resign as manager known to his principal and the principal later accepted it and appointed a new manager; he was not unlawfully dismissed - No period was fixed for the duration of manager’s position; even if there was, principal still entitled to revoke if he no longer has confidence on his agent even before expiration of the period Dialosa v. CA, 130 SCRA 350 - Principal cannot lawfully terminate the agency at will without paying damages - Intent to reserve lots for own use can’t prevail over the clear terms of the agency agreement - Agent allowed to sell the lots until all the subject property is fully disposed of; authority to sell not extinguished until all the lots have been sold - Agency may be rescinded on the grounds specified in Arts. 1381 & 1382; none of them were present in this case New Manila v. Republic, 107 Phil. 824 - Contractor (principal) already did what he had authorized agent to do in his behalf which is to collect the amounts due him from the government; therefore, agency was already revoked Dy Buncio v. Ong Guan, 60 Phil. 606 - PoA was limited and does not include express power to alienate properties - Making a new PoA, whether it enlarges or decreases the authority under a previous PoA, must be held to supplant and revoke the previous one when the two are inconsistent Garcia v. De Manzano, 39 Phil. 577

-

PoA given to son (1st) was not revoked by PoA given to mother (2nd) because son had no knowledge of 2nd PoA PoA authorizes sale and purchase of real property and mortgaging the same as well as borrowing of money; it is general and complete A power so full and complete must necessarily carry with it right to sell half interest in a small boat, especially since sale was necessary to get money or credit

Rallos v. Yangco, 20 Phil. 269 - Having given special notice to 3rd party of agency and inviting them to deal with such agent, it is the principal’s duty to give due and timely notice to such 3rd party upon termination of the agency - Failing to do so, principal responsible to them for whatever goods may have been in good faith and without negligence sent to the agent Compania General de Tobacos v. Diabu, 20 Phil. 321 - Agent has been selling and buying goods on behalf of principal for more than 8 years - Upon termination of agency but without notice to 3rd party, 3rd party had a perfect right to believe that agent was still representing the principal - Evident here that principal was willing to ratify agent’s acts in selling goods but unwilling to ratify acts in purchasing goods Del Rosario v. Abad, 104 Phil. 648 - PoA does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character; therefore, agency was terminated upon death of principal - A mere statement in PoA that agency is coupled with an interest is not enough; such interest must be stated in the PoA - Sale of the property was void since alienation of land acquired by free patent is void Caleongco v. Claparols, 10 SCRA 577 - Financing agreement already contained clauses for protection of agent’s interest and did not call for the execution of any PoA - PoA can be made irrevocable by contract only; however, agency coupled with an interest can still be revoked for just cause, as when the agent betrays the interest of the principal - Agent acted in bad faith and did acts of deliberate sabotage to principal’s business which justified the revocation Valera v. Velasco, 51 Phil. 695 - The fact that the agent sued his principal more than proves for a breach of the juridical relation between them; although the agency has

-

not been expressly renounced, neither dignity nor decorum permits agent to continue representing such principal An agent who institutes an action against the principal, and renders a final account of his operations, is equivalent to an express renunciation of the agency and terminates the juridical relation between them Former agent’s purchase of principal’s right of usufruct is valid

Pasno v. Ravina, 54 Phil. 378 - Power of sale given in a mortgage is a power coupled with an interest which survives the death of the grantor - The creditor-mortgagee with a power of sale has 3 options (for property under custody of a judicial administrator after ownerprincipal’s death): o Waive his security and prove his credit as an ordinary against the estate o Foreclose mortgage by ordinary action in court at any time within the period allowed by the statute of limitations, in accordance with Code of Civil Procedure o Foreclose the mortgage without action in accordance with Act 3135, which is less prejudicial to the estate Ramos v. Caoibes, 94 Phil. 440 - Agent has the obligation to deliver amount y virtue of PoA to his principal - There was no cession of rights made in favor of the agent in the PoA, and the contract of agency is presumed to be gratuitous, unless the agent is a professional agent - When the agent made use of the PoA, principal was already dead; agency was terminated upon the death of the principal; therefore, he can’t keep the proceeds of the claim for himself - Agent’s act of collecting the claim is not such a service as to require compensation Herrera v. Luy Kim Guan, 1 SCRA 406 - Date of death of the principal has not been satisfactorily proven, therefore, documents are presumed to have been executed during the lifetime of the principal - Also, there was no proof that agent was aware of death of the principal; death of the principal does not render th act of an agent unenforceable, where the agent had no knowledge of such extinguishment of the agency