1.
Orient Air Services & Hotel Representatives
v. Court of Appeals and American Air-Lines
Incorporated
G.R. No. 76931, May 29, 1991
DOCTRINE: A contract of agency creates a legal
relationship of representation by the agent on
behalf of the principal, where the powers of the
agent are essentially derived from the principal,
and consequently, it is fiduciary in nature. One of
the legal consequences of the fiduciary nature of
the contract of agency is that it is essentially
revocable: neither the principal nor the agent can
be legally made to remain in the relationship
when they choose to have it terminated.
Facts:
American Airlines, Inc. (American Air), an air
carrier offering passenger and air cargo
transportation in the Philippines, and Orient Air
Services and Hotel Representatives (Orient Air),
entered into a General Sales Agency Agreement
(Agreement), whereby the former authorized the
latter to act as its exclusive general sales agent
within the Philippines for the sale of air passenger
transportation.
In the agreement, Orient Air shall remit in United
States dollars to American the ticket stock or
exchange orders, less commissions to which
Orient Air Services is entitled, not less frequently
than semi-monthly. On the other hand, American
will pay Orient Air Services commission on
transportation sold by Orient Air Services or its
sub-agents. In the agreement, it also states under
paragraph 13 that “American may terminate the
Agreement on two days' notice in the event Orient
Air Services is unable to transfer to the United
States the funds payable by Orient Air Services to
American under this Agreement. Either party may
terminate the Agreement without cause by giving
the other 30 days' notice by letter, telegram or
cable”. Thereafter, American alleged that Orient
Air had reneged on its obligations under the
Agreement by failing to promptly remit the net
proceeds of sales for the months of January to
March 1981 in the amount of US $254,400.40,
American Air by itself undertook the collection of
the proceeds of tickets sold originally by Orient
Air and terminated forthwith the Agreement in
accordance with paragraph 13 which authorize
the termination of the thereof in case Orient Air is
unable to transfer to the United States the funds
payable by Orient Air Services to American.
American Air instituted suit against Orient Air with
the Court of First Instance of Manila “for
Accounting with Preliminary Attachment or
Garnishment, Mandatory Injunction and
Restraining Order” averring the aforesaid basis
for the termination of the Agreement as well as
therein defendant's previous record of failures "to
promptly settle past outstanding refunds of which
there were available funds in the possession of
the defendant, . . . to the damage and prejudice of
plaintiff." 
Orient Air denied the material allegations of the
complaint with respect to plaintiff's entitlement to
alleged unremitted amounts, contending that after
application thereof to the commissions due it
under the Agreement, plaintiff in fact still owed
Orient Air a balance in unpaid overriding
commissions. Further, the defendant contended
that the actions taken by American Air in the
course of terminating the Agreement as well as
the termination itself were untenable. 7. The trial
court ruled in its favor which decision was
affirmed with modification by Court of Appeals. It
held the termination made by the latter as
affecting the GSA agreement illegal and improper compelled by law or by any court. The Agreement
and ordered the plaintiff to reinstate defendant as itself between the parties states that "either party
its general sales agent for passenger may terminate the Agreement without cause by
transportation in the Philippines in accordance giving the other 30 days' notice by letter, telegram
with said GSA agreement. or cable." We, therefore, set aside the portion of
the ruling of the respondent appellate court
reinstating Orient Air as general sales agent of
Issue: American Air.

Whether the Court of Appeals erred in ordering 1. NARIC vs. CA et al

the reinstatement of the defendant as its general
G.R. No. L-32320
sales agent for passenger transportation in the
Philippines in accordance with said General Sales July 16, 1979
Agency Agreement
Facts: 

The National Rice and Corn Corporation (Naric)

Held: had on stock 8000 metric tons of corn which it
could not dispose of due to its poor quality. Naric
Yes. The decision of the lower court ordering the
called for bids for the purchase of the corn and
principal airline company to ―reinstate defendant
rice. But precisely because of the poor quality of
as its general sales agent for passenger
the corn, a direct purchase of said corn even with
transportation in the Philippines in accordance
the privilege of importing commodities did not
with said GSA Agreement, was unlawful since
attract good offers. Davao Merchandising
courts have no authority to compel the principal to
Corporation  (Damerco) came in with its offer to
reinstate a contract of agency it has terminated
act as agent in the exportation of the corn, with
with the agent: By affirming this ruling of the trial
the agent answering for the price thereof and
court, respondent appellate court, in effect,
shouldering all expenses incidental thereto,
compels American Air to extend its personality to
provided it can import commodities, paying the
Orient Air. Such would be violative of the
NARIC therefor from the price it offered for the
principles and essence of agency, defined by law
corn. Damerco was to open a domestic letter of
as a contract whereby "a person binds himself to
credit, which shall be available to the NARIC
render some service or to do something in
drawing therefrom through sight draft without
representation or on behalf of another, WITH THE
recourse. The availability of said letter or letters of
CONSENT OR AUTHORITY OF THE LATTER .
credit to the NARIC was dependent upon the
In an agent-principal relationship, the personality
issuance of the export permit. The payment
of the principal is extended through the facility of
therefor depended on the importation of the
the agent. In so doing, the agent, by legal fiction,
collateral goods, that is after its arrival.
becomes the principal, authorized to perform all
acts which the latter would have him do. Such a The first half of the collateral goods were
relationship can only be effected with the consent successfully imported. Due to the inferior quality
of the principal, which must not, in any way, be of the corn, it had to be replaced with more
acceptable stock. This caused such delay that the
letters of credit expired without the NARIC being
able to draw the full amount therefrom. Checks
and PN were issued by DAMERCO for the
purpose of securing the unpaid part of the price of
the corn and as guaranty that DAMERCO will
purchase the corresponding collateral goods.
But because of the change of administration in
the government, barter transactions
suspended. Hence, DAMERCO was not able to
import the remaining collateral goods.
NARIC instituted in the CFI of Manila against
DAMERCO and Fieldmen’s Insurance Co. Inc. an
action for recovery of a sum of
representing the balance of the value of corn and
rice exported by DAMERCO.
The trial court rendered in favor of NARIC
ordering DAMERCO and Fieldmen’s Insurance
Co. Inc., to pay, jointly and severally. CA reversed
the trial court’s decision and rendered a new
judgement dismissing the complaint as premature
and for lack of cause of action. Hence this petition
for certiorari.
Issue: Whether DAMERCO only acted as an
agent of NARIC or is a buyer
Held: the petition for review is denied and the
resolution of the CA appealed from is hereby
affirmed
AGENT
Clearly from the contract between NARIC and
DAMERCO: bids were previously called for by the
NARIC for  the purchase of corn and rice to be
exported as well as of the imported commodities
that will be brought in, but said biddings did not
succeed in attracting good offers. Subsequently,
Damerco made an offer. Now, to be sure, the
contract designates the Naric as the seller and
the Damerco as the buyer. These designations,
however, are merely nominal, since the contract
thereafter sets forth the role of the “buyer”
(Damerco)’ “as agent of the seller” in exporting
the quantity and kind of corn and rice as well as in
importing the collateral goods thru barter and “to
pay the aforementioned collateral goods.”
were The contract between the NARIC and the
DAMERCO is bilateral and gives rise to a
reciprocal obligation. The said contract consists of
two parts: (1) the exportation by the DAMERCO
as agent for the NARIC of the rice and corn; and
(2) the importation of collateral goods by barter on
money
a back to back letter of credit or no-dollar
remittance basis. It is evident that the DAMERCO
would not have entered into the agreement were
it not for the stipulation as to the importation of
the collateral goods which it could purchase.
It appears that we were also misled to believe
that the Damerco was buying the corn. A closer
look at the pertinent provisions of the contract,
however, reveals that the price as stated in the
contract was given tentatively for the purpose of
fixing the price in barter. It should likewise be
stressed that the aforesaid exportation and
importation was on a “no-dollar remittance basis”.
In other words, the agent, herein defendant
Damerco, was not to be paid by its foreign buyer
in dollars but in commodities. Damerco could not
get paid unless the commodities were imported,
and Damerco was not exporting and importing on
its own but as agent of the plaintiff, because it is
the latter alone which could export and import on
barter basis according to its charter. Thus, unless
Damerco was made an agent of the plaintiff, the
former could not export the corn and rice nor
import at the same time the collateral goods. This
was precisely the intention of the parties.
He is not to be considered a buyer, who should
be liable for the sum sought by NARIC because
the contract itself clearly provides the Damerco
was to export the rice and corn, AND TO BUY
THE collateral goods. There is nothing in the
contract providing unconditionally that Damerco
was buying the rice and corn. To be more
specific, if the agreement was just a sale of corn
to Damerco, the contract need not specify that
Damerco was to buy the collateral goods.
2. MEDRANO and IBAAN RURAL BANK vs.
COURT OF APPEALS
purchased the property and had made a down
payment of P1M. The remaining balance of
P1.2M was to be paid upon the approval of the
incorporation papers of the corporation he was
organizing by the SEC. According to Antonio,
Lee asked her if they had already received their
commission. She answered "no," and Lee
expressed surprise over this. Since the sale of
the property was consummated, the respondents
asked from the petitioners their commission, or
5% of the purchase price. The petitioners refused
to pay and offered a measly sum of P5, 000.00
each. Hence, the present action. Medrano’s
defense: Borbon and Antonio did not perform any
act to consummate the sale. The petitioners

G.R. No. 150678 February 18, 2005 pointed out that the respondents (1) did not
verify the real owner of the property; (2)
Facts:
never saw the property in question; (3) never got
Bienvenido Medrano was the Vice-Chairman of in touch with the registered owner of the
Ibaan Rural Bank. He asked Flor (a cousin), to property; and (4) neither did they perform any
look for a buyer of a foreclosed asset of the act of assisting their buyer in having the
bank (17-hectare mango plantation with 720 property inspected and verified.
trees priced at P2.2M). Dominador Lee, a Makati
Issue:
businessman was a client of respondent Pacita
Borbon, a licensed real estate broker. Borbon WON the Medrano constituted the respondents

relayed to her business associates and friends as his agents and that plaintiffs are entitled to

that she had a ready buyer for a mango any commission for the sale of the subject

orchard. Flor then advised her that her cousin-in- property? YES

law owned a mango plantation which was up for Held:

sale. She told Flor to confer with Medrano
The respondents are indeed the procuring cause
and to give them a written authority to
of the sale. If not for the respondents, Lee would
negotiate the sale of the property. Medrano
not have known about the mango plantation being
issued the Letter of Authority to Borbon and
sold by the petitioners. The sale was
Antonio to negotiate with any prospective buyer
consummated. The bank had profited from such
for the sale of the mango plantation. He promised
transaction. It would certainly be iniquitous if the
Borbon to pay a commission of 5% of the
respondents would not be rewarded their
total purchase price to be agreed upon by the
commission pursuant to the letter of authority.
buyer and seller. An ocular inspection was held
“Procuring cause” = the proximate cause. The
by Lee. Lee informed Antonio that he already
term "procuring cause," in describing a broker’s
activity, refers to a cause originating a series of
events which, without break in their continuity,
result in accomplishment of prime objective of
the employment of the broker – producing a
purchaser ready, willing and able to buy real
estate on the owner’s terms. The evidence on
record shows that the respondents were
instrumental in the sale of the property to
Lee. Without their intervention, no sale could
have be consummated. They were the ones who
settle the sale of the subject land in motion. While
the letter-authority issued in favor of the
respondents was non-exclusive, no evidence
was adduced to show that there were other
persons, aside from the respondents, who
informed Lee about the property for sale. When
there is a close, proximate and causal connection
between the broker’s efforts and the
principal’s sale of his property, the broker is
entitled to a commission. In the absence of fraud,
irregularity or illegality in its execution, such letter-
authority serves as a contract, and is considered
as the law between the parties. The clear
intention is to reward the respondents for
procuring a buyer for the property.
Applying the principle of agency, the court
affirmed the decision of the appellate court that
Bienvenido Medrano constituted the respondents
as his agents, granting them authority to
represent and act on behalf of the former in the
sale of the 17-hectare mango plantation.
3. Bicol Savings and Loan vs CA
G.R. No. 85302 March 31, 1989
 Facts:
Juan de Jesus was the owner of a parcel of land
situated in Naga City. He executed a Special
Power of Attorney in favor of his son, Jose de
Jesus, to negotiate, mortgage his real property in
any bank either private or public entity preferably
in the Bicol Savings Bank, Naga City, in any
amount that may be agreed upon between the
bank and the attorney-in-fact. By virtue thereof,
Jose de Jesus obtained a loan of P20,000 from
petitioner bank and executed a deed of mortgage
on the real property. Juan de Jesus died at an
unknown date. By reason of his failure to pay the
loan obligation even during his lifetime, petitioner
bank caused the mortgage to be extrajudicially
foreclosed. In the subsequent public auction, the
mortgaged property was sold to the bank as the
highest bidder. Private respondents herein,
including Jose de Jesus, who are all the heirs of
the late Juan de Jesus, failed to redeem the
property within one year from the date of the
registration of the Provisional Certificate of Sale.
Nonetheless, the private respondents still
negotiated for the repurchase of the property but
were unsuccessful despite offers and counter-
offers.
Private respondents filed a complaint with the trial
court, praying for the annulment of the deed of
sale but the complaint was dismissed by the trial
court ruling that the deed became absolute. Upon
appeal, the CA reversed the ruling o the trial
court, ruling that Article 1879 of the Civil Code
and stated that since the special power to
mortgage granted to Jose de Jesus did not
include the power to sell, it was error for the lower
Court not to have declared the foreclosure
proceedings, and the auction sale held in null and
void because the Special Power of Attorney given
by Juan de Jesus to Jose de Jesus was merely to
mortgage his property, and not to extrajudicially
foreclose the mortgage and sell the mortgaged
property in the said extrajudicial foreclosure.
Issue: and Virgilio. Eufemia, Ferdinand and Raul
executed a Deed of Absolute Sale of Undivided
Whether or not the agent-son exceeded the
Shares conveying in favor of petitioners (the
scope of his authority in agreeing to a stipulation
Pahuds, for brevity) their respective shares .
in the mortgage deed that petitioner bank could
Eufemia also signed the deed on behalf of her
extrajudicially foreclose the mortgaged property.
four (4) other co-heirs, namely: Isabelita on the
Held:  basis of a special power of attorney , and also for

The sale proscribed by a special power to Milagros, Minerva, and Zenaida but without their

mortgage under Article 1879 is a voluntary and apparent written authority. The deed of sale was

independent contract, and not an auction sale also not notarized. The Pahuds paid the accounts

resulting from extrajudicial foreclosure, which is into the Los Baños Rural Bank where the subject

precipitated by the default of a mortgagor. The property was mortgaged. The bank issued a

stipulation granting an authority to extrajudicially release of mortgage and turned over the owner's

foreclose a mortgage is an ancillary stipulation copy of the OCT to the Pahuds, the Pahuds made

supported by the same cause or consideration for more payments to Eufemia and her siblings.

the mortgage and forms an essential or When Eufemia and her co-heirs drafted an extra-

inseparable part of that bilateral agreement. judicial settlement of estate to facilitate the
transfer of the title to the Pahuds, Virgilio refused
to sign it. Virgilio's co-heirs filed a complaint for
It matters not that the authority to extrajudicially judicial partition of the subject property before the
foreclose was granted by an attorney-in-fact and RTC of Calamba, Laguna.In the course of the
not by the mortgagor personally. The stipulation proceedings for judicial partition, a Compromise
in that regard, although ancillary, forms an Agreement was signed with seven (7) of the co-
essential part of the mortgage contract and is heirs agreeing to sell their undivided shares to
inseparable therefrom. No creditor will agree to Virgilio .. The compromise agreement was,
enter into a mortgage contract without that however, not approved by the trial court because
stipulation intended for its protection. Atty. Dimetrio Hilbero, lawyer for Eufemia and her
six (6) co-heirs, refused to sign the agreement
4. Purita Pahud vs. CA
because he knew of the previous sale made to
G.R. NO. 160346, August 25, 2009
the Pahuds. Eufemia acknowledged having
Facts: received the payments from Virgilio. Virgilio then
sold the entire property to spouses Isagani
Spouses Pedro San Agustin and Agatona Genil
Belarmino and Leticia Ocampo (Belarminos) .
were able to acquire a 246-square meter parcel of
The Belarminos immediately constructed a
land situated in Barangay Anos, Los Baños,
building on the subject property. Alarmed and
Laguna and covered by Original Certificate of
bewildered by the ongoing construction on the lot
Title . Agatona Genil and Pedro San Agustin
they purchased, the Pahuds immediately
died ,( both died intestate) survived by their eight
confronted Eufemia who confirmed to them that
(8) children: respondents, Eufemia, Raul,
Virgilio had sold the property to the
Ferdinand, Zenaida, Milagros, Minerva, Isabelita
Belarminos.Then the Pahuds filed a complaint in
intervention in the pending case for judicial
partition.
Issue:
1. Whether or not the sale of the subject property
by Eufemia and her co-heirs to the Pahuds is
valid and enforceable.
of attorney is necessary for an agent to enter into
a contract by which the ownership of an
immovable property is transmitted or acquired,
either gratuitously or for a valuable consideration.
The authority of an agent to execute a contract of
sale of real estate must be conferred in writing
and must give him specific authority, either to
conduct the general business of the principal or to

Ruling: execute a binding contract containing terms and

conditions which are in the contract he did
1. The transaction needs for qualification:
execute. A special power of attorney is necessary
to enter into any contract by which the ownership
First: the sale made by Eufemia, Isabelita and her
of an immovable is transmitted or acquired either
two brothers to the Pahuds should be valid only
gratuitously or for a valuable consideration. The
with respect to the 4/8 portion of the subject
express mandate required by law to enable an
property. Second; the sale with respect to the 3/8
appointee of an agency in general terms to sell
portion, representing the shares of Zenaida,
must be one that expressly mentions a sale or
Milagros, and Minerva, is void because Eufemia
that includes a sale as a necessary ingredient of
could not dispose of the interest of her co-heirs in
the act mentioned.For the principal to confer the
the said lot absent any written authority from the
right upon an agent to sell real estate, a power of
latter, as explicitly required by law. It is true also
attorneymust so express the powers of the agent
there is no special power, they can file an
in clear and unmistakable language. When there
annulment of the sale, but the true facts of which
is any reasonable doubt that the language so
the seven admitted that they sold their shares to
used conveys such power, no such construction
pahuds, they cannot assail the validity of the
shall be given the document. In the absence of a
transaction. Instead, they just remain silent ,
written authority to sell a piece of land is, ipso
because by allowing them to do so would be
jure, void, precisely to protect the interest of an
tantamount to giving premium to their three (3)
unsuspecting owner from being prejudiced by the
sisters”dishonest and fraudulent deed. Thus their
unwarranted act of another.
silence of the issue bars from a making for a
contrary claim and they are stopped from .5. Inland Realty Investment Service, Inc. vs

impugning the validity of the sale. While the sale Court Of Appeals

with respect to the 3/8 portion is void by express Facts: -

provision of law and not susceptible to ratification.
Respondent Corp, thru Assist. General Manager
The validity of the said transaction cannot be
J. Armando Eduque granted petitioner authority to
corrected on the basis of common law principle of
sell its 9,800 shares of stocks in Architects Bldg. -
estoppel. The law provides: When a sale of a
Petitioner provided prospect buyer Stanford
piece of land or any interest therein is through an
Microsystems Inc., which latter gave a counter
agent, the authority of the latter shall be in writing;
proposal to buy 9,800 stocks at P1,000.00 per
otherwise, the sale shall be void. a special power
share or P9,800,000.00, in which respondent
viewed the offer too low and requested petitioner
to improve the price offered. - Authority to sell
given by respondent to petitioner was extended,
first on October 2, 1975, 30 days from said date,
second on October 28, 1975, 30 days from said
date and on December 2, 1975 30 days from said
date. - Petitioner finally sold the shares to
Stanford only on July 8, 1977, 1 year and 5
months from expiration of the last extended ldate,
for P13,500,000.00. - Sept. 6, 1977, petitioner
demanded payment for commission but was
denied by respondent on the ground of no legal or
factual basis. - Petitioner filed complaint in the
RTC but decision favored to respondents on the
ground that authority to sell expired 30 days from
last date of extension, December 2, 1975.
Petitioners then appealed to the apellate court but
latter was unswayed, affirming the trial court's
decision. Hence this petition.
Issue:
WON the contract of agency still exist after 30
days from the last date of extension?
Ruling: -
No, From September 16, 1975 to January 1,
1976, when petitioners' authority to sell was
subsisting, if at all, petitioners had nothing to
show that they actively served their principal's
interests, pursued to sell the shares
accordance with their principal's terms and
conditions, and performed substantial acts that
proximately and causatively led to
consummation of the sale to Stanford of Araneta,
Inc.'s 9,800 shares in Architects'. - The Court of
Appeals cannot be faulted for emphasizing 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. - 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.
6. Manotok Brothers vs. CA
G.R. No. 94753 April 7 1993
DOCTRINE: • The agent is entitled to his
commission when there is a close, proximate and
causal connection between the agent’s efforts
and labor and the principal’s sale of his property. •
Revocation of agency does not prevent earning of
sales commission where the contract of sale had
already been perfected and partly executed.
Facts:
in
Manotok Brothers, Inc. is the owner of a certain
parcel of land and building, which were formerly
leased by Manila City and used by Claro M.
the Recto HS. Petitioner authorized private
respondent to negotiate with City of Manila for the
sale of the property, with a promise to pay 5% as
commission if sale is consummated. The letters of
authority were extended several times. Then, City
of Manila passed an Ordinance, which
appropriated the money needed to buy the
property. Even though the sale is consummated,
Saligumba never received any commission.
Saligumba claimed that it was because of his
efforts that the Municipal Board passed the
Ordinance. Petitioner, on the other hand, does
not recognize the Saligumba’s role as agent in
the transaction and alleged that since the Deed of
Sale was signed after Saligumba’s authority
expired, he is not entitled to any commission.
Issue in this case is whether Saligumba is entitled
to the agreed commission fees. The Court rules in
favor of Saligumba. Private respondent is the
efficient procuring cause for without his efforts,
the municipality would not have anything to pass
and the Mayor would not have anything to
approve.
Issue: Whether or not private respondent
Saligumba is entitled to the five percent (5%)
agent’s commission? YES
ratio: Court ruled in favor of Saligumba
(respondent) 1. At first sight, it would seem that
private respondent is not entitled to any
commission as he was NOT successful in
consummating the sale between the parties
because the Deed of Sale was executed only
after Saligumba’s authority already expired.
However, going deeper into the case would
reveal that the case is within the coverage of the
exception rather than of the general rule. Based
on Prats v. CA: The sale was only consummated
after the expiration of authority granted to the
broker. In equity, the Court notes that petitioner
had diligently taken steps to bring back together
the buyer and the seller. The broker’s efforts
somehow were instrumental in bringing the
parties together. Based from the foregoing, the
private respondent should be paid with his
commission. Private respondent is the efficient
procuring cause for without his efforts, the
municipality would not have anything to pass and
the Mayor would not have anything to approve.
When there is a close, proximate and causal
connection between the agent’s efforts and labor
and the principal’s sale of his property, the agent
is entitled to a commission. The City of Manila
ultimately became the purchaser of petitioner’s
property mainly through the efforts of Saligumba.
a. It is to be noted that the ordinance was
approved on April 26, 1968 while it was signed on
May 17, 1968. 3 DAYS after the authority of
Saligumba expired. Private respondent pursued
with his goal of seeing that the parties reach an
agreement, on the belief that he alone was
transacting the business with the City
Government as this was what petitioner made it
to appear. It is true that Filomeno Huelgas
followed-up on the matter with Councilor Magsalin
BUT his intervention regarding the purchase
came only AFTER the ordinance had already
been passed. Meaning, there was already
meeting of the minds between Manotok Inc and
City of Manila due to Saligumba’s efforts.
Revocation of agency does not prevent earning of
sales commission where the contract of sale had
already been perfected and partly executed.
Wherefore, the decision of CA is affirmed.
7. Lim vs. CA
G.R. No. 107898. December 19, 1995
Bellosillo, J.
 
Facts:
Manuel and Rosita Lim, spouses, and president
and treasurer respectively of Rigi Bilt Industries,
Inc., allegedly issued 7 Solidbank checks as
payment for goods purchased from and delivered
by Linton Commercial Company, Inc. When
deposited with Rizal Commercial Banking
Corporation, said checks were dishonored for
“insufficiency of funds” with the additional notation
“payment stopped” stamped thereon. Despite
demand, spouses Lim refused to make good the
checks or pay the value of the deliveries. The
RTC held spouses Lim guilty of estafa and
violation of BP22. On appeal, the CA acquitted
accused-appellants of estafa on the ground that
the checks were not made in payment of an
obligation contracted at the time of their issuance
but affirmed the finding that they were guilty of
having violated B.P. Blg. 22. In the present case,
petitioners maintain that the prosecution failed to
prove that any of the essential elements of the
crime punishable under B.P. Blg. 22 was
committed within the jurisdiction of RTC-Malabon
claiming that what was proved was that all the
elements of the offense were committed in
Kalookan City.
Issue:
Whether or not the collector can be deemed as
agent and take the checks as a holder and
thereafter received the payment made.
 
of knowledge of such insufficiency of funds or
credit unless such maker or drawer pays the
holder thereof the amount due thereon, or makes
arrangement for payment in full by the drawee of
such check within five (5) banking days after
receiving notice that such check has not been
paid by the drawee.
The prima facie evidence has not been overcome
by petitioners in the cases before us because

RULING: they did not pay LINTON the amounts due on the
checks; neither did they make arrangements for
Under Sec. 191 NIL, the term “issue” means the
payment in full by the drawee bank within five (5)
first delivery of the instrument complete in form to
banking days after receiving notices that the
a person who takes it as a holder. On the other
checks had not been paid by the drawee bank.
hand, the term “holder” refers to the payee or
indorsee of a bill or note who is in possession of it
or the bearer thereof. Although LINTON sent a
collector who received the checks from petitioners
at their place of business in Kalookan City, they
were actually issued and delivered to LINTON at
its place of business in Balut, Navotas. The
receipt of the checks by the collector of LINTON
is not the issuance and delivery to the payee in
contemplation of law. The collector was not the
person who could take the checks as a
holder, i.e., as a payee or indorsee thereof, with
the intent to transfer title thereto. Neither could
the collector be deemed an agent of LINTON with
respect to the checks because he was a mere
employee.

Section 2 of B.P. Blg. 22 establishes a prima

facie evidence of knowledge of insufficient funds
as follows

The making, drawing and issuance of a check

payment of which is refused by the bank because
of insufficient funds in or credit with such bank,
when presented within ninety (90) days from the
date of the check, shall be prima facie evidence