PNB vs. Manila Surety & Fidelity Co.

, Inc , July 30, 1965 irrevocable power of attorney to make such collections, since an
agent is required to act with care of a good father of a family and
FACTS: becomes liable for the damages which the principal may suffer
The PNB opened a letter of credit and advanced $120,000.00 to through his non performance.
Edington Oil Refinery for 8,000 tons of hot asphalt, of which 2,000 Even if the assignment with power of attorney from the principal
tons worth P279,000.00 were delivered to Adams & Taguba Corp. debtor were considered as more additional security, by allowing the
(ATACO) under a trust receipt guaranteed by Manila Surety & assigned funds to be exhausted without notifying the surety, the
Fidelity Co. To pay for the asphalt ATACO constituted PNB its Bank deprived the former of any possibility of recoursing against that
assignee and attorney-in-fact to receive and collect payments from security. The Bank exonerated the surety, pursuant to Art. 2080 0f
the Bureau of Public Works. the Civil Code.
ATACO delivered asphalt worth P431,466.52 to the Bureau of Public
Works, PNB regularly collected the payments amounting to
P106,382.01, until they ceased to collect payments. Then in 1962
PNB found that there were more payables to ATACO from DOMINGO v. DOMINGO
the Bureau of Public Works. PNB sued ATACO and the Surety, to G.R. No. L-30573; October 29, 1971
recover the balance of P158,563.18 when their demands for Ponente: J. Makasiar
payment were refused.
The trial court ordered ATACO and the Surety to pay PNB the sum FACTS:
of P174,462.34, and the total amount payable by the Surety shall not
exceed P75,000.00. PNB recourse to the Court of Appeals, which On June 2, 1956, Vicente M. Domingo granted Gregorio Domingo, a real
rendered an adverse decision and modified the judgement of estate broker, the exclusive agency to sell his lot No. 883 of Piedad Estate
the court of origin as to the Surety’s liability. Motions for with an area of about 88,477 square meters at the rate of P2.00 per square
reconsideration were also denied. meter (or for P176,954.00) with a commission of 5% on the total price, if the
ISSUE: property is sold by Vicente or by anyone else during the 30-day duration of
Whether or not it is the duty of the surety and not that of the creditor, the agency or if the property is sold by Vicente within three months from the
to see to it that the obligor fulfils his obligation, and that the creditor termination of the agency to a purchaser to whom it was submitted by
owed the surety no duty of active diligence to collect any sum from Gregorio during the continuance of the agency with notice to Vicente. The
the principal debtor. said agency contract was in triplicate, one copy was given to Vicente, while
RULING: the original and another copy were retained by Gregorio.
The appealed decision is AFFIRMED.
HELD: On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Purisima to
The Court of Appeals did not hold the bank answerable for look for a buyer, promising him one-half of the 5% commission.Thereafter,
negligence in failing to collect from the principal debtor but for its Teofilo Purisima introduced Oscar de Leon to Gregorio as a prospective
negligence in collecting the sum due to the debtor from the Bureau of buyer.
Public Works, contrary to its duty as holder of an exclusive and
Oscar de Leon submitted a written offer which was very much lower than the Upon thus learning that Vicente sold his property to the same buyer, Oscar
price of P2.00 per square meter. Vicente directed Gregorio to tell Oscar de de Leon and his wife, he demanded in writing payment of his commission on
Leon to raise his offer. After several conferences between Gregorio and the sale price of P109,000.00.
Oscar de Leon, the latter raised his offer to P109,000.00 on June 20 and
Vicente agreed. Vicente stated that Gregorio is not entitled to the 5% commission because
he sold the property not to Gregorio's buyer, Oscar de Leon, but to another
Upon demand of Vicente, Oscar de Leon issued to him a check in the buyer, Amparo Diaz, wife of Oscar de Leon
amount of P1,000.00 as earnest money, after which Vicente advanced to
Gregorio the sum of P300.00. Oscar de Leon confirmed his former offer to ISSUE:
pay for the property at P1.20 per square meter in another letter. Whether Gregorio was entitled to receive the 5% commission
Subsequently, Vicente asked for an additional amount of P1,000.00 as
earnest money, which Oscar de Leon promised to deliver to him. HELD:

Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the No, Gregorio is not entitled to receive the 5% commission.
sum of 1,000.00 for succeeding in persuading Vicente to sell his lot at P1.20
per square meter or a total in round figure of P109,000.00. This gift of The Supreme Court held that the law imposes upon the agent the absolute
P1,000.00 was not disclosed by Gregorio to Vicente. Neither did Oscar pay obligation to make a full disclosure or complete account to his principal of all
Vicente the additional amount of P1,000.00 by way of earnest money. his transactions and other material facts relevant to the agency, so much so
that the law as amended does not countenance any stipulation exempting
When the deed of sale was not executed on August 1, 1956 as stipulated the agent from such an obligation and considers such an exemption as void.
nor on August 16, 1956 as extended by Vicente, Oscar told Gregorio that he
did not receive his money from his brother in the United States, for which Hence, by taking such profit or bonus or gift or propina from the vendee, the
reason he was giving up the negotiation including the amount of P 1,000 agent thereby assumes a position wholly inconsistent with that of being an
given as earnest money to Vicente and the P 1,000 given to Gregorio as agent for his principal, who has a right to treat him, insofar as his
propina or gift. Commission is concerned, as if no agency had existed. The fact that the
principal may have been benefited by the valuable services of the said agent
When Oscar did not see him after several weeks, Gregorio sensed does not exculpate the agent who has only himself to blame for such a result
something fishy. So, he went to Vicente and read a portion to the effect that by reason of his treachery or perfidy.
Vicente was still committed to pay him 5% commission. Vicente grabbed the
original of the document and tore it to pieces.

From his meeting with Vicente, Gregorio proceeded to the office of the
Register of Deeds of Quezon City, where he discovered a deed of sale
executed on September 17, 1956 by Amparo Diaz.
PHILIPPINE PRODUCTS COMPANY, plaintiff-appellant, Zurich had no license to transact business in the Philippines. For failure to file
vs. an answer within the reglementary period, defendant Primateria Zurich was
PRIMATERIA SOCIETE ANONYME POUR LE COMMERCE declared in default. After trial, judgment was rendered by the lower court
EXTERIEUR: PRIMATERIA (PHILIPPINES) INC., ALEXANDER G. holding defendant Primateria Zurich liable to the plaintiff for the sums of
BAYLIN and JOSE M. CRAME, defendants-appellees. P31,009.71, with legal interest from the date of the filing of the complaint, and
P2,000.00 as and for attorney's fees; and absolving defendants Primateria
G.R. No. L-17160 November 29, 1965 (Phil.), Inc., Alexander G. Baylin, and Jose M. Crame from any and all
BENGZON, C.J.: liability. Plaintiff appealed from that portion of the judgment dismissing its
complaint as regards the three defendants. It is plaintiff's theory that
Facts: Primateria Zurich is a foreign corporation within the meaning of Sections 68
Defendant Primateria Societe Anonyme Pour Le Commerce and 69 of the Corporation Law, and since it has transacted business in the
Exterieur (hereinafter referred to as Primateria Zurich) is a foreign juridical Philippines without the necessary license, as required by said provisions, its
entity and, at the time of the transactions involved herein, had its main office agents here are personally liable for contracts made in its behalf.Section 68
at Zurich, Switzerland. It was then engaged in "Transactions in international of the Corporation Law states: "No foreign corporation or corporation formed,
trade with agricultural products. On October 24, 1951, Primateria Zurich, organized, or existing under any laws other than those of the Philippines
through defendant Alexander B. Baylin, entered into an agreement with shall be permitted to transact business in the Philippines, until after it shall
plaintiff Philippine Products Company, whereby the latter undertook to buy have obtained a license for that purpose from the Securities and Exchange
copra in the Philippines for the account of Primateria Zurich, during "a Commission .. ." And under Section 69, "any officer or agent of the
tentative experimental period of one month from date." The contract was corporation or any person transacting business for any foreign corporation
renewed by mutual agreement of the parties to cover an extended period up not having the license prescribed shall be punished by imprisonment for etc.
to February 24, 1952, later extended to 1953. During such period, plaintiff ... ."
caused the shipment of copra to foreign countries, pursuant to instructions Issue:
from defendant Primateria Zurich, thru Primateria (Phil.) Inc. — referred to Whether defendant Primateria Zurich may be considered a foreign
hereafter as Primateria Philippines — acting by defendant Alexander G. corporation within the meaning of Sections 68 and 69 of the Corporation
Baylin and Jose M. Crame, officers of said corporation. As a result, the total Law;
amount due to the plaintiff as of May 30, 1955, was P33,009.71. At the trial, it Ruling:
was proven that the amount due from defendant Primateria Zurich, on The lower court ruled that the Primateria Zurich was not duly
account of the various shipments of copra, was P31,009.71, because it had proven to be a foreign corporation; nor that a societeanonyme
paid P2,000.00 of the original claim of plaintiff. There is no dispute about ("sociedadanomima") is a corporation; and that failing such proof, the societe
accounting. And there is no question that Alexander G. Baylin and cannot be deemed to fall within the prescription of Section 68 of the
Primateria Philippines acted as the duly authorized agents of Primateria Corporation Law. We agree with the said court's conclusion. In fact, our
Zurich in the Philippines. As far as the record discloses, Baylin acted corporation law recognized the difference between sociedadesanonimas
indiscriminately in these transactions in the dual capacities of agent of the and corporations. At any rate, we do not see how the plaintiff could recover
Zurich firm and executive vice-president of Primateria Philippines, which also from both the principal (Primateria Zurich) and its agents. It has been given
acted as agent of Primateria Zurich. It is likewise undisputed that Primateria judgment against the principal for the whole amount. It asked for such
judgment, and did not appeal from it. It clearly stated that its appeal contract that does not exist. In dealing with Dans, DBP was wearing
concerned the other three defendants. 2 legal hats: the first as a lender and the second as an insurance
agent. As an insurance agent, DBP made Dans go through the
motion of applying for said insurance, thereby leading him and his
Dev. Bank of the Phils. v. Court of Appeals family to believe that they had already fulfilled all the requirements
G.R. No. L-109937, 21 March 1994, 231 SCRA 370 for the MRI and that the issuance of their policy was forthcoming.
DBP had full knowledge that the application was never going to be
FACTS: approved. The DBP is not authorized to accept applications for MRI
Juan B. Dans, together with his family applied for a loan of P500,000 when its clients are more than 60 years of age. . Knowing all the
with DBP. As principal mortgagor, Dans, then 76 years of age was while that Dans was ineligible for MRI coverage because of his
advised by DBP to obtain a mortgage redemption insurance (MRI) advanced age, DBP exceeded the scope of its authority when it
with DBP MRI pool. A loan in the reduced amount was approved and accepted Dan’s application for MRI by collecting the insurance
released by DBP. From the proceeds of the loan, DBP deducted the premium, and deducting its agent’s commission and service fee.
payment for the MRI premium. The MRI premium of Dans, less the The liability of an agent who exceeds the scope of his authority
DBP service fee of 10%, was credited by DBP to the savings depends upon whether the third person is aware of the limits of the
account of DBP MRI-Pool. Accordingly, the DBP MRI Pool was agent’s powers. There is no showing that Dans knew of the limitation
advised of the credit. Dans died of cardiac arrest. DBP MRI Pool on DBP’s authority to solicit applications for MRI.
notified DBP that Dans was not eligible for MRI coverage, being over If the third person dealing with an agent is unaware of the limits of
the acceptance age limit of 60 years at the time of application. DBP the authority conferred by the principal on the agent and he (third
apprised Candida Dans of the disapproval of her late husband’s MRI person) has been deceived by the non-disclosure thereof by the
application. DBP offered to refund the premium which the deceased agent, then the latter is liable for damages to him (V Tolentino,
had paid, but Candida Dans refused to accept the same demanding Commentaries and Jurisprudence on the Civil Code of the
payment of the face value of the MRI or an amount equivalent of the Philippines, p. 422 [1992], citing Sentencia [Cuba] of September 25,
loan. She, likewise, refused to accept an ex gratia settlement which 1907). The rule that the agent is liable when he acts without authority
DBP later offered. Hence, the case at bar. is founded upon the supposition that there has been some wrong or
ISSUE: omission on his part either in misrepresenting, or in affirming, or
Whether or not the DBP MRI Pool should be held liable on the concealing the authority under which he assumes to act (Francisco,
ground that the contract was already perfected? V., Agency 307 [1952], citing Hall v. Lauderdale, 46 N.Y. 70, 75).
HELD: Inasmuch as the non-disclosure of the limits of the agency carries
No, it is not liable. The power to approve MRI application is lodged with it the implication that a deception was perpetrated on the
with the DBP MRI Pool. The pool, however, did not approve the unsuspecting client, the provisions of Articles 19, 20 and 21 of the
application. There is also no showing that it accepted the sum which Civil Code of the Philippines come into play.
DBP credited to its account with full knowledge that it was payment
for the premium. There was as a result no perfected contract of
insurance, hence the DBP MRI Pool cannot be held liable on a
NAPOCOR v. NATIONAL MERCHANDISING Corp. HELD:
G.R. Nos. L-33819 and L-33897; October 23, 1982 Yes, NaMerCo exceeded their authority.
Ponente: J. Aquino
The Supreme Court held that before the contract of sale was signed
FACTS: Namerco was already aware that its principal was having difficulties
Plaintiff-appellant National Power Corporation (NPC) and defendant- in booking shipping space.
appellant National Merchandising Corporation (NAMERCO), the
Philippine representative of New York-based International It is being enforced against the agent because article 1897 implies
Commodities Corporation, executed a contract of sale of sulfur with a that the agent who acts in excess of his authority is personally liable
stipulation for liquidated damages in case of breach. to the party with whom he contracted.
Moreover, the rule is complemented by article 1898 of the Civil Code
Defendant-appellant Domestic Insurance Company executed a which provides that "if the agent contracts in the name of the
performance bond in favor of NPC to guarantee the seller's principal, exceeding the scope of his authority, and the principal does
obligation. In entering into the contract, Namerco, however, did not not ratify the contract, it shall be void if the party with whom the
disclose to NPC that Namerco's principal, in a cabled instruction, agent contracted is aware of the limits of the powers granted by the
stated that the sale was subject to availability of a steamer, and principal".
contrary to its principal's instruction, Namerco agreed that non- Namerco never disclosed to the Napocor the cabled or written
availability of a steamer was not a justification for non-payment of instructions of its principal. For that reason and because Namerco
liquidated damages. exceeded the limits of its authority, it virtually acted in its own name
and not as agent and it is, therefore, bound by the contract of sale
The New York supplier was not able to deliver the sulfur due to its which, however, is not enforceable against its principal.
inability to secure shipping space. Consequently, the Government
Corporate Counsel rescinded the contract of sale due to the
supplier's non-performance of its obligations, and demanded
payment of liquidated damages from both Namerco and the surety.
Thereafter, NPC sued for recovery of the stipulated liquidated
damages. After trial, the Court of First Instance rendered judgment
ordering defendants-appellants to pay solidarity to the NPC reduced
liquidated damages with interest.

ISSUE:
Whether NaMerCo exceeded their authority