Rallos v.

Yangco
FACTS:
Yangco sent Rallos a letter inviting the latter to be the consignor in
buyingand selling leaf tobacco and other native products. Terms and
conditions were alsocontained in the letter.
Accepting the invitation, Rallos proceeded to do a considerable business
withYangco through the said Collantes, as his factor, sending to him as
agent forYangco a good deal of produce to be sold on commission.
Rallos sent to the said Collantes, as agent for Yangco, 218 bundles of
tobacco in the leaf to be sold on commission, as had been other produce
previously.
The said 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 said
Collantes thesum of 1,537.08 belonging to Rallos.
This sum was, apparently, converted to hisown use by said agent.
It appears, however, that prior to the sending of said tobacco Yangco
hadsevered his relations with Collantes and that the latter was no longer
acting as hisfactor.
This fact was not known to Rallos; and it is conceded in the case that
nonotice of any kind was given by Yangco of the termination of the
relations betweenYangco and his agent, Collantes.
Yangco thus refused to pay the said sum upon demand of Rallos,
placingsuch refusal upon the ground that at the time the said tobacco was
received andsold by Collantes, he was acting personally and not as agent of
Yangco.
ISSUE:Whether or not Yangco as principal is liable brought by the sale of theproduce
HELD:Yes.
Yangco, as principal is liable.
Having advertised the fact that Collanteswas 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
andtimely notice thereof to Rallos.
Failing to do so, he is responsible to them forwhatever goods may have
been in good faith and without negligence sent to theagent without
knowledge, actual or constructive, of the termination of suchrelationship.
Yangco did not even inform rallos that collantes was no longer his agent.
Furthermore, yangco advertised collantes to be his agent, he should have
given rallos timely notice that he had already severed ties with collantes.
The negligence of yangco to give timely notice to rallos, makes him liable
for the acts of collantes.
It was the duty of yangco to notify rallos regarding the severed relation
with collantes
J. DANON vs. A. BRIMO
NATURE: Action to recover the sum of P60,000, alleged to be the value of services by
the plaintiff as a broker.
QUICK FACTS & HELD:
Danon (Broker) found a purchaser for the factory of his manager (Brimo),
who promised 5% commission to Danon; Another broker found another
purchaser who would buy the factory at a higher price, said factory was
sold to this purchaser; As such, Danons client did not perfect the sale
withBrimo.
Held:
Danon not the procuring cause.
A broker is never entitled to commissions for unsuccessful efforts.
The risk of failure is only his.
The reward comes only with his success.
Where no time for the continuance of the contract is fixed by its terms,
either party is at liberty to terminate it atwill, subject only to the ordinary
requirements of good faith.

FACTS:
Antonio Brimo, informed the Danon, that he (Brimo) desired to sell his
factory, the Holland American Oil Co., for the sum of P1,200,000
Brimo agreed and promised to pay to the Danon commission of 5%
provided the latter could sell said factory for that amount3.
No definite period of time was fixed within which the Danon should effect
the sale.
It seems that another broker, Sellner, was also negotiating thesale, or
trying to find a purchaser for the same property and that the plaintiff was
informed of the fact either by Brimo himself or by someone else;at least, it
is probable that the plaintiff was aware that he was not alone in the field,
and his whole effort was to forestall his competitor by beingthe first to find
a purchaser and effect the sale.4.
Immediately after having an interview with Mr. Brimo, Danon went to see
Mr. Mauro Prieto, president of the Santa Ana Oil Mill, a corporation,and
offered to sell to him the defendant's property at P1,200,000.
The said corporation was at that time in need of such a factory, and Mr.
Prieto,instructed the manager, Samuel E. Kane, to see Mr. Brimo and
ascertain whether he really wanted to sell said factory, and, if so, to get
permissionfrom him to inspect the premises. Mr. Kane inspected the factory
and, presumably, made a favorable report to Mr. Prieto.
The latter asked for an appointment with Mr. Brimo to perfect the
negotiation.
In the meantime Sellner, the other broker referred to, had found a
purchaser for the sameproperty, who ultimately bought it for P1,300,000.
For that reason Mr. Prieto, the would be purchaser found by the plaintiff,
never came to seeMr. Brimo to perfect the proposed negotiation.
ISSUE: Whether Danon as broker was theProcuring Cause of Sale? NO.
Whether Danon is entitled to Compensation NO
HELD:
The most that can be said as to what the plaintiff had accomplished is, that
he had found a person who might have bought the defendant's factory.
The evidence does not show that the Santa Ana Oil Mill had definitely
decided to buy the property at the fixed price of P1,200,000.
The plaintiff claims that the reason why the sale was not consummated was
because Mr. Brimo refused to sell.
Defendant agreed and promised to pay him a commission of 5% provided
he (the plaintiff) could sell the factory at P1,200.000.
It is difficult to seehow the plaintiff can recover anything in the premises.
The plaintiff's action is an action to recover "the reasonable value" of
services rendered.
It is clear that his "services" did not contribute towards bringing about the
sale.
He was not "the efficient agent or the procuring cause of the sale."
The broker must be the efficient agent or the procuring cause of sale
The means employed by him and his efforts must result in the sale.
The duty assumed by the broker is to bring the minds of the buyer and
seller to an agreement for a sale, and the price and terms on which it is to
bemade, and until that is done his right to commissions does not accrue
It follows, that a broker is never entitled to commissions for unsuccessful
efforts.
The risk of a failure is wholly his. The reward comes only with hissuccess.
He may have introduced to each other parties who otherwise would have
never met; he may have created impressions, which under laterand more
favorable circumstances naturally lead to and materially assist in the
consummation of a sale; he may have planted the very seed fromwhich
others reap the harvest;
but all that gives him no claim
The failure therefore and its consequences were the risk of the broker only.
This however must be taken with one important and necessarylimitation.
If the efforts of the broker are rendered a failure by the fault of the
employer; if capriciously he changes his mind after the purchaser,ready
and willing, and consenting to the prescribed terms, is produced; or if the
latter declines to complete the contract because of some defectof title in the
ownership of the seller, some unremoved incumbrance, some defect which
is the fault of the latter, then the broker does not losehis commissions.
But this limitation is not even an exception to the general rule affecting the
broker's right for it goes on the ground that thebroker has done his duty,
that he has brought buyer and seller to an agreement, but that the contract
is not consummated and fails though theafter-fault of the seller.
One other principle applicable:
Where no time for the continuance of the contract is fixed by its terms
either party is at liberty to terminate it at will ,subject only to the ordinary
requirements of good faith.
Usually the broker is entitled to a fair and reasonable opportunity to
perform hisobligation, subject of course to the right of the seller to sell
independently.
But having been granted him, the right of the principal to terminate his
authority is absolute and unrestricted, except only that he may not do it in
bad faith.
Although the present plaintiff could probably have effected the sale, he is
not entitled to the commissions agreed upon because he had nointervention
whatever in, and much sale in question
It must be borne in mind that no definite period was fixed by the defendant
within which the plaintiff might effect the sale of its factory.
Nor was the plaintiff given by the defendant the exclusive agency of such
sale.
Therefore, the plaintiff cannot complaint of the defendant's conduct in
selling the property through another agent before the plaintiff's efforts were
crowned with success."One who has employed a broker can himself sell the
property to a purchaser whom he has procured, without any aid from the
broker."
DISPOSITIVE:For the foregoing reasons the judgment appealed from is
hereby revoked and the defendant is hereby absolved from all liability
underthe plaintiff's complaint, with costs in both instances against the
plaintiff. So ordered

PNB vs Manila Surety
Facts:
PNB had opened a letter of credit and advanced thereon$120,000 to
Edgington Oil Refinery for 8,000 tons of hotasphalt.
Of this amount, 2,000 tons worth P279,000 werereleased and delivered to
ATACO under a trust receiptguaranteed by Manila Surety and Fidelity.
To pay for the asphalt, ATACO constituted PNB its assigneeand attorney-in-
fact to receive and collect for Bureau of Public Works the amount out of the
funds payable to theassignor.
ATACO delivered to the Bureau of Public Works and the latteraccepted.
Of this amount the Bank regularly collected.
Thereafter for unexplained reasons, the Bank ceased tocollect from the
bureau.
It was later on discovered that moremoney were payable to ATACO from
the Public Works officebut the bank allowed another creditor to collect the
fundsdue to ATACO.
Issue: W/n the bank was negligent in failing to collect thefunds from the bureau and
therefore liable for damages
Held: Yes.
The bank has been negligent in having stopped collectingfrom the bureau
the moneys falling due in favor of ATACO,thereby allowing such funds to be
taken and exhausted byother creditors to the prejudice of the surety.
These acts of PNB were contrary to its duty as holder of anexclusive and
irrevocable power of attorney to make suchcollection, since an agent is
required to act with the care of agood father of a family.
PNB thereby becomes liable for thedamages which the principal may suffer
through its non-performance.
Manila Surety is released from liability as guarantor of theobligation. By the
acts of the creditor PNB, guarantor ManilaSurety cannot be subrogated to
the rights of PNB

BPI vs. De Coster
Facts:
De Coster, La Orden and Poizat issued a promissorynote in favor of BPI for
P292,000
The promissory note was secured by severalmortgages on the several
properties of the debtors
The debtors defaulted so BPI asked the court toforeclose the mortgages
CFI issued an execution order against the threedebtors
Gabriela de Coster, wife of Poizat, complained thatat the time of the filing of
the complaint she was inParis and was absent in the Philippines .and has
noknowledge of the actual facts.
De Coster alsoalleged that the mortgage was made without herconsent and
made in excess of the authority givenhis husband and therefore it was null
and void
ISSUE: Whether or not the transactions entered by Poizat, as an agent of his wife
valid?
HELD:NO.
Paragraph 5 of the power of attorney authorizes the husband for in the
name of his wife to loan or borrow any sums of money or fungible things,
etc. T
his should be construed to mean that the husband had power only to his
wifes money and not to borrow money for or on account of his wife as her
agent and attorney-in-fact.
That does not carry with it or imply that he had the legal right to make his
wife liable as a surety for the preexisting debt of a third person
The following the specific powers of attorney that the wifegave her husband
Paragraph 5 of the power of attorney authorizes the husbandfor in the
name of his wife to "loan or borrow any sums of money or fungible things,
etc." This should be construed tomean that the husband had power only to
loan his wife'smoney and to borrow money for or on account of his wife
asher agent and attorney in fact. That does not carry with it orimply that he
had the legal right to make his wife liable as asurety for the preexisting
debt of a third person.
Paragraph 6 authorizes him to "enter into any kind of contracts whether
civil or mercantile, giving due form thereof either by private documents or
public deeds, etc."
Paragraph 7 authorizes him to "draw, endorse, accept, issueand negotiate
any drafts, bills of exchange, letters of credit,letters of payment, bills, vales,
promissory notes, etc."
The foregoing are the clauses in the power of attorney uponwhich the bank
relies for the authority of the husband toexecute promissory notes for and
on behalf of his wife and asher agent.
It will be noted that there is no provision in either of themwhich authorizes
or empowers him to sign anything or to doanything which would make his
wife liable as a surety for apre-existing debt.
It is fundamental rule of construction that where in aninstrument powers
and duties are specified and defined,that all of such powers and duties are
limited and confinedto those which are specified and defined, and that all
otherpowers and duties are excluded.
It is very apparent from the face of the instrument that thewhole purpose
and intent of the power of attorney was toempower and authorize the
husband to look after and protect the interests of the wife and for her and
in her name totransact any and all of her business. But nowhere does it
provide or authorize him to make her liable as a surety for thepayment of
the pre-existing debt of a third person.
Hence, it follows that the husband was not authorized orempowered to sign
the note in question for and on behalf of the wife as her act and deed, and
that as to her the note is voidfor want of power of her husband to execute
it.
The same thing is true as to the real mortgage to the bank.It was given to
secure the note in question and was not given for any other purpose. The
real property describedin the mortgage to the bank was and is the property
of thewife. The note being void as to her, it follows that as to herthe real
mortgage to the bank is also void for want of power to execute it.

PNB vs. BERNARDO BAGAMASPAD and BIENVENIDO M. FERRER,
Facts :
Because of the Pacific War and by reason of the destruction and loss of
animals of labor, farm implements, and damage to or abandonment of farm
lands, after liberation there was acute shortage of foodstuff.
President Roxas in order to foment and encourage food production,
instructed the plaintiff Philippine National Bank to extend special facilities to
farmers in the form of crop loans in order to enable them to rehabilitate
their farms.
In pursuance of said instructions and to cooperate with the Administration,
the plaintiff Bank passed the corresponding resolution authorizing the
granting of ten-month special crop loans to bona fide food producers, land-
owners or their tenants, under certain conditions.
Delfin Buencamino, one of the Vice-President of the Bank and head of the
Branches and Agencies Department of said institution, was entrusted with
the supervision of the granting of these loans.
Juan Tueres, one of the Assistant Managers of said Department drafted the
corresponding rules and regulations regarding the granting of said specials
crops loans.
After approval by Buencamino, these rules and regulations were embodied
in a circular letter, a copy of which was personally delivered to defendant
Ferrer.
These rules and regulations were later amplified by another circular letter.
Besides circularizing its branches and agencies with these rules and
regulations, on June 14, 1946, the Bank held in Manila a conference in of all
its manager and Agents.
Defendant Ferrer, Assistant Agent of the Cotabato Agency attended the
conference in representation of said Agency.
He arrived late but Tueres explained to him what had been discussed during
the conference, emphasizing to him the necessity of exercising diligence
and care in the granting of the crop loans to see to it that they are granted
only to bona fide planters, land-owners or tenants, as well as repeating to
him the advice of Vicente Carmona, President of the bank, that the
Managers and Agents of the Bank should not allow themselves to be fooled.
The Cotabato Agency under the management of the two defendants began
granting these special crop loans in July, 1946, and by March of the
following year, 1947, said Agency had granted to over 5,000 borrowers,
loans in the total amount of a little over eight and half million pesos.
In their brief the appellant contend that the trial court erred in finding and
holding that extending new special crop loans after November 26, 1946,
amounting to P726,680, as they as Agent and Assistant Agent, respectively,
of the of the Cotabato Agency, did so at their own risk and in violation of
the instructions received from the Manila office; also that the court erred in
holding that they (appellants) acted with extreme laxity, negligence and
carelessness in granting said new special crops loans.
On the first assigned error appellants maintain that outside of the telegram,
which they claim to have received only on December 7, 1946, there was no
instruction by the central office stopping the granting of new special crop
loans.
Appellants not only granted new special crop loans after they were given to
understand by the central office that they should no longer grant said loans
and before appellants received instructions as to what they should do in
that regard, but they also violated the express instructions of the Bank to
the effect that funds received from the Zamboanga Agency should be
utilized only to pay second installments on special crop loans.
The evidence shows that in violation of these instructions and regulations,
the defendants released large loans aggregating P348,768.22 to about 103
borrowers who were neither landowners or tenants but only public land
sales applicants that is to say, persons who have merely filed applications to
buy public lands.
Appellants in their over-enthusiasm and seemingly inordinate desire to
grant as many loans as possible and in amounts disproportionate to the
needs of the borrowers, admitted and passed upon more loan applications
than they could properly handle.

Issue(s): Whether or not the two defendants Bagamaspad and Ferrer acting as
Agent and Assistant Agent of the Cotabato Agency, in granting new crop loans after
November 13, 1946, violated the instructions of the Bank, and that furthermore, in
granting said crop loans, they acted negligently and did not exercise the care and
precaution required of them in order to prevent the release of crop loans to persons
who were neither qualified borrowers nor entitled to the assistance being rendered by
the Government and the Bank, all contrary to the rules and regulations issued by the
Bank.
HELD:
The trial court based the civil liability of the appellants herein on the
provisions of Arts. 1718 and 1719 of the Civil Code, defining and
enumerating the duties and obligations of an agent and his liability for
failure to comply with such duties, and Art. 259 of the Code of Commerce
which provides that an agent must observe the provisions of law and
regulations with respect to business transactions entrusted to him otherwise
he shall be responsible for the consequences resulting from their breach or
omissions; and also Art. 1902 of the Civil Code which provides for the
liability of one for his tortious act, that is to say, any act or omission which
causes damage to another by his fault or negligence.
Appellants while agreeing with the meaning and scope of the legal
provisions cited, nevertheless insist that those provisions are not applicable
to them inasmuch as they are not guilty of any violation of instructions or
regulations of the plaintiff Bank; and that neither are they guilty of
negligence of carelessness as found by the trial court.
A careful study and consideration of the record, however, convinces us and
we agree with the trial court that the defendants-appellants have not only
violated instructions of the plaintiff Bank, including things which said Bank
wanted done or not done, all of which were fully understood by them, but
they (appellants) also violated standing regulations regarding the granting
of loans; and, what is more, thru their carelessness, laxity and negligence,
they allowed loans to be granted to persons who were not entitled to
receive loans.
As pointed out by Counsel for appellee, ordinarily, a principal who collects
either judicially or extrajudicially a loan made by an agent without authority,
thereby ratifies the said act of the agent.
In the present case, however, in filing suits against some of the borrowers
to collect at least part of the unauthorized loans, there was no intention on
the part of the plaintiff Bank to ratify the acts of appellants.
Neither did the plaintiff receive any substantial benefit by its act of filing
these suits if we consider the fact that the collections so far made, form a
small or insignificant portion of the entire principal and interest.
And, we fail to see any iniquity in this act of the plaintiff in suing some of
the borrowers to collect what it could at the same time holding the
appellants liable for the balance, because the plaintiff Bank is not trying to
enrich itself at the expense of the defendants but is merely trying to
diminish as much as possible the loss to itself and automatically decrease
the financial liability of appellants.
Considering the large amount for which appellants are found liable, it is a
matter of serious doubt if they are in a position to pay it. Moreover,
whatever amount is collected by the plaintiff Bank from borrowers, serves
to diminish the financial liability of the appellants, in the same way that the
original claim of P704,903.18, at the very instance of plaintiff was reduced
to P699,803.57.
In other words, the act of the plaintiff Bank in the matter, far from being
iniquitous, is really beneficial to the appellants.