Nielson

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. 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 contemplate only material (non-juridical)
acts." (Reyes & Puno, An Outline of Philippine Civil Law, Vol. V, p. 277). Nielson & Company, Inc. vs.
Lepanto Consolidated Mining Company, 26 SCRA 540, No. L-21601 December 28, 1968

DOMINGO DE LA CRUZ, plaintiff and appellant, vs. NORTHERN THEATRICAL ENTERPRISES INC.,, ET AL,
defendants and appellees,

1.EMPLOYER AND EMPLOYEE; DAMAGES CAUSED TO EMPLOYEE BY A STRANGER CAN NOT BE

RECOVERED FROM EMPLOYER GIVING LEGAL ASSISTANCE TO EMPLOYEE is NOT A LEGAL BUT A MORAL
OBLIGATION.—A claim of an employee against his employer for damages caused to the former by a
stranger or outsider while said employee was in the performance of his duties, presents a novel
question which under present legislation can not be decided in favor of the employee. While it is to the
interest of the employer to give legal help to, and defend, its employees charged criminally in court, in
order to show that he was ,not guilty of any crime either deliberately or through negligence, because
should the employee be finally held criminally liable and he is found to be insolvent, the employer would
be subsidiarily liable, such legal assistance might be regarded as a moral obligation but it does not at
present count with the sanction of man-made laws. If the employer is not legally obliged to give legal
assistance to its employee and provide him with a lawyer, naturally said employee may not recover from
his employer the amount he may have paid a lawyer hired by him.

2.ID.; ID.; PARTIES WHO MAY BE HELD RESPONSIBLE FOR DAMAGES.— If despite the absence of any
criminal responsibility on the part of the employee he was accused of homicide, the responsibility for
the improper accusation may be laid at the door of the heirs of the deceased at whose instance the
action was filed by the State through the Fiscal. This responsibility can not be transferred to his
employer, who in no way intervened, much less initiated the criminal proceedings and whose only
connection or relation to the whole affair was that it employed plaintiff to perform a specific duty or
task, which was performed lawfully and without negligence. De la Cruz vs. Northern Theatrical
Enterprises, Inc., et al., 95 Phil. 739, No. L-7089 August 31, 1954

WILLIAM FRESSEL ET AL., plaintiffs and appellants, vs. MARIANO UY CHACO SONS & COMPANY,
defendant and appellee.

1.INDEPENDENT CONTRACTOR.—Where one party to a contract was authorized to do work according to

his own method and without being subject to the other party's control, except as to the result of the
work, he is an independent contractor and not an agent.
2.ASSIGNMENT; MECHANICS' LIENS.—In the absence of a statute creating mechanics' liens, the owner of
a building is not liable for the value of materials purchased by an independent contractor, either as such
owner or as the assignee of the contractor, 3. PLEADINGS.—On an appeal from a judgment rendered
after a refusal to amend, ambiguous matter will be resolved against the pleader.

4.ID.; MATTERS NOT ADMITTED BY DEMURRER.—The admission of the truth of material and relevant f
acts well pleaded does not extend to render a demurrer an admission of mere conclusions of facts not
stated nor conclusions of law, Fressel vs. Mariano Uy Chaco Sons & Co., 34 Phil. 122, No. 10918 March 4,
1916

THE SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner, vs. FIREMEN’S INSURANCE COMPANY OF
NEWARK, NEW JERSEY COMMERCIAL CASUALTY INSURANCE CO., SALVADOR SlSON, PORFIRIO DE LA
FUENTE and THE COURT OF APPEALS (First Division), respondents.

1.PRINCIPAL AND AGENT; WHEN AGENCY EXISTS AND NOT AN INDEPENDENT CONTRACTOR.—Where
the operator of a gasoline and service station owed his position to the company and the latter could
remove him or terminate his services at will; that the service station belonged to the company and bore
its tradename and the operator sold only the products of the company; that the equipment used by the
operator belonged to the company and were just loaned to the operator and the company took charge
of their repair and maintenance; that an employee of the company supervised the operator and
conducted periodic inspection of the company’s gasoline and service station; that the price of the
products sold by the operator was fixed by the company and not by the operator; and that the receipts
signed by the operator indicated that he was a mere agent. Held: that the operator is an agent of the
company and not an independent contractor.

2.CONTRACTS; NATURE OF CONTRACT; COURTS NOT BOUND UPON THE NAME GIVEN BY PARTIES.—To
determine the nature of a contract courts do not have or are not bound to rely upon the name or title
given it by the contracting parties, should there be a controversy as to what they really had intended to
enter into, but the way the contracting parties do or perform their respective obligations stipulated or
agreed upon may be shown and inquired into, and should such performance conflict with the name or
title given the contract by the parties, the former must prevail over the latter. Shell Co. of the Phils., Ltd.
vs. Firemen’s Ins. Co. of Newark, N.J., et al., 100 Phil., 757, No. L-8169 January 29, 1957

THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF DOMINGA ONG, petitioners
and appellants, vs. CALTEX (PHIL.), INC., MATEO BOQUIREN and THE COURT OF APPEALS, respondents
and appellees.

Evidence; Requisites for admissibility of entries in official records.—There are three requisites for
admissibility of evidence under Section 35, Rule 123, Rules of Court: (a) that the entry was made by a
public officer, or by another person, specially enjoined by law to do so; (b) that it was made by the
public officer in the performance of his duties, or by such other person in the performance of a duty
specially enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the
facts by him slated, which must have been acquired by him personally or through official information
(Moran, Comments on the Rules of Court, Vol. 3, p. 393).
Same; Hearsay rule; Reports not considered an exception to hearsay rule.—The reports of the police and
fire departments do not constitute an exception to the hearsay rule. For, the facts stated therein were
not acquired by the reporting officers through official information, not having been given by the
informants pursuant to any duty to do so.

Same; Report submitted by a police officer in the performonce of his duties.—The report submitted by a
police officer in the performance of his duties, on the basis of his own personal observation of the facts
reported, may properly be considered as an exception to the hearsay rule.

Same; Presumption of negligence under the doctrine of res ipsa loquitur.—Where the thing which
caused the injury complained of is shown to be under the management of the defendant or his servants
and the accident is such as in the ordinary course of things does not happen if those who have its
management or control use proper care, it affords reasonable evidence, in the absence of explanation
by the defendant, that the accident arose from want of care (45 C.J. 1193).

Same; Application of principle to the case at bar.—The gasoline-station, with all its appliances,
equipment and employees, was under the control of appellees. A fire occurred therein and spread to
and burned the neighboring houses. The person who knew or could have known how the fire started
were the appellees and their employees, but they gave no explanation thereof whatsoever. It is a fair
and reasonable inference that the incident happened because of want of care.

Torts; Quasi-delicts; Force majeure; Intervention of unforeseen and unexpected cause.—The

intervention of an unforeseen and unexpected cause is not sufficient to relieve a wrongdoer from
consequences of negligence, if such negligence directly and proximately cooperates with the
independent cause in the resulting injury. (MacAfee v. Traver’s Gas Corporation, 153 S.W. 2nd 442.)

Damages; Liability of owner of gasoline station; Case at bar.—A fire broke out at the Caltex service
station. It started while gasoline was being hosed from a tank into the underground storage. The fire
spread to and burned several neighboring houses owned by appellants. Issue: Whether Caltex should be
held liable for the damages caused to appellants. Held: This question depends on whether the operator
of the gasoline station was an independent contractor or an agent of Caltex. Under the license
agreement the operator would pay Caltex the purely nominal sum of P1.00 for the use of the premises
and all equipment therein. The operator could sell only Caltex products. Maintenance of the station and
its equipment was subject to the approval, in other words control, of Caltex. The operator could not
assign or transfer his rights as licensee without the consent of Caltex. Termination of the contract was a
right granted only to Caltex but not to the operator. These provisions of the contract show that the
operator was virtually an employee of the Caltex, not an independent contractor. Hence, Caltex should
be liable for damages caused to appellants. Africa, et al. vs. Caltex (Phil.), Inc., et al., 16 SCRA 448, No. L-
12986 March 31, 1966

JOSE DE LA PEÑA Y DE RAMON, plaintiff and appellant, vs. FEDERICO HIDALGO, defendant and appellant.

1.AGENCY; ADMINISTRATION OF PROPERTY; IMPLIED AGENCY.—When the agent and administrator of

property informs his principal by letter that for reasons of health and medical treatment he is about to
depart from the place where he is executing his trust and wherein the said property is situated, and
abandons the property, turns it over to a third party, renders accounts of its revenues up to the date on
which he ceases to hold his position and transmits to his principal a general statement which
summarizes and embraces all the balances of his accounts since he began the administration to the date
of the termination of his trust, and, without stating when he may return to take charge of the
administration of the said property, asks his principal to execute a power of attorney in due form in
favor of and transmit the same to another person who took charge of the administration of the said
property, it is but reasonable and just to conclude that the said agent had expressly and definitely
renounced his agency and that such agency was duly terminated, in accordance with the provisions of
article 1732 of the Civil Code, and, although the agent in his aforementioned letter did not use the
words "renouncing the agency," yet such words were undoubtedly so understood and accepted by the
principal, because of the lapse of nearly nine years up to the time of the latter's death, without his
having interrogated either the renouncing agent, disapproving what he had done, or the person who
substituted the latter.

2.ID. ; ID. ; ID.—The person who took charge of the administration of property without express
authorization and without a power of attorney executed by the owner thereof, and performed the
duties of his office without opposition or absolute prohibition on the owner's part, expressly
communicated to the said person, is concluded to have administered the said property by virtue

of an 'implied agency, in acordance with the provisions of article 1710 of the Civil Code, since the said
owner of the property, knowing perfectly well that the said person took charge of the administration of
the same, through designation by such owner's former agent who had to absent himself from the place
for well-founded reasons, remained silent for nearly nine years. Although he did not send a new power
of attorney to the said person who took charge of his property, the fact remains that, during the .period
stated, he neither opposed nor prohibited the new agent with respect to the administration, nor did he
appoint another person in his confidence; wherefore it must be concluded that this new agent acted by
virtue of an implied agency, equivalent to a legitimate agency, tacitly conferred by the owner of the
property administered.

3.ID. ; ID. ; ID.—It is improper to compare the case where the owner of the property is unaware of the
officious management of a third party in the former's interests, with the case where, having perfect
knowledge that his interests and property were so being managed and administered, he did not object,
but in fact consented to such management and administration for many years; for the reason that an
administration by virtue of an implied agency derives its origin from a contract, and the management of
another's business without the knowledge of the owner thereof, is based solely on a quasi-contract—a
distinction sanctioned by the jurisprudence established by the supreme court of Spain in its decision of
July 7, 1881.
4.ID. ; ID. ; ID.—The agent and administrator who was obliged to leave his charge for a legitimate cause
and who duly informed his principal, is thenceforward released and freed from the results and
consequences of the management of the person who substituted him with the consent, even tacit
though it be, of his principal. For this reason, the latter has no right to claim damages against his former
agent whose conduct was in accordance with the provisions of article 1736 of the Civil Code, for the care
of the property and interests of another can not require that the agent make the sacrifice of his health,
of his life, and of his own interests, it having been shown that it was impossible for the latter to continue
in the discharge of his duties.

5. ID.; ID.; ID.; LIABILITY OF ADMINISTRATOR.—The administrator is only responsible for the result and
consequences of his administration during the period when he had charge of his principal's property. His
responsibility can not be held to extend beyond the period of his administration, especially as the
representative of the testate succession of the deceased owner of the property ad

452

452

PHILIPPINE REPORTS ANNOTATED

De la Peña vs. Hidalgo.

issued in his favor an instrument whereby he acknowledges that the said administration was
satisfactorily terminated.

6.ID.; ID.; ID.; ACCOUNTING; PAYMENT.—It is not sufficient that the agent shall have rendered a
satisfactory accounting; in addition thereto it is indispensable that he pay to his principal, or to the
owner of the property administered, any balance shown by such accounts.

7.DEBTS AND DEBTORS; INTEREST.—According to the provisions of article 1755 of the Civil Code,
interest shall be owed only when it has been expressly stipulated, and article 1108 of the same code
provides that should the debtor, who is obliged to pay a certain sum of money, be in default and fail to
fulfill the agreement made with his creditor, he must pay, as indemnity for losses and damages, should
there be no stipulation to the contrary, the interest agreed upon, and should there be no express
stipulation, the legal interest; but, in order that the debtor may be considered to be in default and
obliged to pay such indemnity it is necessary, as a general rule, that his creditor demand of him the
fulfillment of his obligation, judicially or extrajudicially, except in such cases as are limitedly specified in
article 1100 of the aforesaid code. De la Peña vs. Hidalgo., 16 Phil. 450, No. 5486 August 17, 1910

JAI-ALAI CORPORATION OF THE PHILIPPINES, petitioner, vs. BANK OF THE PHILIPPINE ISLANDS,
respondent.
Negotiable Instruments Law; Checks; Banks; Agency; Where check is deposited with a collecting bank
relationship created is that of agency, not creditor-debtor. Same rule follows where after drawee-bank
paid the collecting bank, it was found that signature of payee of checks was forged by one who
previously encashed them.—When the petitioner deposited the checks with the respondent, the nature
of the relationship created at that stage was one of agency, that is, the bank was to collect from the
drawee of the checks the corresponding proceeds. It is true that the respondent had already collected
the proceeds of the checks when it debited the petitioner’s account, so that following the rule in Gullas
vs. Philippine National Bank it might be argued that the relationship between the parties had become
that of creditor and debtor as to preclude the respondent from using the petitioner’s funds to make
payments not authorized by the latter. It is our view nonetheless that no creditor-debtor relationship
was created between the parties. x x x Since under the foregoing provision of Section 23 of the
Negotiable Instruments Law, a forged signature in a negotiable instrument is wholly inoperative and no
right to discharge it or enforce its payment can be acquired through or under the forged signature
except against a party who cannot invoke the forgery, it stands to reason, upon the facts of record, that
the respondent, as a collecting bank which indorsed the checks to the drawee-banks for clearing, should
be liable to the latter for reimbursement, for, as found by the court a quo and by the appellate court,
the indorsements on the checks had been forged prior to their delivery to the petitioner. In legal
contemplation, therefore, the payments made by the drawee-banks to the respondent on account of
the said checks were ineffective; and, such being the case, the relationship of creditor and debtor
between petitioner and the respondent had not been validly effected, the checks not having been
properly and legitimately converted into cash. In Great Eastern Life Ins. Co. vs. Hongkong & Shanghai
Bank, the Court rule that it is the obligation of the collecting bank to reimburse the drawee-bank the
value of the checks subsequently found to contain the forged indorsement of the payee. The reason is
that the bank with which the check was deposited has, no right to pay the sum stated therein to the
forger “or anyone else upon a forged signature.” x x x The petitioner must in turn shoulder the

_______________

* FIRST DIVISION

30

30

SUPREME COURT REPORTS ANNOTATED

Jai-Alai Corp. of the Phil. vs. Bank of the Phil. Is.

loss of the amounts which the respondent, as its collecting agent, had to reimburse to the drawee-
banks. Jai-Alai Corp. of the Phil. vs. Bank of the Phil. Is., 66 SCRA 29, No. L-29432 August 6, 1975

ANDRES QUIROGA, plaintiff and appellant, vs. PARSONS HARDWARE Co., defendant and appellee.

1.SALES; INTERPRETATION OF CONTRACT.—For the classification of contracts, due regard must be paid
to their essential clauses. In the contract in the instant case, what was essential, constituting its cause
and subject matter, was that the plaintiff was to furnish the defendant with the beds which the latter
might order, at the stipulated price, and that the defendant was to pay this price in the manner agreed
upon. These are precisely the essential features of a contract of purchase and sale. There was the
obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to pay their
price. These features exclude the legal conception of an agency or order to sell whereby the mandatary
or agent receives the thing to sell it, and does not pay its price, but delivers to the principal the price he
obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it.
Held: That this contract is one of purchase and sale, and not of commercial agency.

2.ID.; ID.—The testimony of the person who drafted this contract, to the effect that his purpose was to
be an agent for the beds and to collect a commission on the sales, is of no importance to prove that the
contract was one of agency, inasmuch as the agreements contained in the contract constitute, according
to law, covenants of purchase and sale, and not of commercial

502

502

PHILIPPINE REPORTS ANNOTATED

Quiroga vs, Parsons Hardware Co.

agency. It must be understood that a contract is what the law defines it to be, and not what it is called
by the contracting parties.

3.ID.; ID.—The fact that the contracting parties did not; perform the contract in accordance with its
terms, only shows mutual tolerance and gives no right to have the contract considered, not as the
parties stipulated it, but as they performed it.
4.ID.; ID.—Only the acts of the contracting parties, subsequent to, and in connection with, the
performance of the contract must be considered in the interpretation of the contract, when such
interpretation is necessary, but not when, as in the instant case, its essential agreements are clearly set
forth and plainly show that the- contract belongs to a certain kind and not to another.

5.ID.; ID.—The defendant obligated itself to order the beds from the plaintiff by the dozen. Held: That
the effect of a breach of this clause by the defendant would only entitle the plaintiff to disregard the
orders which the defendant might place under other conditions; but if the plaintiff consents to fill them,
he waives his right and cannot complain for having acted thus at his own free will. QUIROGA vs.
PARSONS HARDWARE Co., 38 Phil. 501, No. 11491 August 23, 1918

GONZALO PUYAT & SONS, INC., petitioner, vs. ARCO AMUSEMENT COMPANY (formerly known as Teatro
Arco), respondent.

CONTRACTS; PURCHASE AND SALE; INTERPRETATION.—The contract is the law between the parties and
should include all the things they are supposed to have been agreed upon. What does not appear on the
face of the contract should be regarded merely as "dealer's" or "trader's talk", which can not bind either
party. (Nolbrook v. Conner, 56 So., 576; 11 Am. Rep., 212; Bank v. Brosscell, 120 111., 161; Bank v.
Palmer, 47 111., 92; Hosser v. Copper, 8 Allen, 334; Doles v. Merrill, 173 Mass., 411.) The letters, Exhíbits
1 and 2, by which the respondent accepted the prices of $1,700 and $1,600, respectively, for the sound
reproducing equipment subject of its contract with the petitioner, are clear in their terms and admit of
no other interpretation than

403

VOL. 72, JUNE 20, 1941

403

Puyat & Sons, Inc. vs. Arco Amusement Co.

that the respondent agreed to purchase from the petitioner the equipment in question at the prices
indicated which are fixed and determinate. The respondent admitted in its complaint filed with the
Court of First Instance of Manila that the petitioner agreed to sell to it the first sound reproducing
equipment and machinery. Puyat & Sons, Inc. vs. Arco Amusement Co., 72 Phil. 402, No. 47538 June 20,
1941
FAR EASTERN EXPORT & IMPORT Co., petitioner, vs. LIM TECK SUAN, respondent.

1.PURCHASE AND SALE; WHEN TRANSACTION NOT AN AGENCY OR BROKERAGE.—Where the agreement
speaks of the items (merchandise) therein involved as sold and the sale was even confirmed by the
export company, the agents U. T. Co. and the export company dealt directly with local merchants V. and
S. without expressly indicating or revealing their principals, there was no privity of contract between the
buyers S. and V. and the suppliers F. I. C. and A. J. W. C., respectively, no commission or monetary
consideration was paid or agreed to be paid by the buyers to the export company and the U. T. Co.,
proof that there was no agency or brokerage and that the profit of the latter undoubtedly the difference
between the price listed to the buyers and the net special price quoted to the sellers, by the suppliers.
Held; that the transaction entered into is one of purchase and sale.

2.PRINCIPAL AND AGENT; AGENT OF FOREIGN COMPANY MAY NOT ACT AS AGENT OF LOCAL BUYERS.—
Where a foreign company has an agent here selling its goods and merchandise, that same agent could
not very well act as agent for local buyers, because the interests of his foreign principal and those of the
buyers would be in direct conflict. He could not serve two masters at the same time. (The doctrine in
Gonzalo Puyat & Sons, Inc., vs. Arco Amusement, 72 Phil. 402, reiterated.) Far Eastern Export & Import
Co., vs. Lim Teck Suan, 97 Phil. 171, No. L-7144 May 31, 1955

PEARL ISLAND COMMERCIAL CORPORATION, plaintiff and appellee, vs. LIM TAN TONG and MANILA
SURETY & FIDELITY Co., INC., defendants and appellants.

SURETY BOND; TERMS OF CONTRACTS; PARTLY AGENCY AND PARTLY PURCHASE AND SALE; LIABILITY OF
SURETY.—Surety Company contends that it cannot be held liable on its bond for the reason that the
latter was filed on the theory that the contract between plaintiff and T was one of agency as a result of
which said surety Company guaranteed the faithful performance of T as agent, but that it turned out
that said contract was one of purchase and sale, as shown by the very title of said contract namely
"contract of purchase and sale". However, a careful examination of the terms of the contract, shows
that while it provides for the sale of Bee Wax from plaintiff to T, it also designates T as the sole
distributor of the article within a certain territory; besides, the contract provides that T is to furnish
surety bond to cover all shipments made by plaintiff to him. Held, that the surety company cannot deny
its liability for the value of the shipment of the articles. Any way, it seems to have been the sole concern
and interest of the plaintiff to be sure that it was paid the value of all shipments of Bee Wax to T and the
Surety Company by its bond, guaranteed in the final analysis said payment by T either as purchaser or as
agent. Pearl Is. Commercial Corp. vs. Tan Tong, et al., 101 Phil., 789, No. L-10517 June 28, 1957

LOURDES VALERIO LIM, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent. , 133 SCRA 333, No. L-
34338 November 21, 1984

Same; Same; Agency; Estafa is present where contract to sell constituted another as mere agent.—Aside
from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso’s
tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco
she would be given something. The appellant is a businesswoman, and it is unbelievable that she would
go to the extent of going to Ayroso’s house and take the tobacco with a jeep which she had brought if
she did not intend to make a profit out of the transaction. Certainly, if she was doing a favor to Maria
Ayroso and it was Ayroso who had requested her to sell her tobacco, it would not have been the
appellant who would have gone to the house of Ayroso, but it would have been Ayroso who would have
gone to the house of the appellant and deliver the tobacco to the appellant.”

GREEN VALLEY POULTRY & ALLIED PRODUCTS, INC., petitioner vs. THE INTERMEDIATE APPELLATE
COURT and E.R. SQUIBB & SONS PHILIPPINE CORPORATION, respondents.

Contracts; Damages; Agency; In an agency to sell, the agent is liable to pay the principal for goods sold
by the agent without the principal’s consent.—We do not have to categorize the contract. Whether
viewed as an agency to sell or as a contract of sale, the liability of Green Valley is indubitable. Adopting
Green Valley’s theory that the contract is an agency to sell, it is liable because it sold on credit without
authority from its principal. The Civil Code has a provision exactly in point.

Same; Same; Same; Same.—The commission agent cannot, without the express or implied consent of
the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but
the commission agent shall be entitled to any interest or benefit, which may result from such sale. (Art.
1905, N.C.C.) Green Valley Poultry & Allied Products, Inc. vs. Intermediate Appellate Court, 133 SCRA
697, No. L-49395 December 26, 1984

BERT OSMEÑA & ASSOCIATES, petitioners, vs. THE COURT OF APPEALS and SPOUSES PEDRO QUIMBO
and LEONADIZA QUIMBO, respondents. Bert Osmeña & Associates vs. Court of Appeals, 120 SCRA 395,
No. L-56545 January 28, 1983

Civil Law; Obligations; Sales; Novation; Contract of sale not novated and liability not extinguished absent
a new contract executed by the parties.—Petitioner’s contention that inasmuch as respondent spouses
had agreed to exchange Lot 409 for Lots 1 and 2, the contract of sale had been novated and its liability
extinguished, is untenable. No new contract was ever executed between petitioner and respondent
spouses, notwithstanding Helena Siguenza’s assurances to that effect.

Same; Same; Same; Fraud; Sale of property to another by a seller who was no longer owner of property
constitutes fraud upon the buyer.—Fraud has been established. As the trial Court had concluded: “There
is no question that the defendants have conveyed and disposed of Lots 1 and 2, Block I, Phase II of the
Clarita Village Subdivision to the plaintiffs at a time when they were no longer the owners thereof. At
the time of the execution of the contract of sale, their only interest thereon was a mortgage lien in the
amount of P13,440.00. As mortgagee they did not have the right to sell the same. Helena and Carmen
Siguenza did not reveal this fact to the plaintiffs and the latter relied on their assurances that the same
belong to them. Bert Osmeña and Associates, Inc. as developer and at the same time attorney-in-fact for
Carmen and Helena Siguenza similarly concealed this fact. Their efforts to cover up this fraud make the
acts more detestable and obnoxious. Defendants demonstrated palpable malice, bad faith, wantonness
and incurable dishonesty.”
Same; Same; Same; Damages; Award of damages for pecuniary loss for failure of buyer to build a house,
eliminated; Reason.—The award in the amount of P100,000.00 representing pecuniary loss for

______________

* FIRST DIVISION.

396

396

SUPREME COURT REPORTS ANNOTATED

Bert Osmeña & Associates vs. Court of Appeals

not having been able to build a P100,000.00 house should be eliminated. Respondent spouses did not
lose that amount. It was only the estimated cost of the house they were unable to construct. It was an
expense item, not expected income.

Same; Same; Same; Same; Speculation arising from defendant’s alleged wrongful act cannot be a basis
for an award of damages.—The amount of P5,610.00 awarded representing rentals the spouses could
have saved, from the time when the house was to be finished to the date when respondent Leonadiza
testified in Court (January 1972 to September 6, 1974), should also be eliminated for being speculative.
If they had built their P100,000.00 house, thus avoiding the payment of rentals, they would, on the
other hand, be losing interest or income from that amount. Evidence that the plaintiff could have
bettered his position had it not been for the defendant’s wrongful act cannot serve as basis for an award
of damages.

Same; Same; Same; Same; Moral damages, award of, due to fraud and bad faith of seller, proper, but
must be reduced.—Fraud and bad faith by petitioner company and the Siguenzas having been
established, the award of moral damages is in order. Moral damages should be reduced, however, from
P50,000.00 to P10,000.00.

Same; Same; Same; Same; Exemplary damages, award of, reduced.—Moral damages having been
awarded, exemplary damages were also properly awarded. They should be reduced, however, from
P25,000.00 to P5,000.00.

Same; Same; Same; Attorney’s fees, award of, proper, as aggrieved parties were compelled to litigate to
protect their interests.—The award of P5,000.00 as attorney’s fees is affirmed inasmuch as respondent
spouses were compelled to litigate for the protection of their interests.

Same; Same; Same; Agency; Plea for exemption from liability for damages for allegedly being a mere
agent, untenable, as contract of sale described the party not as agent but as seller.—Petitioner’s plea for
exception from liability for damages on the ground that it was a mere agent of the Siguenzas is
untenable. The contract of sale describes petitioner as seller together with the Siguenzas. In fact,
petitioner was the lone signatory for the sellers in said contract. Bert Osmeña & Associates vs. Court of
Appeals, 120 SCRA 395, No. L-56545 January 28, 1983

PACIFIC COMMERCIAL COMPANY, plaintiff and appellant, vs. ALFREDO L. YATCO, defendant and
appellee.

1.PAYMENT or TAX ON MERCHANT SALES BY MANUFACTURER AND OWNER OF SUGAR; PAYMENT OF

ANOTHER TAX BY ONE WHO MADE THE SALE DOES NOT CONSTITUTE DOUBLE TAXATION.—V. M. Co.
already paid the merchant sales tax for the sales of sugar, in its capacity as manufacturer and owner of
the sugar sold. It is said that the payment of another tax by the plaintiff, who effected the sale,
constitutes double taxation, there having been only one sale. In Gil Hermanos vs. Hord (10 Phil., 218),
this question was already decided in the sense that there is no double taxation. The case at bar is
identical in all respects.

2.ID.; ID.; DECISION IN GIL HERMANOS vs. HORD, SUPRA, HAS NOT BEEN REVERSED.—It is said that the
decision in Gil Hermanos vs. Hord, supra, was reversed in Atkins, Kroll & Co. vs. Posadas (48 Phil., 352),
and other cases. This, however, is not correct. Neither in Atkins, Kroll & Co. vs. Posadas, nor in the other
cases mentioned by the plaintiff, has the decision in Gil Hermanos vs. Hord been reversed. Although a
distinct result was reached in these cases, this was only because they have been found to be different
from the case of Gil Hermanos vs, Hord. On the contrary, in F. E. Zuellig, Inc. vs. Collector of Internal
Revenue (51 Phil., 629), the doctrine in Gil Hermanos was followed.

3.ID.; ID.; ID.; COMMISSION MERCHANT.—The question of whether the appellant, in connection with
the sugar delivered in its warehouses and thereafter sold to the purchasers, acted as a commission
merchant, presents no doubt. A commission merchant is one engaged in the purchase or sale for
another of personal property which, for this purpose, is placed in his possession and at his disposal. He
maintains a relation not only with his principal and the purchasers or vendors, but also with the property
which is the subject matter of the transaction. In the present case, the sugar was shipped by V. M. Co.,
and upon arrival at the port of destination, the plaintiff received and transf erred it for deposit in its
warehouses until the purchaser called for it. The deposit of the sugar in the warehouses of the plaintiff
was made upon its own account and at its own risk until it was sold and taken by the purchaser. There is,
therefore, no doubt that the plaintiff, alter taking the sugar on board until it was sold, had it in its
possession and at its own risk, cir

399

VOL. 68, JULY 20, 1939

399

Pacific Commercial Company vs. Yatco

cumstances determinative of its status as a commission merchant in connection with the sale of sugar
under these conditions.

4.ID.; ID.; ID.; COMMERCIAL BROKER.—The plaintiff merely acted as a commercial broker as to the sale
of the sugar delivered to the purchaser on board. The broker, unlike the commission merchant, has no
relation with the thing he sells or buys. He is merely an intermediary between the purchaser and the
vendor. He acquires neither the possession nor the custody of the things sold. His only office is to bring
together the parties to the transaction. These circumstances are present in connection with the
plaintiff's sale of the sugar which was delivered to the purchaser on board. The sugar sold under these
conditions was shipped by the plaintiff at its expense and risk until it reached its destination, where it
was later taken on board by the purchaser. The plaintiff never had possession of the sugar at any time.
The circumstance that the bill of lading was sent to the plaintiff does not alter its character of being
merely a broker, or constitute possession by it of the sugar shipped, inasmuch as the same was sent to it
for the sole purpose of turning it over to the' purchaser for the collection of the price, The sugar did not
come to its possession in any sense. Pacific Commercial Company vs. Yatco, 68 Phil. 398, No. 45976 July
20, 1939

Same; Same; Same; Sale; There is no contract of sale, but mere agency to sell, where agreement was to
pay over to tobacco owner the proceeds thereof as soon as it was sold.—The fact that appellant
received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as
it was sold, strongly negates transfer of ownership of the goods to the petitioner. The agreement
(Exhibit “A”) constituted her as an agent with the obligation to return the tobacco if the same was not
sold. , 133 SCRA 333, No. L-34338 November 21, 1984
SWITZERLAND GENERAL INSURANCE COMPANY, LTD., petitioner, vs. HON. PEDRO A. RAMIREZ, Presiding
Judge of the Court of First Instance of Manila, Branch XXX, OYAMA LINES, CITADEL LINES and MABUHAY
BROKERAGE CO., INC., respondents.

Code of Commerce; Ship agent; Definition and scope of a ship agent.—A ship agent, according to Article
586 of the Code of Commerce, is “the person entrusted with the provisioning of a vessel, or who
represents her in the port in which she happens to be.” (Italics supplied).

Same; Same; Local representative of a foreign charterer of vessel, which is the entity that represents the
vessel in the port of Manila, is considered a ship agent.—It is not disputed by the private respondent
that it is the local representative in the Philippines of the Oyama Shipping Co., Ltd. and, as alleged by
petitioner, upon arrival of the vessel S/S “St. Lourdes” in Manila, it took charge of the unloading of the
cargo and issued cargo receipts (or tally sheets) in its own name, for the purpose of evidencing discharge
of cargoes and the conditions thereof from the vessel to the arrastre operators and/or unto
barges/lighters, and that claims against the vessel S/S “St. Lourdes” for losses damages sustained by
shipments were in fact filed and processed by respondent Citadel Lines, Inc. These facts point to the
inevitable conclusion that private respondent is the entity that

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* SECOND DIVISION

298

298

SUPREME COURT REPORTS ANNOTATED

Switzerland General Insurance Company, Ltd vs. Ramirez

represents the vessel in the port of Manila and hence is a ship agent within the meaning and context of
Article 586 of the Code of Commerce.
Same; Same; Liabilities of a ship agent.—The Code of Commerce provides, among others that the ship
agent shall also be liable for the indemnities in favor of third persons which arise from the conduct of
the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freightage he may have earned during the
voyage. (Article 587).

Same; Same; Same; Evidence; Where a ship agent does not dispute its liabilities arising from loss or
damage of the goods and no proof was adduced to exempt it from liability, it is liable for the loss
suffered.—At any rate, the liabilities of the ship agent are not disputed by private respondent. It
appearing that the Citadel Lines is the ship agent for the vessel S/S “St. Lourdes” at the port of Manila, it
is, therefore, liable to the petitioner, solidarily with its principal, Oyama Shipping Co., Ltd., in an amount
representing the value of the goods lost and or damaged, amounting to P38,698.94, which was likewise
the amount paid by petitioner, as insurer, to the insured/consignee. As found by the court a quo, there
has been no proof presented to show that the officers of the vessel, in whose custody the goods were
lost or damaged, are exempt from liability therefrom and that the damage was caused by factors and cir
cumstances exempting them from liability.

Same; Same; Insolvency; Insolvency of a foreign charterer does not affect the liability of a ship agent.—
The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of Citadel Lines,
Inc. is concerned. The law does not make the liability of the ship agent dependent upon the solvency or
insolvency of the ship owner. Switzerland General Insurance Company, Ltd vs. Ramirez, 96 SCRA 297,
No. L-48264 February 21, 1980