223 Phil.

450

FIRST DIVISION

G.R. No. 67889, October 10, 1985

PRIMITIVO SIASAT AND MARCELINO SIASAT,

PETITIONERS, VS. INTERMEDIATE APPELLATE COURT
AND TERESITA NACIANCENO, RESPONDENTS.

DECISION

GUTIERREZ, JR., J.:

This is a petition for review of the decision of the Intermediate Appellate

Court affirming in toto the judgment of the Court of First Instance of Manila,
Branch XXI, which ordered the petitioner to pay respondent the thirty
percent (30%) commission on 15,666 pieces of Philippine flags worth
P936,960.00, moral damages, attorney's fees and the costs of the suit.

Sometime in 1974, respondent Teresita Nacianceno succeeded in

convincing officials of the then Department of Education and Culture,
hereinafter called Department, to purchase without public bidding, one
million pesos worth of national flags for the use of public schools
throughout the country. The respondent was able to expedite the approval
of the purchase by handcarrying the different indorsements from one office
to another, so that by the first week of September, 1974, all the legal
requirements had been complied with, except the release of the purchase
orders. When Nacianceno was informed by the Chief of the Budget
Division of the Department that the purchase orders could not be released
unless a formal offer to deliver the flags in accordance with the required
specifications was first submitted for approval, she contacted the owners of
the United Flag Industry on September 17, 1974. The next day, after the
transaction was discussed, the following document (Exhibit A) was drawn
up:
"Mrs. Tessie Nacianceno,

"This is to formalize our agreement for you to represent United

Flag Industry to deal with any entity or organization, private or
government in connection with the marketing of our products
 — flags and all its accessories.

"For your service, you will be entitled to a commission of

thirty (30%) percent.

Signed

Mr. Primitivo Siasat

Owner and Gen. Manager"

On October 16, 1974, the first delivery of 7,933 flags was made by the
United Flag Industry. The next day, on October 17, 1974, the respondent's
authority to represent the United Flag Industry was revoked by petitioner
Primitivo Siasat.

According to the findings of the courts below, Siasat, after receiving the
payment of P469,980.00 on October 23, 1974 for the first delivery, tendered
the amount of P23,900.00 or five percent (5%) of the amount received, to
the respondent as payment of her commission. The latter allegedly
protested. She refused to accept the said amount insisting on the 30%
commission agreed upon. The respondent was prevailed upon to accept the
same, however, because of the assurance of the petitioners that they would
pay the commission in full after they delivered the other half of the
order. The respondent states that she later on learned that petitioner Siasat
had already received payment for the second delivery of 7,833 flags. When
she confronted the petitioners, they vehemently denied receipt of the
payment, at the same time claiming that the respondent had no participation
whatsoever with regard to the second delivery of flags and that the agency
had already been revoked.

The respondent originally filed a complaint with the Complaints and

Investigation Office in Malacañang but when nothing came of the
complaint, she filed an action in the Court of First Instance of Manila to
recover the following commissions: 25% as balance on the first delivery and
30% on the second delivery.

The trial court decided in favor of the respondent. The dispositive portion
of the decision reads as follows:
"WHEREFORE, judgment is hereby rendered sentencing
Primitivo Siasat to pay to the plaintiff the sum of P281,988.00,
 minus the sum P23,900.00, with legal interest from the date of
this decision, and ordering the defendants to pay jointly and
solidarily the sum of P25,000.00 as moral damages, and
P25,000.00 as attorney's fees, also with legal interest from the
date of this decision, and the costs."
The decision was affirmed in toto by the Intermediate Appellate Court. After
their motion for reconsideration was denied, the petitioners went to this
Court on a petition for review on August 6, 1984.

In assailing the appellate court's decision, the petition tenders the following
arguments: first, the authorization making the respondent the petitioner's
representative merely states that she could deal with any entity in connection
with the marketing of their products for a commission of 30%. There was
no specific authorization for the sale of 15,666 Philippine flags to the
Department; second, there were two transactions involved evidenced by the
separate purchase orders and separate delivery receipts, Exhibit 6-C for the
purchase and delivery on October 16, 1974, and Exhibits 7 to 7-C, for the
purchase and delivery on November 6, 1974. The revocation of agency
effected by the parties with mutual consent on October 17, 1974, therefore,
forecloses the respondent's claim of 30% commission on the second
transaction; and last, there was no basis for the granting of attorney's fees
and moral damages because there was no showing of bad faith on the part
of the petitioner. It was respondent who showed bad faith in denying
having received her commission on the first delivery. The petitioner's
counterclaim, therefore, should have been granted.

This petition was initially dismissed for lack of merit in a minute

resolution. On a motion for reconsideration, however, this Court gave due
course to the petition on November 14, 1984.

After a careful review of the records, we are constrained to sustain with

some modifications the decision of the appellate court.

We find petitioners' argument regarding respondent's incapacity to

represent them in the transaction with the Department untenable. There
are several kinds of agents. To quote a commentator on the matter:
"An agent may be (1) universal; (2) general, or (3) special. A
universal agent is one authorized to do all acts for his principal
which can lawfully be delegated to an agent. So far as such a
 condition is possible, such an agent may be said to have universal
authority. (Mec. Sec. 58).

"A general agent is one authorized to do all acts pertaining to a

business of a certain kind or at a particular place, or all acts
pertaining to a business of a particular class or series. He has
usually authority either expressly conferred in general terms or
in effect made general by the usages, customs or nature of the
business which he is authorized to transact.

"An agent, therefore, who is empowered to transact all the

business of his principal of a particular kind or in a particular
place, would, for this reason, be ordinarily deemed a general
agent. (Mec. Sec. 60).

"A special agent is one authorized to do some particular act or

to act upon some particular occasion. He acts usually in
accordance with specific instructions or under limitations
necessarily implied from the nature of the act to be done." (Mec.
Sec. 61) (Padilla, Civil Law, The Civil Code Annotated, Vol. VI,
1969 Edition, p. 204).
One does not have to undertake a close scrutiny of the document
embodying the agreement between the petitioners and the respondent to
deduce that the latter was instituted as a general agent. Indeed, it can easily
be seen by the way general words were employed in the agreement that no
restrictions were intended as to the manner the agency was to be carried out
or in the place where it was to be executed. The power granted to the
respondent was so broad that it practically covers the negotiations leading
to, and the execution of, a contract of sale of petitioners' merchandise with
any entity or organization.

There is no merit in petitioners' allegations that the contract of agency

between the parties was entered into under fraudulent representation
because respondent "would not disclose the agency with which she was
supposed to transact and made the petitioner believe that she would be
dealing with the Visayas", and that "the petitioner had known of the
transactions and/or project for the said purchase of the Philippine flags by
the Department of Education and Culture and precisely it was the one being
followed up also by petitioner."
If the circumstances were as claimed by the petitioners, they would have
exerted efforts to protect their interests by limiting the respondent's
authority. There was nothing to prevent the petitioners from stating in the
contract of agency that the respondent could represent them only in the
Visayas. Or to state that the Department of Education and Culture and the
Department of National Defense, which alone would need a million pesos
worth of flags, are outside the scope of the agency. As the trial court opined,
it is incredible that they could be so careless after being in the business for
fifteen years.

A cardinal rule of evidence embodied in Section 7 Rule 130 of our Revised

Rules of Court states that "when the terms of an agreement have been
reduced to writing, it is to be considered as containing all such terms, and,
therefore, there can be between the parties and their successors-in-interest,
no evidence of the terms of the agreement other than the contents of the
writing", except in cases specifically mentioned in the same rule. Petitioners
have failed to show that their agreement falls under any of these
exceptions. The respondent was given ample authority to transact with the
Department in behalf of the petitioners. Equally without merit is the
petitioners' proposition that the transaction involved two separate contracts
because there were two purchase orders and two deliveries. The petitioners'
evidence is overcome by other pieces of evidence proving that there was
only one transaction.

The indorsement of then Assistant Executive Secretary Roberto Reyes to

the Budget Commission on September 3, 1974 (Exhibit "C") attests to the
fact that out of the total budget of the Department for the fiscal year 1975,
"P1,000,000.00 is for the purchase of national flags." This is also reflected
in the Financial and Work Plan Request for Allotment (Exhibit "F")
submitted by Secretary Juan Manuel for fiscal year 1975 which however,
divided the allocation and release of the funds into three, corresponding to
the second, third, and fourth quarters of the said year. Later
correspondence between the Department and the Budget Commission
(Exhibits "D" and "E") show that the first allotment of P500,000.00 was
released during the second quarter. However, due to the necessity of
furnishing all of the public schools in the country with the Philippine flag,
Secretary Manuel requested for the immediate release of the programmed
allotments intended for the third and fourth quarters. These circumstances
explain why two purchase orders and two deliveries had to be made on one
transaction.

The petitioners' evidence does not necessarily prove that there were two
separate transactions. Exhibit "6" is a general indorsement made by
Secretary Manuel for the purchase of the national flags for public schools. It
contains no reference to the number of flags to be ordered or the amount
of funds to be released. Exhibit "7" is a letter request for a "similar
authority" to purchase flags from the United Flag Industry. This was,
however, written by Dr. Narciso Albarracin who was appointed Acting
Secretary of the Department after Secretary Manuel's tenure, and who may
not have known the real nature of the transaction.

If the contracts were separate and distinct from one another, the whole or
at least a substantial part of the government's supply procurement process
would have been repeated. In this case, what were issued were mere
indorsements for the release of funds and authorization for the next
purchase.

Since only one transaction was involved, we deny the petitioners' contention
that respondent Nacianceno is not entitled to the stipulated commission on
the second delivery because of the revocation of the agency effected after
the first delivery. The revocation of agency could not prevent the
respondent from earning her commission because as the trial court opined,
it came too late, the contract of sale having been already perfected and partly
executed.

In Macondray & Co. v. Sellner (33 Phil. 370, 377), a case analogous to this one
in principle, this Court held:
"We do not mean to question the general doctrine as to the
power of a principal to revoke the authority of his agent at will,
in the absence of a contract fixing the duration of the agency
(subject, however, to some well defined exceptions). Our ruling
is that at the time fixed by the manager of the plaintiff company
for the termination of the negotiations, the defendant real estate
agent had already earned the commissions agreed upon, and
could not be deprived thereof by the arbitrary action of the
plaintiff company in declining to execute the contract of sale for
some reason personal to itself."
The principal cannot deprive his agent of the commission agreed upon by
cancelling the agency and, thereafter, dealing directly with the buyer. (Infante
v. Cunanan, 93 Phil. 691).

The appellate court's citation of its previous ruling in Heimbrod, et al. v.

Ledesma (C.A. 49 O.G. 1507) is correct:
"The appellee is entitled to recovery. No citation is necessary to
show that the general law of contracts the equitable principle of
estoppel, and the principle against unjust enrichment at the
expense of another, uphold payment of compensation for
services rendered."
There is merit, however, in the petitioners' contention that the agent's
commission on the first delivery was fully paid. The evidence does not
sustain the respondent's claim that the petitioners paid her only 5% and that
their right to collect another 25% commission on the first delivery must be
upheld.

When respondent Nacianceno asked the Malacañang Complaints and

Investigation Office to help her collect her commission, her statement under
oath referred exclusively to the 30% commission on the second
delivery. The statement was emphatic that "now" her demand was for the
30% commission on the second release of P469,980.00. The demand letter
of the respondent's lawyer dated November 13, 1974 asked petitioner Siasat
only for the 30% commission due from the second delivery. The fact that
the respondent demanded only the commission on the second delivery
without reference to the alleged unpaid balance — which was only slightly
less than the amount claimed — can only mean that the commission on the
first delivery was already fully paid. Considering the sizeable sum involved,
such an omission is too glaringly remiss to be regarded as an oversight.

Moreover, the respondent's authorization letter (Exhibit "5") bears her

signature with the handwritten words "Fully Paid" inscribed above it.

The respondent contested her signature as a forgery. Handwriting experts

from two government agencies testified on the matter. The reason given by
the trial court in ruling for the respondent is too flimsy to warrant a finding
of forgery.

The court stated that in thirteen documents presented as exhibits, the private
respondent signed her name as "Tessie Nacianceno" while in this particular
instance, she signed as "T. Nacianceno".

The stated basis is inadequate to sustain the respondent's allegation of

forgery. A variance in the manner the respondent signed her name can not
be considered as conclusive proof that the questioned signature is a
forgery. The mere fact that the respondent signed thirteen documents using
her full name does not rule out the possibility of her having signed the
notation "Fully Paid", with her initial for the given name and the surname
written in full. What she was signing was a mere acknowledgment.

This leaves the expert testimony as the sole basis for the verdict of forgery.

In support of their allegation of full payment as evidenced by the signed

authorization letter (Exhibit "5-A"), the petitioners presented as witness Mr.
Francisco Cruz, Jr. a senior document examiner of the Philippine
Constabulary Crime Laboratory. In rebuttal, the respondent presented Mr.
Arcadio Ramos, a junior document examiner of the National Bureau of
Investigation.

While the experts testified in a civil case, the principles developed in criminal
cases involving forgery are applicable. Forgery cannot be presumed. It
must be proved.

In Borromeo v. Court of Appeals (131 SCRA 318, 326) we held that:

xxx xxx xxx

"x x x Where the evidence, as here, gives rise to two

probabilities, one consistent with the defendant's innocence and
another indicative of his guilt, that which is favorable to the
accused should be considered. The constitutional presumption
of innocence continues until overthrown by proof of guilt
beyond reasonable doubt, which requires moral certainty which
convinces and satisfies the reason and conscience of those who
are to act upon it. (People v. Clores, et al., 125 SCRA 67; People v.
Bautista, 81 Phil. 78).
We ruled in another case that where the supposed expert's testimony would
constitute the sole ground for conviction and there is equally convincing
expert testimony to the contrary, the constitutional presumption of
innocence must prevail. (Lorenzo Ga. Cesar v. Hon. Sandiganbayan and People of
the Philippines, 134 SCRA 105) In the present case, the circumstances earlier
mentioned taken with the testimony of the PC senior document examiner
lead us to rule against forgery.

We also rule against the respondent's allegation that the petitioners acted in
bad faith when they revoked the agency given to the respondent.

Fraud and bad faith are matters not to be presumed but matters to be alleged
with sufficient facts. To support a judgment for damages, facts which justify
the inference of a lack or absence of good faith must be alleged and
proven. (Bacolod-Murcia Milling Co., Inc. v. First Farmers Milling Co., Inc., Etc.,
103 SCRA 436).

There is no evidence on record from which to conclude that the revocation

of the agency was deliberately effected by the petitioners to avoid payment
of the respondent's commission. What appears before us is only the
petitioner's use in court of such a factual allegation as a defense against the
respondent's claim. This alone does not per se make the petitioners guilty of
bad faith for that defense should have been fully litigated.

Moral damages cannot be awarded in the absence of a wrongful act or

omission or of fraud or bad faith. (R & B Surety & Insurance Co., Inc. v.
Intermediate Appellate Court, 129 SCRA 736).

We therefore, rule that the award of P25,000.00 as moral damages is without

basis.

The additional award of P25,000.00 damages by way of attorney's fees, was

given by the courts below on the basis of Article 2208, Paragraph 2, of the
Civil Code, which provides: "When the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to
protect his interests;" attorney's fees may be awarded as damages. (Pirovano,
et al. v. De la Rama Steamship Co., 96 Phil. 335).

The underlying circumstances of this case lead us to rule out any award of
attorney's fees. For one thing, the respondent did not come to court with
completely clean hands. For another, the petitioners apparently believed
they could legally revoke the agency in the manner they did and deal directly
with education officials handling the purchase of Philippine flags. They had
reason to sincerely believe they did not have to pay a commission for the
second delivery of flags.

We cannot close this case without commenting adversely on the inexplicably

strange procurement policies of the Department of Education and Culture
in its purchase of Philippine flags. There is no reason why a shocking 30%
of the taxpayers' money should go to an agent or facilitator who had no flags
to sell and whose only work was to secure and handcarry the indorsements
of education and budget officials. There are only a few manufacturers of
flags in our country with the petitioners claiming to have supplied flags for
our public schools on earlier occasions. If public bidding was deemed
unnecessary, the Department should have negotiated directly with flag
manufacturers. Considering the sad plight of underpaid and overworked
classroom teachers whose pitiful salaries and allowances cannot sometimes
be paid on time, a P300,000.00 fee for a P1,000,000.00 purchase of flags is
not only clearly unnecessary but a scandalous waste of public funds as well.

WHEREFORE, the decision of the respondent court is hereby

MODIFIED. The petitioners are ordered to pay the respondent the
amount of ONE HUNDRED FORTY THOUSAND NINE HUNDRED
AND NINETY FOUR PESOS (P140,994.00) as her commission on the
second delivery of flags with legal interest from the date of the trial court's
decision. No pronouncement as to costs.

SO ORDERED.

Relova, De la Fuente, and Patajo, JJ., concur.

Teehankee, J., (Chairman), let copy hereof be furnished the Commission on

Audit for appropriate remedial action, as it may take.

Melencio-Herrera, J., on leave.

Plana, J., no part.