DOMINGO vs. DOMINGO Petitioners:VicenteDomingorepresentedby his heirsRespondents:Gregorio Domingo [VicenteDomingos agent & broker]Intervenor:Teofilo Purisima [GregorioDomingos sub-agent]Quick Summary:Facts: GregorioDomingo,VicenteDomingosbrokerandagent, received P1,000 from Oscar de Leonas gift or propina.Oscargave himsaid amount afterGregorio succeeded inpersuading Vicente to accept his offer tobuy the lot forP1.20instead of P2.Held:An agent who takes a secret profit in the nature of abonus, gratuity or personal benefit from the vendee, withoutrevealing the same to his principal, the vendor, is guilty of abreach of his loyalty to the principal and forfeits his right tocollect the commission from his principal, even if the principaldoes not suffer any injury byreason of such breach of fidelity,or that he obtained better results or that the agency is agratuitous one, or that usage or custom allows it. The fact thattheprincipalmayhavebeen benefited bythevaluableservices of the said agent does not exculpate the agent whohas only himself to blame for such a result by reason of histreacheryorperfidy. Asanecessaryconsequence ofsuchbreach of trust, Gregorio Domingo must forfeit his right tothecommission and must return the part of the commission hereceived from his principal. Facts: Vicente Domingo granted to Gregorio Domingo, a real estate broker, the exclusive agencytosellhis LotNo. 883,Piedad Estate in a document. Said lothas anarea of 88,477 sq. m. According to the document, said lot must be sold for P2 per sq. m. Gregorio is entitled to 5% commission on thetotal price if the property is sold: by Vicente or by anyone else during the 30-day duration of the agency or byVicentewithin 3monthsfrom the termination of the agency to a purchaser to whom it was submitted by Gregorioduringtheeffectivityofthe agency with notice to Vicente. Subsequently, Gregorio authorized Teofilo Purisima to look for a buyer without notifying Vicente. Gregorio promised Teofilo of the 5%commission. Teofilo introduced Oscar de Leon to Gregorio as a prospective buyer. Oscar submitted a written offer which was very much lower than the P2 persq. m. price. VicentedirectedGregoriototell Oscar to raise his offer. After several conferences betweenGregorio and Oscar, Oscar raised his offertoP1.20 per sq. m. or P109,000 in total.Vicente agreed to said offer. Upon Vicentes demand, Oscarissued aP1,000 checktohim asearnestmoney.Vicente,then,advancedP300toGregorio. Subsequently, Vicente asked for anadditional P1,000 as earnest money, whichOscar promised to deliver toVicente. The written agreement, Exhibit C,between the parties was amended. Oscar will vacate on or aboutSeptember 15, 1956 his house and lot at DenverSt.,QC,whichispartofthe purchase priceLater on, it was again amended tostate thatOscar will vacate his house and lot on Dec.1, 1956 because his wife was pregnant at that time. OscargaveGregorioP1,000asagift or propina for succeeding in persuadingVicente to sell his lot at P1.20 per sq. m.gregorio did not disclose said gift or propinato Vicente. Moreover, Oscar did not pay Vicente the additional P1,000 Vicente askedfrom him as earnest money. The deed of sale was not executedsinceOscargaveuponthenegotiationwhen he did not receive his money from hisbrother in the US, which he communicatedto Gregorio. Gregorio did not see Oscar forseveral weeks thus sensing that somethingfishy might be going on.So, hewenttoVicenteshousewhere hereadaportionoftheagreementtotheeffect that Vicente was still willing to payhim 5% commission, P5,450. Thereafter,GregoriowenttotheRegister of Deeds of QC, where hediscovered that a Deed of sale wasexecuted by Amparo de Leon, Oscars wife,over their house and lot infavor of Vicente. After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded in writing the payment of hiscommission. Gregorio also conferred withOscar. Oscar told him that Vicente went tohim and asked him to eliminate Gregorio in the transaction and that he would sell his property to him for P104,000. Inhisreply,Vicente statedthat Gregorio is not entitled to the 5%commissionbecause hesold theproperty not to Gregorio's buyer, Oscar de Leon, but to another buyer, Amparo Diaz,wife ofOscar de Leon. CA:exclusiveagencycontractis genuine. The sale of the lot to Amparo deLeon is practically a sale toOscar. Issue:WONGregoriosactofacceptingthe gift or propinafromOscarconstitutesafraudwhich would cause the forfeiture of his 5% commission YES Ratio: GregorioDomingoasthebroker,received a gift or propina from the prospectivebuyerOscardeLeon,without the knowledge and consent of his principal, Vicente Domingo. His acceptanceof said substantial monetary gift corrupted his duty to serve the interests only of hisprincipal and undermined his loyalty to his principal who gave him partial advance of P3000 on his commission. As a consequence, instead ofexerting his best to persuade his prospective buyer to purchase the propertyonthe most advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of theprospective buyer to purchase the propertyat P1.20 per sq. m. The dutiesand liabilitiesofa broker to his employer are essentially those which an agent owes to hisprincipal. Anagentwhotakesasecret profit in the nature of abonus, gratuity orpersonalbenefitfrom thevendee, without revealing the same to his principal,thevendor,isguiltyofa breach ofhis loyaltytothe principal andforfeitshisrighttocollectthe commission from his principal, even ifthe principal does not suffer any injury by reason of such breach of fidelity, orthat he obtained better results or that the agency is a gratuitous one, or thatusage or custom allows it. Rationale: prevent the possibility ofany wrong not to remedy or repair an actual damage agent thereby assumes a position wholly inconsistent with that of being anagent for hisprincipal, who has a right to treat him, insofar as his commission isconcerned, as if no agency had existed The fact that the principal mayhavebeenbenefitedbythevaluableservicesofthesaidagentdoesnot exculpate the agent who has only himself to blame for such a result byreason of his treachery or perfidy. As a necessary consequence ofsuch breach of trust, Gregorio Domingo must forfeit his right to the commissionandmustreturnthepart of the commission he received from his principal. Decisive Provisions Article 1891 2 and 1909 3 CC Article1891consistsin changing the phrase "to pay" to "to deliver", whichlattertermismorecomprehensive than the former. Paragraph 2 ofArticle 1891isanewadditiondesignedtostressthehighest loyalty that is required to an agent condemning as void any stipulationexemptingtheagentfromthedutyandliabilityimposedon himin paragraph one thereof. Article 1909 demand the utmostgood faith,fidelity,honesty,candorand fairness on the part of the agent, the real estate broker in this case, to his principal, the vendor. The law imposes uponthe agent the absolute obligation to make a full disclosure or complete account to hisprincipalofallhistransactionsandothermaterialfactsrelevanttotheagency,somuch so that the law as amended does not countenance any stipulation exempting the agent from such an obligation and considers such an exemption as void. The duty of an agent is likened to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the highest and truest principle of morality as well as ofthe strictest justice. Situations where the dutymandated byArt1891 does not apply agentorbrokeractedonlyasa middleman with the task of merely bringing together the vendor and vendee, whothemselves thereafter will negotiate on the terms and conditions ofthe transaction agent or broker had informed theprincipalofthe gift orbonusorprofithereceived from the purchaser and hisprincipal did not object Teofilo Purisimas entitlement to his sharein the 5% commission Teofilo can only recover fromGregoriohis shareofwhatever amounts Gregorio Domingo received by virtue of thetransaction as his sub-agency contract was with Gregorio Domingo alone and not with Vicente Domingo, who was not even aware of such sub-agency. Since Gregorio already received atotalofP1,300fromOscarandVicente,P650 of which should be paid by Gregorio toTeofilo. Dispositive:CA decision reversed.

Eurotech Industrial Technologies vs Cuizon

Facts:Edwin Cuizon, general manager of Impact Systems Sales owned by Erwin Cuizon, bought one equipment from Petitioner Eurotech valued at Php 250,000.00, paying Php 50,000.00 as downpayment. When the equipment arrived, petitioner refused to deliver it to the respondent without paying the balance. Edwin and a general manager of Eurotech signed a deed of assignment, whereby Impact Systems assigns its outstanding receivable amounting to Php 365,000.00 to Eurotech, which delivered the equipment thereafter. But Erwin, the proprietor, still collected the receivables despite the assignment. After partial payments made, Eurotech made a final demand of Php 295,000.00, excluding interest and attorney's fees. For failure to meet the demand, Eurotech filed a complaint for sum of money, damages, with application for preliminary attachment. Edwin alleged that he is not a real party in interest in the case for he merely acted as an agent of his principal, Impact Systems. RTC dropped respondent as a party defendant of the case. The CA affirmed the order, hence the appeal was made.Issue:Whether or not respondent, as sales manager, is acting merely as an agent for the sole proprietorshipHeld:Respondent Edwin merely acted as an agent. In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latters consent.\ The underlying principle of the contract of agency is to accomplish results by using the services of others to do a great variety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence qui facit per alium facit per se. The elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority In this case, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal and EDWIN as agent. The only cause of the present dispute is whether respondent EDWIN exceeded his authority when he signed the Deed of Assignment thereby binding himself personally to pay the obligations to petitioner.

Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liable to the party with whom he contracts. The same provision, however, presents two instances when an agent becomes personally liable to a third person: (1) When he expressly binds himself to the obligation; and, 2) When he exceeds his authority. In the last instance, the agent can be held liable if he does not give the third party sufficient notice of his powers. We hold that respondent EDWIN does not fall within any of the exceptions contained in this provision."...the position of manager is unique in that it presupposes the grant of broad powers with which to conduct the business of the principal." The powers of an agent are particularly broad in the case of one acting as a general agent or manager; such a position presupposes a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and management. In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management. A real party in interest is one who "stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit."Soriamont Steamship Agencies Inc. & Ronas v Sprint Transport Services, & PapaSprint filed for a complaint for a sum of money against Soriamont and RonasSubject of dispute: ELA (EQUIPMENT LEASE AGREEMENT) Sprint alleges: It entered into a lease agreement for Equipment with Soriamont Sprint agreed to lease chassis units for the transport of container vans Thru authorization letters, Ronas (on behalf of Soriamont and PAPA TRUCKING SERVICES [PTS]) were able to withdraw 2 chassis units from the container yard of Sprint. Soriamont and Ronas failed to pay rental fees. Sprint was subsequently informed that the equipment was LOST Despite demands, Soriamont and Ronas failed to pay rental fees and failed to replace equipment. Soriamont and Ronas alleges: It was [PTS] who withdrew the equipment. Soriamont and Ronas filed a Third Party Complaint against [PTS], who failed to answer and thus was declared in default RTC favored Sprint, held Soriamont liable CA found that the contract contained an AUTOMATIC RENEWAL CLAUSE Found that Soriamont authorized the withdrawal of [PTS] of the equipment. Affirmed RTC decisionISSUE: Whether or not PTS is an agent of Soriamont? Soriamont is essentially challenging court findings that PTS withdrew the equipment as an agent of Soriamont. In effect, Soriamont is raising questions of fact which is NOT ALLOWED Rule 45 -> only questions of law may be raised in a petition for review Evidence shows that the preponderance of evidence supports the existence of an agency relationship between Soriamont and PTS. The ELA explicitly authorized Soriamont to appoint a representative who shall withdraw and return the leased chassis units (which is PTS) Since the ELA was not shown to be terminated, its AUTOMATIC RENEWAL CLAUSE took effect pursuant to their contract. The settled rule is that persons dealing with an assumed agent are bound at their peril; and if they would hold the principal liable, they must ascertain not only the fact of agency, but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to prove it.Sprint has successfully discharged this burden. Alternatively, if PTS is found to be its agent, Soriamont argues that PTS is liable for the loss of the subject equipment, since PTS acted beyond its authority as agent.Soriamont cites Article 1897 of the Civil Code, which provides:Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. The burden falls upon Soriamont to prove its affirmative allegation that PTS acted in any manner in excess of its authority as agent, thus, resulting in the loss of the subject equipment. To recall, the subject equipment was withdrawn and used by PTS with the authority of Soriamont. And for PTS to be personally liable, as agent, it is vital that Soriamont be able to prove that PTS damaged or lost the said equipment because it acted contrary to or in excess of the authority granted to it by Soriamont.As the Court of Appeals and the RTC found, however, Soriamont did not adduce any evidence at all to prove said allegation.

UY V COURT OF APPEALS FACTS:Petitioners Uy and Roxas are agents authorized to sell eight parcels of land by the owners thereof.By virtue of such authority, petitioners offered to sell the lands located in Benguet to respondent NHA to be utilized and developed as ahousing project. On February14, 1989, the NHA Board approved theacquisition of said lands, at the cost of P23.87M, pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands. Of theeight parcels, however, only five were paid for by the NHA because of thereport it received from the Land Geosciences Bureau of the DENR that theremaining area is located at an active landslide area and therefore, not suitablefor development into ahousing project.In 1991, the NHA cancelled the sale of the 3 parcels of land and subsequentlyoffered the amount of P1.225 million to the landowners as daos perjuicios.On9 March 1992, petitioners filed before the QC RTC aComplaint for Damages.The RTC rendered a decision declaring the cancellation of the contract to bejustified. The trial court nevertheless awarded damages to plaintiffs inthe sameamount offered by NHA to petitioners as damages.Upon appeal by petitioners,the CA held that since there was "sufficient justifiable basis" in cancelling thesale, "it saw no reason" for the award of damages.Hence, this petition.ISSUES:(1) Was there a legal basis for the rescission of the sale of the 3 parcels of land?And granting arguendo that NHA has legal basis to rescind, does the petitionerhave the right to claim for damages?(2) [Irrelevant] Were the petitioners allowed to lodge a complaint as agents?HELD:(1) There was no rescission per se.What is involved is acancellation basedon the negation of the cause ofthe contract.(2) [Irrelevant] No. Petitioners are not parties, heirs,assignees, or beneficiariesof a stipulation pour autrui under the contracts of sale, they do not, undersubstantive law, possess the right they seek to enforce.RATIO:(1) Petitioners confuse the cancellation of the contract by the NHA as arescission of the contract under Art. 1191. The right of rescission or, moreaccurately, resolution, is predicated ona breach of faith by the other party.NHA did not have the right to rescind for the other parties to the contract, thevendors, did not commit any breach of their obligation. The cancellation wasbased on the negation of the cause arising from the realization that the lands,which were the objectof the sale, were not suitable for housing.Cause, whichis the essential reason for the contract, should be distinguished from motive,which is the particular reason of aparty which does not affect the other party.In a contract of sale of a piece of land, such as in this case, the cause of thevendor (petitioners' principals) in entering into the contract is to obtain theprice. For the vendee, NHA, it is the acquisition of the land.The motive of theNHA, on the other hand, is touse said lands for housing. Ordinarily, a party's motives for entering into the contract do not affect thecontract. However,when the motive predetermines the cause, the motive may be regarded as the cause.In this case, it is clear, and petitioners do notdispute, that NHA would not have entered into the contract were the lands notsuitable for housing.In other words, the quality of the land was an impliedcondition for the NHA to enter into the contract.On NHAs part, therefore, the motive was the cause for its being a party to the sale. The findings of the Land Geosciences Bureau were sufficient for the cancellation of the sale NHA was justified in canceling the contract. The realization of the mistake asregards the quality of the land resulted in the negation of the motive/causethus rendering the contractinexistent.Article 1318 ofthe Civil Codeenumerates the essential requisites of a contract: (1) Consent of the parties; (2)Subject matter; and (3) Cause of the obligation which is established.Therefore,assuming that petitioners are parties, assignees or beneficiaries to the contractof sale, they would not be entitled toany award of damages.

MANILA MEMORIAL PARK CEMETERY, INC.vs.PEDRO L. LINSANGANFACTS:Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him.Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to complete the down payment to MMPCI.Baluyot issued handwritten and typewritten receipts for these payments. Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new contract price, as the same was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a documentconfirming that while the contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.

Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against the former.

MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except as to the extent expressly stated in the Agency Manager Agreement. Moreover, MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in fact received a down payment and monthly installments as indicated in the contract.

The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals affirmed the decision of the trial court.

ISSUES:1. Whether or not there was a contract of agency between Baluyot and MMPCI?2. Whether or not MMPCI should be liable for Baluyots act?

HELD:First Issue.Yes. 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. As properly found both by the trial court and the Court of Appeals, Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and, when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.

Second Issue.No. While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract.

To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It also bears emphasis that when the third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person was aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification.