UNILAND RESOURCES VS.

DBP

FACTS

Marinduque Mining Corp. obtained a loan from the DBP and as a security mortgaged
certain real properties. Said lots were, however, been previously mortgaged to Caltex.
Marinduque Mining Corp. failed to pay its obligations to Caltex, which Caltex foreclosed said
lots, with right of redemption by DBP. Bidding was held with only 1 bidder, Counsel Realty
Corp. an affiliate of Glaxo, Philippines, which offered a bid only for the warehouse for
23,900,000, but it was rejected by DBP. DBP then redeemed the 2 lots and offered them for
sale. A pre –bidding conference was held and the public bidding was then held with only 1
bidder, Charges Realty Corp., another affiliate of Glaxo, Philippines, only with respect to the
warehouse for 24,070,000. No bid was submitted for the office building lot. Said office was then
sold to Bank of P.I. as trustee for 17,460,000. DBP admittedly paid broker’s fee on this sale to
the DBP Management Corp. which acted as broker for said negotiated sale. After the sale,
Uniland Resources asked for the payment of its broker’s fee in instrumenting the sale of DBP’s
warehouse lot to Charges Realty Corp. by sending letters to the President and Chairman of
DBP. The claim was denied.

ISSUE:

Whether Uniland Resources and DPB entered into contract of agency in the sale of
warehouse lot?

RULLING:

No. Uniland Resources was never able to secure the required accreditation from DBP to
transact business on behalf of DBP. The letters sent by Uniland to the higher officers of DBP
and APT are merely indicative of desire to secure accreditation. In the contract of agency, no
one may contract in the name of another without being authorized by the latter, unless the
former has by the law a right to represent him. The relation of the agency is one founded on
mutual consent; the principal agrees to be bound by the acts of the agents and the latter in
turn consents to render service on behalf or in representation of the principal. Equity demands
that Uniland Resources be given the sum of 100,000 as commission. DBP was able to realize
profit from the sale of the 2 lots. The award is based purely on equity considerations and not
for the existence of an agency relationship.
 GREEN VALLEY POULTRY AND ALLIED PRODUCT INC. VS. IAC

FACTS:

E.R Squibb and Green Valley entered into an agreement. E.R Squibb & Sons Philippines
Corp. appointed Green Valley Poultry as a non-exclusive distributor for Squibb Veterinary
Products. As distributor, he was entitled to discount. Distribute only for the Central Luzon and
Northern Luzon including Cagayan Valley areas. That Green Valleys is not allowed to transfer
or stock from such places to other parts of Luzon, Visayas or Mindanao which are covered by
other appointed Distributors. The maximum discount that he can give will not go beyond 10%.
Payment for purchases of Squibb will be due 60 days from date of invoice. That no payment
will be accepted in the form of post-dated checks. Payment by check must be on current
dating. It was mutually agreed that either parties can terminate the agreement.

Squibb filed a suit to collect for goods delivered by Green Valley but unpaid.

ISSUE:

Whether the agreement was agency to sell or contract of sale?

RULLING:

The contract was contract of sale. Green Valley is liable; it sold on credit without
authority from its principal. Art.1905 provides that; the commission agent cannot, without the
express or implied consent of the principal, sell on credit. Should he do so, the principal may
demand from him payment in cash, but the commission agent shall be entitled to any interest
or benefits, which may result from such sale.
 VILLA vs. BOSQUE

FACTS:

Rosa Villa was the owner of a printing establishment and bookstore known as La Flor
de Cataluna. Manuel Pirretas, attorney in fact, sold the establishment to Guillermo Bosque and
Jose Ruiz for 55,000 payable on instalment. France and Goulette obligated themselves as
solidary sureties for Bosque and Ruiz. The first instalment was paid in order. The attorney in
fact, absented himself from the Philippines on a long visit to Spain. He executed a document
purporting to be a partial substitution of agency to Figueras Hermanos, a mercantile entity so
that he may be able to affect collection. When the second instalment was due, Bosque and Ruiz
were unable to comply with their obligation and after negotiations with Bosque and Ruiz and
Alfredo Rocha, representative of Hermanos, acting as attorney in fact of Rosa Villa, an
agreement was reached whereby Hermanos accepted 5,800 and received the balance five
promissory notes. The notes were not paid promptly at maturity but the balance due upon
them was finally paid in full by Bosque. Owners of La Flor de Cataluna appear to have
converted it into a limited partnership under the style of Guillermo Bosque, S. en C and
presently a corporation was formed to take over the business under the name Bota Printing
Company Inc. The partnership appears to have conveyed its entire asset to this corporation for
15,000. Hermanos entered into an agreement with Bosque that France and Goulette shall be
relieved from all liability on their contract as sureties. No question is made as to the
authenticity of the documents to release the sureties.

ISSUE:

Whether Rosa Villa is bound to the agreement by Figueras Hermanos?

RULLING:

No, Rosa Villa is not bound. The partial substitution of agency purports to confer on
Figueras Hermanos or the person/s exercising legal representation of the same all of the
powers that had in the original power of attorney. There is nothing to be construed to authorize
Hermanos to discharge any of the debtors without payments or to novate the contract by which
their obligation was created.
 REPUBLIC FLOUR MILLS VS. CENTRAL BANK OF THE PHILIPPINES

FACTS:

RPM is a domestic corporation, the owner and operator of a wheat flour mill an annual
capacity of 50,000 metric tons of flour. As a by-product of milling operations, RPM produces
mill offals which it sells abroad, the proceeds of all sales being surrendered to the Central Bank
as foreign exchange. RPM filed a request with Central Bank for authority to expand the
capacity of its flour mill by 40,000 metric tons. It furnished Central Bank with a detailed
account of its foreign exchange requirements amounting to $949,889.87. The Monetary Board
approved the application. RPM entered into contracts with Thomas Robinson, in England for
the purchase and sales and erection of wheat flour mill and Metropolitan Vickers & British
Thomson Houston Export Co. for the purchase and sales of electrical equipment. Said
contracts provided that it is binding and effective upon the parties once Central Bank
confirmed its approval to the extension of the flour of the flour mill and its commitment to
make available foreign exchange to pay the purchase price. Copies of these were submitted to
Central Bank.

RA 2609 authorized Central Bank to connect a margin fee of not more than 40% on
sales of foreign exchange. Central Bank then fixed the margin fee to 25% and collected 341,945
as margin fees on RPM’s remittances of foreign exchange in payments of the machinery and
equipment exported to the expansion of mill facilities. RPM filed with Central Bank an
application for exemption from the payment of margin fees on said remittances and for the
refund of the money paid. Central Bank denied on ground that RPM did not have outstanding
obligation to pay foreign exchange to Thomas Robinson & Sons for the reason that there
contract was not approved by Monetary Board. RPM sought for recon but Central Bank denied.
RPM filed an action against Central Bank.

ISSUE:

Whether RPM is entitled for exemption?

RULLING:

No. RPM is estopped from claiming exemption from payment of margin fees on its
remittances of foreign exchange in payments for the machinery and equipment used for the
expansion. Under the doctrine of promissory estoppel, an estoppel may arise from the making
of a promise should be relied upon and in fact it was relied upon and if a refusal to enforce it
would be virtually to sanction the preparation of fraud would result in other injustice.
 ORIENT AIR et al. VS. CA

FACTS:

American Airlines Inc. and Orient Air Service and Hotel Representatives entered into a
General Sales Agency Agreement, whereby American Airlines authorized Orient Air to act as its
exclusive general sales agent within the Philippines for the sale of air passenger transportation.

Alleging that Orient Air has reneged its obligation under the Agreements by failing to
promptly remit the net proceeds of sales for the month of January to March 1981, amounting
to US $254,400.40. American Airline undertook the collection of the proceeds of tickets sold
originally by Orient Air and terminated the agreement. American Air instituted suit against
Orient Air with the RTC of Manila for Accounting with Preliminary Attachment or Garnishment,
Mandatory Injunction and Restraining Order. Orient Air denied the material allegation and
claim unpaid overriding commissions of 3%.

ISSUE:

Whether Orient Air is entitled to 3% overriding commission based on sales of its service
actually negotiated or transacted referred to as tickets sales?

RULLING:

Yes. Orient Air is entitled to an overriding commission based on total flown revenue.
American Air’s perception that Orient Air was remiss or in default of its obligations under the
agreement was a situation where Orient Air acted in accordance with the agreement – that of
retaining from the sales proceeds its accrued commissions before remitting the balance to
American Air. Since American Air is obligated to Orient Air by way of such commission, Orient
Air was clearly justified in retaining and refusing to remit the sums claimed by American Air.
American Air’s termination of Agreement was without cause and basis.

Reinstating Orient Air as its general sales agent was set aside. Such ruling would be
violating the principles and essence of agency whereby 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. In an agent- principal relationship, the personality is extended through
the facility of the agent. In so doing, the agent, by legal fiction becomes the principal authorized
to perform all acts which the latter would have him do. Such a relationship can only be affected
with the consent of the principal which must not be compelled by law or by any court.
 VICTORIA’S MILLING CORP. VS CA

FACTS:

St. Therese Merchandising regularly bought sugar from Victoria’s Milling Corp. In the
course of their dealings, VMC issued shipping list/delivery receipt to STM as proof of
purchases. The transaction it covered was a direct sale. STM sold to Consolidated Sugar
Corporation its right in Shipping List/Delivery Receipt No.1214M for 14,750,000, CSC issued
one check and 3 post-dated checks. CSC wrote VMC that it had been authorized by STM to
withdraw the sugar covered by the SLDR.

CSC surrendered SLDR 1214M to VMC’s NAWACO warehouse and was allowed to
withdraw sugar. After 2,000 bags had been released, VMC refused to allow further
withdrawals. CSC then informed STM that SLDR 1214M had been sold and endorsed to it.
VMC could not allow further withdrawals because STM had already withdrawn all the sugar
covered by the cleared checks. VMC also noted that CSC had represented itself to be STM’s
agent as it had withdrawn 2,000 bags for and in behalf of STM. CSC filed a complaint for
specific performance.

ISSUE:

Whether consolidated Sugar Corp. was an agent of STM and estopped to sue upon
SLDR 1214M as an assignee?

RULLING:

No. It is clear from Article 1868 that the basis of agency is representation. On the part
of the principal, there must be an actual intention to appoint or an intention naturally
inferable from his words or actions; and on the part of the agent, there must be an intention to
accept the absence of such intent, there is generally no agency. CSC was a buyer of the SLDR
form, not an agent of STM. CSC was not subject of STM’s control. The authorization given to
CSC contained the phrase for and in our behalf did not establish agency. It is clearly shown by
CSC’s communication to VMC that SLDR 1214M had been sold and endorsed. Such word
intended contract of sale and not agency.
 GONZALO PUYAT & SONS INC. VS. ARCO AMUSEMENT COMPANY

FACTS:

Arco Amusement is a business engaged in generating cinematographs. Gonzalo Puyat &

Sons Inc. was acting as exclusive agents in the Philippines for Starr Piano Company of Indiana,
USA and dealt with cinematographer equipment and company. Arco Amusement approached
Gonzalo Puyat desiring to equip its cinematograph with sound reproducing devices. It was
agreed that Arco Amusement would pay Gonzalo Puyat, in addition to the prize of the
equipment a 10% commission plus all expenses. Starr Piano quoted the list price of equipment
as $1,700 without discount to Gonzalo Puyat which he then told to Arco. Being agreeable, the
equipment was formally authorized to be ordered. ARCO made another order, paying the
equipment for $1,600 which was supposed to be the price quoted by Starr Piano Company plus
10% commission plus all expenses incurred. The 2nd equipment was duly paid the price $1,600
with its 10% commission and $160 for all expenses and charges. The $160 does not represent
actual out - of – pocket expenses by the defendant, but a mere flat charge.

ARCO discovered that the price quoted to them was not the net price but rather list
price and that defendants was able to obtain discount from Starr Piano. They sought to obtain
reduction or reimbursement and failure of this they brought an action.

ISSUE:

Whether the contract between ARCO Amusement and Gonzalo Puyat was one of
purchase and sale or agency?

RULLING:

It is one of purchase and sale. The contract is the law between the parties and should
include all the things they are supposed to have been agreed upon. What does not appear on
the face of the contract should be regarded merely as dealer’s or trader’s talk, which cannot
bind either party. The letters showing ARCO accepted the prices are clear in the terms and
admit no other interpretation that the respondent in question at the prices indicated which are
fixed and determinate.

Whatever unforeseen events might have taken place unfavourable to ARCO such
change in price, mistake in quotation, loss of the goods not covered by the insurance or failure
of the Starr Piano to properly fill the orders as per specification, Gonzalo Puyat might still
legally hold ARCO to the prices fixed. This is incompatible with the pretended relation of agency
between the petitioner and 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 of his principal, and the principal must indemnify the agent for all damage which
the latter may incur in carrying out the agency without fault or imprudence on his part.
 LIM TONG LIM VS. PHILIPPINE FISHING GEAR INDUSTRIES INC.

FACTS:

Antonio Chua and Peter Yao entered into a contract for the purchase of fishing nets of
various sizes from the Philippines Fishing Gear Industries. They were engaged in a business
venture with Lim Tong Lim, who was not a signatory to the agreement. The buyers failed to pay
for the fishing nets and the floats. Philippines Fishing Gear Industries filed a collection suit
against Chua, Yao and Lim. The suit was brought against the 3 in their capacities as general
partners on the allegation that Ocean Quest Fishing Corporation was non-existent Corporation
as shown by a Certificate from SEC.

ISSUE:

Whether Lim Tong Lim may be held liable for the fishing nets and floats purchased from
Philippines Fishing Gear Industries? Whether the acts of Lim, Chua and Yao could be deemed
to have entered into a partnership?

RULLING:

Yes, there exists partnership. Article 1767 provides that by the contract of partnership,
2 or more persons bind themselves to contribute money, property, or industry to a common
fund, with the intention of dividing the profits among themselves. Chua, Yao and Lim had
decided to engage in fishing business, which they started by buying boats, financed by a loan
secured by Jesus Lim. In their compromise agreement, they subsequently revealed their
intention to pay the loan with the proceeds of the sales of the boats, and to divide equally
among them the excess or loss. The purchase and repair of which was finance with borrowed
money fell under the term common fund. The contribution to such fund need to be cash or
fixed assets; it could be intangible like credit or industry. That the parties agreed that any loss
or profit from the sale and operation of the boats would be divided equally among them also
shows that they had indeed formed a partnership.

Lim cannot use the defense of doctrine of corporation by estoppel. One who assumes
obligation to an ostensible corporation cannot resist performance on the ground that there was
in fact no corporation. Even if the ostensible corporate entity is proven to be legally non-
existent, a party may be estopped from denying its corporate existence. An unincorporated
association has no personality and would be incompetent to act and appropriate for itself the
power and attributes of a corporation as provided by law; it cannot create agents or confer
authority on another to act in its behalf; thus, who act or purport to act as its representative or
agent do so without authority and at their own risk. It is an elementary principle that a person
who acts as an agent without authority or without a principal is himself regarded as a
principal, possessed all the right and subject to all the liabilities of a principal. All those who
benefits from the transaction made by the ostensible corporation, despite knowledge of its legal
defects, may be held liable for contracts they impliedly assented to or took advantage of, they
are held liable as general partners.
 US VS. REYES

FACTS:

Montoya is an American Citizen, who was employed as an identification checker at the

U.S. Navy Exchange at Joint United States Military Assistance Group. She is married to
Edgardo, a serviceman employed by the U.S. navy stationed in San Francisco, California.
Maxine Bradford is an American Citizen who was the activity exchange manager at JUSMAG.
Her body and belongings were searched after she had bought some items from the retail store,
where she has purchasing privilege. Montoya filed for damage against Bradford due to
oppressive and discriminatory acts in excess of her authority as store manager of NEX
JUSMAG.

ISSUE:

Whether Bradford enjoys diplomatic immunity?

RULLING:

No. Doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private capacity as an ordinary Citizen. The cloak of
protection afforded the officer and agents of the government is removed the moment of they are
sued in their individual capacity.
 HEIRS OF JOSE LIM VS JULIET VILLA LIM

FACTS:

Jose was a liason officer of Interwood Sawmill in Quezon. Jose, together with his friends
formed a partnership to engage in trucking business. With a contribution of 50,000 each, they
purchased a truck used in the hauling and transport of lumber of sawmill. Until the death of
Jose he managed the operation which now were agreed to continue the business by the heirs of
Jose Lim. The shares in the partnership profit were held in trust by Elfledo. By the partnership
ceased, it had 9 trucks; all were registered under the name of Elfledo. He also managed to buy
motor vehicles from the proceeds to the partnership. Elfledo then died leaving Julieta Lim as
the sole surviving heir. The other heirs of Jose Lim required Julieta Lim to do an accounting.
Julieta refused hence they sued her.

ISSUE:

Whether Elfledo or Jose was the partner in the trucking business?

RULLING:

Elfledo was the partner. Article 1769, the rule on determining whether a partnership
exists held that Elfledo is a partner. Cresencia Lim testified that Jose gave Elfledo 50,000 as
share in the partnership, on a date that coincides with the payment of the initial capital in the
partnership. Elfledo runs the affairs of the partnership, wielding absolute control, power and
authority, without any intervention or opposition from the petitioners. All the properties,
particularly the 9 trucks were registered in the name of Elfledo. Jimmy testified that Elfledo did
not receive any wages or salaries from the partnership. None of the petitioners demanded
periodic accounting from Elfledo during his lifetime.
 PEDRO MARTINEZ VS. ONG PONG CO. & ONG LAY

FACTS:

Pedro Martinez delivered 1,500 to Ong Pong Co., in a private document, acknowledge
that they had received the same with the agreement that they will invest the amount in the
store the profits or losses of which are to divide with Martinez in equal share. Martinez filed a
complaint to compel Ong Pong Co. to render him accounting or refund the 1,500.

ISSUE:

Whether Martinez is entitled to the capital he contributed?

RULLING:

Yes. The whole action is based upon the fact that defendant received certain capital
from the plaintiff for the purpose of organizing a company; they, according to their agreement
were to handle said money and invest it in a store which was the object of the association. In
the absence of a special agreement vesting in one sole person the administration thereof; as
such administrators they were the agent of the company and incurred the liabilities peculiar to
every agent, among which is that rendering account to the principal of their transactions, and
paying him everything that may have received by virtue of the mandatum. Neither of them has
rendered such account nor proven the losses referred to Ong Pong Co.; they are therefor
obliged to refund the money that they received for the purpose of establishing said store.
 ELMO MUNASQUE, VS. CA

FACTS:

Munasque entered into contract with Tropical through its Branch Manager Pons for
remodelling its building without expecting or exchanging any consideration from Galan,
although Galan was named as partner in the contract. Galan would receive compensation in
the form of percentage or commission. Tropical agreed to give Munasque 7,000 soon after the
construction began and 6,000 every fifteen days during the construction. Tropical and/or Pons
delivered a check not to Munasque but to a stranger, Galan succeeded in getting the
indorsement of Munasque. When the 2nd check was due, Munasque refused to indorse it. Pons
succeeded in changing payee’s name from Elmo Munasque to Galan and associates, enabling
Galan to cash the same, placing Munasque in great financial difficulty in his business.
Munasque undertook the construction at his own expense. Because of the Tropical and Pons
unauthorized disbursements to Galan, Munasque demanded the amount to be paid by him.

ISSUE:

Whether a partnership existed between Munasque and Galan?

RULLING:

Yes, a partnership exists. Munasque receive the 1st payment of Tropical with a check
inside out his name, he indorsed the check in favour of Galan. Tropical had every right to
presume that Munasque and Galan were true partners. The payment made by Tropical to
Galan was a good payment. The 2 were partners when the debts were incurred; they are both
liable to 3rd persons who extended credit to their partnership. The obligation of Munasque and
Galan to Blue Diamond and Cebu Southern Hardware is only pro rata under Art. 1816. Art.
1816 should be construed together with Art. 1824. The obligation is solidary because the law
protects him, who in good faith relied upon the authority of the partner, whether such
authority is real or apparent.

Tropical had every reason to believe that partnership existed between them and no fault
or error can be imputed them and it for making payments to “Galan and Associates” and
delivering the same to Galan because Galan was true partner with real authority to transact on
behalf of the partnership.
 CRISTOBAL BONNOVIE, VS. JAIME HERNANDEZ

FACTS:

Plaintiffs with other associates formed a secret partnership for the purpose of acquiring
plants, franchises and other properties of Meralco. No formal articles were drawn for it was the
purpose of the members to incorporate once the deal had been consummated. They elected
Serranzana and Serrano general manager and secretary- treasurer, respectively, of the
partnership. Defendant was taken as a member of the partnership and he was given special
power of attorney. Using the partnership fund, defendant was able to buy properties. The
defendant was the one named in the deed of sale. The members of the partnership proceeded
with the formation of the proposed corporation, apportioning its shares of the stock in
proportion to their respective contributions to the capital. Before the incorporation, several
partners are not satisfied the way matters were being run and fearful that the venture might
fail because the business was not going well. They expressed their desire to withdraw from the
partnership and get back the money they invested. Jaime and Plaintiff withdraw from the
partnership and it was then dissolved. The members who preferred to remain in the business
went ahead of the formation of the corporation. Defendant made a formal assignment of the
properties to the treasurer of the corporation. The new corporation was named Bicol Electric
Company. When the corporate business was already in prosperous condition, Plaintiffs brought
a suit against Jaime, claiming a share in the profit.

ISSUE:

Whether plaintiffs are entitled to their share out of such profit?

RULLING:

No, as a general rule, when a partner retires from the firm, he is entitled to the payment
of what may be due him after liquidation. But certainly no liquidation is necessary where there
is already settlement or an agreement as to what the instant case; it appears that a settlement
was agreed upon on the very day the partnership was dissolved. When the Plaintiffs and Jaime
Reyes withdrew from the partnership on that day they did so as agreed to by all the partners,
subject to the only condition that they were to be repaid their contribution or investment
within 3 days from said date. This condition was fulfilled.
 ANG PUE CO. VS. SEC. OF COMMERCE & INDUSTRY

FACTS:

Ang Pue and Tan Siong, organized the partnership Ang Pue and Company for a term of
5 years extendible by their mutual consent. The purpose of the partnership was to maintain
the business of general merchandising, buying and selling at wholesale and retail, particularly
of lumber, hardware and other construction materials for commerce, either native or foreign.
The articles were registered with SEC. RA 1180 was then enacted regulating the retail
business. Prior to the expiration of the 5 years term, but after enactment of RA 1180, the
partners already mentioned the original articles of part ownership so as to extend the term of
life of the partnership to another 5 years. The registration was refused by SEC on the ground
that the extension was in violation of RA 1180 stating that a partnership not wholly formed by
Filipinos could continue to engage in retail business until the expiration of its term.

ISSUE:

Whether And Pue Co. could extend the term of the partnership?

RULLING:

No. To organize a corporation or a partnership that could claim a juridical personality of

its own and transact business as such, is not a matter of absolute right but a privilege which
may be enjoyed only under such terms as the state may deem necessary to impose. The state,
through Congress, had the right to enact RA 1180 and to provide that only Filipinos and
concerns wholly owned by Filipinos may engage in retail business cannot be seriously
disputed. The provision was clearly intended to apply to partnership already existing at the
time of the enactment of the law is clearly showing by its provision giving them the right to
continue engaging in their retail business until the expiration of the term.