Barretto v. Santa Marina
REITERATIONFacts
The Antecedents: Antonio M. A. Barretto (plaintiff) sued Jose Santa Marina (defendant) for unpaid salary and damages. Barretto alleged he was the agent and manager of the La Insular Cigar and Cigarette Factory, owned by the defendant, under a contract for services. He claimed the defendant summarily and arbitrarily dismissed him on January 8, 1910, in violation of their contract, and refused to pay his salary for services rendered after December 31, 1909, and damages amounting to P100,000. The plaintiff sought P137,000 in total. Procedural History: The trial court overruled the demurrer to the first cause of action (salary) but sustained the demurrer to the second cause of action (damages). The defendant denied the plaintiff's allegations regarding the first cause of action and asserted that there was no fixed contract period, that the plaintiff's power was revoked for just cause, and that the plaintiff had renounced all claims upon selling his rights to the business. After trial, the court awarded the plaintiff salary for the first eight days of January 1910 and for the following month at a reduced rate, dismissing the second cause of action. Both parties excepted to parts of the judgment. The Appeal: The plaintiff appealed the judgment, arguing it was not sufficiently warranted by the evidence and was contrary to law. He specifically contested the dismissal of his second cause of action for damages and the limited award of salary. The plaintiff sought to recover P137,000, comprising P37,000 in salary for 1910 and P100,000 in damages for his alleged wrongful dismissal.
Issue(s)
Whether the plaintiff, Antonio M. A. Barretto, was unlawfully dismissed from his position as agent and manager of the La Insular factory, entitling him to P37,000 in salary for 1910 and P100,000 in damages. Whether the contract of agency had a fixed term, or if it was terminable at will by the principal.
Ruling
The Supreme Court affirmed the judgment of the lower court, dismissing the appeal. The Court ruled that the plaintiff was not unlawfully dismissed but had voluntarily resigned. The defendant, as principal, had the lawful right to revoke the plaintiff's power of attorney due to loss of confidence, negligence, and the plaintiff's own tender of resignation. The plaintiff was only entitled to salary for the period he actually served, as awarded by the lower court, and not to the claimed damages.
Ratio Decidendi
On Issue 1: The Court found that the plaintiff was not dismissed but had voluntarily resigned. This was evidenced by his letter (Exhibit 3) where he acknowledged exceeding his authority and offered his resignation. The principal, Jose Santa Marina, accepted this resignation by appointing a new manager, Mr. J. McGavin. Therefore, the plaintiff's claim for P37,000 in salary for the entire year 1910 and P100,000 in damages was denied. The Court reasoned that an agent who acknowledges negligence and places his position at the principal's disposal cannot claim indemnity for losses and damages when the principal acts upon this resignation or revokes the power due to justified reasons. On Issue 2: The Court held that no fixed period for the duration of the agency was stipulated in the verbal contract or the written power of attorney. Article 1733 of the Civil Code and Article 279 of the Code of Commerce grant the principal the right to revoke the power of attorney at will, especially when confidence is lost. The Court noted that the plaintiff's remuneration was fixed annually but paid monthly, implying a termination based on monthly periods rather than a fixed annual term. Article 302 of the Code of Commerce further supports the right of either party to dissolve a contract of service without a fixed time by giving one month's notice, entitling the employee to one month's salary. Thus, the defendant acted within his rights when he revoked the plaintiff's authority and appointed a successor, and the plaintiff was only entitled to the salary awarded by the lower court for the period served and one month's salary thereafter.
Main Doctrine
The Supreme Court affirmed that a principal may, at will, revoke the power conferred upon an agent, especially when the confidence reposed in the agent has ceased to exist, citing Article 1733 of the Civil Code. This right of revocation is further supported by Article 279 of the Code of Commerce, which allows the principal to revoke a commission at any stage, provided the agent is duly informed. The Court clarified that in contracts for services without a fixed term, either party may dissolve the contract by giving one month's notice, with the employee being entitled to one month's salary, as per Article 302 of the Code of Commerce. Consequently, an agent who voluntarily resigns due to acknowledged negligence or breach of trust cannot claim indemnity for losses and damages, as the principal's action to relieve the agent is deemed lawful and justified.