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ORIENT AIR SERVICESvs. CA1991, PadillaFACTS: American Airlines and Orient Air Services and HotelRepresentatives entered into a General Sales AgencyAgreement wherey American a!thori"ed the latter toact as its e#cl!sive general sales agent within the$hilippines %or the sale o% air passenger transportation&services: solicit and promote passenger tra%%ic'servicing and s!pervising agents etc.( )t was stip!lated that neither Orient nor its s!*agents per%orm services %or any other air carrier similarto those to e per%ormed here!nder %or Americanwitho!t the prior written consent o% American.Remittances* tic+et stoc+ or e#change orders ,-SS

commissions American will pay Orient sales agency commission andan overriding commission /0 o% the tari%% %ares andcharges %or all sales o% transportation over American1sservice y Orient or its s!*agents. )n case o% de%a!lt &remittance( American mayterminate the agreement2 otherwise either party mayterminate witho!t ca!se y giving /3 days1 notice. American alleged that Orient %ailed to promptly remitthe net proceeds o% sales terminated the Agreement

%iled s!it %or acco!nting with preliminary attachment orgarnishment' mandatory in4!nction and restrainingorder Orient denied allegations contending that a%ter theapplication to the commission d!e it ' plainti%% in %actstill owed Orient a alance in !npaid overridingcommissions TC: in %avor o% Orient termination was illegal andimproper* OR5-R-5 $,A)6T)FF TO R-)6STAT-5-F-65A6T AS )TS G-6-RA, SA,-S AG-6T

CA: a%%irmed TC with some modi%ications with respectto the monetary awards

A7-R)CA6 claims overriding commission sho!ld eased only on tic+eted sales*to e entitled to the /0overriding commission' the sale m!st e made yOrient Air and the sale m!st e done with the !se o%American1s tic+et stoc+s OR)-6T: contract!al stip!lation o% /0 overridingcommission covers the total reven!e o% American not

merely %rom the tic+eted sales' invo+ing its designationas the -8C,9S)- General sales agent o% American)SS9-: e#tent o% Orient Air1s right to the /0 overridingcommission H-,5: asis sho!ld e TOTA, R--69- &in%avor o% Orient( ; commissions2 a( sales agency commission2 (overriding commission o% /0 o% tari%% %ares and charges%or all sales o% passenger transpose American airservices. The latter type o% commissions wo!ld accr!e%or sales o% American made not on its tic+et stoc+ !t on

the tic+et stoc+ o% other air carriers sold y s!ch carriersor other a!thori"ed tic+eting %acilities or travelagents. To r!le otherwise wo!ld erase any distinctionetween the ; types o% commissions American air was the party responsile %or thepreparation o% the agreement &contract o% adhesion( Since the American was still oligated to Orient %or thesaid commission' Orient was 4!sti%ied in re%!sing toremit the s!ms demanded. The termination wasthere%ore a person inds himsel% torender some service or to do something inrepresentation or on ehal% o% another'

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the principal is e#tended thro!gh the %acility o% theagent The agent' y legal %iction' ecomes the principal'a!thori"ed to per%orm all acts which the latter wo!ldhave him do. S!ch relationship can only e e%%ectedwith the consent o% the principal' which m!st not' in anyway' e compelled y law or y any co!rt

DAVE THOMAS V. HERMOGENESPINEDA?@?' T!ason

FACTS: )t appears that in ?@/?' Thomas o!ght the ar andresta!rant +nown as Silver 5ollar Ca%B at $la"a Sta Cr!". He employed $ineda as a artender*promoted tocashier and manager 5!ring apanese occ!pation' to prevent the !sinessand its property %rom %alling into enemy hands' Thomasmade a %ictitio!s sale to $ineda %ictitio!s sale wasadmitted y oth parties2 ;ndagreement &secret( statingthat the sale was %ictitio!s

Original !ilding was destroyed y %ire*$ineda wasale to remove some %!rnit!re and a considerale Dty o%stoc+s to a place o% sa%ety*ar was opened on CalleEamang*a%ter months it was trans%erred to theoriginal location Thomas ro!ght a C$A %or the p!rpose o% e#aminingthe oo+s* $ineda threatened Thomas with a g!n i% theypersisted in their p!rpose. So Thomas %iled a case andset !p another ar with the same name on -chag!e St ?stCoA* Thomas so!ght to compel an ACCO96T)6G o%

$ineda1s operations d!ring the time he was in control o%

the ar $ineda claims that there was a /rdveral agreement'the import o% which was that he was to operate the!siness with no liaility other than to t!rn over to theplainti%% as the plainti%% wo!ld %ind it a%ter the war ;ndCoA: ownership o% Silver 5ollar Ca%B trade name it appears that $ineda registered the !siness as his

own

HELD: ?stCoA * valid,ittle or no weight can e attached to $ineda1sassertion. As sole manager with %!ll power to do as his%ancies dictated' the de%endant co!ld strip the !sinessna+ed o% all its stoc+s' leaving the plainti%% holding theag' as it were' when the de%endants management wasterminated. 9nless Thomas was willing to give away his

property and its pro%its' no man in his right senseswo!ld have given his manager an o!tright license s!chas the de%endant claims to have gotten %rom hisemployer The concl!sion th!s seems clear that the de%endantowes the plainti%% an acco!nting o% his management o%the plainti%%s !siness d!ring the occ!pation. The e#actlegal character o% the de%endants relation to theplainti%% matters not a it. )t was eno!gh to show' and ithad een shown' that he had een entr!sted with the

possession and management o% the plainti%%s !sinessand property %or the owners ene%it and had not madean acco!nting. )t was error %or the co!rt elow to declare at this stageo% the proceeding' on the asis o% de%endantsincomplete and inde%inite evidence' that there were nos!rpl!s pro%its 7onies and %oodst!%%s which the de%endant said hehad s!pplied the plainti%% and his da!ghters d!ring thewar are appropriate items to e considered on ta+ingacco!nt

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9pon plainti%%1s release %rom the internment camp' helost no time in loo+ing %or a site where he co!ld open asaloon The !se o% the old name s!ggested that the !sinesswas in %act an e#tension and contin!ation o% the Silver5ollar Ca%B 9pon the reopening o% the ar in the original place*

lease was in the name o% Thomas2 calling cards sayingThomas is the proprietor de%endant was only amanager ;ndCoA* Thomas is the owner o% the trade name )n the %ictitio!s ill o% sale $ineda ac+nowledged

Thomas1 ownership o% the !siness E!siness cards: Thomas is the proprietor 6o aandonment eca!se when Thomas set !p a newsaloon it !sed the same name The most that can e said is that the plainti%%

instr!cted $ineda to renew the registration o% the trade*name and the de%endant !nderstood the instr!ction aspermission to ma+e the registration in his %avorAs legal proposition and in good conscience' thede%endants registration o% the trade name Silver 5ollarCa%e m!st e deemed to have een a%%ected %or theene%it o% its owner o% whom he was a mere tr!stee oremployee.

"The relatio! o a a#et to hi! $ri%i$al are

id&%iar' ad it i! a ele(etar' ad )er' old r&lethat i re#ard to $ro$ert' or(i# the !&*+e%t(atter o the a#e%', he i! e!to$$ed ro(a%&iri# or a!!erti# a title ad)er!e to thato $ri%i$al. Hi! $o!itio i! aalo#o&! to that o atr&!tee ad he %aot %o!i!tetl', -ith the$ri%i$le! o #ood aith, *e allo-ed to %reate ihi(!el a itere!t i o$$o!itio to that o hi!$ri%i$al orcestui &e tr&!t. A re%ei)er, tr&!tee,attore', a#et or a' other $er!o o%%&$'i#id&%iar' relatio! re!$e%ti# $ro$ert' or $er!o!

&tterl' di!a*led ro( a%&iri# or hi! o-*eeit the $ro$ert' %o((itted to hi! %&!tod' or(aa#e(et. The r!le stands on the moral oligation to re%rain %romplacing ones sel% in position which ordinarily e#citecon%licts etween sel%*interest at the e#pense o% onesintegrity and d!ty to another' y ma+ing it possile to

pro%it y yielding to temptation

RAMON RALLOS, ad(i oCo%e$%io Rallo! e!tate, )! ELI/GO CHAN 0 SONS REALT ad CA?@IJ' 7!no"*$alma

FACTS: Concepcion and Ger!ndia oth s!rnamed Rallos weresisters and registered co*owners o% a parcel o% land The sisters e#ec!ted a S$-C)A, $O

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)SS9-: He who acts thro!ghanother acts himsel%> ART ?@?@ CC* %rom A?I3@ o% the Spanish CC* agencyis e#ting!ished y the death' civil interdiction' insanityor insolvency o% the principal or the agent 7A6R-SA: the 4!ridical asis o% agency is

representation*it is not possile %or the representationto contin!e to e#ist once the death o% either isestalished $OTH)-R: agrees with 7anresa2 y the nat!re o%agency' death e#ting!ishes it ,A9R-6T: 4!ridical tie etween the principal and theagent is servered ipso 4!re

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Ca!!ida# $% Mc&en'ie in American 4!rispr!dence' nos!ch con%lict e#ists in o!r own %or the simple reason thato!r stat!te' the Civil Code' e#pressly provides %or twoe#ceptions to the general r!le that death o% theprincipal revo+es ipso 4!re the agency

PA2LO PALMAv -59AR5O CRISTO2AL1934, Pere%to

FACTS: Teatro Arco approached Gon"alo $!yat L Sons. )t wasagreed etween the parties that the latter wo!ld' onehal% o% the plainti%%' order so!nd reprod!cingeD!ipment %rom the Starr $iano Company and that theplainti%% wo!ld pay the de%endant' in addition to theprice o% the eD!ipment' a ?3 per cent commission' pl!sall e#penses' s!ch as' %reight' ins!rance' an+ingcharges' cales' etc Teatro was ale to !y ; eD!ipment %or M?'I33 andM?'N33 &o!ght the ne#t yr( Ao!t / yrs later' in connection with a civil case %iledagainst Gon"alo' the o%%icials o% Arco discovered that theprice D!oted to them y the de%endant with regard totheir two orders mentioned was not the net price !trather the list price' and that the de%endants had

otained a disco!nt %rom the Starr $iano Company They so!ght to otain a red!ction %rom the de%endantor rather a reim!rsement' and %ailing in this theyro!ght the present action. TC: contract etween the parties was one o% o!tright$9RCHAS- A65 SA,- CA: relation etween the parties was that o% AG-6TA65 $R)6C)$A,2 even i% it was p!rchase and sale'Gon"alo was g!ilty o% %ra!d in concealing the tr!e price

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only to the latter as the %ormers e#cl!sive agent in the$hilippines. The respondent co!ld not have sec!red thisdisco!nt %rom the Starr $iano Company and neither wasthe petitioner willing to waive that disco!nt in %avor o%the respondent. Gon"alo was not d!ty o!nd to reveal the privatearrangement it had with the Starr $iano Company

relative to s!ch disco!nt )t is well +nown that local dealers acting as agents o%%oreign man!%act!rers' aside %rom otaining a disco!nt%rom the home o%%ice' sometimes add to the list pricewhen they resell to local p!rchasers. )t was apparentlyto g!ard against an e#oritant additional price that therespondent so!ght to limit it to ?3 per cent' and therespondent is estopped %rom D!estioning that additionalprice.

AL2ALADE6O ' CIA, ! . %, ).The PHILIPPINE REINING CO., a!!&%%e!!or to The Vi!a'a Reii#Co.1977, Street

FACTS: ?@?J* Alalade4o y Cia &ltd part*engaged in !ying and

selling( and isayan Re%ining &corp* engaged inman!%act!ring o% oil( entered into a contract whereyAlalade4o inds itsel% to sell to isayan' all the coprap!rchased y it* contract: ?yr 5!e to the agreement* Alalade4o o!ght coprae#tensively %or isayan. At the end o% ? yr' oth partiescontin!ed the e#isting agreement y tacit consent ?@;3* isayan closed down its %actory at Opon' Ce!and withdrew %rom the copra mar+et Eeca!se o% the large reD!irements o% isayan'

Alalade4o e#tended its !siness that d!ring the co!rseo% the ne#t ;*/ years' it estalished some ;3 agencies

or s!*agencies A%ter the isayan had ceased to !y copra' theiracco!nts were liD!idated. )t appeared that per the lastacco!nt rendered' a alance o% $;JJ in %avor o% isayanwas shown Alalade4o e#pressed its approval o% thesaid acco!nt* no dissatis%action was e#pressed yAlalade4o !ntil N w+s a%ter when it %iled a case

; CoA:?. 6egligent %ail!re o% isayan to provide opport!netransportation %or the copra collected y the plainti%% allegedly' it s!%%ered the diminishment o% weight;. Recovery o% the amo!nt e#pended y plainti%% inmaintaining and e#tending its organi"ation. )t is allegedthat the e#tension o% the !siness was d!e to therepeated ass!rances o% isayan that it wo!ld soonres!me its !siness TC: not negligent wrt ?stCoA !t ordered isayan to

pay /30 o% the costs wrt ;ndCoA AL2ALADE6O8 %otra%t *et-ee the $laiti adthe Vi!a'a Reii# Co. %reated the relatio o$ri%i$al ad a#et *et-ee the $artie!, ad therelia%e i! $la%ed &$o arti%le 179 o the Ci)ilCode -hi%h re&ire! the $ri%i$al to ide(i'the a#et or da(a#e! i%&rred i %arr'i# o&tthe a#e%'

H-,5:

?. 6O 6-G,)G-6C- TC 4!dge care%!lly e#amined the movements o% the%leet o% oats maintained y isayan and %o!nd thatisayan had !sed reasonale promptit!de in its e%%ortsto get the copra %rom the places where it had eendeposited %or shipment. Shrin+age was e#tremely moderate and this %act goesto show that there was no !nd!e delay on the part o%the isayan As per agreement' copra sho!ld e paid %or according

to its weight !pon arrival at Opon regardless o% its

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weight when %irst p!rchased;.6OT -6T)T,-5 TO R-CO-R Care%!l e#amination o% the evidence' series o% letterso% isayan to Alalade4o' convincing eno!gh to s!pportthe r!ling that s!pposed liaility does not e#ist The correspondence s!%%iciently shows on its %ace thatthere was no intention on the part o% the company to lay

a asis %or contract!al liaility o% any sort2 and theplainti%% m!st have !nderstood the letters in that light./.6O $R)6C)$A,*AG-6T R-,AT)O6SH)$ )t is tr!e that the isayan Re%ining Co. made theplainti%% one o% its instr!ments %or the collection o%copra2 !t it is clear that in ma+ing its p!rchases %romthe prod!cers the plainti%% was !ying !pon its ownacco!nt and that when it t!rned over the copra to theisayan Re%ining Co.' p!rs!ant to that agreement' asecond sale was e%%ected.

)n paragraph three o% the contract it is declared thatd!ring the contin!ance o% this contract the isayanRe%ining Co. wo!ld not appoint any other agent %or thep!rchase o% copra in ,egaspi2 and this gives riseindirectly to the in%erence that the plainti%% wasconsidered its !ying agent. E!t the !se o% this term inone cla!se o% the contract cannot dominate the realnat!re o% the agreement as revealed in other cla!ses'no less than in the caption o% the agreement itsel% )n some letters' the term agents were !sed !t this

designation was evidently !sed %or convenience2 and itis very clear that in its activities as a !yer the plainti%%was acting !pon its own acco!nt and not as agents' inthe legal sense' o% the isayan Re%ining Co. The title toall o% the copra p!rchased y the plainti%% !ndo!tedlyremained in it !ntil it was delivered y way o%s!seD!ent sale to said company.

AIR RANCE )! CA, :;< GANA,

AREVALO 0 SAN 6=AN?@J/' 7elencio*Herrera

FACTS8 The Ganas p!rchased %rom A)R FRA6C- thro!gh)mperial Travels @ >open*dated> air passage tic+ets %orthe 7anilaOsa+aTo+yo7anila ro!te. The tic+ets werevalid !ntil 7ay J' ?@I?' non val!ale aprPs de. &$h$/.@3 M?( Sometime in an!ary ?@I?' ose Gana so!ghtassistance o% Teresita 7an!cdoc %or the the e#tension o%the validity o% the tic+ets. Teresita enlisted the help o%,ee -lla. -lla sent the tic+ets to Cesar Rillo' O%%ice7anager o% Air France. The tic+ets were ret!rned to -lla who was in%ormedthat e#tension was not possile !nless the %aredi%%erentials res!lting %rom the increase in %ares'triggered y an increase o% the e#change rate o% the 9Sdollar to the $hilippine peso and the increased travel ta#were %irst paid. -lla then ret!rned the tic+ets to Teresitaand in%ormed her o% the impossiility o% e#tension. The Ganas had sched!led their depart!re on 7ay I'?@I?' day e%ore the e#piry. Teresita reD!ested -lla to arrange the revalidation o%the tic+ets. -lla warned Teresita that altho!gh thetic+ets co!ld e !sed y the GA6AS i% they le%t on I 7ay

?@I?' the tic+ets wo!ld no longer e valid %or the rest o%their trip eca!se the tic+ets wo!ld then have e#piredon J 7ay ?@I?. Teresita replied that it will e !p to theGA6AS to ma+e the arrangements. So -lla on his own'attached to thet ic+ets validating stic+ers %or theOsa+aTo+yo %light 6otwithstanding the warnings' Ganas departed %rom7anila. However' %or the Osa+aTo+yo %light' A, re%!sedto honor the tic+ets eca!se o% their e#piration. Samedi%%ic!lty wrt their ret!rn trip to 7anila as Air France also

re%!sed to honor the tic+ets So !pon their ret!rn' the Ganas commenced an action

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%or damages arising %rom Ereach o% Contract o% carriage A)R FRA6C-

o Ganas ro!ght !pon themselves thepredicament they %o!nd themselves in

o -lla1s a%%i#ing o% validating stic+ers on the tic+etswitho!t the +nowledge and consent o% Air Franceviolated airline tari%% r!les and reg!lation and was

eyond the scope o% his a!thority as a travel agento )t was not g!ilty o% any %ra!d!lent cond!ct or

ad %aith TC* in %avor o% Air France* dismissed the complaint CA* reversed TC)SS9-: direct sale.>

Therea%ter' ST7 sold to private respondent Consolidated

S!gar Corporation &CSC( its rights in S,5R 6o. ?;?7.That same day' CSC wrote petitioner that it had eena!thori"ed y ST7 to withdraw the s!gar covered y theS,5R. However' a%ter ;'333 ags had een released'petitioner re%!sed to allow %!rther withdrawals o% s!gar.CSC th!s inD!ired when it wo!ld e allowed to withdrawthe remaining ;/'333 ags. )n its reply' petitioner saidthat it co!ld not allow any %!rther withdrawals o% s!gareca!se ST7 had already withdrawn all the s!garcovered y the cleared chec+s. $etitioner also noted

that CSC had represented itsel% to e ST7s agent as ithad withdrawn the ;'333 ags >%or and in ehal%> o%ST7.

As a res!lt' CSC %iled a complaint %or speci%icper%ormance. $etitioners primary de%ense a D!o wasthat it was an !npaid seller %or the ;/'333 ags. SinceST7 had already drawn in %!ll all the s!garcorresponding to the amo!nt o% its cleared chec+s' itco!ld no longer a!thori"e %!rther delivery o% s!gar to

CSC. $etitioner also contended that it had no privity o%

Agency J

http://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.html

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contract with CSC. F!rthermore' the S,5Rs prescrieddelivery o% the s!gar to the party speci%ied therein anddid not a!thori"e the trans%er o% said partys rights andinterests.

The Trial Co!rt rendered its 4!dgment %avoring theprivate respondent CSC. The appellate co!rt a%%irmed

said decision !t modi%ied the costs against petitioner.

I!!&e8 sold and endorsed> to it. The !se o% thewords >sold and endorsed> means that ST7 and CSC

intended a contract o% sale' and not an agency. Hence'on this score' no error was committed y therespondent appellate co!rt when it held that CSC wasnot ST7s agent and co!ld independently s!e petitioner.

E&rote%h Id&!trial Te%holo#ie!, I%.). Ed-i C&i>o ad Er-i C&i>o;33I' Chico*6a"ario

ACTS8-!rotech is engaged in the !siness o% importation anddistri!tion o% vario!s -!ropean ind!strial eD!ipment.)t has as one o% its c!stomers )mpact Systems Saleswhich is a sole proprietorship owned y -rwin C!i"on.

-!rotech sold

to )mpact Systems vario!s prod!cts allegedly amo!nting to $@?'//J.33. C!i"ons so!ght to !y %rom -!rotech ?!nit o% sl!dge p!mp val!ed at $;3'333.33 with C!i"onsma+ing a down payment o% $3'333.33.

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HELD86o.

-dwin insists that he was a mere agent o% )mpactSystems which is owned y -rwin and that his stat!s ass!ch is +nown even to -!rotech as it is alleged in theComplaint that he is eing s!ed in his capacity as thesales manager o% the said !siness vent!re. ,i+ewise'

-dwin points to the 5eed o% Assignment which clearlystates that he was acting as a representative o% )mpactSystems in said transaction.

Art. ?J@I. The agent who acts as s!ch is not personallyliale to the party with whom he contracts' !nless hee#pressly inds himsel% or e#ceeds the limits o% hisa!thority witho!t giving s!ch party s!%%icient notice o%his powers.

)n a %otra%t o a#e%'' a person inds himsel% torender some service or to do something inrepresentation or on ehal% o% another with the latter1sconsent. )ts p!rpose is to e#tend the personality o%the principal or the party %or whom another acts and%rom whom he or she derives the a!thority to act. Theasis o% agency is representation' that is' the agentacts %or and on ehal% o% the principal on matters withinthe scope o% his a!thority and said acts have the samelegal e%%ect as i% they were personally e#ec!ted y the

principal.

The elements o% the contract o% agency:&?( consent' e#press or implied' o% the parties toestalish the relationship2&;( the o4ect is the e#ec!tion o% a 4!ridical act inrelation to a third person2&/( the agent acts as a representative and not%or himsel%2&( the agent acts within the scope o% his a!thority

An agent' who acts as s!ch' is not personally liale tothe party with whom he contracts. There are ; instanceswhen an agent ecomes personally liale to a thirdperson. The %irst is when he e#pressly inds himsel% tothe oligation and the second is when he e#ceeds hisa!thority. )n the last instance' the agent can e heldliale i% he does not give the third party s!%%icient notice

o% his powers. -dwin does not %all within any o% thee#ceptions contained in Art. ?J@I.

)n the asence o% an agreement to the contrary' amanaging agent may enter into any contracts thathe deems reasonaly necessary or reD!isite %orthe protection o% the interests o% his principal entr!stedto his management.

-dwin C!i"on acted well within his a!thority when he

signed the 5eed o% Assignment. -!rotech re%!sed todeliver the ? !nit o% sl!dge p!mp !nless it received' in%!ll' the payment %or )mpact Systems1 indetedness.)mpact Systems desperately needed the sl!dge p!mp%or its !siness since a%ter it paid the amo!nt o%$3'333.33 as down payment it still persisted innegotiating with -!rotech which c!lminated in thee#ec!tion o% the 5eed o% Assignment o% its receivales%rom Toledo $ower Company. The signi%icant amo!nt o%time spent on the negotiation %or the sale o% the sl!dge

p!mp !nderscores )mpact Systems1 perseverance to gethold o% the said eD!ipment. -dwin1s participation in the5eed o% Assignment was reasonaly necessary or wasreD!ired in order %or him to protect the !siness o% hisprincipal.

Phile5 Mii# Cor$. ). Co((i!!ioer

o Iteral Re)e&e

Agency ?3

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;33J' =nares*Santiago

ACTS8$hile# 7ining Corp. entered into an agreement withEag!io Gold 7ining Co. %or the %ormer to manage andoperate the latter1s mining claim' +nown as the Sto.6ino 7ine. The parties1 agreement was denominated as

$ower o% Attorney which provides inter alia:

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assets to $hile# 7ining' trans%erring to the latter Eag!ioGold1s eD!itale title in its $hilodrill assets and %inallysettling the remaining liaility thro!gh propertiesthat Eag!io Gold may acD!ire in the %!t!re.

The parties e#ec!ted an Amendment to Compromisewith 5ation in $ayment where the parties determined

that Eag!io Gold1s indetedness to petitioner act!allyamo!nted to $;@'?/I';.33' which s!mincl!ded liailities o% Eag!io Gold to other creditorsthat petitioner had ass!med as g!arantor. Theseliailities pertained to long*term loans amo!nting to9SM??'333'333.33 contracted y Eag!io Gold %romthe Ean+ o% America 6T L SA and Citian+ 6.A. Thistime' Eag!io Gold !ndertoo+ to pay petitioner in two segments y %irst assigningits tangile assets %or $?;I'J/J'3?.33 and then

trans%erring its eD!itale title in its $hilodrill assets %or$?N'/3;';N.33. The parties then ascertained that Eag!io Gold had a remaining o!tstanding indetedness topetitioner in the amo!nt o% $??'@@N'INJ.33.

$hile# 7ining wrote o%% in its ?@J; oo+s o% acco!nt theremaining o!tstanding indetedness o% Eag!io Gold ycharging $??;'?/N'333.33 to allowances and reservesthat were set !p in ?@J? and $;'JN3'INJ.33 to the ?@J;operations.

)n its ?@J; ann!al income ta# ret!rn' $hile# 7iningded!cted %rom its gross income the amo!nto% $??;'?/N'333.33 as loss on settlement o% receivales %rom Eag!io Gold against reserves and allowances.However' the E)R disallowedthe amo!nt as ded!ction %or ad det and assessedpetitioner a de%iciency income ta# o% $N;'J??'?N?./@.$hile# 7ining protested e%ore the E)R arg!ing that theded!ction m!st e allowed since all reD!isites %or a ad

det ded!ction were satis%ied' to wit:

&a( there was a valid and e#isting det2&( the det was ascertained to e worthless2 and&c( it was charged o%%within the ta#ale year when it wasdetermined to e worthless.E)R denied petitioner1s protest. )t held that the allegeddet was not ascertained to e worthless since Eag!io

Gold remained e#isting and had not %iled a petition %oran+r!ptcy2 and that the ded!ction did not consist o% avalid and s!sisting det considering that' !nder themanagement contract' petitioner was to e paid 30 o%the pro4ect1s net pro%it.ISS=E8

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the parties entered into an agency contract co!pledwith an interest that cannot e withdrawn y Eag!ioGold.

The main o4ect o% the $ower o% Attorney was not tocon%er a power in %avor o% petitioner to contract withthird persons on ehal% o% Eag!io Gold !t to create a

!siness relationship etween petitioner and Eag!ioGold' in which the %ormer was to manage and operatethe latter1s mine thro!gh theparties1 m!t!al contri!tion o% material reso!rces andind!stry. The essence o% an agency' even one that isco!pled with interest' is the agent1s aility to representhis principal and ring ao!t !siness relations etweenthe latter and third persons.

The strongest indication that petitioner was a partner in

the Sto. 6ino 7ine is the %act that it wo!ld receive 30o% the net pro%its as compensation !nder paragraph?; o% the agreement. Theentirety o% the parties1 contract!al stip!lations simply leads to no other concl!sion than that petitioner1scompensation is act!ally its share in the income o% the

4oint vent!re. Article ?IN@ &( o% the Civil Code e#plicitlyprovides that the receipt y a person o% a share in thepro%its o% a !siness is prima %acie evidence that he is apartner in the !siness.

Su(ro)ation* Ci$i a+, O(i)ation! and contract!, )t isthe trans%er o% all the rights o% the creditor to a thirdperson' who s!stit!tes him in all his rights. There aretwo +inds o% s!rogation: le#als!rogation which ta+esplace witho!t agreement !t y operation o% laweca!se o% certain acts' and %o)etioals!rogationis that which ta+es place y agreement o% theparties. &Chemphil -#port L )mport vs. Co!rt o% Appeals'G.R. 6os. ??;/J*/@ 5ecemer ?;' ?@@(

Sho$$er! Paradi!e Realt' 0De)elo$(et Cor$. )!. eli$eRo&e

7??3, Vit

ACTS8On ;/ 5ecemer ?@@/' petitioner Shopper1s $aradiseRealty L 5evelopment Corporation' represented y itspresident' eredigno Atien"a' entered into a twenty*%iveyear lease with 5r. Felipe C. RoD!e' now deceased' overa parcel o% land. Sim!ltaneo!sly' petitioner and 5r.RoD!e li+ewise entered into a memorand!m o%agreement %or the constr!ction' development andoperation o% a commercial !ilding comple# on theproperty. Con%ormaly with the agreement' petitioner

iss!ed a chec+ %or another $;3'333.33 >downpayment>to 5r. RoD!e.

The contract o% lease and the memorand!m o%agreement' oth notari"ed' were to e annotated on

TCT 6o. /3@? within si#ty &N3( days %rom ;/ 5ecemer?@@/ or !ntil ;/ Fer!ary ?@@. The annotations'however' were never made eca!se o% the !ntimelydemise o% 5r. Felipe C. RoD!e. The death o% 5r. RoD!eon ?3 Fer!ary ?@@ constrained petitioner to deal with

respondent -%ren $. RoD!e' one o% the s!rviving childreno% the late 5r. RoD!e' !t the negotiations ro+e downd!e to some disagreements. Respondent then %iled acase %or ann!lment o% the contract o% lease and thememorand!m o% agreement' with a prayer %or theiss!ance o% a preliminary in4!nction.

-%ren $. RoD!e alleged that he had long een theasol!te owner o% the s!4ect property y virt!e o% adeed o% donation inter vivos e#ec!ted in his %avor y his

parents' 5r. Felipe RoD!e and -lisa RoD!e' on ;N

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5ecemer ?@IJ' and that the late 5r. Felipe RoD!e hadno a!thority to enter into the assailed agreements withpetitioner. The donation was made in a p!licinstr!ment d!ly ac+nowledged y the donor*spo!sese%ore a notary p!lic and d!ly accepted on the sameday y respondent e%ore the notary p!lic in the sameinstr!ment o% donation. The title to the property'

however' remained in the name o% 5r. Felipe C. RoD!e'and it was only trans%erred to and in the name o%respondent si#teen years later' or on ?? 7ay ?@@.

The trial co!rt dismissed the complaint o% therespondent' e#plaining that >&o(rdinarily' a deed o%donation need not e registered in order to e validetween the parties. Registration' however' is importantin inding third persons. Th!s' when Felipe RoD!eentered into a leased contract with de%endant

corporation' plainti%% -%ren RoD!e &co!ld( no longerassert the !nregistered deed o% donation and say thathis %ather' Felipe' was no longer the owner o% thes!4ect property at the time the lease on the s!4ectproperty was agreed !pon.>

On appeal' the Co!rt o% Appeals reversed the decision o%the trial co!rt' e#plaining that petitioner was not alessee in good %aith having had prior +nowledge o% thedonation in %avor o% respondent' and that s!ch act!al

+nowledge had the e%%ect o% registration inso%ar aspetitioner was concerned.

HELD8 The e#istence' aleit !nregistered' o% thedonation in %avor o% respondent is !ndisp!ted. The trialco!rt and the appellate co!rt have not erred in holdingthat the non*registration o% a deed o% donation does nota%%ect its validity. As eing itsel% a mode o% acD!iringownership' donation res!lts in an e%%ective trans%er o%

title over the property %rom the donor to the donee. )n

donations o% immovale property' the law reD!ires %orits validity that it sho!ld e contained in a p!licdoc!ment' speci%ying therein the property donated andthe val!e o% the charges which the donee m!st satis%y.

The Civil Code provides' however' that >titles o%ownership' or other rights over immovale property'which are not d!ly inscried or annotated in the

Registry o% $roperty &now Registry o% ,and Titles and5eeds( shall not pre4!dice third persons.> It i! enou)-.(et+een t-e partie! to a donation of an immo$a(e

propert#. t-at t-e donation (e made in a pu(icdocument (ut. in order to (ind t-ird per!on!. t-edonation mu!t (e re)i!tered in t-e re)i!tr# of Propert#/Re)i!tr# of Land Tite! and 0eed!"%Consistently'Section 3 o% Act 6o. @N &,and Registration Act(' as soamended y Section ? o% $.5. 6o. ?;@ &$ropertyRegistration 5ecree(' states:

1SECTION 51.Con$e#ance and ot-er deain)! (#re)i!tered o+ner%2 An o+ner of re)i!tered and ma#con$e#. mort)a)e. ea!e. c-ar)e or ot-er+i!e dea +it-t-e !ame in accordance +it- e3i!tin) a+!% He ma# u!e!uc- form! of deed!. mort)a)e!. ea!e! or ot-er$ountar# in!trument! a! are !ufficient in a+% 4ut nodeed. mort)a)e. ea!e. or ot-er $ountar# in!trument.e3cept a +i purportin) to con$e# or affect re)i!teredand !-a ta5e effect a! a con$e#ance or (ind t-e and.

(ut !-a operate on# a! a contract (et+een t-e partie!and a! e$idence of aut-orit# to t-e Re)i!ter of 0eed! toma5e re)i!tration%

1T-e act of re)i!tration !-a (e t-e operati$e act tocon$e# or affect t-e and in!ofar a! t-ird per!on! areconcerned. and in a ca!e! under t-i! 0ecree. t-ere)i!tration !-a (e made in t-e office of t-e Re)i!ter of0eed! for t-e pro$ince or cit# +-ere t-e and ie!%1

Petitio deied.

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NIELSON 0 CO. INC. V. LEPANTOCONSOLIDATED MINING CO.?@NJ' Ualdivar

a%t!8 An operating agreement was e#ec!ted e%ore Article ?' de%ining contract o% lease o% service'provides that >)n a lease o% wor+ or services' one o% theparties inds himsel% to ma+e or constr!ct something or

to render a service to the other %or a price certain.> )n

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oth agency and lease o% services one o% the partiesinds himsel% to render some service to the other party.Agency' however' is disting!ished %rom lease o% wor+ orservices in that the asis o% agency is representation'while in the lease o% wor+ orservices the asis is employment.

The lessor o% services does not represent his employer'

while the agent represents his principal. F!rther' agencyis a preparatory contract' as agency >does not stop withthe agency eca!se the p!rpose is to enter into othercontracts.> The most characteristic %eat!re o% an agencyrelationship is theagents power to ring ao!t !siness relations etweenhis principal and third persons. >The agent is destined toe#ec!te 4!ridical acts &creation' modi%ication ore#tinction o% relations with third parties(. ,ease o%services contemplate only material&non*4!ridical( acts.>

6eilson not e#ec!ting 4!ridical acts: Herein' theprincipal and paramo!nt !nderta+ing o% 6ielson !nderthe management contract was the operation anddevelopment o% the mine and the operation o% the mill.All the other !nderta+ings mentioned in the contract arenecessary or incidental to the principal !nderta+ing. )nthe per%ormance o% this principal !nderta+ing 6ielsonwas not in any way e#ec!ting 4!ridical acts %or ,epanto'destined to create' modi%y or e#ting!ish !sinessrelations etween ,epanto and third persons. )n other

words' in per%orming its principal !nderta+ing 6ielsonwas not acting as an agent o% ,epanto' in the sense thatthe term agent is interpreted !nder the law o% agency'!t as one who was per%orming material acts %or anemployer' %or a compensation. $rior approval o% ,-$A6TO reD!ired: )t is tr!e that themanagement contract provides that 6ielson wo!ldalso act as p!rchasing agent o% s!pplies and enter intocontracts regarding the sale o% mineral' !t the contractalso provides that 6ielson co!ld not ma+e any p!rchase'

or sell the minerals' witho!t the prior approval o%

,epanto. )t is clear' there%ore' that even inthese cases 6ielson co!ld not e#ec!te 4!ridical acts which wo!ld ind ,epanto witho!t %irst sec!ring the approvalo% ,epanto. 6ielson' then' was to act only as anintermediary' not as an agent. 5etailed operating contract: The statements inthe ann!al report %or ?@/N' and %rom the provision o%

paragraph 8) o% the 7anagement contract' that theemployment y ,epanto o% 6ielson to operate andmanage its mines was principally in consideration o% the+now*how and technical services that 6ielson o%%ered,epanto. The contract th!s entered into p!rs!ant to theo%%er made y 6ielson and accepted y ,epanto was a>detailed operating contract>. )t was not a contract o%agency. 6owhere in the record is it shown that ,epantoconsidered 6ielson as its agent and that ,epanto terminated the

management contract eca!se it had lost its tr!st andcon%idence in 6ielson. Contract cannot e revo+ed at will: From the provisiono% paragraph 8) o% the management contract',epanto co!ld not terminate the agreement at will.,epanto co!ld terminate or cancel the agreement ygiving notice o% termination ninety days in advance onlyin the event that 6ielson sho!ld prosec!te in ad %aithand not in accordance with approved mining practicethe operation and development o% the mining properties

o% ,epanto. ,epanto co!ld not terminate the agreementi% 6ielson sho!ld cease to prosec!te the operation anddevelopment o% the mining properties y reason o% actso% God' stri+e and other ca!ses eyond the control o%6ielson. The management contract in D!estion is notrevocale at the will o% ,epanto. )t is not a contract o%agency as de%ined in Article ?I3@ o% the old Civil Code'!t a contract o% lease o% services as de%ined in Article? o% the same Code. This contract can note !nilaterally revo+ed y ,epanto.

Di!$o!iti)e8

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)6 )-< OF TH- FOR-GO)6G CO6S)5-RAT)O6S'

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ISS=E8Agents Signat!re>

As the CA correctly r!led' the %all o% S)SO61s car %romthe hydra!lic

li%t was the res!lt o% some !n%oreseen shortcoming o%the mechanism itsel%. As the servicing 4o on S)SO61scar was accepted y 5- ,A F9-6T- in the normal andordinary cond!ct o% his !siness as operator o% SH-,,1sservice station' and that the de%ective hydra!lic li%tca!sed the %all o% the car' he is liale there%or. SH-,,'his principal' is also liale as 5- ,A F9-6T- acted withinthe representative a!thority granted him as SH-,,1sagent.A! the a%t o the a#et a%ti# -ithi the !%o$e o

hi! a&thorit' i! the a%t o the $ri%i$al, the*rea%h o the &dertai# *' the a#et i! oeor-hi%h the $ri%i$al i! a!-era*le7oreover' SH-,, !ndertoo+ to >answer and see to itthat theeD!ipments are in good r!nning order and!sale condition.>Ovio!sly' SH-,, %ailed to ma+e athoro!gh chec+ !p o% the hydra!licli%ter. Hence' it wasalso negligent in that aspect to which it m!st answer' asthe %a!lty li%ter was the ca!se o% the %all o% the S)SO61scar.

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As the act o% the agent or his employees acting withinthe scope o% his a!thority is the act o% the principal' thereach o% the !nderta+ing y the agent is one %or whichthe principal is answerale. The latter was negligent andthe company m!st answer %or the negligent act o% itsmechanic which was the ca!se o% the %all o% the car %romthe hydra!lic li%ter.

DOMINGO DE LA CR=B,v.NORTHERN THEATRICAL

ENTERPRISES INC., ET AL.,7ontemayor' ?@

ACTS86orthern Theatrical -nterprises )nc * operated a movieho!se in ,aoag' )locos 6orte.

5omingo 5e ,a Cr!" special g!ard o% 6orthern whosed!ties were to g!ard the main entrance' to maintainpeace and order and to report the commission o%disorders within premises. He carried a revolver.7artin wanted to crash the gate or entrance o% themovie ho!se. )n%!riated y the re%!sal o% 5e la Cr!" tolet him in witho!t %irst providing himsel% with a tic+et'7artin attac+ed him with a olo. 5e la Cr!" de%endanthimsel% as est he co!ld !ntil he was cornered' at which

moment to save himsel% he shot 7artin' res!lting in thelatters death.5e la Cr!" was charged with homicide. A%ter a re*investigation cond!cted y the $rovincial Fiscal thelatter %iled a motion to dismiss the complaint' which wasgranted y the co!rt. 5e la Cr!" was again acc!sed o%

the same crime o% homicide. A%ter trial' he was %inallyacD!itted o% the charge.

)n oth criminal cases 5e la Cr!" employed a lawyer tode%end him. He demanded %rom his %ormer employerreim!rsement o% his e#penses !t was re%!sed' a%terwhich he %iled the present action against the moviecorporation and the three memers o% its oard o%directors' to recover not only the amo!nts he had paidhis lawyers !t also moral damages said to have een

s!%%ered

6orthern as+ed %or the dismissal o% the complaint.

CF) o% )locos 6orte' a%ter re4ecting the theory o% 5e laCr!" that he was an agent o% 6orthern and that as s!chagent he was entitled to reim!rsement o% thee#penses inc!rred y him in connection with the agency&Arts. ?I3@*?I;@ o% the old Civil Code(' %o!nd that 5e ,aCr!" had no ca!se o% action and dismissed the

complaint witho!t costs.

ISS=E8 ON the relatio!hi$ -a! that o $ri%i$alad a#et.H-,5: 6o.

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per%ormance o% his d!ty' !t rather y a third party orstranger not in the employ o% his employer' may recoversaid damages against his employer. 5e ,a Cr!" wasnot employed to represent 6orthern in its dealingswiththird parties. He was a mere employee hired to per%ormacertain speci%ic d!ty or tas+.

;. )% the employer is not legally oliged to give' legalassistance to its employee and provide him with alawyer' nat!rally said employee may not recover theamo!nt he may have paid a lawyer hired y him.All the laws and principles o% law we have %o!nd' asregards master and servants' or employer andemployee' re%er to cases o% physical in4!ries' light orserio!s' res!lting in loss o% a memer o% the ody or o%any one o% the senses' or permanent physical disaility

or even death' s!%%ered in line o% d!ty and in the co!rseo% the per%ormance o% the d!ties assigned to theservant or employee' and these cases are mainlygoverned y the -mployers ,iaility Act andthe

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FACTS: ,ot* originally owned in common y AnatolioE!enconse4o &?;( and ,oren"o and Santiago Eon &?;( Anatolio1s rights' interests and participation over theportion o% the said lot was trans%erred and conveyed toAtty. Tecla San Andres Uiga awardee in an a!ctionsale &decision in 4!venile delinD!ency and domestic

relations co!rt( Ey virt!e o% Certi%icate o% redemption* rights' interests'claim andor participation o% Atty Uiga were trans%erredand conveyed to petitioner &Santos( in his capacity asattorney*in*%act o% the children o% Anatolio )t wo!ld appear that petitioner Santos had redeemedthe a%orementioned share o% Anatolio ' !pon thea!thority o% a special power o% attorney &S$A( e#ec!tedin his %avor y the children o% Anatolio Santos now claims to have acD!ired the share o%

Anatolio in the said lot ca!sed a s!division plan* hewants said to segregate his allegedshare in the lot and a

TCT iss!ed in his name

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alera sold his right o% redemption to -d!ardoHernande"* Hernande" conveyed the same right o%redemption to alera himsel%*!t then another personSalvador alle4o' who had an e#ec!tion !pon a

4!dgment against the plainti%% rendered in another case'levied !pon said right o% redemption* right o%redemption sold to alle4o and was de%initely

ad4!dicated to him. ,ater' he trans%erred the said righto% redemption to elasco &so !ng right o% redemptionna!wi +ay elasco so in e%%ect the title was consolidatedin his name' ergo the agent got the title to the right o%!s!%r!ct to the a%orementioned property(

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ecome asol!te' the latter did not have to acco!nt %orsaid rents