DOMINION INSURANCE CORP. V.

COURT OF APPEALS
Facts:
Rodolfo S. Guevarra instituted a complaint for sum of money against defendant
Dominion Insurance Corporation. Plaintiff sought to recover thereunder the sum of
P156,473.90 which he claimed to have advanced in his capacity as manager of
defendant to satisfy certain claims filed by defendants clients.
Petitioner (Dominion Insurance Corp.) denied any liability to private respondent and
asserted a counterclaim for P249,672.53, representing premiums that respondent
allegedly failed to remit.
The RTC ruled in favor of Guevarra and ordered thepetitioner to pay him the sum he
claims. The CA affirmed the decision of the RTC.
Issues:
1)Whether or not respondent Guevarra acted within his authority as agent for petitioner
2)Whether or not respondent Guevarra is entitled to reimbursement of amounts he paid
out of his personal money in settling the claims of several insured.
Held:
1) No.
A perusal of the Special Power of Attorney

would show that petitioner (represented by
third-party defendant Austria) and respondent Guevarra intended to enter into a
principal-agent relationship. Despite the word "special" in the title of the document, the
contents reveal that what was constituted was actually a general agency.
The instruction of petitioner as the principal could not be any
clearer.1wphi1 Respondent Guevarra was authorized to pay the claim of the insured,
but the payment shall come from the revolving fund or collection in his possession.
Having deviated from the instructions of the principal, the expenses that respondent
Guevarra incurred in the settlement of the claims of the insured may not be reimbursed
from petitioner Dominion. This conclusion is in accord with Article 1918, Civil Code
2) YES.
The law on agency prohibits respondent Guevarra from obtaining reimbursement, his
right to recover may still be justified under the general law on obligations and contracts.
Article 1236, second paragraph, Civil Code, provides:
"Whoever pays for another may demand from the debtor what he has paid, except
that if he paid without the knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the debtor."
In this case, when the risk insured against occurred, petitioners liability as insurer
arose.1wphi1 This obligation was extinguished when respondent Guevarra paid the
claims and obtained Release of Claim Loss and Subrogation Receipts from the insured
who were paid.
Thus, to the extent that the obligation of the petitioner has been extinguished,
respondent Guevarra may demand for reimbursement from his principal. To rule
otherwise would result in unjust enrichment of petitioner.
CMS LOGGING V. COURT OF APPEALS,
FACTS:
Petitioner CMS is a forest concessionaire engaged in the logging business, while
private respondent DRACOR is engaged in the business of exporting and selling logs
and lumber. CMS and DRACOR entered into a contract of agency whereby the former
appointed the latter as its exclusive export and sales agent for all logs that the former
may produce, for a period of 5 years.
Six months before the expiration of the agreement, CMS's president, Atty. Carlos Moran
Sison, and general manager and legal counsel, Atty. Teodoro R. Dominguez,
discovered that DRACOR had used Shinko Trading Co., Ltd. as agent, representative
or liaison officer in selling CMS's logs in Japan for which Shinko earned a commission .
CMS claimed that this commission paid to Shinko was in violation of the agreement
and that it (CMS) is entitled to this amount as part of the proceeds of the sale of the
logs. CMS contended that since DRACOR had been paid the 5% commission under the
agreement, it is no longer entitled to the additional commission paid to Shinko as this
tantamount to DRACOR receiving double compensation for the services it rendered.
CMS sued DRACOR for the commission received by Shinko and for moral and
exemplary damages, while DRACOR counterclaimed for its commission, from the sales
made by CMS of logs to Japanese firms. In its reply, CMS averred as a defense to the
counterclaim that DRACOR had retained the sum of its commission for the sales made
by CMS. Thus, as its counterclaim to DRACOR's counterclaim, CMS demanded
DRACOR return the amount it unlawfully retained.
In dismissing the complaint, the trial court ruled that no evidence was presented to show
that Shinko received the commission of U.S. $77,264.67 arising from the sale of CMS's
logs in Japan.The counterclaim was likewise dismissed, as it was shown that DRACOR
had waived its rights to the balance of its commission in a letter dated February 2, 1963
to Atty. Carlos Moran Sison, president of CMS.
The Court of Appeals affirmed the dismissal of the complaint.
ISSUE:
1) WON DRACOR is entitled to its 5% commission arising from the direct sales
made by CMS to buyers in Japan


HELD:
1) No. In the case at bar, CMS appointed DRACOR as its agent for the sale of its
logs to Japanese firms. During the existence of the contract of agency, DRACOR
admitted that CMS sold its logs directly to several Japanese firms. This act
constituted an implied revocation of the contract of agency under Article 1924.

In New Manila Lumber Company, Inc. vs. Republic of the Philippines,
24
this
Court ruled that the act of a contractor, who, after executing powers of attorney in
favor of another empowering the latter to collect whatever amounts may be due
to him from the Government, and thereafter demanded and collected from the
government the money the collection of which he entrusted to his attorney-in-
fact, constituted revocation of the agency in favor of the attorney-in-fact.

Since the contract of agency was revoked by CMS when it sold its logs to
Japanese firms without the intervention of DRACOR, the latter is no longer
entitled to its commission from the proceeds of such sale and is not entitled to
retain whatever moneys it may have received as its commission for said
transactions. Neither would DRACOR be entitled to collect damages from CMS,
since damages are generally not awarded to the agent for the revocation of the
agency, and the case at bar is not one falling under the exception mentioned,
which is to evade the payment of the agent's commission


DYBUNCIO AND CO. V. ONG GUAN CAN
FACTS:
Ong Guan Can, Jr. Executed on behalf of the Ong Guan Can, the deed covering the
sale of arice-mill and camarin, in favor of buyers who reliedupon a 1928 power
of attorney attached to the deed, but which turned out was not a generalpower of
attorney but a limited one and did not give the express power to alienate the
propertiesin question.The creditors of Ong Guan Can sought to have the sale declared
void. But the buyers, defendants juantong and Pua Giok Eng claimed that they were
theowners and lessees of the property.Defendants claimed that the defect in the sons
authority to sell on behalf of the father was
curedby an earlier 1920 general power of attorney given to the same agent [son] by
the father.
Ttrial the Court of First Instance of Capiz held that the deed was invalid and that the
property was subject to the execution which has been levied on said properties by the
judgment creditor of the owner. Defendants Juan Tong and Pua Giok bring this appeal
and insist that the deed is valid.
ISSUE:
WON the deed of sale was invalid
HELD:
YES.
The sale is void. The making and accepting of a new power of attorney, whether it
enlarges or decreases the power of the agent under a prior power of attorney, must be
held to supplant and revoke the latter when the two are inconsistent. If the new
appointment with limited powers does not revoke the general power of attorney, the
execution of the second power of attorney would be a mere
futile gesture.Since the title of Ong Guan Can has not be endivested by deed of sale,
his properties are subjectto attachment and execution.
VALENZUELA V. COURT OF APPEALS
FACTS:
Petitioner Arturo P. Valenzuela is a General Agent of private respondent Philippine
American General Insurance Company, Inc. since 1965. As such, he was authorized to
solicit and sell in behalf of Philamgen all kinds of non-life insurance, and in
consideration of services rendered was entitled to receive the full agent's commission of
32.5% from Philamgen under the scheduled commission rates. (From 1973 to 1975,
Valenzuela solicited marine insurance from one of his clients, the Delta Motors, Inc.
(Division of Electronics Airconditioning and Refrigeration) from which he was entitled to
a commission of 32. However, Valenzuela did not receive his full commission from
insurance coverage of the Delta Motors. Premium payments were paid directly to
Philamgen and Valenzuela's commission.
Philamgen started to become interested in and expressed its intent to share in the
commission due Valenzuela on a fifty-fifty. Valenzuela refused.
Philamgen and its President Aragon insisted on the sharing of the commission with
Valenzuela, but he firmly reiterated his objection to the proposals. Because of the
refusal of Valenzuela, Philamgen and its officers took drastic action. They reversed the
commission due him by not crediting in his account the commission earned from the
Delta Motors insurance, placed agency transactions on a cash and carry basis,
threatened the cancellation of policies issued by his agency, and started to leak out
news that Valenzuela has a substantial account with Philamgen. This resulted in the
decline of his business as insurance agent. Philamgen terminated the General Agency
Agreement of Valenzuela in December 1978.
The petitioners sought relief by filing the complaint against the private respondents
RTC ruled in his favor, as his termination was found to be unjustified. However, the CA
ruled in favor of Philamgen, as CA ordered Valenzuela to pay Philamgen the amount
corresponding to the unpaid and uncollected premiums.
ISSUE:
whether or not Philamgen and/or its officers can be held liable for damages due to the
termination of the General Agency Agreement it entered into with the petitioners.
HELD:
YES
We agree with the court a quo that the principal cause of the termination of Valenzuela
as General Agent of Philamgen arose from his refusal to share his Delta commission.
The records sustain the conclusions of the trial court on the apparent bad faith of the
private respondents in terminating the General Agency Agreement of petitioners.
In the case at bar, the records show that the findings and conclusions of the trial court
are supported by substantial evidence and there appears to be no cogent reason to
disturb them
Philamgen told the petitioners of its desire to share the Delta Commission with them. It
stated that should Delta back out from the agreement, the petitioners would be charged
interests through a reduced commission after full payment by Delta.
Philamgen proposed reducing the petitioners' commissions by 50% thus giving them an
agent's commission of 16.25%. Philamgen insisted on the reduction scheme followed
on June 1, 1978 by still another insistence on reducing commissions and proposing two
alternative schemes for reduction. There were other pressures. Demands to settle
accounts, to confer and thresh out differences regarding the petitioners' income and the
threat to terminate the agency followed. The petitioners were told that the Delta
commissions would not be credited to their account.They were informed that the
Valenzuela agency would be placed on a cash and carry basis thus removing the 60-
day credit for premiums due. Existing policies were threatened to be cancelled. The
Valenzuela business was threatened with diversion to other agencies. Rumors were
also spread about alleged accounts of the Valenzuela. The petitioners consistently
opposed the pressures to hand over the agency or half of their commissions and for a
treatment of the Delta account distinct from other accounts. The pressures and
demands, however, continued until the agency agreement itself was finally terminated.
It is also evident from the records that the agency involving petitioner and private
respondent is one "coupled with an interest," and, therefore, should not be freely
revocable at the unilateral will of the latter.
In the insurance business in the Philippines, the most difficult and frustrating period is
the solicitation and persuasion of the prospective clients to buy insurance policies.
Normally, agents would encounter much embarrassment, difficulties, and oftentimes
frustrations in the solicitation and procurement of the insurance policies. To sell policies,
an agent exerts great effort, patience, perseverance, ingenuity, tact, imagination, time
and money. In the case of Valenzuela, he was able to build up an Agency from scratch
in 1965 to a highly productive enterprise with gross billings of about P2,500,000.00
premiums per annum. The records sustain the finding that the private respondent
started to covet a share of the insurance business that Valenzuela had built up,
developed and nurtured to profitability through over 13 years of patient work and
perseverance. When Valenzuela refused to share his commission in the Delta account,
the boom suddenly fell on him.
The private respondents by the simple expedient of terminating the General Agency
Agreement appropriated the entire insurance business of Valenzuela. With the
termination of the General Agency Agreement, Valenzuela would no longer be entitled
to commission on the renewal of insurance policies of clients sourced from his agency.
Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela
jointly and severally liable with the insured for unpaid premiums. Under these
circumstances, it is clear that Valenzuela had an interest in the continuation of the
agency when it was unceremoniously terminated not only because of the commissions
he should continue to receive from the insurance business he has solicited and
procured but also for the fact that by the very acts of the respondents, he was made
liable to Philamgen in the event the insured fail to pay the premiums due. They are
estopped by their own positive averments and claims for damages. Therefore, the
respondents cannot state that the agency relationship between Valenzuela and
Philamgen is not coupled with interest. "There may be cases in which an agent has
been induced to assume a responsibility or incur a liability, in reliance upon the
continuance of the authority under such circumstances that, if the authority be
withdrawn, the agent will be exposed to personal loss or liability". Furthermore, there is
an exception to the principle that an agency is revocable at will and that is when the
agency has been given not only for the interest of the principal but for the interest of
third persons or for the mutual interest of the principal and the agent. In these cases, it
is evident that the agency ceases to be freely revocable by the sole will of the principal.
At any rate, the question of whether or not the agency agreement is coupled with
interest is helpful to the petitioners' cause but is not the primary and compelling reason.
For the pivotal factor rendering Philamgen and the other private respondents liable in
damages is that the termination by them of the General Agency Agreement was tainted
with bad faith. Hence, if a principal acts in bad faith and with abuse of right in
terminating the agency, then he is liable in damages. This is in accordance with the
precepts in Human Relations enshrined in our Civil Code