G.R. No. L-74623 - Bisaya Land Transportation Co., Inc. vs. Sanchez

Petitioner Bisaya Land Transportation Company, Inc. (BISTRANCO) operated passenger-cargo vessels with Butuan City as one port of call.
Private respondent Marciano C. Sanchez was initially an employee of BISTRANCO as quartermaster from 1954 to 1959 and later provided stevedoring services for BISTRANCO vessels in Butuan City.
In May 1975, Sanchez was appointed as shipping agent of BISTRANCO in Butuan City for the M/V Don Mariano.
Later, when BISTRANCO was under receivership, Atty. Adolfo V. Amor, as receiver, appointed Sanchez acting shipping agent for additional vessels pending formal agency contract.

Sanchez assumed role with commission same as predecessor—10% commission on freight and passenger revenues from Butuan City and 5% on freight going to Butuan.
A formal Contract of Agency (Exhibit "F") between BISTRANCO (represented by receiver Amor) and Sanchez was executed on July 27, 1976.
On July 30, 1976, Sanchez and BISTRANCO executed a Supplemental Shipping Agency Contract (Exhibit "G") to address prejudicial clause in Paragraph 16 of the earlier contract.
Neither contract was submitted to or approved by the receivership court.
Based on these contracts, Sanchez:

Leased land owned by Jose S. Mondejar for wharf and berthing facilities.
Constructed a wharf and bodega, building office facilities and maintaining an office force of 13 employees at his expense.
Operated six cargo trucks and one jeep to service the agency.
Engaged in advertising and maintained good relations with the Butuan City business community.
Substantially increased BISTRANCO’s shipping volumes and his commissions—from P8,535/month (1975) to about P32,000/month (late 1979).

On December 26, 1979, BISTRANCO's Executive Vice-President, Benjamin G. Roa, advised Sanchez that a BISTRANCO branch office in Butuan City would operate from January 1, 1980, effectively repudiating Sanchez’s contracts.
BISTRANCO opened a branch office on January 15, 1980, advising local shippers to transact directly with the branch, limiting Sanchez’s business and commissions.
Sanchez filed suit for specific performance, preliminary injunction, and damages on December 28, 1979.

The Regional Trial Court ruled in favor of Sanchez, declaring the agency contracts valid and binding until July 27, 1981, and awarded P588,000.00 for unearned commissions plus damages and attorney’s fees.
The Intermediate Appellate Court affirmed the decision.
BISTRANCO petitioned for certiorari to the Supreme Court contesting the validity of contracts, the branch office opening, effect of other agreements, and damages award.

Can a court-appointed receiver validly enter into a contract without the court’s approval?
Does BISTRANCO’s opening of a branch office in Butuan City violate the Contract of Agency and Supplemental Shipping Agency Contract, assuming their validity?
Do the Memorandum of Agreement and Working Agreement (Exhibits "S" and "U") novate or alter the questioned agency contracts?
Is the award of unearned commissions and damages to Sanchez justified?