Puyat and Sons Co. v.

Arco Amusement Company

Facts:

Respondent is engaged in operating cinematographs, while petitioner is acting as an agent for Starr
Piano Company of Richmond. Respondent negotiated with petitioner and agreed that petitioner
would order sound reproducing equipment on its behalf, and respondent would pay 10% commission
and out-of-pocket expenses in addition to the selling price. Transactions for 2 orders transpired.
After 3 years, respondent discovered that that price quoted to them by petitioner was not the net
price but the list price. They sought to obtain reimbursement from the petitioner, and failing on this,
filed the instant case.

Issue:

Whether the contract between petitioner and respondent is that of agency or a mere contract of
sales

Held:

The letters, by which the respondent accepted the prices for the sound reproducing equipment
subject of its contract with the petitioner, are clear in their terms and admit no other interpretation
that the respondent in question at the prices indicated which are fixed and determinate. The
respondent admitted in its complaint filed with the Court of First Instance of Manila that the petitioner
agreed to sell to it the first sound reproducing equipment and machinery.

We agree with the trial judge that "whatever unforseen events might have taken place unfavorable to
the defendant (petitioner), such as change in prices, mistake in their quotation, loss of the goods not
covered by insurance or failure of the Starr Piano Company to properly fill the orders as per
specifications, the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices
fixed of $1,700 and $1,600." This is incompatible with the pretended relation of agency between the
petitioner and the respondent, because in agency, the agent is exempted from all liability in the
discharge of his commission provided he acts in accordance with the instructions received from his
principal (section 254, Code of Commerce), and the principal must indemnify the agent for all
damages which the latter may incur in carrying out the agency without fault or imprudence on his
part (article 1729, Civil Code).

While the letters state that the petitioner was to receive ten per cent (10%) commission, this does
not necessarily make the petitioner an agent of the respondent, as this provision is only an additional
price which the respondent bound itself to pay, and which stipulation is not incompatible with the
contract of purchase and sale.

In the second place, to hold the petitioner an agent of the respondent in the purchase of equipment
and machinery from the Starr Piano Company of Richmond, Indiana, is incompatible with the
admitted fact that the petitioner is the exclusive agent of the same company in the Philippines. It is
out of the ordinary for one to be the agent of both the vendor and the purchaser. The facts and
circumstances indicated do not point to anything but plain ordinary transaction where the respondent
enters into a contract of purchase and sale with the petitioner, the latter as exclusive agent of the
Starr Piano Company in the United States.

It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any
difference between the cost price and the sales price which represents the profit realized by the
vendor out of the transaction. This is the very essence of commerce without which merchants or
middleman would not exist.

Quiroga v. Parsons

Facts:

Plaintiff engaged into a contract for the exclusive sale of its beds with defendants. Plaintiff filed a
complaint against the defendant for violation of the following obligations: not to sell the beds at
higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the
same; and to order the beds by the dozen and in no other manner. Plaintiff alleged that the
defendant was his agent.

Issue:

Whether the defendant was a purchaser or an agent of the plaintiff for the sale of his beds

Held:

There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the
defendant, to pay their price. These features exclude the legal conception of an agency or order to
sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but
delivers to the principal the price he obtains from the sale of the thing to a third person, and if he
does not succeed in selling it, he returns it. By virtue of the contract between the parties the
defendant, on receiving the beds, was necessarily obliged to pay their price within the term fixed,
without any other consideration and regardless as to whether he had or had not sold the beds. The
words commission on sales used in clause (A) of article 1 mean nothing else, as stated in the
contract itself, than a mere discount on the invoice price. The word agency, also used in articles 2
and 3, only expresses that the defendant was the only one that could sell the plaintiff's beds in the
Visayan Islands. With regard to the remaining clauses, the least that can be said is that they are not
incompatible with the contract of purchase and sale.

PARTIES TO A CONTRACT OF SALE

Rubias v. Batiller

Facts:

Before the war with Japan, Francisco Militante filed an application for registration of the parcel of
land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the
land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent.
Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the
matter being that he and his predecessors-in-interest have always been in actual, open and
continuous possession since time immemorial under claim of ownership of the portions of the lot in
question.
Issue:

Whether or not the contract of sale between appellant and his father-in-law was void because it was
made when plaintiff was counsel of his father-in-law in a land registration case involving the property
in dispute

Held:

The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action
and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in
question was predicated on the sale thereof made by his father-in- law in his favor, at a time when
Militante's application for registration thereof had already been dismissed by the Iloilo land
registration court and was pending appeal in the Court of Appeals.

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six
paragraphs certain persons, by reason of the relation of trust or their peculiar control over the
property, from acquiring such property in their trust or control either directly or indirectly and "even at
a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public
officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6)
others especially disqualified by law.
Fundamental consideration of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public officers and employees of government property intrusted to them and by
justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by
them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new
article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void
from the beginning."
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by
ratification. The public interest and public policy remain paramount and do not permit of compromise
or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians, agents and administrators
(Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by
means of and in "the form of a new contact, in which cases its validity shall be determined only by
the circumstances at the time the execution of such new contract. The causes of nullity which have
ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at
the time of the first contract, may have already become lawful at the time of the ratification or second
contract; or the service which was impossible may have become possible; or the intention which
could not be ascertained may have been clarified by the parties. The ratification or second contract
would then be valid from its execution; however, it does not retroact to the date of the first contract."

Philippine Trust Co. v. Roldan

Facts:

Mariano Bernardo, a minor, inherited 17 parcels of land from his deceased father. Respondent,
Marianos step-mother, was appointed his guardian. As guardian, she sold the 17 parcels to Dr.
Ramos, her brother-in-law, for P14,700. After a week, Dr. Ramos sold the lands to her for P15,000.
Subsequently, she sold 4 out of 17 parcels to Emilio Cruz. Petitioner replaced Roldan as guardian,
and two months thereafter, this litigation sought to declare as null and void the sale to Dr. Ramos,
and the sale to Emilio Cruz.
Issue:

Whether the sale of the land by the guardian is null and void for being violative of the prohibition for
a guardian to purchase either in person or through the mediation of another the property of her ward

Held:

Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee
cannot be allowed to have any inducement to neglect his wards interest, and in line with the courts
suspicion whenever the guardian acquires wards property we have no hesitation to declare that in
this case, in the eyes of the law, Socorro Roldan took by purchase her wards parcels thru Dr.
Ramos, and that Article 1459 of the Civil Code applies.