1. SAFIC ALCAN & CIE, petitioner, vs. IMPERIAL VEGETABLE OIL CO., INC.

,
respondent.
FACTS
In 1985, Safic Alcan & Cie (SAC), a corporation, entered into an agreement with Imperial
Vegetable Oil Co., Inc. (IVO) whereby the latter shall deliver tones of coconut oil to SAC. Both
parties complied. IVO was represented by its president, Dominador Monteverde. In 1986, SAC
again entered into an several agreements with IVO but this time it was agreed that IVO shall
deliver the coconut oil 8 months from the agreement or sometime in 1987. This time, IVO failed
to deliver and SAC sued IVO.
IVO in its defense aver that Monteverde was acting beyond his power as president when he
made the 1986 agreement with SAC; that Monteverde is acting beyond his power because the
1986 contracts were speculative in nature and speculative contracts are prohibited by the bylaws of IVO.
SAC insists that there is an implied agency between IVO and Monteverde because SAC and
Monteverde has been transacting since 1985 and that IVO benefited from said transactions.
ISSUE:
Whether or not Monteverdes act in entering into the 1986 contracts is ultra vires.
HELD:
Yes. It was proven by IVO, when they presented a copy of their by-laws, that Monteverde acted
beyond his authority when he entered into speculative contracts with SAC in 1986. The 1986
contracts are speculative because at the time of the contracts, the coconuts are not even
growing at that time and are yet to be harvested. Hence, the 1986 contracts are sales of mere
expectations and this is something prohibited by the by-laws and the Board of Directors of IVO.
There can be no implied agency too simply because there has been a previous transaction
between SAC and IVO where IVO was represented by Monteverde. This is because the 1985
contract and the 1986 contracts are very different. The 1985 contract is not speculative while the
1986 contracts are speculative hence, SAC should have secured the confirmation by IVOs Board
that Monteverde is indeed authorized to enter into such agreements. Further, Monteverde did not
even present the said 1986 agreements before the Board of Directors so there was, in fact, no
occasion at all for ratification. The contracts were not even reported in IVOs export sales book
and turn-out book. Neither were they reflected in other books and records of the corporation. It
must be pointed out that the Board of Directors, not Monteverde, exercises corporate power.
Clearly, Monteverdes speculative contracts with Safic never bound IVO and Safic cannot
therefore enforce those contracts against IVO.

Four-Fold Test to Determine the Existence of an Employer-Employee Relationship

2. Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc.
(570 SCRA 503)
FACTS:
The contractual relationship between Tongko and Manulife had two basic phases. The first phase
began on July 1, 1977, under a CareerAgents Agreement, which provided that the Agent is an
independent contractor and nothing contained herein shall be construed or interpreted as
creating an employer-employee relationship between the Company and the Agent.The second
phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales Agency
Organization. In 1990, he became a Branch Manager. In 1996), Tongko became a Regional Sales
Manager. Tongkos gross earnings consisted of commissions, persistency income, and
management overrides. Since the beginning, Tongko consistently declared himself self-employed
in his income tax returns. Under oath, he declared his gross business income and deducted his
business expenses to arrive at his taxable business income.Respondent Renato Vergel de Dios,
sales manager, wrote Tongko a letter dated November 6, 2001 on concerns that were brought up
duringthe Metro North Sales Managers Meeting, expressing dissatisfaction of Tongkos
performance in their agent recruiting business, which resulted in some changes on how Tongko
would conduct his duties, including that Tongko hire at his expense a competent assistant to
unload him of routine tasks, which he had been complaining to be too taxing for him.On
December 18, 2001, de Dios wrote Tongko another letter which served as notice of termination of
his Agency Agreement with the company effective fifteen days from the date of the letter. Tongko
filed an illegal dismissal complaint with the National Labor Relations Commission (NLRC),alleging
that despite the clear terms of the letter terminating his Agency Agreement, that he was
Manulifes employee before he was illegally dismissed. The labor arbiter decreed that no
employer-employee relationship existed between the parties.The NLRC reversed the labor
arbiters decision on appeal; it found the existence of an employer-employee relationship and
concluded thatTongko had been illegally dismissed.The Court of Appeals found that the NLRC
gravely abused its discretion in its ruling and reverted to the labor arbiters decision that no
employer-employee relationship existed between Tongko and Manulife. The SC affirmed the
ruling of CA that the petitioner was an insurance agent, not the employee, of the respondent The
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife). The petitioner filed a motion for
reconsideration.
ISSUE:
Is there an employer-employee relationship between Tongko and Manulife or Tongko is a mere
agent?
HELD:
NO. In the determination of
parties, this court applies the
relationship. Jurisprudence is
relationshipis in dispute, four

whether an employer-employee relationship exists between 2

four-fold test todetermine the existence of the elements of such
firmly settled that whenever the existence of an employment
elements constitute the reliable yardstick: (a) the selection and

engagement of the employee; (b) the payment of wages; (c) the powerof dismissal; and (d) the
employers power to control the employees conduct. IT is the so-called control test which
constitutes the most important indexof existence of the employer-employee relationship that is,
whether the employer controls or has reserved the right to control the employee not only asto
the result of the work to be done but also as to the means and methods by which the same is to
be accomplished. Stated otherwise, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control not only the end to be
achieved butalso the means to be used in reaching such end. In the case at bar, the absence of
evidence showing Manulifes control over Tongkos contractual duties points to the absence of
any employer-employee relationship between Tongko and Manulife. In the context of the
established evidence, Tongko remained an agent all along; although his subsequent duties made
him a lead agent with leadership role, he was nevertheless only an agent whose basic contract
yields no evidence of means-and-manner control. Claimant clearly failed to substantiate his claim
of employment relationship by the quantum of evidence the Labor Code requires.Tongkos failure
to comply with the guidelines of de Dios letter, as a ground for termination of Tongkos agency,
is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts applying the laws ofinsurance,
agency and contracts.
We hereby DENY the Motion for Reconsideration WITH FINALITY for lack of merit. No further
pleadings shall be entertained. Let entry of judgment proceed in due course.

3. MEDRANO and IBAAN RURAL BANK vs. COURT OF APPEALS

G.R. No. 150678 February 18, 2005
Facts: Bienvenido Medrano was the Vice-Chairman of Ibaan Rural Bank. He asked Flor (a cousin),
to look for a buyer of a foreclosed asset of the bank (17-hectare mango plantation with 720 trees
priced at P2.2M). Dominador Lee,a Makati businessman was a client of respondent Pacita Borbon,
a licensed real estate broker. Borbon relayed toher business associates and friends that she had
a ready buyer for a mango orchard. Flor then advised her thather cousin-in-law owned a mango
plantation which was up for sale. She told Flor to confer with Medrano and togive them a written
authority to negotiate the sale of the property. Medrano issued the Letter of Authority toBorbon
and Antonio to negotiate with any prospective buyer for the sale of the mango plantation. He
promisedBorbon to pay a commission of 5% of the total purchase price to be agreed upon by the
buyer and seller.An ocular inspection was held by Lee. Lee informed Antonio that he already
purchased the property and hadmade a down payment ofP1M. The remaining balance of P1.2M
was to be paid upon the approval of theincorporation papers of the corporation he was
organizing by the SEC. According to Antonio, Lee asked her if they had already received their
commission. She answered "no," and Lee expressed surprise over this. Since thesale of the
property was consummated, the respondents asked from the petitioners their commission, or 5%
of the purchase price. The petitioners refused to pay and offered a measly sum of P5,000.00
each. Hence, the present action.
Medranos defense:
Borbon and Antonio did not perform any act to consummate the sale. The petitioners pointed out
that the respondents (1) did not verify the real owner of the property; (2) never saw the property
inquestion; (3) never got in touch with the registered owner of the property; and (4) neither did
they perform anyact of assisting their buyer in having the property inspected and verified.
Issue: WON the plaintiffs are entitled to any commission for the sale of the subject property?
Held: Yes , The respondents are indeed the procuring cause of the sale. If not for the
respondents, Lee would not haveknown about the mango plantation being sold by the
petitioners. The sale was consummated. The bank had profited from such transaction. It would
certainly be iniquitous if the respondents would not be rewarded their commission pursuant to
the letter of authority. Procuring cause = the proximate cause. The term "procuring cause," in
describing a brokers activity, refersto a cause originating a series of events which, without
break in their continuity, result in accomplishment of prime objective of the employment of the
broker producing a purchaser ready, willing and able to buy realestate on the owners

terms.The evidence on record shows that the respondents were instrumental in the sale of the
property to Lee. Withouttheir intervention, no sale could have been consummated. They were
the ones who set the sale of the subjectland in motion. While the letter-authority issued in favor
of the respondents was non-exclusive, no evidence wasadduced to show that there were other
persons, aside from the respondents, who informed Lee about the property for sale. When there
is a close, proximate and causal connection between the brokers efforts and the principals sale
of his property, the broker is entitled to a commission.In the absence of fraud, irregularity or
illegality in its execution, such letter-authority serves as a contract,and is considered as the law
between the parties. The clear intention is to reward the respondents for procuring a buyer for
the property.

4. Spouses Fernando Viloria and Lourdes Viloria vs Continental Airlines

FACTS: In 1997, while the spouses Viloria were in the United States, they approached Holiday
Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San
Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train
because it was already fully booked; that they must purchase plane tickets for Continental
Airlines; that if they wont purchase plane tickets; theyll never reach their destination in time.
The couple believed Magers representations and so they purchased two plane tickets worth
$800.00.
Later however, the spouses found out that the train trip wasnt really fully booked and so they
purchased train tickets and went to their destination by train instead. Then they called up Mager
to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines. As
the couple were now in the Philippines, they filed their request with Continental Airlines office in
Ayala. The spouses Viloria alleged that Mager misled them into believing that the only way to
travel was by plane and so they were fooled into buying expensive plane tickets.
Continental Airlines refused to refund the amount of the tickets and so the spouses sued the
airline company. In its defense, Continental Airlines claimed that the tickets sold to them by
Mager were non-refundable; that, if any, they were not bound by the misrepresentations of
Mager because theres no contract of agency existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the
RTC.
ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:
there is consent, express or implied of the parties to establish the relationship;
the object is the execution of a juridical act in relation to a third person;
the agent acts as a representative and not for himself, and

the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it concluded
an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter
into contracts of carriage with third persons on the airlines behalf. The third element is also
present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is
Continental Airlines and not Holiday Travel who is bound by the contracts of carriage entered into
by Holiday Travel on its behalf. The fourth element is also present considering that Continental
Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted
to it.
Continental Airlines also never questioned the validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppel. Continental Airlines cannot be allowed to
take an altogether different position and deny that Holiday Travel is its agent without condoning
or giving imprimatur to whatever damage or prejudice that may result from such denial or
retraction to Spouses Viloria, who relied on good faith on Continental Airlines acts in recognition
of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the
avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to
apply it in this case would result in gross travesty of justice.

5. EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v. CUIZON

G.R. No. 167552; April 23, 2007
Ponente: J. Chico-Nazario
FACTS:
From January to April 1995, petitioner sold to Impact Systems various products allegedly
amounting to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one
unit of sludge pump valued at P250,000.00 with respondents making a down payment of
P50,000.00. When the sludge pump arrived from the United Kingdom, petitioner refused to
deliver the same to respondents without their having fully settled their indebtedness to
petitioner. Thus, on 28 June 1995, respondent EDWIN and Alberto de Jesus, general manager of
petitioner, executed a Deed of Assignment of receivables in favor of petitioner. Impact systems is
owed by ERWIN Cuizon.
Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo
Power Company the amount of P365,135.29. Alarmed by this development, petitioner made
several demands upon respondents to pay their obligations. As a result, respondents were able
to make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents
a final demand letter wherein it was stated that as of 11 June 1996, respondents' total
obligations stood at P295,000.00 excluding interests and attorney's fees.
Because of
respondents' failure to abide by said final demand letter, petitioner instituted a complaint for
sum of money, damages, with application for preliminary attachment against herein respondents
By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party
in interest in this case. According to him, he was acting as mere agent of his principal, which was

the Impact Systems, in his transaction with petitioner and the latter was very much aware of this
fact.
ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems
The Supreme Court held that in a contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another with the latter's consent. Its
purpose is to extend the personality of the principal or the party for whom another acts and from
whom he or she derives the authority to act. It is said that the basis of agency is representation,
that is, the agent acts for and on behalf of the principal on matters within the scope of his
authority and said acts have the same legal effect as if they were personally executed by the
principal.
In this case at hand, the parties do not dispute the existence of the agency relationship between
respondents ERWIN as principal and EDWIN as agent.