AGENCY (Obieta) DIGESTS by Sham Zaragoza
ARTICLES 1868-1872 rather by a 3rd party or stranger not in the employ of his
1. DE LA CRUZ V NORTHERN THEATRIAL ENTERPRISES
FACTS:
The Northern Theatrical Enterprises, a domestic corporation
opearated a movie house in Laoag, Ilocos Norte and among
the persons employed by it was plaintiff De La Cruz, hired as
special guard whose duties were to guard the main entrance of
the cine, to maintain peace and order and to report the
commission of disorder within the premises
As such guard, he carried a revolver
One Benjamin Martin wanted to crash the gate or entrance of
the movie house. Infuriated by the refusal of plaintiff to let him
in without first providing himself with a ticket, Martin attacked
him with a bolo
Plaintiff defended himself until he was cornered, at which
moment to save himself, he shot gate crasher resulting in
latters death
Plaintiff was charged with homicide but was acquitted of
charge after trial. In both criminal cases against him, he
employed a lawyer to defend him
He then demanded from NLE reimbursement of expenses but
was refused thus filed present action against the company and
t3 members of its Board of Directors to recover not only the
amounts he had paid his lawyers but also moral damages said
to have been suffered due to his worry, neglect of his interests
and his family as well in the supervision of the cultivation of his
land, a total of P 15,000.
CFI rejected plaintiffs theory that he was an agent of the
company and that he had no cause of action and dismissed
the complaint
ISSUE:
W/N Plaintiff De la Cruz is considered as an agent of the
corporation and as such entitled to reimbursement for
expenses incurred in conncection with agency
RULING: No, Plaintiff is mere employee
The relationship between the movie corporation and plaintiff
was not that of principal and agent because the principle of
representation as a characteristic of agency was in no way
involved.
Plaintiff was not employed to represent corporation in its
dealings with 3rd parties
Plaintiff is a mere employee hired to perform a certain specific
duty or task, that of acting as a special guard and staying at
the main entrance of the movie house to stop gate crashers
and to maintain peace and order within the premises.
Sub issue (relevant to Agency): W/N an employee or servant
who in line of duty and while in the performance of the task
assigned to him, performs an act which eventually results in his
incurring in expenses caused not directly by his master or
employer or by reason of his performance of his duty, but
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employer may recover said damages against his employer
Ruling: No
Although the employer has a moral obligation to give employee
legal assistance to aid the latter in his case, he has no legal
obligation to do so.
If the employer is not legally obliged to give legal assistance to
employee and provide him with a lawyer, naturally said
employee may not recover the amount he may have paid a
lawyer hired by him.
Damages suffered by plaintiff by reason of expenses incurred
by him in remunerating his lawyer is not caused by his act of
shooting to death the gate crasher but rather by filing the
charge of homicide which made it necessary for him to defend
himself with the aid of counsel.
Had no criminal charge against him, there would have been no
expenses incurred or damages suffered.
2. KER AND CO, LTD V. LINGAD
FACTS:
Ker and Co, Ltd. was assessed by then Commissioner of
Internal Revenue Domingo the sum of P 20,272.33 as the
commercial brokers percentage tax, surcharge and
compromise penalty.
There was a request on the part of Ker for the cancellation of
such assessment which request was turned down
As a result, it filed a petition for review with Court of Tax
Appeals
CTA: Ker taxable except as to the compromise penalty of
P500, the amount due from it being fixed at P19,772.33
Such liability arose from a contract of Ker with the United
States Rubber International. The former being referred to as
the distributor and the latter specifically designated as the
company
The contract was to apply to transactions between the former
and Ker, as distributor from July 1, 1948 to continue in force
until terminated by either party giving to the other 60 days
notice
The shipments would cover products for consumption in
Cebu, Bohol, Leyte Samar, Jolo, Negros Oriental and
Mindanao except province of Davao, Ker as distributor being
precluded from disposing such products elsewhere than in the
above places unless written consent would first be obtained
from the company
Ker as distributor is required to exert every effort to have the
shipment of the products in the maximum quantity and to
promote in every way the sale sale thereof.
Crucial stipulation: The company shall from time to time
consign to Ker and Ker will receive, accept and/hold upon
consignment the products specified under the terms of this
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
agreement in such quantities as in the judgment of company
may be necessary
It is further agreed that this agreement does not constitute Ker
the agent or legal representative of the company for any
purpose whatsoever
ISSUE:
W/N the relationship thus created is one of vendor and vendee
(contract of sale) or of broker and principal (contract of agency)
RULING:
Broker and principal- contract of agency
By taking the contractual stipulations as a whole and not just
the disclaimer, it would seem that the contract between them is
a contract of agency
The CTA, in considering such stipulations provided in the
contract, concluded that all these circumstances are
irreconcilably antagonistic to the idea of an independent
merchant
CTA: upon analysis of the whole, together with actual conduct
of the parties thereto, that the relationship between them is one
of brokerage or agency
National Internal Revenue Code: defined Commercial broker
as all persons, other than importer, manufacturers, producers
or bona fide employees who, for compensation or profit, sell or
bring about sales or purchase of merchandise for other
persons or bring proposed buyers and sellers together and
also includes commission merchants such as Ker in this case
The mere disclaimer in a contract that an entity like Ker is not
the agent or legal representative for any purpose whatsoever
does not suffice to yield the conclusion that it is an
independent merchant if the control over the goods for resale
of goods consigned is pervasive in character
Thus, SC rejected Kers petition to reverse decision of CTA
3. GUARDEX ENTERPRISES V NLRC
FACTS:
Escandor-engaged, under the name and style of Guardex
Enterprises in (a) manufacture and sale of fire-fighting
equipment such as fire extinguishers, fire hose cabinets and
related products, and (b) occasionally, the building or
fabrication of fire trucks
Junbee Orbeta- a freelance salesman
Orbeta somehow learned that Escandor had offered to
fabricate a fire truck for Rubberworld )Phil) inc thus he wrote
Escandor inquiring about the amount of commission for the
sale of a fire truck. Escandor replied saying that it was P15,000
per unit
4 days later, Orbeta offered to look after Escandors pending
proposal to sell a fire truck to Rubberworld, ans asked for P250
as representation expenses to which Escandor agreed and
gave him the money
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When Escandor didnt get any word from Orbeta after 3 days,
she herself inquired in writing from Rubberworld about her offer
of sale of a fire truck. She then sent a revised price quotation
some ten days laeter.
in the meantime, Orbeta sold to other individuals some of
Escanodors fire extinguishers, receiving traveling expenses in
connection therewith as well as the corresponding
commissions and after that he then dropped out of sight.
About 7 months afterwards, Escandor herself finally concluded
a contract with Rubberworld for the latters purchase of a fire
truck
Orbeta suddenly reappeared an asked for his commission for
the sale of the fire truck to Rubberworld to which Escandor
refused, saying that he had had nothing to do with the offer,
negotiation and consummation of the sale
Orbeta then filed a complaint against Escandor with the
Ministry of Labor which ruled in his favor. It was affirmed by the
National Labor Relations Commission on appeal taken by
Escandor
ISSUE:
W/N Orbeta is an agent of Guardex Enterprises thus entitled to
sales commission
RULING: No
The claim that she gave verbal authority to Orbeta to offer to a
fire truck to Rubberworld was belied from the fact that months
prior to Orbetas approaching Escandor, the latter already had
made a written offer of a fire truck to Rubberworld. All that she
consented to was for Orbeta to follow up that pending offer. It
seems fairly evident that the representation allowance of
P250 was meant to cover the expenses for the follow up
offered by Orbeta-an ambiguous fact which does not of itself
suggest the creation of an agency and is not at all inconsistent
with the theory of its absence in this case.
Even if Orbeta is considered to have been Escandors agent
for the time he was supposed to follow up the offer to sell,
such agency would have been deemed revoked upon the
resumption of direct negotiations between Escandor and
Rubberworld, Orbeta having in the meantime abandoned all
efforts (if indeed any were exerted) to secure the deal in
Escandors behalf.
No jurisdiction for Labor Arbiter or NLRC in dealing with this
case since jurisiction vested in tehm by the Labor Code
extends generally speaking only to cases arising from
employer-employee relationship.
4. ORIENT AIR SERVCES AND HOTEL REPRESENTATIVES
V CA
FACTS:
American Airlines, inc, an air carrier offering passenger and air
cargo transportation in the Phils, and Orient Air Services and
Hotel Representatives entered into a General Sales Agency
Agreement whereby the former authorized the latter to act as
its exclusive general sales agent within the Phils for the sale of
air passenger transportation
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
Some of the pertinent provisions are:
Orient Air Services shall perform these services:
a. solict and promote passenger traffic for the services of
American and if necessary, employ staff competen and
sufficient to do so
b. provide and maintain a suitable area in its place of business
to be used exclusively for the transaction of the business of
American
c. arrange for distribution of Americans timetables, tariffs and
promotional material to sales agents nad the general public in
the assigned territory
d. service and supervise sales agents in the assigned territory
including if required by American the control of remittances and
commissions retained
e. hold out a passenger reservation facility to sales agents and
general public in the assigned territory
Alleging that Orient Air had reneged on its obligations under
the Agreement by failing to remit the net proceeds of sale in
the amount of US $ 254,400, American Air by itself undertook
the collection of the proceeds of tickets sold originally by Orient
Air and terminated forthwith the Agreement
American Air instituted suit against Orient Air for Accounting
with Preliminary Attachment or Garnishment, Mandatory
Injunction and Restraining Order averring the basis for the
termination of the Agreement as well as Orient Airs previous
record of failures to promptly settle past outstanding refunds
of which there were available funds in the possession of the
Orient Air to the damage and prejudice of American Air
TC ruled in favor of Orient Air to which the Intermediate
Appelalate Court (now CA) affirmed TCs decision with
modifications with respect to monetary awards granted.
ISSUE: W/N Orient Air is entitled to the 3% overriding
commission
RULING: Yes
It is a well settled principle that in the interpretation of a
contract, the entirety thereof must be taken into consideration
to ascertain the meaning of its provisions. The various
stipulations in the contract must be read together to give effect
to all
The Agreement, when interpreted in accordance with the
foregoing principles, entitles Orient Air to the 3%
overriding commission based on total revenue or as referred to
by the parties, total flown revenues.
As the designated General Sales Agent of American Air, Orient
Air was responsible for the promotion and marketing of
American Airs services for air passenger transportation and
the solicitation of sales therefor. In return for such efforts and
services, Orient Air was to be paid commissions of 2 kinds:
first, a sales agency commission, ranging from 7 to 8% of tariff
fares and charges from sales by Orient Air when made on
American Air ticket stock; and second, an overriding
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commission of 3% of tariff fares and charges for all sales of
passenger transportation over American Air services.
The second type of commissions would accrue for sales of
American Air services made not on its ticket stocket but on the
ticket stock of other air carriers sold by such carriers or other
authorized ticketing facilities or travel agents.
In addition, it is clear from the records that American Air was
the party responsible for the preparation of the Agreement.
Consequently, any ambiguity in this contract of adhesion is to
be taken contra proferentem construed against the party
who cause the ambiguity and could have avoided it by the
exercise of a little more care.
5. BORDADOR V LUZ
FACTS:
Petitioners were engaged in the business of purchase and sale
of jewelry and respondent Brigida Luz, also known as Aida
Luz, was their regular customer.
On several occasions, respondent Deganos, brother of Luz,
received several pieces of gold and jewelry from petitioners
amounting to P382, 816. These items and their prices were
indicated in seventeen receipts covering the same. 11 of the
receipts stated that they were received for a certain Aquino, a
niece of Deganos, and the remaining 6 receipts indicated that
they were received for Luz.
Deganos was supposed to sell the items at a profit and
thereafter remit the proceeds and return the unsold items to
Bordador. Deganos remitted only the sum of P53, 207. He
neither paid the balance of the sales proceeds, nor did he
return any unsold item to petitioners.
The total of his unpaid account to Bordador, including interest,
reached the sum of P725, 463.98. Petitioners eventually filed a
complaint in the barangay court against Deganos to recover
said amount.
In the barangay proceedings, Luz, who was not impleaded in
the caes, appeared as a witness for Deganos and ultimately,
she and her husband, together with Deganos signed a
compromise agreement with petitioners.
In that compromise agreement, Deganos obligated himself to
pay petitioners, on installment basis , the balance of his
account plus interest thereon. However, he failed to comply
with his aforestated undertakings.
Petitioners instituted a complaint for recovery of sum of money
and damages, with an application for preliminary attachment
against Deganos and Luz.
Deganos and Luz was also charged with estafa
During the trial of the civil cae, petitioners claimed that
Deganos acted as agent of Luz when received the subject
items of jewelry, and because he failed to pay for the same,
Luz, as principal, and her spouse are solidarily liable with him
Trial court ruled that only Deganos was liable to Bordador for
the amount and damages claimed. It held that while Luz did
have transactions with petitioners in the past, the items
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
involved were already paid for and all that Luz owed Bordador
was the sum or P21, 483 representing interest on the principal
account which she had previously paid for.
CA affirmed TCs decision
ISSUE:
W/N Luz are liable to petitioners for the latters claim for money
and damages in the sum of P725,463.98, plus interests and
attorneys fees, despite the fact that the evidence does not
show that they signed any of the subject receipts or authorized
Deganos to receive the items of jewelry on their behalf
RULING: No
Evidence does not support the theory of Bordador that
Deganos was an agent of Luz and that the latter should
consequently be held solidarily liable with Deganos in his
obligation to petitioners.
The basis for agency is representation. Here, there is no
showing that Luz consented to the acts of Deganos or
authorized him to act on her behalf, much less with respect to
the particular transactions involved.
It was grossly and inexcusably negligent of petitioner to entrust
to Deganos, not once or twice but on at least six occasions as
evidenced by 6 receipts, several pieces of jewelry of
substantial value without requiring a written authorization from
his alleged principal.
A person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent.
Records show that neither an express nor an implied agency
was proven to have existed between Deganos and Luz.
Evidently, Bordador who were negligent in their transactions
with Deganos cannot seek relief from the effects of their
negligence by conjuring a supposed agency relation between
the two respondents where no evidence supports such claim
6. DE LA PENA V HIDALGO
FACTS:
De la Pena y de Ramon and De Ramon, in her own behalf and
as the legal guardian of her son Roberto De la Pena, filed in
the CFI a written complaint against Hidalgos
De La Pena y de Ramon, as the judicial administrator of the
estate of the deceased De la Pena y Gomiz, with the consent
of the court filed a second amended complaint prosecuting his
action solely against Frederico Hidalgo
CFI ruled in favor of plainiff-administrator for the sum of P13,
606.19 and legal interest from the date of the filing of the
complaint and the costs of the trial.
De la Pena y Ramon filed a third amended complaint with the
permission of the court alleging, among other things, as a first
cause of action, when Frederico Hidalgo had possession of
and administered the following properties to wit, 1 house and
lot; at Calle San Luis; another house and lot at Calle Cortada;
another house and lot at Calle San Luis, and a fenced lot on
the same street, all of the district of Ermita, and another house
and lot at Calle Looban de Paco, belonging to his principal, De
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la Pena y Gomiz, according to the power of attorey executed in
his favor
Hidalgo, as such agent, collected the rents and income from
said properties, amounting to P50, 244, which sum, collected
in partial amounts and on different dates, he should have
deposited, in accordance with the verbal agreement between
the deceased and himself in the general treasury of the
Spanish Government at an interest of 5% per annum, which
interest on accrual was likewise to be deposited in order that it
also might bear interest; that Hidalgo did not remit or pay to
Gomiz, during his lifetime, nor to any representative of the said
Gomiz, the sum aforestated nor any part thereof with the sole
exception of P1,289.03, nor has he deposited the unpaid
balance of said sum in the treasury, according to agreement,
wherefore he has become liable to his principal and to the
administrator for the said sum, together with its interest
amounting to P72,548.24
The court ruled in favor of De la Pena and said that Hidalgo, as
administrator of the estate of deceased Gomiz, actually owed
De la Pena
ISSUE: W/N Hidalgo is considered an agent of Gomiz and as
such must reimburse present administrator, De la Pena
RULING: No
Gomiz, before embarking for Spain, executed before a notary a
power of attorney in favor of Hidalgo as his agent and that he
should represent him and administer various properties he
owned and possessed in Manila.
After Hidalgo occupied the position of agent and administrator
of De la Pena y Gomizs property for several years, the former
wrote to the latter requesting him to designate a person who
might substitute him in his said position in the event of his
being obliged to absent himself from these Islannds
From the procedure followed by the agent, Hidalgo, it is
logically inferred that he had definitely renounced his agency
and that the agency was duly terminated according to the
provisions of art 1782
Although the word Renounce was not employed in
connection with the agency executed in his favor, yet when the
agent informs his principal that for reasons of health and by
medical advice he is about to depart from the place where he
is exercising his trust and where the property subject to his
administration is situated, abandons the property, turns it over
to a third party, and transmits to his principal a general
statement which summarizes and embraces all the balances of
his accounts since he began to exercise his agency to the date
when he ceased to hold his trust, it then reasonable and just to
conclude that the said agent expressly and definitely
renounced his agency.
7. GUTIERREZ HERMANOS V ORENSE
FACTS:
Duran, a nephew of Orense, with the latters knowledge and
consent, executed before a notary a public instrument whereby
he sold and conveyed to plaintiff company for P1,500 the said
property
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
The vendor, Duran reserving to himself the right to repurchase
it for the same price within a period of 4 years from the date of
said instrument
That plaintiff company had not entered into possession of the
purchased property, owing to its continued occupancy by
Orense and his nephew, Duran by virtue of a contract of lease
executed by the plaintiff to Duran
said instrument of sale was publicly and freely confirmed and
ratified by Orense in a verbal declaration made by him
that, in order to perfect the title to the said property, the plaintiff
had to demand of Orense that he execute in legal form a deed
of conveyance of the property, but that the defendant Orense
refused to do so, without any justifiable cause or reason
This suit involves the validity and efficacy of the sale under
right of redemption of a parcel of land and a masonry house
with a nipa hut erected thereon, effected by Duran, a nephew
of the owner of the property, Orense for the sum of P1,500 by
means of a notarial instrument
After the lapse of 4 years stipulated for the redemption, Orense
refused to deliver the property to the purchaser, the firm of
Gutierrez Hermanos and to pay the rental thereof at the rate of
P30 per month for its use and occupation when the period for
its repurchase terminated.
Counsel for the firm filed a complaint praying, among other
remedies, that Orense be compelled to execute a deed for the
transfer and conveyance to the plaintiff company of all the
right, title and interest which Orense had in the property sold,
and to pay the same the rental of the property
ISSUE: W/N Duran, nephew of the owner of the property,
Orense, is an agent and was authorized to sell the land in favor
of petititioner
RULING: Yes
Reecords in this case shows that Orense did give his consent
in order that his nephew, Duran might sell the property in
question to company and that he did thereafter confirm and
ratify the sale by means of a public instrument executed before
a notary
It having been proven at the trial that Orense gave his consent
to the said sale, it follows that he conferred verbal, or at least
implied, power of agency upon his nephew Duran who
accepted it in the same way by selling the said property
The principal must therefore fulfill all the obligations contracted
by the agent, who acted within the scope of his authority
Even if consent was granted subsequently to the sale, it is
unquestionable that Orense, the owner of the property,
approved the action of his nephew, who in this acted as the
manager of his uncles business and Orenses ratification
produced the effect of an express authorization to make the
said sale
The sale of the said property made by Duran to the company
was indeed null and void in the beginning, but afterwards
become perfectly valid and cured of the defect of nullity it bore
at its execution by the confirmation solemnly made by the said
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owner upon his stating under oath to the judge that he himself
consented to his nephews making the said sale
8. JOHNLO TRADING CO V FLORES
FACTS:
M.B. Florentino & Co, Ltd, filed with the CFI of La Union
against Johnlo Trading Company and Lipsett Pacific
Corporation a case for the collection of the sum of P14,304.19
and damages in the sum of P10,000.
collaterally, plaintiff alleged that Johnlo had transferred to
Lipsett all its equipment and properties in the Philippines with
intent to defraud its creditors and, as said Johnlo has no other
property in the Phils to pay its indebtedness, it prayed that said
properties be attached.
Motion for attachment was granted but was later amended at
the request of the plaintiff, upon its finding that all of the said
properties had been transferred to other persons and the
proceeds of the sale deposited with the National City Bank of
New York
Consequentlym the deposit in the amount of P25,000 was
garnished in compliance with the order of the court
Johnlo Company is a joint venture organized by 2 foreign
corporations to engage soley in the demilitarization of
ammunition at Rosario, La Union, and Bauan, Batangas, under
a direct contract with our Government wherein as a special
concession, it was not required to register with the Bureau of
Commerce nor to obtain a license to do business in the Phils
as required by law because the business to be undertaken was
single and isolated
because of that concession, it was not also required to
designate any agent in the Phils upon whom legal process may
be served under the law in cases of litigation
However, the summons for Johnlo Company in this case was
served on Charles Balcoff upon the claim that he is its
representative in the Phils.
as no one appeared in behalf of Johnlo, the court, upon
petition of the plaintiff declared said company in default
after being informed that it was declared in default, Johnlo
Company, through counsel, filed motion for recon and prayed
for the setting aside of said order upon the ground that Balcoff,
not being its agent nor representative, the Court had not yet
acquired jurisdiction over its person, and therefore, the period
for filing its answer had not yet commenced to run
ISSUE: W/N Balcoff is deemed not just a counsel but also an
agent of Johnlo Company
RULING: yes, both counsel and agent/representative
It may be stated that an attorney cannot, without authority to
do so, accept service of process which commences action
against his client
As a general rule, an attorney-at-law has no authority merely
by virtue of his general employment as such to waive or admit
service for his client of original process by which the court for
the first time acquires jurisdiction of the client
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
The record is not quite clear that Balcoff acted merely as
counsel in his relation to Johnlo. There is proof to show that he
acted in a representative capacity in and outside of court, so
much so that he undertook to settle claims that had been filed
against it
The service made upon him of the summons intended for
Johnlo can be deemed sufficient in contemplation of law to
bind his client, Johnlo upon the theory that, as the only person
in the Phils charged with the duty of settling claims against it,
he must be presumed, to communicate to his client the service
made upon him of any process that may result in a judgment
and execution that may deprive it of its property and the
probabilities are, under such circumstances, that the
corporation will be duly informed of the pendency of the suit
Balcoff acted in this case not merely as counsel of Johnlo
Company but also as its representative in the settlement of
claims
ARTICLES 1873-1877
1. RALLOS V YANGCO
FACTS:
Yangco sent Rallos a letter inviting the latter to be the
consignor in buying and selling leaf tobacco and other native
products. Terms and conditions were also contained in the
letter.
Accepting the invitation, Rallos proceeded to do a considerable
business with Yangco trhough the said Collantes, as his factor,
sending to him as agent for Yangco a good deal of produce to
be sold on commission.
Rallos sent to the said Collantes, as agent for Yangco, 218
bundles of tobacco in the leaf to be sold on commission, as
had been other produce previously.
The said Collantes received said tobacco and sold it for the
sum of P1,744. The charges for such sale were P206.96,
leaving in the hands of said Collantes the sum of 1,537.08
belonging to Rallos. This sum was, apparently, converted to his
own use by said agent.
It appears, however, that prior to the sending of said tobacco
Yangco had severed his relations with Collantes and that the
latter was no longer acting as his factor. This fact was not
known to Rallos; and it is conceded in the case that no notice
of any kind was given by Yangco of the termination of the
relations between Yangco and his agent, Collantes.
Yangco thus refused to pay the said sum upon demand of
Rallos, placing such refusal upon the ground that at the time
the said tobacco was received and sold by Collantes, he was
acting personally and not as agent of Yangco.
ISSUE: W/N Collantes is an agent of Yangco. If so, Yangco as
principal must refund to Rallos the said sum brought by the
sale of the produce
RULING: Yes
Yangco, as principal is liable. Having advertised the fact that
Collantes was his agent and having given special notice to
Rallos of that fact, and having given them a special invitation to
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deal with such agent, it was the duty of Yangco on the
termination of the relationship of the principal and agent to give
due and timely notice thereof to Rallos.
Failing to do so, he is responsible to them for whatever goods
may been in good faith and without negligence sent to the
agent without knowledge, actual or constructive, of the
termination of such relationship
2. B. H. MACKE ET AL V JOSE CAMPS
FACTS:
B. H. Macke and W.H. Chandler, partners doing business
under thee firm name of Macke, Chandler And Company,
allege that during the months of February and March 1905,
they sold to Jose Camps and delivered at his place of
business, known as the :Washington Caf, various bills of
goods amounting to P351.50; that Camps has only paid on
account of said goods the sum of P174; that there is still due
them on account of said goods the sum of P177.50
Plaintiffs made demand for the payment from defendant and
that the latter failed and refused to pay the said balance or any
part of it
Macke, one of the plaintiffs, testified that on the order of one
Ricardo Flores, who represented himself to be the agent of
Jose Camps, he shipped the said goods to the defendant at
the Washington Caf; that Flores (agent) later acknowledged
the receipt of the said goods and made various payments
thereon amounting in all to P174; that believes that Flores is
still the agent of Camps; and that when he went to the
Washington Caf for the purpose of collecting his bill he found
Flores, in the absence of Camps, apparently in charge of the
business and claiming to be the business manager of Camps,
said business being that of a hotel with a bar and restaurant
annexed.
A written contract was introduced as evidence, from which it
appears that one Galmes, the former of Washington Caf
subrented the building wherein the business was conducted, to
Camps for 1 year for the purpose of carrying on that business,
Camps obligating himself not to sublet or subrent the building
or the business without the consent of the said Galmes.
This contract was signed by Camps and the name of Ricardo
Flores as a witness and attached thereon is an inventory of the
furniture and fittings which also is signed by Camps with the
word sublessee below the name, and at the foot of this
inventory the word received followed by the name Ricardo
Flores with the words managing agent immediately following
his name.
ISSUE: W/N Ricardol Flores was the agent of Camps
Ruling: Yes
Evidence is sufficient to sustain a finding that Flores is the
agent of Camps in the management of the bar of the
Washington Caf with authority to bind Camps, his principal,
for the payment of the goods
The contract sufficiently establishes the fact that Camps was
the owner of the business and of the bar, and the title of
managing agent attached to the signature of Flores which
appears on that contract, together with the fact that at the time
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
the purchases were made, Flores was apparently in charge of
the business performing the duties usually intrusted to a
managing agent leave little room for doubt that he was there as
the authorized agent of Camps.
Agency by Estoppel --- One who clothes another with apparent
authority as his agent, and holds him out to the public as such,
can not be permitted to deny the authority of such person to
act as his agent, to the prejudice of innocent third persons
dealing with such person in good faith and in the honest belief
that he is what he appears to be.
Estoppel---- Whenever a party has, by his own declaration, act
or omission, intentionally and deliberately led another to
believe a particular thing true, and to act upon such belief, he
can not, in any litigation arising out of such declaration, act, or
omission be permitted to falsify; and unless the contrary
appears, the authority of the agent must be presumed to
include all the necessary and usual means of carrying his
agency into effect.
3. RIO Y OLABARRIETA AND MOLINA V YU TEC & CO.
FACTS:
Plaintiff, Rio is a copartnernership organized and existing
under the laws of the Phil Islands. The defendant, Yu Tec and
Co is a domestic corporation and the defendant, Calvin is of
age and a resident of Manila
Rio alleges that Yu Tec & Co, which was then a limited
partnership, authorized its agent, J.V. Molina to find a
purchaser or a lessee of a tract of land belonging to it located
on Calle Velasquez, Tondo, Manila.
Within the time given the agent found a purchaser in the name
of plaintiff (Rio) which offered to purchase the land for the sum
of P 40,000 and that Mollina, its agent, made known its offer to
the respondent company which refused to accept it
Yu Tec offered to sell the land for P42,000 instead, of which
P7,000 was to be paid on the signing of the contract, and the
balance Riwithin two years, with interest of 8% and the
remaining P25,000 at the end of the second year, all to be
secured by a first mortgage
Rio accepted the offer but Yu Tec company made several
excuses and refused to carry out the agreement
That defendant, Calvin, with full knowledge of the facts and
within the specified period, fraudulently conspiring with Yu Tec,
entered into a contract by which he purchased the property
from the company.
By reason thereof, Rio suffered damages in the sum of
P12,000 and prays that the sale to Calvin be declared null and
void, and ordering company to comply with the contract and to
execute a deed to Rio and to pay damages of P12,000
ISSUE: W/N the contract of purchase and sale of real property
is void unless the authority of the agent be in writing and
subscribed by the party sought to be charged
RULING: Yes
Molina, the agent, could not enforce the specific performance
of Exhibit B. There is no evidence in the record of any written
7
contract between Rio and Yu Tec for the sale and purchase of
the real property
Exhibit B (letter giving authority to J. Molina as agent of Yu Tec
and if the latter shall not take advantage of selling it within the
time given, the authority given shall be cancelled) is nothing
more than an authority to sell
While Exhibit B might be construed as fixing the price of the
sale of the parcel of land, it does not specify the terms and
conditions upon which the sale was to be made
Since Exhibit B already expired, that fact would destroy the
legal force and effect of Exhibit C (specified and defined the
terms and conditions of any sale made by Molina
In the absence of a renewal or extension in writing signed by
the party to be charged or its agent, Molina had no authority to
sell the property upon any terms and conditions after the
stipulated period.
4. GUTIERREZ HERMANOS V ORENSE
FACTS:
Orense had been the owner of a parcel of land, with the
building and improvements thereon situated in the pueblo of
Albay, and had been registered under his name
Jose Duran, a nephew of Orense, with the latters knowledge
and consent, executed before a notary a public instrument
whereby he sold and conveyed to Gutierrez Hermanos, for P
1,500 the aforementioned property with Duran having the right
to repurchase for the same price within 4 years
Plaintiff had not entered into possession of the land since it is
being occupied by Orense and Duran, by virtue of a contract of
lease executed by plaintiff to Duran
Said instrument of sale of property, executed by Duran was
publicly and freely confirmed and ratified by Orense in a verbal
declaration made by him to the effect that the instrument was
executed by his nephew with his knowledge and consent
In order to perfect the title to said property, plaintiff had to
demand Orense that he execute in legal form a deed of
conveyance of the parcel of land but the latter refused to do so,
without any justifiable cause or reason, and he should be
compelled to execute said deed because his nephew is
notoriously insolvent and cannot reimburse plaintiff company
for the price of sale which he received
Duran failed to exercise his right of repurchase and Orense
also refused to deliver the property and to pay rental thereof
ISSUE: 1. W/N the sale executed by Duran, nephew of
Orense, in favor of that Orense publicly ratified and confirmed
the said sale
2. W/N a contract of agency, express or implied was
present in this case
RULING: YES TO BOTH
Evidence shows that Orense did give his consent in order that
his nephew, Duran might sell the property to plaintiff company
and that he did confirm and ratify the sale by means of public
instrument executed before a notary
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
It follows that Orense conferred verbal, or at least implied,
power of agency upon his nephew Duran, who accepted it in
the same way by selling the said property
The principal must fulfill all the obligations contracted by the
agent, who acted within the scope of his authority
Even if said consent was granted subsequently to the sale, it is
questionable that Orense, the owner of the property, approved
the action of his nephew, who in this case acted as the
manager of his uncles business and Orenses ratification
produced the effects of an express authorization to make the
said sale
A contract executed in the name of another by one who has
neither his authorization nor legal representation shall be void,
unless it should be ratified by the person in whose name it was
executed before being revoked by the other contracting party
The sale of the said property made by Duran to Gutierrez
Hermanos was indeed null and void from the beginning, but
afterwards became perfectly valid and cured of the defect of
nullity it bore at its execution by the confirmation solemnly
made by the said owner upon his stating under oath to the
judge that he himself consented to his nephews making the
said sale
5. JIMENEZ V RABOT
FACTS:
Gregorio Jimenez filed this action to recover from Rabot, a
parcel of land situated in Alaminos, Pangasinan
The property in question, together with two other parcels in the
same locality originally belonged to Jimenez, having been
assigned to him as one of the heirs in the division of the estate
of his father
It further appears that while Gregorio Jimenez was staying at
Vigan, Ilocos Sur, his property in Alaminos was confided by
him to the care of his elder sister Nicolasa Jimenez.
He wrote his sister a letter from Vigan in which he informed her
that he was pressed for money and requested her to sell one
of his parcels of land and send him the money in order that he
might pay his debts. The letter contains no description of the
land to be sold other than is indicated in the words one of my
parcels of land.
Acting upon this letter, Nicolasa approached Rabot and the
latter agreed to buy the property for the sum of P500. P250
was paid at once, with the understanding that a deed of
conveyance would be executed when the balance should be
paid.
Nicolasa admits having received this payment but there is no
evidence that she sent it to her brother
After one year, Gregorio Jimenez went back to Alaminos and
demanded that his sister surrender the piece of land to him, it
being then in her possession.
She refused upon some pretext or other to do so and as a
result, plaintiff instituted an action to recover the land from her
control
8
Meanwhile, Nicolasa executed and delivered to Rabot a deed
purporting to convey to him the parcel of land
ISSUE: W/N the authority conferred on Nicolasa by the letter
was sufficient to enable her to bind her brother of the sale
made in favor of Rabot
RULING: Yes
As a matter of formality, a power of attorney to convey real
property ought to appear in a public document, just as any
other instrument intended to transmit or convey an interest in
such property ought to appear in a public document
Art. 1713 of the Civil Code requires that the authority to
alienate land shall be contained in an express mandate
Subsection 5 of section 335 of Code of Civil Procedure say
that the authority of the agent must be in writing and
subscribed by the party to be charged
SC: the authority expressed in the letter is a sufficient
compliancw tih both requirements
The purpose in giving a power of attorney is to substitute the
mind and hand of the agent for the mind and hand of the
principal; and if the character and extent of the power is so
defined as to leave no doubt as to the limits within which the
agent is authorized to act, and he acts within those limits, the
principal cannot question the validity of his act
The general rule here applicable is that the description must be
sufficiently definite to identify the land either from the recitals of
the contract or deed or from external facts referred to in the
document, thereby enabling one to determine the identity of
the land and if the description is uncertain on its face or is
shown to be applicable with equal plausibility to more than one
tract, it is insufficient.
6. COSMIC LUMBER CORPORATION V CA
FACTS
Cosmic Corporation, through its General Manager executed a
Special Power of Attorney appointing Paz G. Villamil-Estrada
as attorney-in-fact to initiate, institute and file any court action
for the ejectment of third persons and/or squatters of the entire
lot 9127 and 443 for the said squatters to remove their houses
and vacate the premises in order that the corporation may take
material possession of the entire lot
Paz G. Villamil Estrada, by virtue of her power of attorney,
instituted an action for the ejectment of private respondent
Isidro Perez and recover the possession of a portion of lot 443
before the RTC
Estrada entered into a Compromise Agreement with Perez, the
terms and conditions such as:
In order for Perez to buy the said lot he is presently
occupying, he has to pay to plaintiff through Estada
the sum of P26,640 computed at P80/square meter
and that Cosmic Lumber recognizes ownership and
possession of Perez by virtue of this compromise
agreement over said portion of 333 sqm of lot 443
and whatever expenses of subdivision, registration
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
and other incidental expenses shall be shouldered by
Perez
although the agreement was approved by the trial court and
the decision became final and executory it was not executed
within the 5 year period from date of its finality allegedly due to
the failure of Cosmic Lumber to produce the owners duplicate
copy of title needed to segregate from lot 443 the portion sold
by the attorney-in-fact, Paz Estrada to Perez under the
compromise agreement
ISSUE: W/N there is a contract of agency between Cosmic
Lumber, principal and Paz Estrada, agent thus binding the
principal over the compromise agreement made by the agent
to a third person, Perez in selling the portion of the said
property
RULING: No
The authority granted Villamil-Estrada under the special power
of attorney was explicit and exclusionary: for her to institute
any action in court to eject all persons found on lots number
9127 and 443 so that Cosmic Lumber could take material
possession thereof and for this purpose, to appear at the pre-
trial and enter into any stipulation of facts and/or compromise
agreement but only insofar as this was protective of the rights
and interests of Cosmic Lumber in the property
Nowhere in this authorization was Villamil-Estrada granted
expressly or impliedly any power to sell the subject property
nor a portion thereof
Neither can a conferment of the power to sell be validly
inferred from the specific authority to enter into a compromise
agreement because of the explicit limitation fixed by the
grantor that the compromise entered into shall only be so far
as it shall protect the rights and interest of the corporation in
the aforementioned lots.
In the context of special investiture of powers to Villamil-
Estrada, alienation by sale of an immovable certainly cannot
be deemed protective of the right of Cosmic Lumber to
physically possess the same, more so when the land was
being sold for a price of P80/sqm , very much less than its
assessed value of P250/sqm and considering further that
plaintiff never received the proceeds of the sale
When the sale of a piece of land or any interest thereon is
through an agent, the authority of the latter shall be in writing;
otherwise, the sale should be void. Thus, the authority of an
agent to execute a contract for the sale of real estate must be
conferred in writing and must give him specific authority, either
to conduct the general business of the principal or to execute a
binding contract containing terms and conditions which are in
the contract he did execute
For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the
agent in clear and unmistakable language
It is therefore clear that by selling to Perez a portion of Cosmic
Lumbers land through a compromise agreement, Villamil-
Estrada acted without or in obvious authority. The sale ipso
jure is consequently void and so is the compromise agreement.
This being the case, the judgment based thereon is necessarily
void
9
When an agent is engaged in the perpetration of a fraud upon
his principal for his own exclusive benefit, he is not really
acting for the principal but is really acting for himself, entirely
outside the scope of his agency
7. RAET V CA
FACTS:
Petitioners Cesar and Elviira Raet (the spouses Raet) and
petitioners Rex and Edna Mitra (Spouses Mitra) negotiated
with Amparo Gatus concerning the possibility of bu*ying the
rights of the latter to certain units at the Las Villas de Sto. Nino
Subdivision in Meycauyan, Bulacan.
This subdivision ws developed by private respondent Phil Ville
Development and Housing Corporation (PVDHC) primarily for
parties qualified to obtain loans from the Government Service
Insurance System (GSIS).
Spouses Raet and Spouses Mira paid Gatus the total amounts
of P40,000 and P35,000 respectively for which they were
issued receipts by Gatus in her own name
Both spouses applied directly with PVDHC for the purchase of
units in the said subdivision. As they were not GSIS members,
they looked for members who could act as accommodation
parties by allowing them to use their policies. PVDHC would
process the applications for the purchase of the units upon the
approval by the GSIS of petitioners loan application
Spouses Raet presented GSIS policy of Ernesto Casidsid,
while the spouses Mitra that of Dena Lim. The former paid
P32,653 while the latter paid P27,000 to PVDHC on the
understanding that these accounts would be credited to the
purchase prices of the units which will be determined after the
approval of their loan applications with the GSIS.
Spouses Raet were allowed to occupy the unit built on Lot 4,
Block 67, Phase 4A of the subdivision while Spouses Mitra
were given the unit on Lot 7, Block 61, Phase 4A thereof
GSIS, however, disapproved the loan applications of both
spouses. They were advised by PVDHC to seek other sources
of financing but were still allowed to remain in the said
premises
Failure of both spouses to raise money, PVDHC demanded
them to vacate the units they were occupying and ejectment
cases were filed against them
ISSUE: W/N there were perfected contracts of sale between
petitioners and private respondent PVDHC involving the units
in question
RULING: No
SC: Parties in this case had not reached any agreement with
regard to the sale of the units in question
Records do not show the total costs of the units in question
and the payment schemes therefore. The figures referred to by
both spouses were mere estimates given to them by Gatus.
The parties transactions thus, lacked the requisites ressential
for the perfection of contracts
 AGENCY (Obieta) DIGESTS by Sham Zaragoza
Both spouses dealt with Gatus who was not the agent of
PVDHC. The criminal case for estafa against her was
dismissed because it was found out that she never
represeneted herself to be an agent of PVDHC
Both spouses knew from the beginning that Gatus was
negotiating with them in her own behalf and not as an agent of
PVDHC
There is thus no basis for the finding of HLURB Arbiter that
Gatus was the agent of PVDHC with respect to the
transactions in question
Since PVDHC had no knowledge of the figures Gatus gave to
both spouses as estimates of the costs of the units, it could not
have ratified the same at the time the latter applied for the
purchase of the units. PVDHC was to enter into agreements
concerning subject units with both spouses only upon approval
of their loan applications with GSIS which failed to materialize
There are no written contracts to evidence the alleged sales. If
both spouses and PVDHC had indeed entered into contracts
involving said units, it is rather strange that contracts of such
importance have not been reduced in writing
8. CITY-LITE REALTY CORPORATION V CA
FACTS
Private Respondent F.P. Holdings and Realty Corporation (F.P.
Holdings), formerly the Sparta Holdings Inc, was the registered
owner of a parcel of land situated along E. Rodriguez Avenue,
Quezon City also known as the Violago Property or the San
Lorenzo Ruiz Commercial Center, with an area of 71,754 sqm
The property was offered for sale to the general public through
the circulation of a sales brochure containing the description of
the property and the asking price of P6,250/sqm with terms of
payment negotiable. In addition, brokers commission was 2%
of selling price, net of withholding taxes and other charges.
Contact person was Meldin Al G. Roy, Metro Drug Inc.
The front portion consisting of 9,192 sqm is the subject of this
litigation
Al G. Roy sent a sales brochure, together with the location plan
and copy of the TCT to Atty. Gelacio Mamaril, a practicing
lawyer and a licensed real estate broker. Mamaril passed in
turn passed on these documents to Antonio Teng, Executive
Vice President, and Atty Victor Villanueva, Legal Counsel of
City-Lite
City-Lite conveyed its interest to purchase a portion or one-half
(1/2) of the front lot of the Violago Property Apparently, Roy
subsequently informed City-Lites representative that it would
take time to subdivide the lot and F.P. HOLDINGS was not
receptive to the purchase of only half of the front lot
Atty. Mamaril wrote Metro Drug (Al G. Roy) expressing City-
Lites desire to buy the entire front lot of the subject property
instead of only half thereof provided the asking price of
P6,250/sqm was reduced and that payment be in installment
for a certain period
The parties reached an agreement and Roy agreed to sell the
property to City-Lite provided only the latter submit its
acceptance in writing to the terms and conditions of the sale
10
For some reason or another and despite demand, F.P.
HOLDINGS refused to execute the corresponding deed of sale
in favor of City-Lite of the front lot of the property
Trial court ruled in favor of City-Lite ordering F.P. HOLDINGS to
execute a deed of sale of the property in favor of the former for
the total consideration of P55,056,250 payable as follows: P15
M as downpayment to be payable immediately upon execution
of the deed of sale and the balance within 6 months from
downpayment without interest
CA reversed TCs decision
ISSUE: W/N there was a perfected contract of sale between
City-Lite and respondent F.P. HOLDINGS because of a lack of
definite agreement on the manner of paying the purchase price
and that Metro Drug and Meldin Al G. Roy were not authorized
to sell the property to City-Lite, and that the authority of Roy
was only limited to that of mere liaison or contact person
RULING: No, Roy mere contact person
Art. 1874 of NCC: When the sale of a piece of land or any
interest therein is through an agent, the authority of the latter
shall be in writing, otherwise, the sale shal be void.
The absence of authority to sell can be determined from the
written memorandum issued by respondent F.P. HOLDINGS
President requesting Metro Drugs assistance in finding buyers
for the property
Memorandum indicates that Meldin G. Roy and/or Metro Drug
was only to assist F.P. Holdings in looking for buyers and
referring to them possible prospects whom they were
supposed to endorse to F.P. Holdings.
But the final evaluation, appraisal and acceptance of the
transaction could be made only by F.P. Holdings. In other
words, Roy and/or Metro Drug was only a contact person with
no authority to conclude a sale of the property
Roy and/or Metro Drug was a mere broker and Roy/s only job
was to bring parties the parties together for a possible
transaction
SC: for lack of a written authority to sell the Violago Property
on the part of Roy and/or Metro Drug, the sale should be as it
is declared null and void
9. SIMMIE V H. BRODEK
FACTS:
Simmie filed an action against Brodek to recover the sum of
1,350 pesos for services performed by the former for Brodek in
the purchase of a interest in the launch called Fred L. Dorr.
Evidence shows that Brodek was the owner of interest in the
said launch prior to the time of the alleged contract and that
one A.J. Washburn was the owner of the other half.
Simmie claims that he entered into a contract with Brodek by
the terms of which he was to purchase the half interest owned
by said Washburn for a sum not to exceed 3,500 pesos.
 AGENCY (Obieta) DIGESTS by Sham Zaragoza

He further claims that he was to receive for such services a

sum equal to the difference between 3,500 pesos and
whatever sum less than that amount for which he could
purchase the said launch
He further claims that by virtue of this agreement he entered
into a contract with the said Washburn to pay to the latter the
sum of 2,150 pesos and that there was due from Brodek to him
the difference between 3,500 pesos and 2,150 pesos, or the
sum of 1,350 pesos
As to the second cause, the court held that the plaintiff did not
have any source of income that could produce him such a
large sum of money as that invested in the construction of the
house; and the fact that the deceased had more than the
necessary amount to build the house
ISSUE: W/N there was a contract of agency between plaintiff
and respondent entitling the former compensation for services
rendered in favor of the latter

Inferior court ruled in favor the plaintiff, Simmie RULING: NO

ISSUE: W/N there was a contract of agency between Brodek
and Simmie, the latter to purchase the said launch for the
principal, Brodek
RULING: YES
Where Brodek enters into a contract through his authorized
agent Dorr, with Simmie to purchase property, agreeing to pay
a fixed price for such property, allowing Simmie, a sum equal
to the difference between this fixed price and whatever sum
less than that for which Simmie is able to purchase the
property, and Simmie has completed the contract of sale and
there is nothing left to be done except the payment of the said
property, and then Brodek closes said contract without the
intervention of Simmie, the former is liable to the latter for an
amount equal to the difference between the actual purchase
price of said property and the which Brodek agreed to pay for
the same
Plaintiff insists that, as his services as agent of the deceased
M Larena having been rendered, an obligaton to compensate
them must necessarily arise.
The trial court held that the compensation for the services of
the plaintiff was the gratuitous use and occupation of some of
the houses of said deceased by plaintiff and his family
If it were true that the plaintiff and the deceased had an
understanding to the effect that plaintiff was to receive
compensation aside from the use and occupation of the
houses of the deceased, it cannot be explained how the
plaintiff could have rendered services as he did for 8 years
without receiving and claiming any compensation from the
deceased.

10. AGUNA V. LARENA

FACTS:
This action is brought to recover the sum of P29,600 on two
causes against the administrator of the estate of the deceased
Mariano Larena

Upon his first cause of action, plaintiff claims the sum of

P9,600, the alleged value of services rendered by him to said
deceased as his agent in charge of the deceaseds houses
situated in Manila

Under the second cause of action, plaintiff alleges that one of

the buildings belonging to the deceased and described in his
complaint was built by him with the consent of the deceased,
and for that reason he is entitled to recover the sum disbursed
by him in its construction, amounting to P20,000

Evidence shows that plaintiff rendered services to the

deceased, consisting in the collection of the rents due from the
tenants occupying the deceaseds houses in Manila and
attending to the repair of said houses when necessary. He also
took such steps as were necessary to enforce the payment of
rents and all that was required to protect the interests of the
deceased in connection with said houses

Evidence also shows that at the time he rendered his services,

he did not receive any compensation, however it is a fact that
during said period, plaintiff occupied a house belonging to the
deceased without paying any rent at all
Upon the first cause of action, the trial court held that the
compensation for services of plaintiff was the gratuitous use
and occupation of some of the houses of the deceased by the
plaintiff and his family
11