CASE 11. Inland Realty v.

Court of Appeals, 273 SCRA 70 (1997):

PRINCIPLE/RATIO:
Obligation to Pay Agent’s Compensation (Art. 1875)
The lapse of more than one (1) year and five (5) months between the expiration of
petitioners' authority to sell and the consummation of the sale to Stanford, to be a
significant index of petitioners' non-participation in the really critical events leading to
the consummation of said sale, i.e., the negotiations to convince Stanford to sell at
Araneta, Inc.'s asking price, the finalization of the terms and conditions of the sale,
the drafting of the deed of sale, the processing of pertinent documents, and the
delivery of the shares of stock to Stanford.

FACTS:

1. Plaintiff Inland Realty Investment Service, Inc. (Inland Realty for short) is a
corporation engaged [in], among others . . . the real estate business [and]
brokerages, duly licensed by the Bureau of Domestic Trade . . . [Inland Realty]
planned their sales campaign, sending proposal letters to prospective buyers.
2. One such prospective buyer to whom a proposal letter was sent to was
Stanford Microsystems, Inc. . . . [that] counter-proposed to buy 9,800 shares
offered at P1,000.00 per share or for a total of P9,800,000.00, P4,900,000.00
payable in five years at 12% per annum interest until fully paid.
3. Upon plaintiffs' receipt of the said counter-proposal, it immediately wrote
defendant a letter to register Stanford Microsystems, Inc. as one of its
prospective buyers that the price offered by Stanford was too low and
suggested that plaintiffs see if the price and terms of payment can be involved
upon by Stanford. The authority to sell given to plaintiffs by defendants was
extended several times, October 2, 1975, October 28, 1975, Dec 2, 1975 for
30 days
4. Plaintiff Roman de los Reyes testified that when his company was initially
granted the authority to sell, he asked for an exclusive authority and for a
longer period but Armando Eduque would not give the life of authority
5. On July 8, 1977, plaintiffs sold the 9,800 shares of stock in Architect’s Inc to
Stanford Microsystems Inc. for P13,500,000.00.
6. On September 6, 1977, plaintiffs demanded formally from defendants for
payment of 5% broker’s commission at P13,500,000.00 or a total amount of
P675,00.00

P CONTENTION:
Petitioners come to us with a two-fold agenda:
(1) to obtain from us a declaration that the trial court and the respondent
appellate court gravely erred when appreciating the facts of the case by
disregarding Exhibits "L," a Letter dated October 28, 1976 signed by
Gregorio Araneta II, renewing petitioners' authority to act as sales agent for
a period of thirty (30) days from same date, and Exhibit "M," a Letter dated
 November 16, 1976 signed by petitioner de los Reyes, naming four (4)
other prospective buyers, respectively; and
(2) to obtain from us a categorical ruling that a broker is automatically entitled
to the stipulated commission merely upon securing for, and introducing to,
the seller the particular buyer who ultimately purchases from the former the
object of the sale, regardless of the expiration of the broker's contract of
agency and authority to sell
R: CONTENTION:
Ascribing merit to private respondents' defense that, after their authority to sell
expired thirty (30) days from December 2, 1975, or on January 1, 1976, petitioners
abandoned the sales transaction and were no longer privy to the consummation and
documentation thereof, the trial court dismissed petitioners' complaint for collection of
unpaid broker's commission.

LOWER COURT/S DECISION:

Petitioners appealed, but the Court of Appeals was unswayed in the face of evidence
of the expiration of petitioners' agency contract and authority to sell on January 1,
1976 and the consummation of the sale to Stanford on July 8, 1977 or more than one
(1) year and five (5) months after petitioners' agency contract and authority to sell
expired.

ISSUE/S:

Whether or not there was an automatic entitlement to the stipulated commission on

the part of the broker for merely securing for, and introducing to, the seller, the
particular buyer who ultimately purchases from the former the object of the sale,
regardless of the expiration of the broker's contract of agency and authority to sell.
RULING/S:
No.
Petitioners did not succeed in outrightly selling said shares under the predetermined
terms and conditions set out by Araneta, Inc., e.g., that the price per share is
P1,500.00. They admit that they could not dissuade Stanford from haggling for the
price of P1,000.00 per share with the balance of 50% of the total purchase price
payable in five (5) years at 12% interest per annum.

Certainly, when the lapse of the period of more than one (1) year and five (5) months
between the expiration of petitioners' authority to sell and the consummation of the
sale, is viewed in the context of the utter lack of evidence of petitioners' involvement
in the negotiations between Araneta, Inc. and Stanford during that period and in the
subsequent processing of the documents pertinent to said sale, it becomes
undeniable that the respondent Court of Appeals did not at all err in affirming the trial
court's dismissal of petitioners' claim for unpaid brokerage commission.
CASE 12. Siasat v. Intermediate Appelate Court, 139 SCRA 238 (1985)
PRINCIPLE/RATIO:
General or Universal Agency
An agent may be (1) universal: (2) general, or (3) special. A universal; agent is one
authorized to do all acts for his principal which can lawfully be delegated to an agent.
So far as such a condition is possible, such an agent may be said to have universal
authority. (Mec. Sec. 58).
A general agent is one authorized to do all acts pertaining to a business of a certain
kind or at a particular place, or all acts pertaining to a business of a particular class
or series. He has usually authority either expressly conferred in general terms or in
effect made general by the usages, customs or nature of the business which he is
authorized to transact.
An agent, therefore, who is empowered to transact all the business of his principal of
a particular kind or in a particular place, would, for this reason, be ordinarily deemed
a general agent. (Mec Sec. ,30).
A special agent is one authorized to do some particular act or to act upon some
particular occasion. lie acts usually in accordance with specific instructions or under
limitations necessarily implied from the nature of the act to be done. (Mec. Sec. 61)
(Padilla, Civil Law The Civil Code Annotated, Vol. VI, 1969 Edition, p. 204).

FACTS:
1. Respondent Teresita Nacianceno succeeded in convincing officials of the then
Department of Education and Culture, hereinafter called Department, to
purchase without public bidding, one million pesos worth of national flags for
the use of public schools throughout the country.
2. The respondent was able to expedite the approval of the purchase by hand-
carrying the different indorsements from one office to another. so that by the
first week of September, 1974, all the legal requirements had been complied
with, except the release of the purchase orders.
3. When Nacianceno was informed by the Chief of the Budget Division of the
Department that the purchase orders could not be released unless a formal
offer to deliver the flags in accordance with the required specifications was
first submitted for approval, she contacted the owners of the United Flag
Industry on September 17, 1974.
4. On October 16, 1974, the first delivery of 7,933 flags was made by the United
Flag Industry. The next day, on October 17, 1974, the respondent's authority
to represent the United Flag Industry was revoked by petitioner Primitivo
Siasat
5. Siasat, after receiving the payment of P469,980.00 on October 23, 1974 for
the first delivery, tendered the amount of P23,900.00 or five percent (5%) of
the amount received, to the respondent as payment of her commission. She
refused to accept the said amount insisting on the 30% commission agreed
upon.
6. The respondent was prevailed upon to accept the same, however, because of
the assurance of the petitioners that they would pay the commission in full
after they delivered the other half of the order.
 7. The respondent states that she later on learned that petitioner Siasat had
already received payment for the second delivery of 7,833 flags. When she
confronted the petitioners, they vehemently denied receipt of the payment, at
the same time claiming that the respondent had no participation whatsoever
with regard to the second delivery of flags and that the agency had already
been revoked

P CONTENTION:
In assailing the appellate court's decision, the petition tenders the following
arguments:
first, the authorization making the respondent the petitioner's representative merely
states that she could deal with any entity in connection with the marketing of their
products for a commission of 30%. There was no specific authorization for the sale of
15,666 Philippine flags to the Department;
second, there were two transactions involved evidenced by the separate purchase
orders and separate delivery receipts, Exhibit 6-C for the purchase and deliver on
October 16, 1974, and Exhibits 7 to 7-C, for the purchase and delivery on November
6, 1974. The revocation of agency effected by the parties with mutual consent on
October 17, 1974, therefore, forecloses the respondent's claim of 30% commission
on the second transaction;
last, there was no basis for the granting of attorney's fees and moral damages
because there was no showing of bad faith on the part of the petitioner. It was
respondent who showed bad faith in denying having received her commission on the
first delivery. The petitioner's counterclaim, therefore, should have been granted.
R: CONTENTION:
Respondent is incapacitated to represent them in the transaction with the
Department.
LOWER COURT/S DECISION:
The trial court decided in favor of the respondent.
The decision was affirmed in toto by the Intermediate Appellate Court.

After their motion for reconsideration was denied, the petitioners went to this Court
on a petition for review on August 6, 1984.
ISSUE/S:
Whether or not the respondent had no participation whatsoever with regard to the
second delivery of flags and that the agency had already been revoked.
RULING/S:
We find respondent's argument regarding respondent's incapacity to represent them
in the transaction with the Department untenable.

There is merit, however, in the petitioners' contention that the agent's commission on
the first delivery was fully paid. The evidence does not sustain the respondent's claim
that the petitioners paid her only 5% and that their right to collect another 25%
commission on the first delivery must be upheld.

The fact that the respondent demanded only the commission on the second delivery
without reference to the alleged unpaid balance which was only slightly less than the
amount claimed can only mean that the commission on the first delivery was already
fully paid, Considering the sizeable sum involved, such an omission is too glaringly
remiss to be regarded as an oversight.

There is no evidence on record from which to conclude that the revocation of the
agency was deliberately effected by the petitioners to avoid payment of the
respondent's commission. What appears before us is only the petitioner's use in
court of such a factual allegation as a defense against the respondent's claim. This
alone does not per se make the petitioners guilty of bad faith for that defense should
have been fully litigated.
CASE 13. Mamaril v. Boy Scouts of the Phiippines, 688 SCRA 437 (2013)
PRINCIPLE/RATIO:
Distinguished from Employment contract
Nor can it be said that a principal-agent relationship existed between BSP and the
security guards Peña and Gaddi as to make the former liable for the latter's complained
act. Article 1868 of the Civil Code states that "by the contract of agency, a person binds
himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter." The basis for agency therefore is
representation,21 which element is absent in the instant case. Records show that BSP
merely hired the services of AIB, which, in turn, assigned security guards, solely for
the protection of its properties and premises. Nowhere can it be inferred in the Guard
Service Contract that AIB was appointed as an agent of BSP. Instead, what the parties
intended was a pure principal-client relationship whereby for a consideration, AIB
rendered its security services to BSP.
FACTS:
1. Spouses Benjamin C. Mamaril and Sonia P. Mamaril (Sps. Mamaril) are
jeepney operators since 1971. They would park their six (6) passenger
jeepneys every night at the Boy Scout of the Philippines' (BSP) compound
located at 181 Concepcion Street, Malate, Manila for a fee of ₱300.00 per
month for each unit.
2. On May 26, 1995 at 8 o'clock in the evening, all these vehicles were parked
inside the BSP compound. The following morning, however, one of the
vehicles with Plate No. DCG 392 was missing and was never recovered.
3. According to the security guards Cesario Peña (Peña) and Vicente Gaddi
(Gaddi) of AIB Security Agency, Inc. (AIB) with whom BSP had contracted5 for
its security and protection, a male person who looked familiar to them took the
subject vehicle out of the compound.
4. On November 20, 1996, Sps. Mamaril filed a complaint 6 for damages before
the Regional Trial Court (RTC) against BSP, AIB, Peña and Gaddi. In support
thereof, Sps. Mamaril averred that the loss of the subject vehicle was due to
the gross negligence of the above-named security guards on-duty who
allowed the subject vehicle to be driven out by a stranger despite their
agreement that only authorized drivers duly endorsed by the owners could do
so. Peña and Gaddi even admitted their negligence during the ensuing
investigation

P CONTENTION:
They therefore prayed that Peña and Gaddi, together with AIB and BSP, be held
liable for: (a) the value of the subject vehicle and its accessories in the aggregate
amount of ₱300,000.00; (b) ₱275.00 representing daily loss of income/boundary
reckoned from the day the vehicle was lost; (c) exemplary damages; (d) moral
damages; (e) attorney's fees; and (f) cost of suit
R: CONTENTION:
In its Answer,7 BSP denied any liability contending that not only did Sps. Mamaril
directly deal with AIB with respect to the manner by which the parked vehicles would
be handled, but the parking ticket8 itself expressly stated that the "Management shall
not be responsible for loss of vehicle or any of its accessories or article left therein." It
also claimed that Sps. Mamaril erroneously relied on the Guard Service Contract.
Apart from not being parties thereto, its provisions cover only the protection of BSP's
properties, its officers, and employees.
AIB alleged that it has observed due diligence in the selection, training and supervision
of its security guards while Peña and Gaddi claimed that the person who drove out the
lost vehicle from the BSP compound represented himself as the owners' authorized
driver and had with him a key to the subject vehicle. Thus, they contended that Sps.
Mamaril have no cause of action against them.
LOWER COURT/S DECISION:
After due proceedings, the RTC rendered a Decision9 dated November 28, 2001 in
favor of Sps. Mamaril.
The RTC found that the act of Peña and Gaddi in allowing the entry of an unidentified
person and letting him drive out the subject vehicle in violation of their internal
agreement with Sps. Mamaril constituted gross negligence, rendering AIB and its
security guards liable for the former's loss.
Only BSP appealed the foregoing disquisition before the CA.

ISSUE/S:

1. Whether or not the CA seriously erred in absolving respondent BSP from any
liability.
2. Whether or not the CA committed serious error in the interpretation of law when it
considered the agreement between BSP and petitioners a contract of lease,
whereby the BSP is not duty bound to protect or take care of petitioners' vehicles

RULING/S:
The petition lacks merit.
1. it is undisputed that the proximate cause of the loss of Sps. Mamaril's vehicle
was the negligent act of security guards Peña and Gaddi in allowing an
unidentified person to drive out the subject vehicle. Proximate cause has been
defined as that cause, which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces the injury or loss, and without
which the result would not have occurred. On the other hand, the records are
bereft of any finding of negligence on the part of BSP.
2. Moreover, the Court concurs with the finding of the CA that the contract
between the parties herein was one of lease25 as defined under Article
164326 of the Civil Code. It has been held that the act of parking a vehicle in a
garage, upon payment of a fixed amount, is a lease.27 Even in a majority of
American cases, it has been ruled that where a customer simply pays a fee,
parks his car in any available space in the lot, locks the car and takes the key
with him, the possession and control of the car, necessary elements in
bailment, do not pass to the parking lot operator, hence, the contractual
relationship between the parties is one of lease.
Here, BSP was not remiss in its obligation to provide Sps. Mamaril a suitable
parking space for their jeepneys as it even hired security guards to secure the
premises; hence, it should not be held liable for the loss suffered by Sps.
Mamaril.
It bears to reiterate that the subject loss was caused by the negligence of the
security guards in allowing a stranger to drive out plaintiffs-appellants' vehicle
despite the latter's instructions that only their authorized drivers may do so.
Moreover, the agreement with respect to the ingress and egress of Sps.
Mamaril's vehicles were coordinated only with AIB and its security
guards,29 without the knowledge and consent of BSP.
CASE 14. Nielsen & Co., Inc.v. Lepanto Consolidated Mining Co., 34 Phil, 122
(1915)
PRINCIPLE/RATIO:
In agency, the agent exercises discretionary powers, while in lease of service, the
lessor (like a servant) ordinarily performs only ministerial functions

On the basis of the interpretation of Article 1709 of the old Civil Code, Article 1868 of
the new Civil Code has defined the contract of agency in more explicit terms, as
follows:
By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of
the latter.
There is another obvious distinction between agency and lease of services. Agency is
a preparatory contract, as agency "does not stop with the agency because the purpose
is to enter into other contracts." The most characteristic feature of an agency
relationship is the agent's power to bring about business relations between his principal
and third persons. "The agent is destined to execute juridical acts (creation,
modification or extinction of relations with third parties). Lease of services contemplate
only material (non-juridical) acts." (Reyes and Puno, "An Outline of Philippine Civil
Law," Vol. V, p. 277).
FACTS:

1. An operating agreement was executed before World War II (on January 30,
1937) between Nielson & Co. Inc. and the Lepanto Consolidated Mining Co.
whereby the former operated and managed the mining properties owned by the
latter for a management fee of P 2,500.oo a month and a 10% participation in
the net profits resulting from the operation of the mining properties, for a period
of 5 years.
2. In the latter part of 1941, the parties agreed to renew the contract for another
period of 5 years, but in the meantime, the Pacific War broke out in December
1941.
3. In January 1942 operation of the mining properties was disrupted on account of
the war. The mill, power plant, supplies on hand, equipment, concentrates on
hand mines, were destroyed. The Japanese forces thereafter occupied the
mining properties, operated the mines during the continuance of the war.
4. After the mining properties were liberated from the Japanese forces, Lepanto
took possession thereof and embarked in rebuilding and reconstructing the
mines and mill. On June 26, 1948, the mines resumed operated under the
exclusive management of Lepanto.
5. Shortly after the mines were liberated from the Japanese invaders in 1945, a
disagreement arose between Nielson and Lepanto over the status of the
operating contract which as renewed expired in 1947. Under the terms thereof,
the management contract shall remain in suspense in case fortuitous event or
force majeure such as war or civil commotion adversely affects the work of
mining and milling.
 6. On February 6, 1958, Nielson brought an action against Lepanto to recover
certain sums of money.

P CONTENTION:

R: CONTENTION:

LOWER COURT/S DECISION:

After trial, the court a quo rendered a decision dismissing the complaint with costs.
The court stated that it did not find sufficient evidence to establish LEPANTO's
counterclaim and so it likewise dismissed the same
ISSUE/S:
Whether the management contract is contract of agency or contract of lease of
services.
RULING/S:
The contract in instant case is for lease of services.

In both agency and lease of services one of the parties binds himself to render some
service to the other party. Agency, however, is distinguished from lease of work or
services in that the basis of agency is representation, while in the lease of work or
services the basis is employment. The lessor of services does not represent his
employer, while the agent represents his principal.

Further, agency is a preparatory contract, as agency "does not stop with the agency
because the purpose is to enter into other contracts." The most characteristic feature
of an agency relationship is the agent's power to bring about business relations
between his principal and third persons. "The agent is destined to execute juridical
acts (creation, modification or extinction of relations with third parties). Lease of
services contemplate only material (non-juridical) acts."

In this case, the principal and paramount undertaking of Nielson under the
management contract was the operation and development of the mine and the
operation of the mill. All the other undertakings mentioned in the contract are
necessary or incidental to the principal undertaking — these other undertakings
being dependent upon the work on the development of the mine and the operation of
the mill. In the performance of this principal undertaking Nielson was not in any way
executing juridical acts for Lepanto, destined to create, modify or extinguish business
relations between Lepanto and third persons.
In other words, in performing its principal undertaking Nielson was not acting as an
agent of Lepanto, in the sense that the term agent is interpreted under the law of
agency, but as one who was performing material acts for an employer, for a
compensation. It is true that the management contract provides that Nielson would
also act as purchasing agent of supplies and enter into contracts regarding the sale
of mineral, but the contract also provides that Nielson could not make any purchase,
or sell the minerals, without the prior approval of Lepanto.
It is clear, therefore, that even in these cases Nielson could not execute juridical acts
which would bind Lepanto without first securing the approval of Lepanto. Nielson,
then, was to act only as an intermediary, not as an agent.

Further, from the statements in the annual report for 1936, and from the provision of
paragraph XI of the Management contract, that the employment by Lepanto of
Nielson to operate and manage its mines was principally in consideration of the
know-how and technical services that Nielson offered Lepanto. The contract thus
entered into pursuant to the offer made by Nielson and accepted by Lepanto was a
"detailed operating contract". It was not a contract of agency. Nowhere in the record
is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated
the management contract because it had lost its trust and confidence in Nielson.
CASE 15. Quiroga v. Parsons Hardware, 38 Phil. 501

PRINCIPLE/RATIO:
When the terms of the agreement compels the purported agent to pay for the
products received from the purported principal within the stipulated period, even
when there has been no sale thereof to the public, the underlying relationship is not
one of contract of agency to sell, but one of actual sale. A real agent does not
assume personal responsibility for the payment of the price of the object of the
agency; his obligation is merely to turn-over to the principal the proceeds of the sale
once he receives them from the buyer. Consequently, since the underlying
agreement is not an agency agreement, it cannot be revoked except for cause
FACTS:
1. On January 24, 1911, in this city of manila, a contract in the following tenor
was entered into by and between the plaintiff
2. CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J.
PARSONS, BOTH MERCHANTS ESTABLISHED IN MANILA, FOR THE
EXCLUSIVE SALE OF "QUIROGA" BEDS IN THE VISAYAN ISLANDS.
P CONTENTION:
Of the three causes of action alleged by the plaintiff in his complaint, only two of
them constitute the subject matter of this appeal and both substantially amount to the
averment that the defendant violated the following obligations: not to sell the beds at
higher prices than those of the invoices; to have an open establishment in Iloilo;
itself to conduct the agency; to keep the beds on public exhibition, and to pay for
the advertisement expenses for the same; and to order the beds by the dozen
and in no other manner.
But the plaintiff alleged that the defendant was his agent for the sale of his beds in
Iloilo, and that said obligations are implied in a contract of commercial agency.
R: CONTENTION:

LOWER COURT/S DECISION:

ISSUE/S:
Whether or not, the defendant, by reason of the contract hereinbefore transcribed,
was a purchaser or an agent of the plaintiff for the sale of his beds.
RULING/S:
It would be enough to hold, as we do, that the contract by and between the
defendant and the plaintiff is one of purchase and sale, in order to show that it was
not one made on the basis of a commission on sales, as the plaintiff claims it was, for
these contracts are incompatible with each other. But, besides, examining the
clauses of this contract, none of them is found that substantially supports the
plaintiff's contention. Not a single one of these clauses necessarily conveys the idea
of an agency. The words commission on sales used in clause (A) of article 1 mean
nothing else, as stated in the contract itself, than a mere discount on the invoice
price. The word agency, also used in articles 2 and 3, only expresses that the
defendant was the only one that could sell the plaintiff's beds in the Visayan Islands.
With regard to the remaining clauses, the least that can be said is that they are not
incompatible with the contract of purchase and sale.

Only the acts of the contracting parties, subsequent to, and in connection with, the
execution of the contract, must be considered for the purpose of interpreting the
contract, when such interpretation is necessary, but not when, as in the instant case,
it’s essential agreements are clearly set forth and plainly show that the contract
belongs to a certain kind and not to another.

In respect to the defendant's obligation to order by the dozen, the only one expressly
imposed by the contract, the effect of its breach would only entitle the plaintiff to
disregard the orders which the defendant might place under other conditions; but if
the plaintiff consents to fill them, he waives his right and cannot complain for having
acted thus at his own free will.

For the foregoing reasons, we are of opinion that the contract by and between the
plaintiff and the defendant was one of purchase and sale, and that the obligations the
breach of which is alleged as a cause of action are not imposed upon the defendant,
either by agreement or by law