Metrobank v.

CA, 194 SCRA 169

Facts:
Philippine Fish Marketing Authority drawn and purportedly signed by its General Manager 38
treasury warrants amounting to P1,755,228.37.
Around January 1979, Eduardo Gomez opened an account with Golden Savings and deposited
said 38 treasury warrants for a period of 2 months. Six of these warrants are payable to Gomez
while 32 of these were subsequently endorsed by Gloria Castillo (Cashier of Golden Savings)
between 25 June 1979 and 16 July 1979 while these were deposited on Golden Savings savings
account in Metrobank. The deposited accounts were sent for clearing which forwarded to the
Bureau of Treasury for special clearing.
For more than 2 weeks after the deposit, Gloria went to Metrobank to ask whether the warrants
had been cleared but was told to wait. Later, Metrobank decided to allow Golden Savings to
withdraw after repeated inquiry. Series of withdrawals was made on July 9, July 13, and July 16
1979.
On 21 July 1979, Metrobank informed Golden Savings that 32 warrants had been dishonored by
the Bureau of Treasury on 19 July 1979. Metrobank demanded Golden Savings the amount
withdrawn but the demand was rejected.
Metrobank sued Golden Savings in the Regional Trial Court which rendered a judgment in favor
of the Golden Savings. Metrobank filed a motion for reconsideration.
On 4 November 1986, the lower Court modified a part of its decision which is still in favor of
Golden Savings. Metrobank filed a petition for review.
Defenses of Metrobank:
1.
That the Golden Savings should have exercised more care in checking the personal
circumstances.
2.
That Metrobank was acting only as a collecting agent for Golden Savings and give it the
right to charge back to the depositors account any amount previously credited whether or not
such item is returned.
ISSUE:
WON, Metrobank as an Agent, is liable?
HELD:
YES! In stressing that it was acting only as a collecting agent for Golden Savings, Metrobank
seems to suggest that as a mere agent, it cannot be liable to the principal. This is not exactly true.
On the contrary, Article 1909 of the Civil Code of the Philippines clearly provides:

Art. 1909. The agent is responsible not only for fraud but also for negligence, which shall be
judged with more less rigor by the courts, according to whether the agency was or was not for a
compensation.
The negligence of Metrobank has been sufficiently established. To repeat for emphasis, it was the
clearance given by it that assured Golden Savings it was already safe to allow Gomez to
withdraw the proceeds of the treasury warrants he had deposited Metrobank misled Golden
Savings. There may have been no express clearance, as Metrobank insists (although this is
refuted by Golden Savings) but in any case that clearance could be implied from its allowing
Golden Savings to withdraw from its account not only once or even twice but three times. The
total withdrawal was in excess of its original balance before the treasury warrants were
deposited, which only added to its belief that the treasury warrants had indeed been cleared.
British Airways v. CA, 285 SCRA 450 - Karl
British Airways v. CA and Mahtani and Philippine Airlines

Principal: British Airways

Agent: Philippine Airlines
3 Party: Gop Mahtani
Agency Relationship: BA and PAL are members of the International Air Transport Association (IATA),
wherein member airlines are regarded as agents of each other in the issuance of the tickets and other
matters pertaining to their relationship.
rd

FACTS
Mahtani wanted to visit Bombay, India. He obtained the services of Mr. Viko Gumar to prepare his travel
plans, including the purchase of his plane tickets. The latter in turn bought a MANILA-HONGKONGBOMBAY-MANILA round-trip ticket from BA.
Since BA had no direct flights from Manila to Bombay, Mahtani had to take a flight to Hongkong via PAL,
and upon arrival in Hongkong he had to take a connecting flight to Bombay on board BA.
Prior to his departure, Mahtani checked in at the PAL counter in Manila his two pieces of luggage
containing his clothings and personal effects, confident that upon reaching Hongkong, the same would be
transferred to the BA flight bound for Bombay.
Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was missing and that
upon inquiry from the BA representatives, he was told that the same might have been diverted to London.
After patiently waiting for his luggage for one week, BA finally advised him to file a claim by
accomplishing the Property Irregularity Report.
Back in the Philippines, Mahtani filed his complaint for damages and attorneys fees against BA and Mr.
Gumar. BA answered that Mahtani had no cause of action against them. BA also filed a third-party
complaint. against PAL alleging that the reason for the non-transfer of the luggage was due to the latters
late arrival in Hongkong, thus leaving hardly any time for the proper transfer of Mahtanis luggage to the
BA aircraft bound for Bombay.
RTC ruled in favor of Mahtani for actual damages of P7,000.00 for the value of the two (2) suit cases;
Four Hundred U.S. ($400.00) Dollars representing the value of the contents of plaintiffs luggage; Fifty
Thousand (P50,000.00) Pesos for moral and actual damages and twenty percent (20%) of the total

amount imposed against the defendant for attorneys fees and costs of this action. . Court also dismissed
BA's third-party suit against PAL. CA affirmed. Hence this petition.
ISSUE
W/N BA should be held liable for the lost luggage - YES
W/N the dismissal of the third-party suit action against PAL was proper - NO
HELD
Petition partly granted. CA modified insofar as the third-party suit against PAL be reinstated.
Contract of carriage breached
Before we resolve the issues raised by BA, it is needful to state that the nature of an airlines contract of
carriage partakes of two types, namely: 1) a contract to deliver a cargo or merchandise to its destination
and 2) a contract to transport passengers to their destination. A business intended to serve the travelling
public primarily, it is imbued with public interest, hence, the law governing common carriers imposes an
exacting standard. Neglect or malfeasance by the carriers employees could predictably furnish bases for
an action for damages.
In the instant case, it is apparent that the contract of carriage was between Mahtani and BA. Moreover, it
is indubitable that his luggage never arrived in Bombay on time. Therefore, as in a number of cases we
have assessed the airlines culpability in the form of damages for breach of contract involving misplaced
luggage.
Award for actual damages proper
BA asserts that the award of compensatory damages in the separate sum of P7,000.00 for the loss of
Mahtanis two pieces of luggage was without basis since Mahtani in his complaint stated the following as
the value of his personal belongings: 1) Personal belongings (P10k) and 2) Gifts to relatives ($5k)
Moreover, he failed to declare a higher valuation with respect to his luggage, a condition provided for in
the ticket, which reads: Liability for loss, delay, or damage to baggage is limited unless a higher value is
declared in advance and additional charges are paid: For most international travel (including domestic
corporations of international journeys) the liability limit is approximately U.S. $9.07 per pound (U.S.
$20.00) per kilo for checked baggage and U.S. $400 per passenger for unchecked baggage.
Simply stated, it is the position of BA that there should have been no separate award for the luggage and
the contents thereof since Mahtani failed to declare a separate higher valuation for the luggage, and
therefore, its liability is limited, at most, only to the amount stated in the ticket.
Court disagrees. In the past, we have ruled against blind reliance on adhesion contracts where the facts
and circumstances justify that they should be disregarded. In addition, we have held that benefits of
limited liability are subject to waiver such as when the air carrier failed to raise timely objections during
the trial when questions and answers regarding the actual claims and damages sustained by the
passenger were asked.
Here, BA is estopped from raising limited liability as a defense when it allowed Mahtani to testify as to the
actual damages he incurred due to the misplacement of his luggage, without any objection, as evinced by
the steno notes. Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed by
counsel of the adverse party to be inadmissible for any reason, the latter has the right to object.
However, such right is a mere privilege which can be waived. Necessarily, the objection must be made
at the earliest opportunity, lest silence when there is opportunity to speak may operate as a waiver of
objections. BA has precisely failed in this regard.
BA has cause of action against PAL

CA erred in dismissing the third-party complaint. Undeniably, for the loss of his luggage, Mahtani is
entitled to damages from BA, in view of their contract of carriage. Yet, BA adamantly disclaimed its
liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident.
In resolving this issue, it is worth observing that the contract of air transportation was exclusively between
Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the formers journey to PAL,
as its subcontractor or agent. In fact, the fourth paragraph of the Conditions of Contracts of the ticket
issued by BA to Mahtani confirms that the contract was one of continuous air transportation from Manila
to Bombay.
Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from Manila to
Hongkong acted as the agent of BA. Well-settled is the rule therefore that an agent is also responsible
for any negligence in the performance of its function (NCC 1909)and is liable for damages which the
principal may suffer by reason of its negligent act (NCC 1884). Also, it is worth mentioning that both BA
and PAL are members of the International Air Transport Association (IATA), wherein member airlines are
regarded as agents of each other in the issuance of the tickets and other matters pertaining to their
relationship. Therefore, in the instant case, the contractual relationship between BA and PAL is one of
agency, the former being the principal, since it was the one which issued the confirmed ticket, and the
latter the agent.
Our pronouncement that BA is the principal is consistent with our ruling in Lufthansa German Airlines v.
Court of Appeals. We ruled therein that: In the very nature of their contract, Lufthansa is clearly the
principal in the contract of carriage with Antiporda and remains to be so, regardless of those instances
when actual carriage was to be performed by various carriers. The issuance of confirmed Lufthansa
ticket in favor of Antiporda covering his entire five-leg trip aboard successive carriers concretely attest to
this.
Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone,
and not PAL, since the latter was not a party to the contract. However, this is not to say that PAL is
relieved from any liability due to any of its negligent acts. In China Air Lines, Ltd. v. Court of Appeals,
while not exactly in point, the case, however, illustrates the principle which governs this particular
situation. In that case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also
liable for its own negligent acts or omission in the performance of its duties.
Accordingly, to deny BA the procedural remedy of filing a third-party complaint against PAL for the
purpose of ultimately determining who was primarily at fault as between them, is without legal basis.
After all, such proceeding is in accord with the doctrine against multiplicity of cases which would entail
receiving the same or similar evidence for both cases and enforcing separate judgments therefor. It must
be borne in mind that the purpose of a third-party complaint is precisely to avoid delay and circuity of
action and to enable the controversy to be disposed of in one suit. It is but logical, fair and equitable to
allow BA to sue PAL for indemnification, if it is proven that the latters negligence was the proximate
cause of Mahtanis unfortunate experience, instead of totally absolving PAL from any liability.
3rd-Party complaints, defined
The third-party complaint is, therefore, a procedural device whereby a third party who is neither a party nor privy to the act or deed
complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to
enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the
plaintiffs claim. The third-party complaint is actually independent of and separate and distinct from the plaintiffs complaint.
(Firestone v. Tempengko)

Fortis v. Gutierrez Hennanos, 6 Phil 100 - Jem

Fortis, an employee of Gutierez Hermanos, brought the action to recover the balance of his
salary for the year 1902, which is 5 per cent of the net profits of Hermanos business, and the
amount he expended for the year 1903 amounting to P600. The salary was in accordance with the
contract made by Miguel Alonzo Gutierrez, who was made as one of the managers of the
company, with full power to transact all of the business and to make a contract of employment.
In 1903, Fortis went to Hong Kong to look after the business of Gutierrez Hermanos in the
matter of the repair of a certain steamship, for which he expended P600. Gutierrez Hermanos
contended that Fortis is not entitled to compensation for the services rendered, because according
to Art. 1711, the contract of agency is supposed to be gratuitous in the absence of an agreement
to the contrary. Lower court ruled in favor of Fortis.
Issue: Whether Fortis, as an agent of Gutierrez Hermanos in Hong Kong, is entitled to
reimbursement of the P600 expense he incurred.
Held:
Yes. Art 1711 is inapplicable in this case because the amount of six hundred pesos is not claimed
as compensation for services but as a reimbursement for money expended by him in the business
of Hermanos. Thus, it is Article 1728 (now Art. 1912 of the NCC) that is inapplicable Article.
The principal must advance to the agent, should the latter so request, the sums necessary for the
execution of the agency. Should the agent have advanced them, the principal must reimburse him
therefore, even if the business or undertaking was not successful, provided the agent is free from
all fault. The reimbursement shall include on the sums advanced, from the day on which the
advance was made.

UNJUST COMPENSATION***
Reimbursement
Decline

Cia General de Tabacos vs Diaba, 20 Phil 321

(Art. 1922 NCC)

FACTS:
Plaintiff commenced an action against the defendant for the purpose of recovering P442 for
goods sold and delivered by the plaintiff through its agent Gutierrez to the defendant. The
defendant admitted that he had purchased from plaintiffs agent of the goods amounting to P692
and that he had sold to Gutierrez abaca and other effects amounting to P1,308 leaving a balance
due him of P616. Plaintiff claims that it had suspended Gutierrez as its agent and that he had no
further authority to represent it.
ISSUE: W/N plaintiff correctly terminated the agency
HELD:
NO. There is no proof that the orders given by the plaintiff to Gutierrez had ever been
communicated to the defendant. The defendant had a perfect right to believe, until otherwise
informed, that the agent of the plaintiff in his purchase of abaca and other effects was still
representing the plaintiff in said transactions.

Art 1923
Garcia vs De Manzano, 39 Phil 577 - Karl
Garcia vs. de Manzano
Doctrines:
The appointment of a new agent for the same business produces revocation of the previous
agency from the day on which notice was given to the former agent, excepting the provisions of
the next preceding article.
Facts:
Narciso Manzano was a Filipino merchant who went to Spain in May 1910 and died there on
08 September 1913.
He gave a general power of attorney to his son, Angel Manzano and a second general power of
attorney to his wife, Josefa Samson
Narciso was a partner of Ocejo, Perez & Co.(OPC) in running a small steamer. When the
period expired, OPC refused to continue the contract and demanded that Narciso buy or sell.
Angel, by virtue of the GPA from his father:
o sold the other half of the boat to Garcia (registered in his son's name since he was a
Spaniard and cannot register the same at the Custom House)
o Executed a contract of loan where Garcia agreed to lend Narciso P12,000.00. This
was secured by a mortgage over 3 parcels of land (registration though was refused by
registrar)
Josefa was assigned as the administratix of the property of Narciso. CFI then ordered the
partition of Narciso's property among his heirs.
Garcia filed his action to foreclose the so-called mortgage. Josefa stated that the estate had
already been divided to Narciso's heirs.
Josefa alleged that:

o The GPA given to Josefa revoked the one given to Angel

o Garcia took advantage of the youth and inexperience of Angel to falsely and
maliciously make him believe that he had the authority under the GPA to sell the
interest of his father.
CFI: judgment against Josefa Samson only
Issues:
1. W/N the GPA to Josefa revoked the GPA of Angel
2. W/N the GPA authorized the sale by Angel of the half interest in the steamer to Garcia
Held/Ratio:
1. NO. According to Article 1753, the appointment of a new agent for the same business
produces revocation of the previous agency from the day on which notice was given to the former
agent, excepting the provisions of the next preceding article. Defendants failed to prove that
notice of the subsequent GPA was given to Angel. He did not know of the GPA given to his
mother. Thus, it must be considered to prove that he was acting under a valid GPA when he sold
the half interest in the steamer.
2. YES. The GPA given to Angel is general and complete, terms of which authorize the sale,
buying and mortgaging of real property and the borrowing of money. Although it does not state
that the agent may sell the steamer, since it is so full and complete as to authorize sale of real
property, it must necessarily carry with it the right to sell the half interest. The record further
shows the sale was necessary in order to get money or a credit without it would be impossible to
continue the business which was being conducted in the name of Narciso and for his benefit