09-29-2018 Agency Digests.docx

Balboa

Issue: Whether or not the respondents were Medrano and the bank’s agents

BIENVENIDO R. MEDRANO and IBAAN RURAL BANK, petitioners, vs. COURT OF APPEALS, PACITA G. BORBON, JOSEFINA E. ANTONIO and ESTELA A. FLOR, respondents.

Ruling: YES.

DOCTRINE: “Procuring cause” is meant to be the proximate cause. The term “procuring cause,” in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker— producing a purchaser ready, willing and able to buy real estate on the owner’s terms. A broker will be regarded as the “procuring cause” of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begunThe means employed by him and his efforts must result in the sale. Agent: Pacita Borbon, Josefina Antonio, Estela Flor Principal: Medrano/Ibaan Rural Bank. Facts: Medrano was the vice-Chairman of Ibaan Rural Bank, a bank owned by the Medrano family. Medrano asked Flor, a cousin in law, to look for a buyer of a foreclosed asset of the bank, a mango plantation in Ibaan, Batangas. Dominador Lee was a businessman who was a client of Borbon. Lee expressed that he preferred a land with mango trees. Borbon relayed to her business associates and friends that she had a ready buyer for a mango orchard. Flor then advised her that her cousin-in-law owned a mango plantation which was up for sale. Borbon told Flor to confer with Medrano and to give them a written authority to negotiate the sale of the property. Medrano did so. Lee inspected the property on his own and was instructed to get in touch with Ganzon regarding the property. Subsequently, Lee bought the land and Antonio found out about the sale. The respondents asked from the petitioners their commission, or the 5% of the purchase price stated in the written authority. Petitioners refused to give 5% and offered a measly sum of 5K PHP each. Hence, respondents filed an action against petitioners. Agent’s theory: Respondents were entitled to their commission. Principal’s theory: The petitioners refuse to pay them commission, asserting that they are not the efficient procuring cause of the sale, and that the letter of authority signed by petitioner Medrano is not binding against the petitioners.

Procuring cause The records disclose that respondent Pacita Borbon is a licensed real estate broker and respondents Josefina Antonio and Estela A. Flor are her associates. A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some purposes the agent of both parties. A broker is one whose occupation is to bring parties together, in matters of trade, commerce or navigation. “Procuring cause” is meant to be the proximate cause. The term “procuring cause,” in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy real estate on the owner’s terms. A broker will be regarded as the “procuring cause” of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun. The means employed by him and his efforts must result in the sale. Indeed, the evidence on record shows that the respondents were instrumental in the sale of the property to Lee. Without their intervention, no sale could have been consummated. The fact that it was Lee who personally called Borbon and asked for directions prove that it was only through the respondents that Lee learned about the property for sale. Significantly, too, Ms. Teresa Ganzon testified that there were no other persons other than the respondents who inquired from her about the sale of the property to Lee. It can thus be readily inferred that the respondents were the only ones who knew about the property for sale and were responsible in leading a buyer to its consummation. The petitioners insist that the respondents are not entitled to any commission since they did not actually perform any acts of “negotiation” as required in the letter authority.

The letter of authority must be read as a whole and not in its truncated parts. Certainly, it was not the intention of Medrano to expect the respondents to do just that (to negotiate) when he issued the letter of authority. The clear intention is to reward the respondents for procuring a buyer for the property. Before negotiating a sale, a broker must first and foremost bring in a prospective buyer. It has been held that a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. The essential feature of a broker’s conventional employment is merely to procure a purchaser for a property ready, able, and willing to buy at the price and on the terms mutually agreed upon by the owner and the purchaser. And it is not a prerequisite to the right to compensation that the broker conduct the negotiations between the parties after they have been brought into contact with each other through his efforts. While it may be true that the Ibaan Rural Bank did not authorize Medrano to sell the land, note that Medrano was former president of the said bank. By reason of his past association with the officers of the said bank (who are, in fact, his relatives), it is unbelievable that Bienvenido R. Medrano could simply have issued the said letter of authority without the knowledge of the said officers. Dispositive: Petition DENIED.

Ballesteros Inland Realty Investment Service, Inc., Roman de los Reyes v. Court of Appeals, Araneta, Inc., Amado Eduque Doctrine: The Court of Appeals cannot be faulted for emphasizing the lapse of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale to Stanford, to be a significant index of petitioners' non-participation in the really critical events leading to the consummation of said sale, i.e., the negotiations to convince Stanford to sell at Araneta, Inc.'s asking price, the finalization of the terms and conditions of the sale, the drafting of the deed of sale, the processing of pertinent documents, and the delivery of the shares of stock to Stanford. Certainly, when the lapse of the period of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale, is viewed in the context of the utter lack of evidence of petitioners' involvement in the negotiations between Araneta, Inc. and Stanford during that period and in the subsequent processing of the documents pertinent to said sale, it becomes undeniable that the respondent Court of Appeals did not at all err in affirming the trial court's dismissal of petitioners' claim for unpaid brokerage commission. Petitioners were not the efficient procuring cause in bringing about the sale in question on July 8, 1977 and are, therefore, not entitled to the stipulated broker's commission of "5% on the total price.

Agent: Inland Realty, Roman de los Reyes Principal: Araneta, Inc, Amado Eduque Third Person: Stanford Microsystems Facts of the Case 1. Petitioner is a corporation engaged in real estate business. On 16 Sept.1975, It was granted by respondents within a 30-day period to sell its share of stock in Architects Bldg. through petitioner R.M. de los Reyes. 2. Inland Realty represented by (Roman de los Reyes) send to one of its prospective buyers, Stanford Microsystems, an offer of said sale of stocks. Stanford Microsystems answered with a counter-offer. However, petitioner

opposed because the counter-offer was too low. Petitioner then asked through respondent de los Reyes if the price can be adjusted. This resulted for the period of the contract to be extended three times: the first being on October 2, 1975, for 30 days from said date, the second on October 28, 1975 for 30 days from said date and on December 2, 1975 for 30 days from said date. 3. Petitioner de los Reyes asked if he can be given and for a longer period but Armando Eduque would not give, but according to this witness, the life of the authority could always be extended for the purpose of negotiation that would be continuing. 4. On 8 July 1977, petitioners finally sold the shares of stock in favor of Stanford Microsystems. Therefore, petitioners demanded formally from defendants, through a letter of demand, for payment of broker’s commission at 5%. The same was denied by defendants on the ground that the claim has no factual or legal basis. 5. Respondents contend that the authority to sell expired thirty (30) days from December 2, 1975, or on January 1, 1976, petitioners abandoned the sales transaction and were no longer privy to the consummation and documentation thereof, the trial court dismissed petitioners' complaint for collection of unpaid broker's commission.

authority to sell. They also failed to produce an efficient cause in brining about the sale in question. a. Petitioners claim that the letter dated 28 Oct. 1976 was for the renewal of Inland Realty’s authority to act as agent to sell for the shares of stock. However, said letter is fraudulent because petitioners have failed to produce a certified copy of the letter and they do not even have a machine copy. b. Petitioners also contend that regardless whether or not their authority to sell had expired, they are automatically entitled to broker’s commission upon securing and introducing Stanford to respondents. In this regard, petitioners only submit Stanford’s name as a prospective buyer. They failed outrightly in selling the said shares under the predetermined conditions set by respondent. Disposition: DENIED

Chua National Brewery & Allied Industries Labor Union of the Philippines v. San Miguel Brewery, Inc., The Independent San Miguel Brewery Workers’ Association, and all other known non-union workers of the San Miguel Brewery, Inc.

6. On appeal, the Court of Appeals ruled that there was no longer any agency after the last extension. The length of time which had transpired from the date of last extension of authority to the final consummation of the sale with Stanford of about one (1) year and 5ve (5) months without any communication at all from plaintiffs to defendants with respect to the suggestion of defendants that Stanford's offer was too low and suggested if plaintiffs may make it better. We have a case of proposal and counter-proposal which would not constitute a definite closing of the transaction just because it was plaintiff who solely suggested to defendants the name of Stanford as buyer.

Agent: National Brewery & Allied Industries Labor Union of the Philippines

Issue/s

Principal: San Miguel Brewery workers

1.

Is petitioner Inland Realty entitled to brokerage fees?

Ruling 1. Petitioner is not entitled to the brokerage fees. There was no express authority given by the respondents for the extension of the 30-day period of

DOCTRINE: A union that obtains benefits for all members of a company is not entitled to receive an agency fee from non-members. Agency is presumed to be for compensation unless there is proof to the contrary.

Facts: National Brewery & Allied Industries Labor Union of the Philippines (Labor Union) is the bargaining representative of regular workers paid on the daily basis and of route helpers of San Miguel Brewery (San Miguel). It signed a collective bargaining agreement with San Miguel, providing that San Miguel will deduct a union agency fee from the wages of workers who are not members of the union, provided that they authorize San Miguel to make such

deductions in writing, or if a competent court directs San Miguel to make such deductions. Labor Union alleges that it had obtained benefits for all workers of San Miguel, but the Independent San Miguel Workers’ Association (Workers’ Association) and San Miguel refused to deduct the union agency fee from the wages of workers who are not members of the Labor Union. Labor Union then filed for the collection of union agency fees under the bargaining contract with the CFI of Manila. The lower court dismissed the complaint, stating that there is nothing in the Industrial Peace Act that authorizes the collection of agency fees, and neither can they be justified under the rules of quasi contract because the workers had not neglected their business so as to warrant the intervention of an officious manager. The rules of agency are also inapplicable because there was no agreement between the union and the workers belonging as to the payment of fee, nor any allegation in the complaint that the amount the union sought to collect from each employee was the expense incurred by the union in representing him. Agent’s theory: Labor Union is entitled to a union fee for benefits that it obtained for all San Miguel workers. Issue: Whether Labor Union is entitled to the union agency fee sought from the workers who are not part of the union Ruling: No. Under the Industrial Peace Act, the right of employees "to self-organization and to form, join or assist labor organizations of their own choosing" is a fundamental right that yields only to the proviso that "nothing in this Act or statute of the Republic of the Philippines shall preclude an employer from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees.” The Court cites the case of General Motors Corp., where it upheld the principle that where the parties are not free to require employees to be a member of a union as a condition of employment, neither can they require a lesser form of union security, such as an agency fee.

While it is true that whatever benefits the majority union obtains from the employer accrue to its members as well as to nonmembers, it does not justify the collection of agency fee from non-members. There is no unjust enrichment due to the benefits that accrue to nonmembers by reason of a collective bargaining agreement because the benefits are extended to them precisely to avoid discrimination among employees. The collection of agency fee is neither justified on the principle of agency. When a union acts as the bargaining agent, it assumes the responsibility imposed upon it by law to represent not only its members but all employees in the appropriate bargaining unit of which it is the agent. The Civil Code states that agency is presumed to be for compensation unless there is proof to the contrary. There can be no better proof that the agency created by law between the bargaining representative and the employees in the unit is without compensation than the fact that these employees in the minority voted against the appellant union. Thus, Labor Union is not entitled to the agency fee. Dispositive: Petition/Appeal is GRANTED/DENIED.

Jackson CONSEJO INFANTE, petitioner, vs. JOSE CUNANAN, JUAN MIJARES and THE COURT OF APPEALS, SECOND DIVISION, respondents DOCTRINE: A principal may withdraw the authority given to an agent at will. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without according to the party prejudiced the reward which is due him. Agent: Jose Cunanan and Juan Mijares Principal: Consejo Infante Third party: Pio S. Noche Facts: Consejo Infante contracted the services of Jose Cunanan and Juan Mijares, to sell her two parcels of land, together with a house built thereon for a price of P30,000 subject to the condition that the purchaser would assume

the mortgage existing thereon in the favor of the Rehabilitation Finance Corporation. Infante agreed to pay them a commission of 5 per cent on the purchase price plus whatever overprice they may obtain for the property. Cunanan and Mijares found one Pio S. Noche who was willing to buy the property under the terms agreed upon with Infante, but when they introduced him to Infante, the latter informed them that she was no longer interested in selling the property. Infante also made Cunanan and Mijares sign a document stating therein that the written authority she had given them was already cancelled. Later on, Infante dealt directly with Pio S. Noche selling to him the property for P31,000. Upon learning this transaction, Cunanan and Mijares demanded from defendant the payment of their commission, but she refused and so they brought the present action. Infante admitted having contracted the services of Cunanan and Mijares to sell her property but stated that she agreed to pay them a commission of P1,200 only on condition that they buy her a property somewhere in Taft Avenue to where she might transfer after selling her property. Infante avers that while Cunanan and Mijares took steps to sell her property as agreed upon, they sold the property at Taft Avenue to another party and because of this failure it was agreed that the authority she had given them be cancelled. RTC ruled in favor of Cunanan and Mijares, which was affirmed by the CA. Agent’s theory: Respondents claim that while they agreed to cancel the written authority given to them, they did so merely upon the verbal assurance given by petitioner that, should the property be sold to their own buyer, Pio S. Noche, they would be given the commission agreed upon. Principal’s theory: Infante contends that authority has already been withdrawn when, by the voluntary act of respondents, they executed a document stating that said authority shall be considered cancelled and without any effect, so that when petitioner sold the property to Pio S. Noche, she was already free from her commitment with respondents and, therefore, was not in duty bound to pay them any commission for the transaction.. Third person’s theory: N/A Issue: Whether or not Infante has the obligation to pay Cunanan and Mijares.

Ruling: YES. There is enough justification to conclude that respondents are entitled to the commission originally agreed upon. A principal may withdraw the authority given to an agent at will. That petitioner had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the petitioner. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without according to the party prejudiced the reward which is due him. Petitioner took advantage of the services rendered by respondents but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commission agreed upon. Dispositive: Petition/Appeal is GRANTED/DENIED

Lopez Antonio PRATS doing business under the name of Phil. Real Estate Exchange VS. CA, Alfonso DORONILA and Philippine National Bank (PNB) DOCTRINE: The offer of defendant Doronila to sell the subject land to the Social Security System (SSS) was formally accepted by the SSS only after the exclusive authority granted by Doronila in favor of the petitioner had expired. The respondent court’s factual findings that petitioner was not the efficient procuring cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority) provide no basis in law to grant relief to petitioner. However, in equity, the Court notes that petitioner had taken steps to bring back together respondent and the SSS and that Doronila finally sold the property to the SSS at P3.25 per square meter which was the very same price counter-offered by the SSS and accepted by him when he alone was dealing exclusively with the said buyer long before Prats came into the picture. On

the other hand Prats’ efforts somehow were instrumental in bringing them together again and finally pushing with the transaction at the same price. Under the circumstances, the Court grants in equity Php100,000 by way of compensation for his efforts and assistance in the transaction.

RTC: Ruled in favor of the plaintiff and required Doronila to pay Prats 1.3M as his professional fee as real estate broker

Agent: Antonio PRATS, General Manager of Phil. Real Estate Exchange (PHILREX)

Agent’s theory: Prats brought SSS and Doronila together even before the expiry of Prats’ exclusive option and authority to negotiate the sale (Prats organized several luncheons with SSS and Doronila during the effectivity of and authority to negotiate the sale)

Principal: Alfonso DORONILA Third party: Social Security System (SSS) Facts: Alfonso Doronila was selling 300 hectares of land. For that purpose, Doronila designated several agents. Doronila had offered the same property to the Social Security System (SSS) but failed to consummate the sale and that his offer to sell to the SSS having failed, Doronila gave Antonio Prats an exclusive option and authority to negotiate the sale of said property.

CA: Reversed the decision of RTC and dismissed the case based on the ground that authority of appellee expired already

Principal’s theory: Prats should not be entitled to professional fee since the contract of sale was finalized and consummated after the expiry his exclusive authority to negotiate. Issue: WON Prats is entitled to professional fee as real estate broker

Thereafter, Doronila wrote a letter to the SSS withdrawing his previous offer to sell the same land and requesting the return to him of all papers concerning his offered property. SSS complied with said request of defendant Doronila and gave these papers to Prats as his duly authorized real estate broker.

Ruling: PRATS IS ENTITLED TO A COMPENSATION OF PHP 100,000 ONLY. Defendant Doronila offer to sell the subject land to SSS was formally accepted only after the exclusive authority of Prats had expired. The court’s factual findings that petitioner was not the efficient procuring cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority) provide no basis in law to grant relief to petitioner.

Plaintiff immediately worked to negotiate the sale of defendant Doronila’s land to the SSS, making the necessary contacts and representations to bring the parties together, namely, the owner and the buyer, and bring about the ultimate sale of the land by defendant Doronila to SSS. However, Prats’ exclusive option and authority to negotiate the sale if said property expired. After expiring, SSS made a counter-offer of P3.25 per square meter which Doronila accepted. Thereafter, Doronila and SSS executed the corresponding deed of absolute sale.

The Court has noted that Doronila finally sold the property to the SSS at the very same price counter-offered by the SSS and accepted by him when he alone was dealing exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats’ efforts somehow were instrumental in bringing them together again and finally consummating the transaction at the same price, although such finalization was after the expiration of Prats’ extended exclusive authority. Still, such price was higher than that stipulated in the exclusive authority granted by Doronila to Prats.

Plaintiff Prats demanded from Doronila the payment of his professional fee as real estate broker. However, Doronila refused to pay the professional fees of Prats on the ground that the contract of sale with SSS was closed after the expiry of his exclusive option and authority to negotiate the sale with Prats expired. Doronila claims that he had not received any written offer from any prospective buyers of the plaintiff during the agreed period of 60 days until the last day of the authorization and that it is not true that plaintiff brought together defendant Doronila and the officials of the SSS.

In equity the Court notes that petitioner had diligently taken steps to bring back together respondent Doronila and the SSS. Dispositive: Court grants in equity the sum of One Hundred Thousand Pesos by way of compensation for Prats’ efforts and assistance in the transaction, which however was finalized and consummated after the expiry his exclusive authority.

Palenzuela UNILAND RESOURCES, petitioner, vs. DEVELOPMENT BANK OF THE PHILIPPINES, respondent. DOCTRINE: The basic axiom in Civil Law that no one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him (Art. 1317, Civil Code). From this principle, among others, springs the relationship of agency which, as with other contracts, is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the latter in turn consents to render service on behalf or in representation of the principal.

Agent: Uniland Resources Principal: DBP Facts: Marinduque Mining Corp. (MMC) obtained a loan from respondent bank DBP and mortgaged a warehouse lot and an office bldg. previously mortgaged by MMC to Caltex, and the mortgage in favor of DBP was entered on their titles as a second mortgage. The account of MMC with DBP was later transfereed to the Assets Privitization Trust (APT). MMC failed to pay its obligation prompting Caltex to foreclose on its mortgage. APT on the other hand offered to sell to the public through DBP its right of redemption on said two lots by public bidding. DBP subsequently retrieved the account from APT and redeemed said lots from Caltex. A public bidding for the sale of the two lots was held and the warehouse lot was sold to Charges Realty Corp. The office building lot was later sold by DBP to a different buyer. After the aforesaid sale, Uniland Resources sent two letters to DBP asking for the payment of its broker's fee in instrumenting the sale of the warehouse lot to Charges Realty Corp. Uniland filed a case to recover from DBP the broker's fee.

Ruling 1: NO. It is a well-settled rule that the contract of Agency is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the latter in turn consents to render service on behalf or in representation of the principal. In the case at bar, there was no contract of agency, express or implied. The petitioner was never able to secure the required accreditation from respondent DBP to transact business on behalf of the latter. It was always made clear to petitioner that only accredited brokers may look for buyers on behalf of respondent DBP. Issue 2: Whether or not petitioner may be granted equity consideration for consummating the sale even without authority to broker the transaction from respondent. Ruling 2: YES. Through petitioner, respondent DBP was directly informed of the existence of an interested buyer. Petitioner's persistence in communicating with respondent DBP reinforced the seriousness of the offer. This piece of information no doubt had a bearing on the subsequent decisions made by respondent DBP as regards the disposition of its properties. In equity, respondent DBP is ordered to pay petitioner the amount of One Hundred Thousand Pesos (P100,000.00). Dispositive: Appeal is GRANTED with modifications.

Manotok Manotok Brothers Inc. v. Court of Appeals DOCTRINE: When there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission.

RTC ordered DBP to pay the broker’s fee to the petitioner. On appeal, the Court of Appeals reversed the judgment of the lower court.

Facts:

Issue 1: Whether or not there was a contract of agency between DBP and Uniland in the sale of the warehouse lot.

Manotok Brothers, Inc. (petitioner) owns land and building that he leased to City of Manila and is being used by the Claro M. Recto High School.

Petitioner authorizes Salvador Saligumba (private respondent) to negotiate with the City of Manila the sale of the aforementioned property and promises private respondent 5% commission when sale is consummated. Petitioner executed another letter to extend the authority of private respondent for another 120 days. The Municipal Board of the City of Manila eventually, on April 26, 1968, passed Ordinance No. 6603, appropriating money for the purchase of the property which private respondent was authorized to sell. Said ordinance however, was signed by the City Mayor only on May 17, 1968, one hundred eighty three (183) days after the last letter of authorization. Petitioner received the full payment of the purchase price, but private respondent did not receive a single centavo as commission Agent Salvador Saligumba Theory/Claim Petitioner alleges that he had successfully negotiated the sale of the property. He claimed that it was because of his efforts that the Municipal Board of Manila passed Ordinance No. 6603 which appropriated the sum for the payment of the property subject of the sale. Principal Manotok Brothers, Inc. Theory/Claim Petitioner denies the claim of private respondent on the following grounds: (1) private respondent would be entitled to a commission only if the sale was consummated and the price paid within the period given in the respective letters of authority; and (2) private respondent was not the person responsible for the negotiation and consummation of the sale, instead it was Filomeno E. Huelgas, the PTA president for 1967-1968 of the Claro M. Recto High School.

Issue: Whether or not private respondent is entitled to the five percent agent’s commission? Ruling: YES. Private respondent is entitled to five percent agent’s commission.

At first sight, it would seem that private respondent is not entitled to any commission as he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired. By this alone, one might be misled to believe that this case squarely falls within the ambit of the established principle that a broker or agent is not entitled to any commission until he has successfully done the job given to him. Going deeper however into the case would reveal that it is within the coverage of the exception rather than of the general rule. When there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission; despite the expiration of his authority, when a sale was finally consummated. We agree with respondent Court that the City of Manila ultimately became the purchaser of petitioner's property mainly through the efforts of private respondent. The efforts of private respondent to ensure the consummation of the sale include: 1. He set a meeting to negotiate the sale and lot and building to the City of Manila with Rufino Manotok at the office of Fructuoso Ancheta, principal of C.M. Recto High School. 2. Private respondent then went to Councilor Mariano Magsalin, the author of the Ordinance which appropriated the money for the purchase of said property, to present the project. He also went to the Assessor's Office for appraisal of the value of the property. 3. After securing the report of the appraisal committee, he went to the City Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila. The latter office approved the report and so private respondent went back to the City Mayor's Office, which thereafter indorsed the same to the Municipal Board for appropriation. Without discounting the fact that when Municipal Ordinance No. 6603 was signed by the City Mayor on May 17, 1968, private respondent's authority had already expired, it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's authorization was still in force. Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's authority. It is also worth emphasizing that from the records, the

only party given a written authority by petitioner to negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent. While it may be true that Filomeno Huelgas followed up the matter with Councilor Magsalin, the author of Municipal Ordinance No. 6603 and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed — when the buyer has already agreed to the purchase and to the price for which said property is to be paid. Without the efforts of private respondent then, Mayor Villegas would have nothing to approve in the first place. It was actually private respondent's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated.

Lessee Lapid in turn sub-leased the fishpond to Lopez for Php 50,000 during the last seven months of the original lease. Respondent Salenga was hired by Lapid as fishpond watchman. In the sub-lease, Lopez rehired respondent Salenga. On March 11, 1993, respondent Salenga, through a certain Lagman, sent a demand letter to Lopez and Lapid for unpaid salaries and non-payment of the 10% share in the harvest. Lopez then wrote a letter to respondent Salenga informing the latter that for the last two months of the sub-lease, he had given the rights over the fishpond to a certain Mario Palad and Ambit Perez for Php 20,000.

Dispositive: Petition is DENIED.

Sabado Antonio B. Baltazar v. Ombudsman Eulogio M. Mariano, et al. (2006) Doctrine: Agency cannot be further delegated. What is allowed under Art. 1892 is a substitute---not a delegation---of the agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former.

Agent: Faustino Mercado Agent of the Agent: Antonio B. Baltazar Principal: Pacencia Regala Third Party:

This prompted respondent Salenga to file a Complaint before the Provincial Agrarian Reform Adjudication Board (PARAB), against Lopez and. Lapid for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of Harvest. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB, Pampanga. Salenga made several amendments in his complaint including the issuance of a TRO and preliminary injunction. The prayer for the issuance of a restraining order was allowed, since the motion was unopposed. After the trial, Ilao, Jr. dismissed the Complaint for lack of merit but respondent Salenga, appealed the decision before the DARAB Appellate Board. Pending resolution of the agrarian case, a case was instituted by petitioner Antonio Baltazar, an alleged nephew of Mercado, against private respondents Ombudsman Mariano, Jimenez, Jr., Ilao, Jr. and Salenga before the Office of the Ombudsman for conspiracy through the issuance of the TRO in allowing respondent Salenga to retain possession of the fishpond, operate it, harvest the produce, and keep the sales under the safekeeping of other private respondents.

Facts:

Moreover, Baltazar maintains that respondent Ilao, Jr. had no jurisdiction to hear and act on the DARAB Case filed by respondent Salenga as there was no tenancy relation between respondent Salenga and Lopez, and thus, the complaint was dismissible on its face.

Regala owns a seven-hectare fishpond in Pampanga. Her Attorney-in-Fact, Mercado, leased the fishpond for Php 230,000 to Lapid for a three-year period from August 7, 1990 to August 7, 1993.

The Ombudsman issued a Resolution finding cause to bring respondents to court. Consequently, the Information was filed against all the private respondents before the Sandiganbayan.

Before the graft court, respondent Ilao, Jr. filed his MR which was granted. He then filed his Counter-Affidavit while petitioner Baltazar did not file any replyaffidavit despite notice to him. The OSP of the Ombudsman conducted the reinvestigation and recommended the dismissal of the complaint in against all respondents. Upon review, the Ombudsman approved the OSPs recommendation. Consequently, the criminal case before the Sandiganbayan was also dismissed. Agent’s Theory: By virtue of an SPA, Baltazar is duly authorized by Mercado to institute the suit on the latter’s behalf. Agent of the Agent’s Theory: Baltazar is duly authorized by Mercado to institute the suit by virtue of an SPA from Mercado. Principal’s Theory: Third Person’s Theory:

(2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. While the Civil Code under Article 1892 allows the agent to appoint a substitute, such is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is clear in the aforecited Article that what is allowed is a substitute and not a delegation of the agency. Clearly, petitioner is not a real party in interest who will be benefited or injured by the results of the cases. Dispositive: Petition is Denied.

Issue: Whether or not Baltazar is duly authorized to institute the suit on behalf of Mercado? (Whether or not agency can be further delegated?) Ruling: No, Agency cannot be further delegated. Tirol Baltazar asserts that he is duly authorized by Mercado to institute the suit and presented an SPA from Mercado. However, such SPA is unavailing for Baltazar. For one, petitioner’s principal, Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of Mercado.

VIRGIE SERONA, petitioner, vs. HON. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents. DOCTRINE: The law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. However, petitioner is not entirely free from any liability towards Quilatan. The rule is that an accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. Then too, an agent who is not prohibited from appointing a sub-agent but does so without express authority is responsible for the acts of the sub-agent.

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute:

Agent: Virgie Serona

(1) When he was not given the power to appoint one;

Principal: Leonida Quilatan

Sub-agent: Marichu Labrador

Facts: Quilatan and Serona entered into a contract of agency. July 1992 to September 1992: Leonida Quilatan delivered pieces of jewelry to Virgie Serona to be sold on commission basis. By oral agreement of the parties, petitioner shall remit payment or return the pieces of jewelry if not sold to Quilatan, both within 30 days from receipt of the items. September 24, 1992: Serona failed to pay. Thus, Quilatan required her to execute an acknowledgment receipt indicating their agreement and the total amount due, to wit: Ako, si Virginia Serona, nakatira sa Mother Earth Subd., Las Pinas, ay kumuha ng mga alahas kay Gng. Leonida Quilatan na may kabuohang halaga na P567,750.00 para ipagbili para ako magkakomisyon at ibibigay ang benta kung mabibili o ibabalik sa kanya ang mga nasabing alahas kung hindi mabibili sa loob ng 30 araw. Las Pinas, September 24, 1992. The receipt was signed by petitioner and a witness, Rufina G. Navarette. Unknown to Quilatan, Serona had earlier entrusted the jewelry to Marichu Labrador for the latter to sell on commission basis. Serona was not able to collect payment from Labrador, which caused her to likewise fail to pay her obligation to Quilatan. Subsequently, Quilatan sent a formal letter of demand to Serona for failure to settle her obligation. Quilatan executed a complaint affidavit against petitioner before the Office of the Assistant Provincial Prosecutor. Thereafter, an information for estafa under the RPC was filed against petitioner and raffled to the RTC-Las Pinas. Petitioner pleaded not guilty to the charge. Principal’s theory: Quilatan testified that petitioner was able to remit P100,000.00 and returned P43,000.00 worth of jewelry; that at the start, petitioner was prompt in settling her obligation. However, subsequently the payments were remitted late; that petitioner still owed her in the amount of P424,750.00. Agent’s theory: Serona admitted that she received several pieces of jewelry from Quilatan and that she indeed failed to pay for the same. She claimed that she entrusted the pieces of jewelry to Marichu Labrador who failed to pay for the same, thereby causing her to default in paying Quilatan. She presented

handwritten receipts evidencing payments made to Quilatan prior to the filing of the criminal case. Serano argues that the prosecution failed to establish the elements of estafa as penalized under Article 315, par. 1(b) of the Revised Penal Code. In particular, she submits that she neither abused the confidence reposed upon her by Quilatan nor converted or misappropriated the subject jewelry; that her giving the pieces of jewelry to a sub-agent for sale on commission basis did not violate her undertaking with Quilatan. Moreover, petitioner delivered the jewelry to Labrador under the same terms upon which it was originally entrusted to her. It was established that petitioner had not derived any personal benefit from the loss of the jewelry. Consequently, it cannot be said that she misappropriated or converted the same. Sub-agent’s theory: Marichu Labrador confirmed that she received pieces of jewelry from petitioner worth P441,035.00. She identified an acknowledgment receipt signed by her and testified that she sold the jewelry to a person who absconded without paying her. Labrador also explained that in the past, she too had directly transacted with Quilatan for the sale of jewelry on commission basis; however, due to her outstanding account with the latter, she got jewelry from petitioner instead. RTC found Serona guilty of estafa. After appeal, the CA affirmed judgement of conviction. Issue: Whether or not there was estafa committed and abuse of confidence on the part of petitioner in entrusting the subject jewelries to her sub-agent for sale on commission to prospective buyers. Ruling: NO. The elements of estafa through misappropriation or conversion as defined in Article 315, par. 1(b) of the Revised Penal Code are: (1) that the money, good or other personal property is received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return, the same; (2) that there be misappropriation or conversion of such money or property by the offender or denial on his part of such receipt; (3) that such misappropriation or conversion or denial is to the prejudice of another; and (4) that there is a demand made by the offended party on the offender. While the first, third and fourth elements are concededly present, we find the second element of misappropriation or conversion to be lacking in the case at bar.

Petitioner did not ipso facto commit the crime of estafa through conversion or misappropriation by delivering the jewelry to a sub-agent for sale on commission basis. We are unable to agree with the lower courts conclusion that this fact alone is sufficient ground for holding that petitioner disposed of the jewelry as if it were hers, thereby committing conversion and a clear breach of trust. The law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the appointment of Labrador as petitioner sub-agent was not expressly prohibited by Quilatan, as the acknowledgment receipt, does not contain any such limitation. Neither does it appear that petitioner was verbally forbidden by Quilatan from passing on the jewelry to another person before the acknowledgment receipt was executed or at any other time. Thus, it cannot be said that petitioners act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is, in fact, legally sanctioned. The essence of estafa under Article 315, par. 1(b) is the appropriation or conversion of money or property received to the prejudice of the owner. The words convert and misappropriated connote an act of using or disposing of anothers property as if it were ones own, or of devoting it to a purpose or use different from that agreed upon. To misappropriate for ones own use includes not only conversion to ones personal advantage, but also every attempt to dispose of the property of another without right. In the case at bar, it was established that the inability of petitioner as agent to comply with her duty to return either the pieces of jewelry or the proceeds of its sale to her principal Quilatan was due, in turn, to the failure of Labrador to abide by her agreement with petitioner. Notably, Labrador testified that she obligated herself to sell the jewelry in behalf of petitioner also on commission basis or to return the same if not sold. In other words, the pieces of jewelry were given by petitioner to Labrador to achieve the very same end for which they were delivered to her in the first place. Consequently, there is no conversion since the pieces of jewelry were not devoted to a purpose or use different from that agreed upon. Similarly, it cannot be said that petitioner misappropriated the jewelry or delivered them to Labrador without right. Aside from the fact that no condition or limitation was imposed on the mode or manner by which petitioner was to

effect the sale, it is also consistent with usual practice for the seller to necessarily part with the valuables in order to find a buyer and allow inspection of the items for sale. However, petitioner is not entirely free from any liability towards Quilatan. The rule is that an accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. Then too, an agent who is not prohibited from appointing a sub-agent but does so without express authority is responsible for the acts of the sub-agent. Considering that the civil action for the recovery of civil liability arising from the offense is deemed instituted with the criminal action, petitioner is liable to pay complainant Quilatan the value of the unpaid pieces of jewelry. Dispositive: Petition is GRANTED.