Assignment 26 August 2015

Nielson & Co., Inc vs. Lepanto Consolidated Mining Co.

Facts: Operating agreement between Nielson and Co., Inc and Lepanto Consolidated Mining Company, whereby the former operated and managed the latter’s mining property.

Contract was entered into on Jan. 30, 1937, for five years, with an option to renew for the same term on the same basis. Contract was renewed in 1941.

Dec. 1941 – WW II Jan. 1942 – mining operations ceased. Feb. 1942 – mills, plants and other property were destroyed and occupied by the Japanese

Army. 1945 – Japanese forces are ousted and parties regain control of the property. 1945 – disagreement between Nielson and Lepanto as to w/n contract is to expire in 1947. June 26, 1948 – mining operations officially resumed under Lepanto. Terms of the contract: Both parties to this agreement fully recognize that the terms of this

Agreement are made possible only because of the faith or confidence that the Officials of each company have in the other; therefore, in order to assure that such confidence and faith shall abide and continue, NIELSON agrees that LEPANTO may cancel this Agreement at any time upon ninety (90) days written notice, in the event that NIELSON for any reason whatsoever, except force majeure, strike and other causes beyond its control, shall cease to prosecute the operation and development of the properties herein described, in good faith and in accordance with approved mining practice.

Nielson contends that the contract was suspended and should be extended. Lepanto contends that the contract expired in 1947 and that period of suspension did not

extend the contract. The Court of First Instance (CFI) in Manila held for the defendant, Lepanto. Nielsen appealed to the Supreme Court (SC) and the SC reversed the decision of the CFI;

It held that the contract was suspended until Jan. 26, 1948, when mining operations resumed. Lepanto seeks for motion for reconsideration based on the ff grounds:

1. That the contract entered into was a contract of agency which was effectively revoked and terminated in 1945;2. That the court erred in holding that the period of suspension extended the life of the management contract.3. The court erred in reversing the ruling of the trial judge that the management agreement was only suspended but not extended on account of the war.4. The court erred in reversing the finding of the trial judge that Nielson's action had prescribed, but considering only the first claim and ignoring the prescriptibility of the other claims.5. The court erred in holding that the period of suspension of the contract on account of the war lasted from February 1942 to June 26, 1948.6. Assuming arguendo that Nielson is entitled to any relief, the court erred in awarding as damages (a) 10% of the cash dividends declared and paid in December, 1941; (b) the management fee of P2,500.00 for the month of January, 1942; and (c) the full contract price for the extended period of sixty months, since these damages were neither demanded nor proved and, in any case, not allowable under the general law of damages.7. Assuming arguendo that appellant is entitled to any relief, the court erred in ordering appellee to issue and deliver to appellant share's of stock together with fruits thereof.8. The court erred in awarding to appellant an undetermined amount of shares of stock and/or cash, which award cannot be ascertained and executed without further litigation.9. The court erred in rendering judgment for attorney's fees.

Issue: WON management contract be considered a contract of agency and therefore effectively revoked and terminated.

Ruling: Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the contract of agency, one person binds himself to render some service or do something for the account or at the request of another." Article 1544, defining contract of lease of service, provides that "In a lease of work or services, one of the parties binds himself to make or construct something or to render a service to the other for a price certain." In both agency and lease of services one of the parties binds himself to render some service to the other party. Agency, however, is distinguished from lease of work or services in that the basis of agency is representation, while in the lease of work or services the basis is employment. The lessor of services does not represent his employer, while the agent represents his principal. Further, agency is a preparatory contract, as agency "does not stop with the agency because the purpose is to enter into other contracts." The most characteristic feature of an agency relationship is the agent's power to bring about business relations between his principal and third persons. "The agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties). Lease of services contemplates only material (non-juridical) acts." Herein, the principal and paramount undertaking of Nielson under the management contract was the operation and development of the mine and the operation of the mill. All the other undertakings mentioned in the contract are necessary or incidental to the principal undertaking — these other undertakings being dependent upon the work on the development of the mine and the operation of the mill. In the performance of this principal undertaking Nielson was not in any way executing juridical acts for Lepanto, destined to create, modify or extinguish business relations between Lepanto and third persons. In other words, in performing its principal undertaking Nielson was not acting as an agent of Lepanto, in the sense that the term agent is interpreted under the law of agency, but as one who was performing material acts for an employer, for compensation. It is true that the management contract provides that Nielson would also act as purchasing agent of supplies and enter into contracts regarding the sale of mineral, but the contract also provides that Nielson could not make any purchase, or sell the minerals, without the prior approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not execute juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson, then, was to act only as an intermediary, not as an agent. Further, from the statements in the annual report for 1936, and from the provision of paragraph XI of the Management contract, that the employment by Lepanto of Nielson to operate and manage its mines was principally in consideration of the know-how and technical services that Nielson offered Lepanto. The contract thus entered into pursuant to the offer made by Nielson and accepted by Lepanto was a "detailed operating contract". It was not a contract of agency. Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that Lepanto terminated the management contract because it had lost its trust and confidence in Nielson.

G. Puyat & Sons, Inc. vs Arco Amusements Co.

Facts: "Teatro Arco", is a corporation engaged in the business of operating cinematographs. In 1930, its name was changed to Arco Amusement Company. About the same time, Gonzalo Puyat & Sons, Inc., another corporation in addition to its other business, was acting as exclusive agents in the Philippines for the Starr Piano Company of Richmond, Indiana, U.S. A. which dealt in cinematographer equipment and machinery, and the Arco Amusement Company desiring to equip its cinematograph with sound reproducing devices, approached Gonzalo Puyat & Sons, Inc. After some negotiations, it was agreed between the parties, that GP&S, on behalf of Arco, order sound reproducing equipment from the Starr Piano Company and that Arco would pay the GP&S, in addition to the price of the equipment, a 10 per cent commission, plus all expenses, such as, freight, insurance, banking charges, cables, etc. The equipment arrived about the end of the year 1929, and upon delivery of the same to the plaintiff and the presentation of necessary papers, the price of $1.700, plus the 10 per cent commission agreed upon and plus all the expenses and charges, was duly paid by the plaintiff to the defendant.

Sometime the following year, and after some negotiations between the same parties, another order for sound reproducing equipment was placed by the plaintiff with the defendant, on the same terms as the first order. The equipment under the second order arrived in due time, and the defendant was duly paid.

About three years later, the officials of the Arco Amusement Company discovered that the price quoted to them by the defendant with regard to their two orders mentioned was not the net price but rather the list price, and that the defendants had obtained a discount from the Starr Piano Company. Moreover, by reading reviews and literature on prices of machinery and cinematograph equipment, said officials of the plaintiff were convinced that the prices charged them by the defendant were much too high including the charges for out-of-pocket expense. For these reasons, they sought to obtain a reduction from the defendant or rather a reimbursement, and failing in this they brought the present action.

Issue: WON the contract between the petitioner and the respondent was one of outright purchase and sale or one of agency

Ruling: Gonzalo Puyat & Sons cannot be the agent of Arco Amusement in the purchase of equipment from Starr Piano Company as Puyat & Sons is already the exclusive agent of Starr Piano in the Philippines. Puyat cannot be the agent of both vendor and purchaser. The fact that a commission was offered to the other does not necessarily mean that the latter has become the agent of the former, as this was only an additional price which Arco bound itself to pay and which is not incompatible with the contract of purchase and sale. Puyat is not bound to reimburse the profit acquired in the transaction, as this is the very essence of commerce involving middlemen and merchants. The contract is the law between the parties. What does not appear on the face of the contract should be regarded as dealers or traders talk which cannot bind either party. Not every concealment is fraud, short of fraud, and such as that in this case, is considered as business acumen.

Hahn vs CA

Facts: Petitioner Alfred HAHN is a Filipino citizen doing business under the name "Hahn-Manila." He is the holder of the BMW trademark in the Philippines (which makes him a legit dealer of BMW cars here). On the other hand, private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign corporation existing under the laws of Germany. HAHN executed in favor of BMW a "Deed of Assignment with Special Power of Attorney" where he ceded his rights over the BMW trademark in the Philippines in favor of BMW so that the latter can proceed to also become a dealer of BMW cars in the Philippines, on the condition that HAHN remain in close business relation with BMW (i.e. that HAHN remains exclusive dealer of BMW cars). Also, one of the stipulations in the Deed of Assignment made Hahn an attorney-in-fact of BMW in cases of prosecutions against usurpers of the BMW trademark in the Philippines. Later, Hahn was informed that BMW was arranging to grant exclusive dealership of BMW cars to another entity, accordingly due to BMW’s dissatisfaction with various aspects of HAHN's business (decline in sales, deteriorating services, inadequate showroom and warehouse facilities, and his alleged failure to comply with the standards for an exclusive BMW dealership). Nonetheless, BMW expressed willingness to continue business relations with HAHN on the basis of a "standard BMW importer" contract, otherwise, if this was not acceptable to HAHN, BMW would have no alternative but to terminate petitioner's exclusive dealership. HAHN protested, claiming that the termination of his exclusive dealership would be a breach of the Deed of Assignment. HAHN insisted that as long as the assignment of its trademark subsisted, he remained BMW's exclusive dealer in the Philippines because the assignment was made in consideration of the exclusive dealership. Because of HAHN's insistence on the former business relation, BMW withdrew its offer of a "standard importer contract" and terminated the exclusive dealer relationship. Hence, HAHN filed a complaint for specific performance and damages against BMW to compel it to continue the exclusive dealership.

Issue: WON Hahn is an agent of BMW or a broker.

Ruling: HAHN, in his complete allegations pointed out that he placed orders made with him directly with BMW. It is BMW that fixed the down payment and pricing charges, the scheduled production month for the orders and that payment was made by the buyer directly to BMW! HAHN was merely credited with commissions from the total purchase price upon the invoicing of a vehicle order by BMW. All orders were on invoices and forms of BMW. And these allegations were substantially admitted by BMW which in its petition for certiorari before the CA. This arrangement shows an agency. An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. As to the service centers and showrooms which he said he had put up at his own expense, HAHN has said that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. BMW also periodically inspected the service centers to see to it that BMW standards were maintained. This illustrates the extent of BMW’s control over HAHN’s activities! More so, these allegations as to BMW extensive control over HAHN’s activities were also admitted by BMW in its letter to HAHN terminating the exclusive dealership. In any case, the fact that HAHN invested his own money to put up these service centers and showrooms does not necessarily prove that he is not an agent of BMW. In addition, BMW held out private respondent Hahn as its exclusive distributor in the Philippines, even as it announced in the Asian region that Hahn was the "official BMW agent" in the Philippines.

Conde vs CA

Facts: Margarita Conde, Bernardo Conde and Dominga Conde sold with a right of repurchase, within 10 years from, a parcel of agricultural land to the Altera Spouses. The contract provided that: “If at the end of 10 years the said land is not repurchased, a new agreement shall be made between the parties and in no case title and ownership shall be vested in the hand of the party of the Second Part (Alteras).” The Cadastral Court of Leyte then adjudicated the lot to the Alteras subject to the right of redemption counting from 7 April 1938 after returning the amount of PHP 165.00. On 28 November 1945, Paciente Cordero, son-in-law of the Alteras signed a document allowing Eusebio Amarille, the representative of the Condes, to repurchase the land. On 30 June 1965, Pio Altera sold the disputed lot to the spouses Ramon Conde and Catalina Conde. (Relationship to the other Condes were not shown). Dominga then filed a Complaint for quieting of title to property.

Issue: WON there is implied agency.

Ruling: Implied agency created from silence or lack of action or failure to repudiate the agency.—If, as opined by both the Court a quo and the Appellate Court, petitioner had done nothing to formalize her repurchase, by the same token, neither have the vendees-a-retro done anything to clear their title of the encumbrance therein regarding petitioner’s right to repurchase. No new agreement was entered into by the parties as stipulated in the deed of pac to de retro, if the vendors a retro failed to exercise their right of redemption after ten years. If, as alleged, petitioner exerted no effort to procure the signature of Pio Altera after he had recovered from his illness, neither did the Alteras repudiate the deed that their son-in-law had signed. Thus, an implied agency must be held to have been created from their silence or lack of action, or their failure to repudiate the agency.

Rallos vs Yangco

Facts: Teodoro Yangco sent Florentino Rallos a letter inviting the latter to be the consignor in buying and selling leaf tobacco and other native products. Terms and conditions were also contained in the letter. Accepting the invitation, Rallos proceeded to do a considerable business with Yangco through Florentino Collantes, as his factor, sending to him as agent for Yangco a good deal of produce to be sold on commission. Rallos sent to Collantes, as agent for Yangco,

218 bundles of tobacco in the leaf to be sold on commission, as had been other produce previously. Collantes received said tobacco and sold it for the sum of P1,744. The charges for such sale were P206.96, leaving in the hands of Collantes the sum of 1,537.08 belonging to Rallos. This sum was, apparently, converted to his own use by said agent. It appears, however, that prior to the sending of said tobacco, Yangco had severed his relations with Collantes and that the latter was no longer acting as his factor. This fact was not known to Rallos; and it is conceded in the case that no notice of any kind was given by Yangco of the termination of the relations between Yangco and his agent, Collantes. Yangco thus refused to pay the said sum upon demand of Rallos, placing such refusal upon the ground that at the time, the said tobacco was received and sold by Collantes, he was acting personally and not as agent of Yangco.

Issue: WON Collantes is an agent of Yangco.

Ruling: Yes. Yangco, as principal is liable. Having advertised the fact that Collantes was his agent and having given special notice to Rallos of that fact, and having given them a special invitation to deal with such agent, it was the duty of Yangco on the termination of the relationship of the principal and agent to give due and timely notice thereof to Rallos. Failing to do so, he is responsible to them for whatever goods may been in good faith and without negligence sent to the agent without knowledge, actual or constructive, of the termination of such relationship

Siasat vs IAC

Facts: Teresita Nacianceno succeeded in convincing officials of the Department of Education and Culture, to purchase without public bidding, 1m worth of national flags for the use of public schools throughout the country. When Nacianceno was informed by the Chief of the Budget Division of the Department that the purchase orders could not be released unless a formal offer to deliver the flags in accordance with the required specifications was first submitted for approval, she contacted the owners of the United Flag Industry. The next day, after the transaction was discussed, a document was executed formalizing Nacianceno’s authority to represent United Flag Industry and entitling her to a 30% commission. This was signed by Primitivo Siasat. After the first delivery of flags was made, Nacianceno’s authority was revoked by Siasat. After Siasat received the payment for the first delivery, he tendered 5% of the amount received to Nacianceno as payment of her commission. Nacainceno refused to accept the said amount insisting on the 30% commission agreed upon. However, Nacianceno still accepted the amount because Siasat assured her that she would receive the commission in full after the delivery of the other half of the order. When Nacianceno later on learned that Siasat had already received payment for the 2nd delivery, she confronted him. Siasat denied the receipt of payment, at the same time claiming that the Naciaceno had no participation whatsoever with regard to the 2nd delivery of flags and that the agency had already been revoked. Nacianceno filed a complaint with the Complaints and Investigation Office of Malacanang. When nothing came of the complaint, she filed an action in the CFI to recover her commissions (25%, as balance of the 1st delivery and 30%, on the 2nd delivery)

TC – decided in favour of Nacianceno IAC – affirmed the decision. Siasat – (1) the authorization making Nacianceno United Flag Industry’s representative merely states that she could deal with any entity in connection with the marketing of their products for a commission of 30%. There was no specific authorization for the sale of the Philippine flags to the Department (2) there were 2 transaction. The revocation of agency effected by the parties with mutual consent forecloses Nacianceno’s claim of 30& commission on the 2nd transaction (3) no basis for granting of attorney’s fees and moral damages because there was no showing of bad faith on the part of Siasat.

Issue: 1. WON Nacianceno was authorized to negotiate the sale of the Philippine flags to the Department. 2. WON the revocation of agency forecloses Nacianceno’s claim of 30% commission on the 2nd transaction.

Ruling: 1. YES. It can easily be seen by the way general words were employed in the agreement that no restrictions were intended as to the manner the agency was to be carried out or in the place where it was to be executed. The power granted to the Nacianceno was so broad that it practically covers the negotiations leading to, and the execution of, a contract of sale of Siasat’s merchandise with any entity or organization. There are several kinds of agents: An agent may be (1) universal: (2) general, or (3) special.

A universal agent is one authorized to do all acts for his principal which can lawfully be delegated to an agent. So far as such a condition is possible, such an agent may be said to have universal authority.

A general agent is one authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business of a particular class or series. He has usually authority either expressly conferred in general terms or in effect made general by the usages, customs or nature of the business which he is authorized to transact. An agent, therefore, who is empowered to transact all the business of his principal of a particular kind or in a particular place, would, for this reason, be ordinarily deemed a general agent.

A special agent is one authorized to do some particular act or to act upon some particular occasion. lie acts usually in accordance with specific instructions or under limitations necessarily implied from the nature of the act to be done. There is no merit in Siasat’s allegations that the contract of agency between the parties was entered into under fraudulent representation because Nacianceno would not disclose the agency with which she was supposed to transact and made Siasat believe that she would be dealing with The Visayas", and that "the petitioner had known of the transactions and/or project for the said purchase of the Philippine flags by the Department of Education and Culture and precisely it was the one being followed up also by the petitioner." If the circumstances were as claimed by Siasat, they would have exerted efforts to protect their interests by limiting the Nacianceno's authority. It is incredible that they could be so careless after being in the business for fifteen years.

Phil. National Bank vs Sta. Maria

Facts: Maximo Sta. Maria obtained sugar crop loans from the Philippine National Bank under the power of the attorney, executed in his favor by his brothers and sisters to mortgage a 16-odd hectare parcel of land, jointly owned by all of them. Valeriana the sister of Maximo, alone also executed in favor of her brother Maximo a special power of attorney to borrow money and mortgage any real estate owned by her. Maximo applied for two separate crop loans with the PNB, one in the amount of P15,000 but only P13,216.11 was extended by the PNB and the other for P23,000 but only P12,427.57 was extended by the PNB. As security for the two loans, Maximo executed it in his own name in favor of PNB two chattel mortgages, guaranteed by the surety bonds for the full authorized amounts of loans executed by the Associated Insurance & Surety Co., Inc. PNB filed the case on February 10,1961 against Defendant Maximo Sta. Maria and his six brothers and sisters and the Associated Insurance & Surety Co., Inc. for the collection of unpaid balances of two sugar crop loans. The Trial Court rendered judgment in favor of the PNB. Maximo did not appeal but his siblings appealed and contended that they had given their brother Maximo the authority to borrow money but only to mortgage the real estate jointly owned by them and that if they are liable, the liability should not go beyond the value of the property which9 they had authorized to be given as security of the loans obtained by Maximo. They further contended that they did not benefit whatsoever from the loans.

Issue: WON there is an agency.

Ruling: a special power of attorney to mortgage real estate is limited to such authority to mortgage and does not bind the grantor personally to other obligations contracted by the grantee, in the absence of any ratification or other similar act that would estop the grantor from questioning or disowning such other obligations contracted by the grantee.

The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo, was merely to mortgage the property jointly owned by them. They did not grant Maximo any authority to contract for any loans in their names and behalf. Maximo alone, with Valeriana who authorized him to borrow money, must answer for said loans and the other defendants-appellants' only liability is that the real estate authorized by them to be mortgaged would be subject to foreclosure and sale to respond for the obligations contracted by Maximo. But they cannot be held personally liable for the payment of such obligations, as erroneously held by the trial court. The fact that Maximo presented to the plaintiff bank Valeriana's additional special power of attorney expressly authorizing him to borrow money, aside from the authority to mortgage executed by Valeriana together with the other defendants-appellants also in Maximo's favor, lends support to our view that the bank was not satisfied with the authority to mortgage alone. The outcome might be different if there had been an express ratification of the loans by defendants-appellants or if it had been shown that they had been benefited by the crop loans so as to put them in estoppel. Valeriana's liability for the loans secured by Maximo is not joint and several or solidary as adjudged by the trial court, but only joint, pursuant to the provisions of Article 1207 of the Civil Code that "the concurrence ... of two or more debtors in one and the same obligation does not imply that ... each one of the (debtors) is bound to render entire compliance with the prestation.

Maritime Agencies &Services, Inc. vs CA

Facts: Transcontinental Fertilizer Company of London chartered from Hongkong the motor vessel named “Hong Kong Island” for the shipment of 8073.35 MT (gross) bagged urea from Novorossisk, Odessa, USSR, to the Philippines, the parties signing for this purpose a Uniform General Charter dated 9 August 1979. Of the total shipment, 5,400.04 MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04 to be discharged in Manila and the remaining 2,000 MT in Cebu. The goods were insured by the consignee with the Union Insurance Society of Canton, Ltd. for P6,779,214.00 against all risks. Maritime Agencies & Services, Inc. was appointed as the charterer’s agent and Macondray Company, Inc. as the owner’s agent. The vessel arrived in Manila on 3 October 1979, and unloaded part of the consignee’s goods, then proceeded to Cebu on 19 October 1979, to discharge the rest of the cargo. On 31 October 1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the amount of P87,163.54, representing C & F value of the 383 short landed bags. On 12 January 1980, the consignee filed another formal claim, this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value of 574 bags of net unrecovered spillage. These claims having been rejected, the consignee then went to Union, which on demand paid the total indemnity of P113,123.86 pursuant to the insurance contract. As subrogee of the consignee, Union then filed on 19 September 1980, a complaint for reimbursement of this amount, with legal interest and attorney’s fees, against Hongkong Island Company, Ltd., Maritime Agencies& Services, Inc. and/or Viva Customs Brokerage. On 20 April 1981, the complaint was amended to drop Viva and implead Macondray Company, Inc. as a new defendant. On 4 January 1984, after trial, the trial court rendered judgment, ordering (a) Hongkong Island Co., Ltd., and its local agent Macondray & Co., Inc. to pay Union the sum of P87,1 63.54 plus 12% interest from 20 April 1981 until the whole amount is fully paid,P1,000.00 as attorney’s fees and to pay ½ of the costs; and (b) Maritime Agencies & Services, Inc., to pay Union the sum of P36,030.23, plus 12% interest from 20 April 1981 until the whole amount is fully paid,P600.00 as attorney’s fees and to pay ½ of the costs.

Issue: WON Maritime is liable as a ship agent.

Ruling: Union seeks to hold Maritime liable as ship agent on the basis of the ruling in the case of Switzerland General Insurance Co., Ltd. v. Ramirez. However, we that case is applicable.

In that case, the charterer represented itself on the face of the bill of lading as the carrier. The vessel owner and the charterer did not stipulate in the Charter party on their separate respective liabilities for the cargo. The loss/damage to the cargo was sustained while it was still on board or under the custody of the vessel. As the charterer was itself the carrier, it was made liable for the acts of the ship captain who was responsible for the cargo while under the custody of the vessel.

As for the charterer's agent, the evidence showed that it represented the vessel when it took charge of the unloading of the cargo and issued cargo receipts (or tally sheets) in its own name. Claims against the vessel for the losses/damages sustained by that cargo were also received and processed by it. As a result, the charterer's agent was also considered a ship agent and so was held to be solidarily liable with its principal.

The facts in the cases at bar are different. The charterer did not represent itself as a carrier and indeed assumed responsibility ability only for the unloading of the cargo, i.e, after the goods were already outside the custody of the vessel. In supervising the unloading of the cargo and issuing Daily Operations Report and Statement of Facts indicating and describing the day-to-day discharge of the cargo, Maritime acted in representation of the charterer and not of the vessel. It thus cannot be considered a ship agent. As a mere charterer's agent, it cannot be held solidarily liable with Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Notably, Transcontinental was disclosed as the charterer's principal and there is no question that Maritime acted within the scope of its authority. Maritime cannot be held liable for the acts of its known principal resulting in injury to Union.