DELA CRUZ V NORTHERN THEATRICAL

FACTS:
In 1941 the Northern Theatrical Enterprises Inc. operated a movie house in Laoag,
Ilocos Norte and employed a certain Domingo de la Cruz as a special guard
assigned at the main entrance. In the afternoon of July 4, 1941, Benjamin Martin
(gate crasher) wanted to enter the movie house without a ticket but refused by De
la Cruz. The former (Martin) attacked De la Cruz with a bolo. De la Cruz defended
himself until he was cornered to save his life he shot Martin, which caused Martins
death. He was charged of homicide (Criminal Case No. 8449) of the Court of First
Instance of Ilocos Norte, but was granted a motion to dismiss on January 1943.
However, on July 8, 1947, he was again accused of homicide and was acquitted of
the charge. In both cases De la Cruz employed a lawyer to defend himself. He
demanded from Northern Theatrical Enterprises and to its three board members to
recover reimbursement for Atty. Conrado Rubios fees as well as moral damages, a
total of Php 15,000.00. Northern asked for the dismissal of the complaint. The CFI
after rejecting the theory of De la Cruz that he was an agent and such was entitled
to reimbursement of expenses incurred in connection with the agency.
ISSUE:

Whether the relationship was that of principal and agent?

Whether or not De la Cruz is entitled for reimbursement?

HELD:
NO. The Supreme Court held that the plaintiff was a mere employee hired to
perform a specific task or duty.
NO. In terms of his reimbursement, an employee who in the line of duty may
recover damages against his employer. However, the damages incurred consisting
of the payment of lawyers fee did not flow directly from the performance of his
duties.
TUAZON V. HEIRS OF BARTOLOME RAMOS
FACTS:
Respondents alleged that on a relevant date, spouses Tuazon purchased from
their predecessor-in-interest cavans of rice. That on the total number of cavans,
only a certain portion has been paid for. In payment thereof, checks have been
issued but on presentment, the checks were dishonored. Respondents alleged
that since spouses anticipated the forthcoming suit against them, they made

fictitious sales over their properties. As defense, the spouses averred that it was
the wife of Bartolome who effected the sale and that Maria was merely her agent in
selling the rice. The true buyer of the cavans was Santos. The spouses further
averred that when Ramos got the check from Santos, she took it in good faith and
didn't knew that the same were unfunded.
HELD:
First, there is no contract of agency.
If it was truly the intention of the parties to have a contract of agency, then
when the spouses sued Santos on a separate civil action, they should have
instituted the same on behalf and for the respondents. They didn't do so. The
filing in their own names negate their claim that they acted as
mere agents in selling the rice.
Second, the spouses are liable on the check.
As indorser, Tuazon warranted that upon due presentment, according to their
tenor, and that in case they were dishonored, she would pay the
corresponding amount. After the instrument is dishonored by non-payment,
indorsers cease to be merely secondarily liable. They became
principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed
against the maker before suing the indorser.
Santos is not an
indispensable party to the suit against the spouses.
Victorias Milling Co., Inc. vs. CA and Consolidated Sugar Corp., [G.R. #
117356]
Facts: St. Therese Merchandising (hereafter STM) regularly bought sugar from
petitioner Victorias Milling Co., Inc. In the course of their dealings, petitioner issued
several Shipping List/Delivery Receipts to STM as proof of purchases. Among these
was SLDR No. 1214M, which gave rise to the instant case. SLDR No. 1214M covers
25,000 bags of sugar. The transaction it covered was a "direct sale."
Thereafter, STM sold to private respondent Consolidated Sugar Corporation (CSC) its
rights in SLDR No. 1214M. That same day, CSC wrote petitioner that it had been
authorized by STM to withdraw the sugar covered by the SLDR. However, after
2,000 bags had been released, petitioner refused to allow further withdrawals of
sugar. CSC thus inquired when it would be allowed to withdraw the remaining
23,000 bags. In its reply, petitioner said that it could not allow any further
withdrawals of sugar because STM had already withdrawn all the sugar covered by
the cleared checks. Petitioner also noted that CSC had represented itself to be
STM's agent as it had withdrawn the 2,000 bags "for and in behalf" of STM.
As a result, CSC filed a complaint for specific performance. Petitioner's primary
defense a quo was that it was an unpaid seller for the 23,000 bags. Since STM had
already drawn in full all the sugar corresponding to the amount of its cleared
checks, it could no longer authorize further delivery of sugar to CSC. Petitioner also

contended that it had no privity of contract with CSC. Furthermore, the SLDRs
prescribed delivery of the sugar to the party specified therein and did not authorize
the transfer of said party's rights and interests.
The Trial Court rendered its judgment favoring the private respondent CSC. The
appellate court affirmed said decision but modified the costs against petitioner.
Issue: Whether or not the Court of Appeals erred in not ruling that CSC was an agent
of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.
Held: No. It is clear from Article 1868 that the basis of agency is representation. One
factor which most clearly distinguishes agency from other legal concepts is control;
one person - the agent - agrees to act under the control or direction of another - the
principal
That the authorization given to CSC contained the phrase "for and in our (STM's)
behalf" did not establish an agency. Ultimately, what is decisive is the intention of
the parties. That no agency was meant to be established by the CSC and STM is
clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been
"sold and endorsed" to it. The use of the words "sold and endorsed" means that STM
and CSC intended a contract of sale, and not an agency. Hence, on this score, no
error was committed by the respondent appellate court when it held that CSC was
not STM's agent and could independently sue petitioner.
Loadmasters Customs Services Inc. vs. Glodel Brokerage Corporation
Digested
LOADMASTERS CUSTOMS SERVICES, INC., vs. GLODEL BROKERAGE
CORPORATION and R&B INSURANCE CORPORATION, / G.R. No. 179446 /
January 10, 2011
FACTS:
The case is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court assailing the August 24, 2007 Decision of the Court of Appeals (CA) in
CA-G.R. CV No. 82822.
On August 28, 2001, R&B Insurance issued Marine Policy No. MN00105/2001 in favor of Columbia to insure the shipment of 132 bundles of electric
copper cathodes against All Risks. On August 28, 2001, the cargoes were shipped
on board the vessel "Richard Rey" from Isabela, Leyte, to Pier 10, North Harbor,
Manila. They arrived on the same date.
Columbia engaged the services of Glodel for the release and withdrawal of
the cargoes from the pier and the subsequent delivery to its warehouses/plants.
Glodel, in turn, engaged the services of Loadmasters for the use of its delivery
trucks to transport the cargoes to Columbias warehouses/plants in Bulacan and
Valenzuela City.
The goods were loaded on board twelve (12) trucks owned by Loadmasters,
driven by its employed drivers and accompanied by its employed truck helpers. Of
the six (6) trucks route to Balagtas, Bulacan, only five (5) reached the destination.
One (1) truck, loaded with 11 bundles or 232 pieces of copper cathodes, failed to
deliver its cargo.

Later on, the said truck, was recovered but without the copper cathodes.
Because of this incident, Columbia filed with R&B Insurance a claim for insurance
indemnity in the amount ofP1,903,335.39. After the investigation, R&B Insurance
paid Columbia the amount ofP1,896,789.62 as insurance indemnity.
R&B Insurance, thereafter, filed a complaint for damages against both
Loadmasters and Glodel before the Regional Trial Court, Branch 14, Manila (RTC), It
sought reimbursement of the amount it had paid to Columbia for the loss of the
subject cargo. It claimed that it had been subrogated "to the right of the consignee
to recover from the party/parties who may be held legally liable for the loss."
On November 19, 2003, the RTC rendered a decision holding Glodel liable for
damages for the loss of the subject cargo and dismissing Loadmasters counterclaim
for damages and attorneys fees against R&B Insurance.
Both R&B Insurance and Glodel appealed the RTC decision to the CA.
On August 24, 2007, the CA rendered that the appellee is an agent of
appellant Glodel, whatever liability the latter owes to appellant R&B Insurance
Corporation as insurance indemnity must likewise be the amount it shall be paid by
appellee Loadmasters. Hence, Loadmasters filed the present petition for review on
certiorari.
ISSUE:
Whether or not Loadmasters and Glodel are common carriers to determine their
liability for the loss of the subject cargo.
RULING:
The petition is PARTIALLY GRANTED. Judgment is rendered declaring petitioner
Loadmasters Customs Services, Inc. and respondent Glodel Brokerage Corporation
jointly and severally liable to respondent
Under Article 1732 of the Civil Code, common carriers are persons, corporations,
firms, or associations engaged in the business of carrying or transporting passenger
or goods, or both by land, water or air for compensation, offering their services to
the public. Loadmasters is a common carrier because it is engaged in the business
of transporting goods by land, through its trucking service. It is a common carrier as
distinguished from a private carrier wherein the carriage is generally undertaken by
special agreement and it does not hold itself out to carry goods for the general
public. Glodel is also considered a common carrier within the context of Article
1732. For as stated and well provided in the case of Schmitz Transport & Brokerage
Corporation v. Transport Venture, Inc., a customs broker is also regarded as a
common carrier, the transportation of goods being an integral part of its business.
Loadmasters and Glodel, being both common carriers, are mandated from the
nature of their business and for reasons of public policy, to observe the
extraordinary diligence in the vigilance over the goods transported by them
according to all the circumstances of such case, as required by Article 1733 of the
Civil Code. When the Court speaks of extraordinary diligence, it is that extreme
measure of care and caution which persons of unusual prudence and
circumspection observe for securing and preserving their own property or rights.
With respect to the time frame of this extraordinary responsibility, the Civil Code
provides that the exercise of extraordinary diligence lasts from the time the goods
are unconditionally placed in the possession of, and received by, the carrier for

transportation until the same are delivered, actually or constructively, by the carrier
to the consignee, or to the person who has a right to receive them.
The Court is of the view that both Loadmasters and Glodel are jointly and severally
liable to R & B Insurance for the loss of the subject cargo. Loadmasters claim that it
was never privy to the contract entered into by Glodel with the consignee Columbia
or R&B Insurance as subrogee, is not a valid defense.
For under ART. 2180. The obligation imposed by Article 2176 is demandable not only
for ones own acts or omissions, but also for those of persons for whom one is
responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry.
It is not disputed that the subject cargo was lost while in the custody of
Loadmasters whose employees (truck driver and helper) were instrumental in the
hijacking or robbery of the shipment. As employer, Loadmasters should be made
answerable for the damages caused by its employees who acted within the scope of
their assigned task of delivering the goods safely to the warehouse.
Glodel is also liable because of its failure to exercise extraordinary diligence. It
failed to ensure that Loadmasters would fully comply with the undertaking to safely
transport the subject cargo to the designated destination. Glodel should, therefore,
be held liable with Loadmasters. Its defense of force majeure is unavailing.
For the consequence, Glodel has no one to blame but itself. The Court cannot come
to its aid on equitable grounds. "Equity, which has been aptly described as a justice
outside legality, is applied only in the absence of, and never against, statutory law
or judicial rules of procedure." The Court cannot be a lawyer and take the cudgels
for a party who has been at fault or negligent.
Westmont Investment Corp. v Francia
FACTS:
Amos Francia, convinced by the bank manager of Westmont Bank, made an
investment in Westmont Investment. Amos also invited his siblings to join in the
investment since the interest rate offered was impressive. They invested an
aggregate amount of P3.9M. When the Francia siblings demanded the retirement of
their investment on its maturity, Westmont Investment told them that they have no
funds at the moment and requested for an extension. They also advised the
Francias that their money was borrowed by Pearlbank. When the period of extension
given to Westmont Investment expired, they were still not able to pay the Francias
resulting to a suit filed by the latter against Westmont Investment, impleading
Pearlbank as well in the complaint. Westmont Investment contends that they were
merely acting as an agent of Pearlbank which authorized
them to borrow money on its behalf. They averred that they merely brokered a
loan transaction between
Pearlbank and the Francias. Westmont provided documents to support their claim
showing that Pearlbank borrowed an amount equivalent to the investment of the
Francias.
ISSUE:
Whether or not Westmont Investment is an agent of Pearlbank.

HELD:
No. The fact that Pearlbank questioned Westmont Investments practice of naming
Pearlbank as a borrower of certain investments made by other investors with
Westmont Investment only shows that
AUTHORITY from Pearlbank is absent. The evidence presented is not sufficient to
prove that Westmont Investment was authorized by Pearlbank to borrow money for
it and that an agency existed therefrom. Neither was there a ratification, expressly
or impliedly, that it had authorized or consented to said transaction. Also, the
Francias had no personal knowledge of Pearlbank. The Francias maintained that
they only transacted with Westmont Investment and Pearlbank was never
mentioned by Westmont Investment until the time they knew that the latter does
not have any funds pointing then Pearlbank as the borrower of their investment.
The fact that the Francias impleaded Pearlbank in their suit does not defeat the fact
that they only transact with Westmont Investment. They only did so to protect their
interest when they found out that Westmont was already bankrupt.
Soriamont Steamship Agencies Inc. & Ronas v Sprint Transport Services, &
Papa

Sprint filed for a complaint for a sum of money against Soriamont and Ronas

Subject 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 thecontainer 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
anagency 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 liablefor the loss of the subject equipment, since PTS acted
beyond its authority asagent. Soriamont cites Article 1897 of the Civil Code, which
provides: Art. 1897. The agent who acts as such is not personally liable tothe party
with whom he contracts, unless he expressly binds himself orexceeds the limits of
his authority without giving such party sufficientnotice of his powers. The burden
falls upon Soriamont to prove its affirmative allegation that PTSacted in any manner
in excess of its authority as agent, thus, resulting in the loss ofthe subject
equipment. To recall, the subject equipment was withdrawn and used byPTS 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 bySoriamont.
As the Court of Appeals and the RTC found, however, Soriamont did notadduce any
evidence at all to prove said allegation.
J-PHIL MARINE, INC. v. NLRC
G.R. No. 175366; August 11, 2008
Ponente: J. Carpio-Morales
FACTS:
Warlito E. Dumalaog (respondent), who served as cook aboard vessels plying
overseas, filed on March 4, 2002 before the National Labor Relations Commission
(NLRC) a pro-forma complaint against petitioners manning agency J-Phil Marine,
Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman

Shipping Services for unpaid money claims, moral and exemplary damages, and
attorney's fees.
Respondent's total claim against petitioners was P864,343.30 plus P117,557.60
representing interest and P195,928.66 representing attorney's fees
By Decision of August 29, 2003, Labor Arbiter Fe Superiaso-Cellan dismissed
respondent's complaint for lack of merit.
On appeal, the NLRC, by Decision of September 27, 2004, reversed the Labor
Arbiter's decision.
During the pendency of the case before the Supreme Court, respondent, against the
advice of his counsel, entered into a compromise agreement with petitioners. He
thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor
Arbiter.
ISSUE:
Whether the act of Dumalaog in entering into a compromise agreement without the
assistance of a counsel is proper
HELD:
Yes, the act of Dumalaog in entering into a compromise agreement without a lawyer
is proper.
The Supreme Court held that the relation of attorney and client is in many respects
one of agency, and the general rules of agency apply to such relation. The acts of
an agent are deemed the acts of the principal only if the agent acts within the scope
of his authority. The circumstances of this case indicate that respondent's counsel is
acting beyond the scope of his authority in questioning the compromise agreement.
Dumalaog has undoubtedly the right to compromise a suit without the intervention
of his lawyer cannot be gainsaid, the only qualification being that if such
compromise is entered into with the intent of defrauding the lawyer of the fees
justly due him, the compromise must be subject to the said fees.
In the case at bar, there is no showing that respondent intended to defraud his
counsel of his fees.
Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente
Pedrosa, TeresitaPedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008Quisumbing, J.
FACTS:

Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued by

Filipinas LifeAssurance Co. Pedroso claims Renato Valle was her insurance agent
since 1972 and Valle collectedher monthly premiums. In the first week of January
1977, Valle told her that the Filipinas Life EscoltaOffice was holding a promotional

investment program for policyholders. It was offering 8% prepaidinterest a month

for certain amounts deposited on a monthly basis. Enticed, she initially investedand
issued a post-dated check for P10,000. In return, Valle issued Pedroso his personal
check forP800 for the 8% prepaid interest and a Filipinas Life Agent receipt.

Pedroso called the Escolta office and talked to Francisco Alcantara, the
administrative assistant, whoreferred her to the branch manager, Angel Apetrior.
Pedroso inquired about the promotionalinvestment and Apetrior confirmed that
there was such a promotion. She was even told she couldpush through with the
check she issued. From the records, the check, with the endorsement of Alcantara
at the back, was deposited in the account of Filipinas Life with the Commercial Bank
and Trust Company, Escolta Branch.

Relying on the representations made by Filipinas Lifes duly authorized

representatives Apetrior andAlcantara, as well as having known agent Valle for quite
some time, Pedroso waited for the maturityof her initial investment. A month after,
her investment of P10,000 was returned to her after shemade a written request for
its refund. To collect the amount, Pedroso personally went to the Escoltabranch
where Alcantara gave her the P10,000 in cash. After a second investment, she
made 7 to 8more investments in varying amounts, totaling P37,000 but at a lower
rate of 5% prepaid interest amonth. Upon maturity of Pedrosos subsequent
investments, Valle would take back from Pedroso thecorresponding agents receipt
he issued to the latter.

Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance policyholder,
about theinvestment plan. Palacio made a total investment of P49,550 but at only
5% prepaid interest.However, when Pedroso tried to withdraw her investment, Valle
did not want to return some P17,000worth of it. Palacio also tried to withdraw hers,
but Filipinas Life, despite demands, refused to returnher money.
ISSUE:
WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the
claim of Pedroso and Palacio or WON its agent Renato Valle is solely liable to
Pedroso and Palacio
HELD:

Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were
received by Valleand remitted to Filipinas Life, using Filipinas Lifes official receipts.
Valles authority to solicit andreceive investments was also established by the
parties. When Pedroso and Palacio soughtconfirmation, Alcantara, holding a
supervisory position, and Apetrior, the branch manager, confirmedthat Valle had
authority. While it is true that a person dealing with an agent is put upon inquiry
andmust discover at his own peril the agents authority, in this case, Pedroso and
Palacio did exercisedue diligence in removing all doubts and in confirming the
validity of the representations made byValle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle.
By the contract of agency, a person binds himself to render some service or to do
something in representation or onbehalf of another, with the consent or authority of
the latter. The general rule is that the principal isresponsible for the acts of its agent
done within the scope of its authority, and should bear thedamage caused to third
persons. When the agent exceeds his authority, the agent becomespersonally liable

for the damage. But even when the agent exceeds his authority, the principal is
stillsolidarily liable together with the agent if the principal allowed the agent to act
as though the agenthad full powers. The acts of an agent beyond the scope of his
authority do not bind the principal,unless the principal ratifies them, expressly or
impliedly.

Ratification
adoption or confirmation by one person of an act performed on his behalf by
anotherwithout authority

Even if Valles representations were beyond his authority as a debit/insurance

agent, Filipinas Lifethru Alcantara and Apetrior expressly and knowingly ratified
Valles acts. Filipinas Life benefited fromthe investments deposited by Valle in the
account of Filipinas Life