Orient Air vs Court of Appeals Case Digest on Agency

AGENCY TRUST AND PARTNERSHIP CASE DIGEST

Orient-Air Services and Hotel Representatives vs. Court of Appeals

May 29, 1991 FACTS:

 American Air entered into a General Sales Agency Agreement between Orient Air Services and Hotel Representatives (Orient Air) whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. In 1981, Orient Air reneged in its obligations by failing to promptly remit the net proceeds of sales for the months of January to March 1981 amounting to $254,400.  American Air instituted a suit against Orient Air with CFI Manila for Accounting with Preliminary Pre liminary  Attachment/Garnishment, Mandatory Injuction Injuction and Restraining Order. Orient Air answered with counterclaim denying the material allegation and contends the following: American Air Air still still owed Orient Air a balance in unpaid unpaid overriding overriding commission. commission. Orient Air Air contends that the contractual stipulation of a 3%  overriding commission covers the   and not merely that derived from the ticketed sales total revenue of American Air  and undertaken by the former. The termination of the contract is untenable -  American Air’s Air’s precipitous precipitous conduct conduct had occasioned occasioned prejudice prejudice to its business business interests. interests. Trial Court ruled in favor of Orient Air ordering American Air to “reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with the said GSA Agreement.” Court of Appeals affirmed the decision of the Trial Court. Issue:

Whether the respondent appellate court correctly ruled that Orient Air be reinstated again as sales agent of American Air? Ruling:

SC affirmed the decision of the CA however, set aside the portion of the ruling by the appellate court reinstating Orient Air as the General Sales Agent of American Air. By affirming this ruling of the trial court, respondent appellate court, in effect, compels American  Air to extend its personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby “a person  binds himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR  AUTHORITY OF THE LATTER.” In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court.