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AGENCY,

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Orient Air’s Contention:
I. INTRODUCTION - AGENCY Orient Air denied the material allegations of the complaint with respect to
plaintiff's entitlement to alleged unremitted amounts, contending that after
application thereof to the commissions due it under the Agreement, plaintiff
Case #1 Orient Air Services v. CA (G.R. No. 76931. May 29, 1991) in fact still owed Orient Air a balance in unpaid overriding commissions.


Further, the defendant contended that the actions taken by American Air in
the course of terminating the Agreement as well as the termination itself
TOPIC: Definition and Objective of Agency were untenable, Orient Air claiming that American Air's precipitous conduct
had occasioned prejudice to its business interests.
(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 Trial Court’s Decision – Favored the allegations of the defendant (Orient Air).
fiction, becomes the principal, authorized to perform all acts which the latter The termination made by the American Air as affecting the GSA agreement
would have him do. Such a relationship can only be effected with the consent illegal and improper and order the plaintiff to reinstate defendant as its
of the principal, which must not, in any way, be compelled by law or by any general sales agent for passenger tranportation in the Philippines in
court.) accordance with said GSA agreement.

FACTS: IAC/CA’s Decision – Affirmed TC’s decision with some modifications with
This case is a consolidation of two (2) petitions for review on certiorari of a respect to the monetary awards granted.
decision of the CA.
Both parties appealed the aforesaid resolution and decision of the
American Airlines, Inc. (American Air, for brevity), an air carrier offering respondent court.
passenger and air cargo transportation in the Philippines, and Orient Air
Services and Hotel Representatives (Orient Air, for brevity), entered into a ISSUE/S:
General Sales Agency Agreement (Agreement, for brevity), whereby the • W-O-N the termination made by the American Air on the GSA
former authorized the latter to act as its exclusive general sales agent within Agreement was illegal and improper. (YES)
the Philippines for the sale of air passenger transportation. • W-O-N Orient Air or its sub-agents is entitled to the 3% overriding
commison of the tariff fees and charges for all sales of
In consideration of the mutual convenants herein contained, the parties transportation over American’s services. (YES)
hereto agree as follows:
RULING:
1. Representation of American by Orient Air Services The decision favored Orient Air.

x x x x x x x x x It is a well settled legal principle that in the interpretation of a contract, the
entirety thereof must be taken into consideration to ascertain the meaning
4. Remittances of its provisions. The various stipulations in the contract must be read
Orient Air shall remit in United States dollars to American the ticket stock or together to give effect to all.
exchange orders, less commissions to which Orient Air is entitled hereunder.
The Court finds merit in the contention of Orient Air that the Agreement,
5. Commissions when interpreted in accordance with the foregoing principles, entitles it to
American will pay Orient Air commission on transportation sold hereunder the 3% overriding commission based on total revenue, or as referred to by
by Orient Air or its sub-agents. the parties, "total flown revenue."

x x x x x x x x x As the designated exclusive General Sales Agent of American Air, Orient Air
was responsible for the promotion and marketing of American Air's services
(b) Overriding commission for air passenger transportation, and the solicitation of sales therefor.
In addition to the above commission American will pay Orient Air an
overriding commission of 3% of the tariff fares and charges for all sales of In return for such efforts and services, Orient Air was to be paid commissions
transportation over American's service by Orient Air or its sub-agents. of two (2) kinds: first, a sales agency commission, ranging from 7-8% of tariff
fares and charges from sales by Orient Air when made on American Air ticket
x x x x x x x x x stock; and second, an overriding commission of 3% of tariff fares and charges
for all sales of passenger transportation over American Air services.
13. Termination
American may terminate the Agreement on two days' notice in the event An additional point before finally disposing of this issue. It is clear from the
Orient Air is unable to transfer to the United States the funds payable by records that American Air was the party responsible for the preparation of
Orient Air to American under this Agreement. Either party may terminate the the Agreement. Consequently, any ambiguity in this "contract of adhesion" is
Agreement without cause by giving the other 30 days' notice by letter, to be taken "contra proferentem", i.e., construed against the party who
telegram or cable. caused the ambiguity and could have avoided it by the exercise of a little
more care. Thus, Article 1377 of the Civil Code provides that the
x x x x x x x x x interpretation of obscure words or stipulations in a contract shall not favor
the party who caused the obscurity.
American Air’s Contention:
Alleging that Orient Air had reneged on its obligations under the Agreement To put it differently, when several interpretations of a provision are
by failing to promptly remit the net proceeds of sales, American Air by itself otherwise equally proper, that interpretation or construction is to be
undertook the collection of the proceeds of tickets sold originally by Orient adopted which is most favorable to the party in whose favor the provision
Air and terminated forthwith the Agreement in accordance with Paragraph was made and who did not cause the ambiguity.
13 thereof (Termination).


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American Air’s Termination of the Agreement ISSUE/S:
Orient Air was entitled to an overriding commission based on total flown • W-O-N the death of the principal or of the agent extinguishes the
revenue. American Air's perception that Orient Air was remiss or in default of agency. (YES, as a general rule under Article 1919 of the civil
its obligations under the Agreement was, in fact, a situation where the latter code.)
acted in accordance with the Agreement—that of retaining from the sales • W-O-N the law provides an exception to the general rule. (YES,
proceeds its accrued commissions before remitting the balance to American Artile 1931 of the civil code provides an exception to the general
Air. Since the latter was still obligated to Orient Air by way of such rule under Article 1919 of the civil code.)
commissions. Orient Air was clearly justified in retaining and refusing to • W-O-N Article 1931 is applicable in this case. (NO, the two
remit the sums claimed by American Air. The latter's termination of the conditions must concur the absence of one will render the act of
Agreement was, therefore, without cause and basis, for which it should be the agent invalid and unenforceable.)
held liable to Orient Air.
RULING:
By affirming this ruling of the trial court, respondent appellate court, in The decision favored Ramon Rallos.
effect, compels American Air to extend its personality to Orient Air.
1. It is a basic axiom in civil law embodied in our Civil Code that no
Such would be violative of the principles and essence of agency, defined by one may contract in the name of another without being authorized by the
law as a contract whereby "a person binds himself to render some service or latter, or unless he has by law a right to represent him. A contract entered
to do something in representation or on behalf of another, WITH THE into in the name of another by one who has no authority or the legal
CONSENT OR AUTHORITY OF THE LATTER . (emphasis supplied) representation or who has acted beyond his powers, shall be unenforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it
The Agreement itself between the parties states that "either party may has been executed, before it is revoked by the other contracting party.
terminate the Agreement without cause by giving the other 30 days' notice Article 1403 (1) of the same Code also provides:
by letter, telegram or cable." (emphasis supplied) We, therefore, set aside
the portion of the ruling of the respondent appellate court reinstating Orient ART. 1403. The following contracts are unenforceable, unless they are
Air as general sales agent of American Air. justified:

WHEREFORE, with the foregoing modification, the Court AFFIRMS the (1) Those entered into in the name of another person by one who has
decision and resolution of the respondent Court of Appeals, dated 27 January been given no authority or legal representation or who has acted beyond his
1986 and 17 December 1986, respectively. Costs against petitioner American powers; (Personal Note: This provision pertains to Unauthorized Contracts) ...
Air. SO ORDERED.
Out of the above given principles, sprung the creation and acceptance of the
relationship of agency whereby one party, caged the principal (mandante),
Case #2 Rallos v. Felix Go Chan (G.R. No. L-24332. January 31, 1978) authorizes another, called the agent (mandatario), to act for and in his behalf
in transactions with third persons.


TOPIC: Elements of the Contract of Agency The essential elements of agency are:
(1) there is consent, express or implied of the parties to establish the
The following are the essential elements of the contract of agency: relationship;
(a) Consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person;
(b) Object, which is the execution of a juridical act in relation to third parties; (3) the agents acts as a representative and not for himself, and
(c) Agent acts as a representative and not for himself; and (4) the agent acts within the scope of his authority.
(d) Agent acts within the scope of his authority.
Agency is basically personal representative, and derivative in nature. The
FACTS: authority of the agent to act emanates from the powers granted to him by
Concepcion and Gerundia both surnamed Rallos were sisters and registered his principal; his act is the act of the principal if done within the scope of the
co-owners of a parcel of land. The sisters executed a special power of authority. Qui facit per alium facit se. "He who acts through another acts
attorney in favor of their brother, Simeon Rallos, authorizing him to sell for himself".
and in their behalf.
2. There are various ways of extinguishing agency, but here we are
On March 3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon concerned only with one cause — death of the principal Paragraph 3 of Art.
Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 1919 of the Civil Code which was taken from Art. 1709 of the Spanish Civil
5983 to Felix Go Chan & Sons Realty Corporation. Code provides:

Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos ART. 1919. Agency is extinguished.
filed a complaint, praying (1) that the sale of the undivided share of the
deceased Concepcion Rallos be declared unenforceable, and said share be xxx xxx xxx
reconveyed to her estate; (2) that the Certificate of title issued in the name
of Felix Go Chan & Sons Realty Corporation be cancelled and another title be 3. By the death, civil interdiction, insanity or insolvency of the
issued in the names of the corporation and the "Intestate estate of principal or of the agent; ... (Emphasis supplied)
Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by
way of attorney's fees and payment of costs of suit. By reason of the very nature of the relationship between principal and
agent, agency is extinguished by the death of the principal or the agent.
While the case was pending in the trial court, both Simon and his sister This is the law in this jurisdiction.
Gerundia died and they were substituted by the respective administrators of
their estates. Pothier agrees with Manresa that by reason of the nature of agency, death is
a necessary cause for its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso jure upon the death of

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either without necessity for the heirs of the fact to notify the agent of the There are several cases which seem to hold that although, as a general
fact of death of the former. principle, death revokes an agency and renders null every act of the agent
3. It is the contention of respondent corporation which was thereafter performed, yet that where a payment has been made in ignorance
sustained by respondent court that notwithstanding the death of the of the death, such payment will be good.
principal (Concepcion Rallos) the act of the attorney-in-fact, Simeon Rallos in
selling the former's sham in the property is valid and enforceable inasmuch The Civil Code, expressly provides for two exceptions to the general rule that
as the corporation acted in good faith in buying the property in question. death of the principal revokes ipso jure the agency, to wit:
(1) that the agency is coupled with an interest (Art 1930), and
Articles 1930 and 1931 of the Civil Code provide the exceptions to the (2) that the act of the agent was executed without knowledge of the death of
general rule aforementioned. (Check codal provisions) the principal and the third person who contracted with the agent acted also
in good faith (Art. 1931).
Article 1930 is not involved because admittedly the special power of attorney
executed in favor of Simeon Rallos was not coupled with an interest. Exception No. 2 is the doctrine followed in Cassiday, and again We stress the
indispensable requirement that the agent acted without knowledge or notice
Article 1931 is the applicable law. Under this provision, an act done by the of the death of the principal.
agent after the death of his principal is valid and effective only under two
conditions, viz: In the case before Us the agent Simeon Rallos executed the sale
(1) that the agent acted without knowledge of the death of the principal and notwithstanding notice of the death of his principal. Accordingly, the agent's
(2) that the third person who contracted with the agent himself acted in act is unenforceable against the estate of his principal.
good faith.
IN VIEW OF ALL THE FOREGOING, We set aside the decision of respondent
Good faith here means that the third person was not aware of the death of appellate court, and We affirm en toto the judgment rendered by then Hon.
the principal at the time he contracted with said agent. These two requisites Amador E. Gomez of the Court of First Instance of Cebu, quoted in pages 2
must concur the absence of one will render the act of the agent invalid and and 3 of this Opinion, with costs against respondent realty corporation at all
unenforceable. instances.

In the instant case, it cannot be questioned that the agent, Simeon Rallos, So Ordered.
knew of the death of his principal at the time he sold the latter's share to
respondent corporation. The knowledge of the death is clearly to be inferred
from the pleadings filed by Simon Rallos before the trial court. That Simeon Case #3 Uy v. CA (G.R. No. 120465. September 9, 1999)
Rallos knew of the death of his sister Concepcion is also a finding of fact of
the court a quo and of respondent appellate court when the latter stated
that Simon Rallos 'must have known of the death of his sister, and yet he TOPIC: Agents only render some service or do something in representation
proceeded with the sale of the lot in the name of both his sisters Concepcion or on behalf of their principals. The rendering of such service does not make
and Gerundia Rallos without informing appellant (the realty corporation) of them parties to the contracts of sale executed in behalf of the latter (the
the death of the former. principals).

On the basis of the established knowledge of Simon Rallos concerning the Nevertheless, an agent, in his own behalf, may bring an action founded on a
death of his principal Concepcion Rallos, Article 1931 of the Civil Code is contract made for his principal, as an assignee of such contract. The customs
inapplicable. The law expressly requires for its application lack of knowledge of business or the course of conduct between the principal and the agent
on the part of the agent of the death of his principal; it is not enough that the may indicate that an agent who ordinarily has merely a security interest is a
third person acted in good faith. transferee of the principal’s rights under the contract and as such is
permitted to bring suit. If the agent has settled with his principal with the
4. Another argument advanced by respondent court is that the understanding that he is to collect the claim against the obligor by way of
vendee acting in good faith relied on the power of attorney which was duly reimbursing himself for his advances and commissions, the agent is in the
registered on the original certificate of title recorded in the Register of Deeds position of an assignee who is the beneficial owner of the chose in action. He
of the province of Cebu, that no notice of the death was ever annotated on has an irrevocable power to sue in his principal’s name.
said certificate of title by the heirs of the principal and accordingly they must
suffer the consequences of such omission. FACTS: William Uy and Rodel Roxas (petitioners) are agents authorized to sell
8 parcels of land (with an area of 31.8231 has.) by the owners thereof. By
If the agency has been granted for the purpose of contracting with certain virtue of such authority, petitioners offered to sell the lands to NHA
persons, the revocation must be made known to them. But if the agency is (respondent) to be utilized and developed as a housing project.
general in nature, without reference to particular person with whom the
agent is to contract, it is sufficient that the principal exercise due diligence to On 1989, the NHA Board passed a resolution approving the acquisition of
make the revocation of the agency publicity known. said lands at the cost of P23.867M. Of the 8 parcels of land, however, only 5
were paid for by the NHA because of the report it received from the Land
In case of a general power which does not specify the persons to whom Geosciences Bureau of the DENR that the remaining area is located at an
represents' on should be made, it is the general opinion that all acts, active landslide area, hence, not suitable for development into a housing
executed with third persons who contracted in good faith, without project.
knowledge of the revocation, are valid. In such case, the principal may
exercise his right against the agent, who, knowing of the revocation, On 1991, the NHA issued another resolution cancelling the sale over the
continued to assume a personality which he no longer had. three parcels of land. The NHA, however, subsequently offered the amount
of P1.225 million to the landowners as daos perjuicios.
The above discourse however, treats of revocation by an act of the principal
as a mode of terminating an agency which is to be distinguished from On 1992, petitioners filed before the RTC of Quezon City a Complaint for
revocation by operation of law such as death of the principal which obtains Damages against NHA and its General Manager Robert Balao. Petitioners
in this case. claim that they lodged the complaint not in behalf of their principals but in
xxx xxx xxx their own name as agents directly damaged by the termination of the
contract. The damages prayed for were intended not for the benefit of their

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principals but to indemnify petitioners for the losses they themselves Petitioners also have not shown that they are assignees of their principals to
allegedly incurred which consist mainly of unearned income and advances. the subject contracts. While they alleged that they made advances and that
they suffered loss of commissions, they have not established any agreement
RTC Decision granting them the right to receive payment and out of the proceeds to
The RTC rendered a decision declaring the cancellation of the contract to be reimburse [themselves] for advances and commissions before turning the
justified. The trial court nevertheless awarded damages to plaintiffs in the balance over to the principal[s].
sum of P1.255 million, the same amount initially offered by NHA to
petitioners as damages. [IMPORTANT IN CASE ATTY WILL ASK: An agent, in his own behalf, may bring
an action founded on a contract made for his principal, as an assignee of such
CA Decision contract.
Upon appeal by petitioners, the CA reversed the decision of the trial court Section 372. Agent as Owner of Contract Right
and entered a new one dismissing the complaint. It held that since there was
sufficient justifiable basis in cancelling the sale, it saw no reason for the (1) Unless otherwise agreed, an agent who has or who acquires an
award of damages. The Court of Appeals also noted that petitioners were interest in a contract which he makes on behalf of his principal
mere attorneys-in-fact and, therefore, not the real parties-in-interest in the can, although not a promisee, maintain such action thereon as
action before the trial court. The CA noted that: might a transferee having a similar interest.
“…plaintiffs alleged themselves to be sellers agents for several
owners of the 8 lots subject matter of the case. Obviously, The Comment on subsection (1) states:
William Uy and Rodel Roxas in filing this case acted as attorneys-
in-fact of the lot owners who are the real parties in interest but a. Agent a transferee. One who has made a contract on behalf of
who were omitted to be pleaded as party-plaintiffs in the case. another may become an assignee of the contract and bring suit
This omission is fatal. Where the action is brought by an attorney- against the other party to it, as any other transferee. The customs
in-fact of a land owner in his name, (as in our present action) and of business or the course of conduct between the principal and
not in the name of his principal, the action was properly dismissed the agent may indicate that an agent who ordinarily has merely a
because the rule is that every action must be prosecuted in the security interest is a transferee of the principals rights under the
name of the real parties-in-interest (Section 2, Rule 3, Rules of contract and as such is permitted to bring suit. If the agent has
Court).” settled with his principal with the understanding that he is to
collect the claim against the obligor by way of reimbursing himself
“When plaintiffs Uy and Roxas sought payment of damages in for his advances and commissions, the agent is in the position of
their favor…it becomes obviously indispensable that the lot an assignee who is the beneficial owner of the chose in action. He
owners be included, mentioned and named as party-plaintiffs, has an irrevocable power to sue in his principals name. x x x. And,
being the real party-in-interest. Uy and Roxas, as attorneys-in-fact under the statutes which permit the real party in interest to sue,
or apoderados, cannot by themselves lawfully commence this he can maintain an action in his own name. This power to sue is
action, more so, when the supposed special power of attorney, in not affected by a settlement between the principal and the
their favor, was never presented as an evidence in this case. obligor if the latter has notice of the agents interest. x x x. Even
Besides, even if herein plaintiffs Uy and Roxas were authorized by though the agent has not settled with his principal, he may, by
the lot owners to commence this action, the same must still be agreement with the principal, have a right to receive payment and
filed in the name of the pricipal, As such indispensable party, their out of the proceeds to reimburse himself for advances and
joinder in the action is mandatory and the complaint may be commissions before turning the balance over to the principal. In
dismissed if not so impleaded.” such a case, although there is no formal assignment, the agent is
in the position of a transferee of the whole claim for security; he
ISSUE 1: Whether petitioners are real parties-in-interest. has an irrevocable power to sue in his principals name and, under
statutes which permit the real party in interest to sue, he can
RULING: No, Article 1311 of the Civil Code, states that: maintain an action in his own name.

Contracts take effect only between the parties, their assigns, and But in this case, the petitioners were not able to prove that they
heirs, except in case where the rights and obligations arising from are assignees which would’ve clothed them the right to maintain
the contract are not transmissible by their nature, or by this action].
stipulation, or by provision of law. x x x.
If a contract should contain some stipulation in favor of a third Finally, it does not appear that petitioners are beneficiaries of a stipulation
person, he may demand its fulfillment provided he communicated pour autrui under the second paragraph of Article 1311 of the Civil Code.
his acceptance to the obligor before its revocation. A mere Indeed, there is no stipulation in any of the Deeds of Absolute Sale clearly
incidental benefit or interest of a person is not sufficient. The and deliberately conferring a favor to any third person. Section 372 (2) of the
contracting parties must have clearly and deliberately conferred a Restatement of the Law on Agency (Second) states:
favor upon a third person.
(2) An agent does not have such an interest in a contract as to
Petitioners are not parties to the contract of sale between their principals entitle him to maintain an action at law upon it in his own name
and NHA. They are mere agents of the owners of the land subject of the sale. merely because he is entilted to a portion of the proceeds as
As agents, they only render some service or do something in representation compensation for making it or because he is liable for its breach.
or on behalf of their principals. The rendering of such service did not make
them parties to the contracts of sale executed in behalf of the latter. Since a The fact that an agent who makes a contract for his principal will
contract may be violated only by the parties thereto as against each other, gain or suffer loss by the performance or nonperformance of the
the real parties-in-interest, either as plaintiff or defendant, in an action upon contract by the principal or by the other party thereto does not
that contract must, generally, either be parties to said contract. entitle him to maintain an action on his own behalf against the
other party for its breach. An agent entitled to receive a
Neither has there been any allegation, much less proof, that petitioners are commission from his principal upon the performance of a contract
the heirs of their principals. which he has made on his principals account does not, from this
fact alone, have any claim against the other party for breach of

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the contract, either in an action on the contract or otherwise. An that he did not have the necessary funds on hand, and that he would have to
agent who is not a promisee cannot maintain an action at law wait the return of his principal, Jose Camps, who was at that time visiting in
against a purchaser merely because he is entitled to have his the provinces.
compensation or advances paid out of the purchase price before
payment to the principal. A written contract dated May 25, 1904, was introduced in evidence, from
which it appears that one Galmes, the former owner of the business now
As petitioners are not parties, heirs, assignees, or beneficiaries of a known as the "Washington Cafe," subrented the building to the defendant
stipulation pour autrui under the contracts of sale, they do not, under for a period of one year for the purpose of carrying on the business. It
substantive law, possess the right they seek to enforce. Therefore, they are appeared that the defendant obligated himself not to sublet or subrent the
not the real parties-in-interest in this case. building or the business without the consent of the said Galmes. This
contract was signed by the defendant and the name of Ricardo Flores
ISSUE 2: Whether petitioners are entitled to an award of damages. appears thereon as a witness. Attached to the said contract is an inventory of
the furniture and fittings which is also signed by the defendant with the word
RULING: No because NHA is justified in cancelling the contract. (Note: "sublessee" (subarrendatario) below the name, and at the foot of this
Contract was cancelled, not rescinded.) inventory the word "received" (recibo) followed by the name "Ricardo
Flores," with the words "managing agent" (el manejante encargado)
Cause is the essential reason which moves the contracting parties to enter following his name.
into it. It is the immediate, direct and proximate reason which justifies the
creation of an obligation through the will of the contracting parties. Cause, The defendant, on the other hand, argued that the foregoing facts are not
which is the essential reason for the contract, should be distinguished from sufficient to establish the fact that he received the goods for which payment
motive, which is the particular reason of a contracting party which does not is demanded.
affect the other party. Ordinarily, a partys motives for entering into the
contract do not affect the contract. However, when the motive ISSUES: Whether or not defendant is liable to pay the outstanding balance to
predetermines the cause, the motive may be regarded as the cause. the plaintiffs.

In this case, it is clear, and petitioners do not dispute, that NHA would not RULING: Yes, he is liable. The Court ruled that Flores was the agent of Jose
have entered into the contract were the lands not suitable for housing. In Camps in the management of the bar of the Washington Cafe with authority
other words, the quality of the land was an implied condition for the NHA to to bind the defendant, his principal, for the payment of the goods mentioned
enter into the contract. in the complaint.

Accordingly, we hold that the NHA was justified in cancelling the contract. The contract introduced in evidence sufficiently establishes the fact that the
The realization of the mistake as regards the quality of the land resulted in defendant was the owner of business and of the bar, and the title of
the negation of the motive/cause thus rendering the contract inexistent. "managing agent" attached to the signature of Flores which appears on that
Article 1318 of the Civil Code states that: contract, together with the fact that, at the time the purchases in question
were made, Flores was apparently in charge of the business, performing the
Art. 1318. There is no contract unless the following requisites concur: duties usually entrusted to managing agent, leave little room for doubt that
(1) Consent of the contracting parties; he was there as authorized agent of the defendant. One who clothes another
(2) Object certain which is the subject matter of the contract; apparent authority as his agent, and holds him out to the public as such,
(3) Cause of the obligation which is established. cannot be permitted to deny the authority of such person to act as his agent,
to the prejudice of innocent third parties dealing with such person in good
Therefore, assuming that petitioners are parties, assignees or beneficiaries to faith.
the contract of sale, they would not be entitled to any award of damages.
Petition is denied. Flores, as managing agent of the Washington Cafe, had authority to buy such
reasonable quantities of supplies as might from time to time be necessary in
carrying on the business of hotel bar may fairly be presumed from the nature
Case #4 Macke v. Camps (G.R. No. 2962. February 27, 1907) of the business, especially in view of the fact that his principal appears to
have left him in charge during more or less prolonged periods of absence.
After an examination of the items of the account attached to the complaint,
TOPIC: Whenever a party has, by his own declaration, act, or omission,
we are of opinion that he was acting within the scope of his authority in
intentionally and deliberately led another to believe a particular thing true, ordering these goods are binding on his principal, and in the absence of
and to act upon such belief, he cannot, in any litigation arising out such
evidence to the contrary, furnish satisfactory proof of their delivery as
declaration, act, or omission, be permitted to falsify it and unless the
alleged in the complaint.
contrary appears, the authority of an agent must be presumed to include all
the necessary and usual means of carrying his agency into effect.

FACTS: B. H. Macke and W. H. Chandler (plaintiffs) are partners doing Case #5 Prudential Bank v. CA (G.R. No. 108957 June 14, 1993)
business under the firm name of Macke, Chandler & Company. They alleged


that during the months of February and March 1905, they sold to Jose Camps
TOPIC: The principal is liable for obligations contracted by the agent. The
(defendant) and delivered at his place of business, known as the
agent's apparent representation yields to the principal's true representation
"Washington Cafe", various bills of goods amounting to P351.50. Allegedly,
and the contract is considered as entered into between the principal and the
the defendant has only paid the sum of P174 (Outstanding Balance:
third person.
P177.50). Demand for the payment has been made but the defendant had

failed and refused to pay the said balance or any part of it. FACTS: Aurora F. Cruz (respondent), with her sister as co-depositor, invested

P200,000.00 with the Prudential Bank at its branch in Quezon City on June
B. H. Macke testified that on the order of one Ricardo Flores, who
23, 1986. The placement was for 63 days at 13.75% annual interest. For this
represented himself to be agent of the defendant, he shipped the said goods purpose, the amount of P196,122.88 was withdrawn from the depositors'
to the defendants at the Washington Café. Flores later acknowledged the
saving account and applied to the investment. The difference of P3,877.07
receipt of said goods and made various payments amounting in all to P174.
represented the pre-paid interest.
Upon demand for payment of balance of the account, Flores informed him

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The transaction was evidenced by a Confirmation of Sale delivered to Cruz The liability of the principal for the acts of the agent is not even debatable.
two days later, together with a Debit Memo in the amount withdrawn and Such liability dates back to the Roman Law maxim, Qui per alium facit per
applied to the confirmed sale. These documents were issued by Susan seipsum facere videtur. "He who does a thing by an agent is considered as
Quimbo, the employee of the bank to whom Cruz was referred and who was doing it himself." This rule is affirmed by the Civil Code thus:
apparently in charge of such transactions.
Art. 1910. The principal must comply with all the obligations
Upon maturity of the placement on August 25, 1986, Cruz returned to the which the agent may have contracted within the scope of his
bank to renew (or roll-over) her investment. Quimbo, who again attended to authority.
her, prepared a Credit Memo crediting the amount of P200,000.00 in Cruz's
savings account passbook. She also prepared a Debit Memo for the amount Art. 1911. Even when the agent has exceeded his authority, the
of P196,122.88 to cover the re-investment of P200,000.00 minus the prepaid principal is solidarily liable with the agent if the former allowed
interest of P3,877.02. the latter to act as though he had full powers.

This time, Cruz was asked to sign a Withdrawal Slip for P196,122.98, Conformably, we have declared in countless decisions that the
representing the amount to be re-invested after deduction of the prepaid principal is liable for obligations contracted by the agent. The
interest. Quimbo explained this was a new requirement of the bank. Several agent's apparent representation yields to the principal's true
days later, Cruz received another Confirmation of Sale and a copy of the representation and the contract is considered as entered into
Debit Memo. between the principal and the third person.

On October 27, 1986, Cruz returned to the bank and sought to withdraw her A bank is liable for wrongful acts of its officers done in the
P200,000.00. However, she was informed that the investment appeared to interests of the bank or in the course of dealings of the officers in
have been already withdrawn by her on August 25, 1986. their representative capacity but not for acts outside the scope of
their authority.
There was no copy on file of the Confirmation of Sale and the Debit Memo
allegedly issued to her by Quimbo. Quimbo herself was not available for A bank holding out its officers and agent as worthy of confidence
questioning as she had not been reporting for the past week. will not be permitted to profit by the frauds they may thus be
enabled to perpetrate in the apparent scope of their employment;
Every day thereafter, Cruz went to the bank to inquire about her request to nor will it be permitted to shirk its responsibility for such frauds,
withdraw her investment. She received no definite answer, not even to the even though no benefit may accrue to the bank therefrom.
letter she wrote the bank. Finally, Cruz sent the bank a demand letter dated
November 12, 1986 for the amount of P200,000.00 plus interest. Accordingly, a banking corporation is liable to innocent third
persons where the representation is made in the course of its
In a reply dated November 20, 1986, the bank's Vice President Lauro J. business by an agent acting within the general scope of his
Jocson said that there appeared to be an anomaly and requested Cruz to authority even though, in the particular case, the agent is secretly
defer court action as they hoped to settle the matter amicably. Increasingly abusing his authority and attempting to perpetrate a fraud upon
worried, Cruz sent another letter reiterating her demand. his principal or some other person, for his own ultimate benefit.

This time the reply of the bank was unequivocal and negative. She was told Application of these principles in especially necessary because banks have a
that her request had to be denied because she had already withdrawn the fiduciary relationship with the public and their stability depends on the
amount she was claiming. confidence of the people in their honesty and efficiency.

Cruz's reaction was to file a complaint for breach of contract against Such faith will be eroded where banks do not exercise strict care in the
Prudential Bank in the RTC of Quezon City. She demanded the return of her selection and supervision of its employees, resulting in prejudice to their
money with interest, plus damages and attorney's fees. depositors.

In its answer, the bank denied liability, insisting that Cruz had withdrawn her It would appear from the facts established in the case that the petitioner was
investment. The bank also instituted a third-party complaint against Quimbo, less than eager to present Quimbo at the trial or even to establish her
who did not file an answer and was declared in default. The bank, however, liability although it made the initial effort — which it did not pursue — to
did not present any evidence against her (Quimbo). hold her answerable in the third-party complaint.

RTC rendered a judgment in favor of Cruz. The bank was ordered to pay her What ever happened to her does not appear in the record. Her absence from
P200,000.00, plus interest thereon at the rate of 13.75% per annum from the proceedings feeds the suspicion of her possible misdeed, which the bank
October 27, 1986, until fully paid; P30,000.00, as moral damages; seems to have studiously ignored by its insistence that the missing money
P20,000.00, as exemplary damages; and P25,000.00, as reasonable attorney's had been actually withdrawn by Cruz.
fees.
By such insistence, the bank is absolving not only itself but also, in effect and
CA affirmed in toto the RTC Ruling. by extension, the disappeared Quimbo who apparently has much to explain.

ISSUE: Whether the bank is liable to pay Cruz for breach of contract. Petition is denied and CA decision is affirmed.

RULING: Yes. Cruz had the right to withdraw her P200,000.00 placement Case #6 Litonjua, Jr. v. Eternit Corp. (490 SCRA 204)
when it matured pursuant to the terms of her investment as acknowledged
and reflected in the Confirmation of Sale. FACTS:
The Eternit Corporation (EC) is a corporation duly organized and registered
The failure of the bank to deliver the amount to her pursuant to the under Philippine laws. It had been engaged in the manufacture of roofing
Confirmation of Sale constituted its breach of their contract, for which it materials and pipe products. Its manufacturing operations were conducted
should be held liable. on eight parcels of land with a total area of 47,233 square meters, located in
Mandaluyong City, Metro Manila. Ninety (90%) percent of the shares of

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stocks of EC were owned by Eteroutremer S.A. Corporation (ESAC), a EC and ESAC arguments:
corporation organized and registered under the laws of Belgium. Jack Since Eteroutremer was not doing business in the Philippines, it cannot be
Glanville, an Australian citizen, was the General Manager and President of subject to the jurisdiction of Philippine courts; the Board and stockholders of
EC, while Claude Frederick Delsaux was the Regional Director for Asia of EC never approved any resolution to sell subject properties nor authorized
ESAC. Both had their offices in Belgium. Marquez to sell the same; and the telex dated October 28, 1986 of Jack
Glanville was his own personal making which did not bind EC.
In 1986, the management of ESAC grew concerned about the political
situation in the Philippines and wanted to stop its operations in the country. EC alleged that Marquez had no written authority from the Board of
The Committee for Asia of ESAC instructed Michael Adams, a member of Directors to bind it; neither were Glanville and Delsaux authorized by its
EC’s Board of Directors, to dispose of the eight parcels of land. Adams board of directors to offer the property for sale. Since the sale involved
engaged the services of realtor/broker Lauro G. Marquez so that the substantially all of the corporation’s assets, it would necessarily need the
properties could be offered for sale to prospective buyers. authority from the stockholders.

Marquez thereafter offered the parcels of land and the improvements Trial court:
thereon to Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. Both Declared that since the authority of the agents/realtors was not in writing,
agreed to pay the final offer of US$1,000,000.00 and P2,500,000.00 to cover the sale is void and not merely unenforceable, and as such, could not have
all existing obligations prior to final liquidation. The Litonjua brothers been ratified by the principal. There is no valid and binding sale between the
deposited the amount of US$1,000,000.00 with the Security Bank & Trust plaintiffs and said defendants.
Company, Ermita Branch, and drafted an Escrow Agreement to expedite the
sale. CA:
Ruled that Marquez, who was a real estate broker, was a special agent within
However, with the assumption of Corazon C. Aquino as President of the the purview of Article 1874 of the New Civil Code. Under Section 23 of the
Republic of the Philippines, the political situation in the Philippines had Corporation Code, he needed a special authority from EC’s board of directors
improved. Marquez received a telephone call from Glanville, advising that to bind such corporation to the sale of its properties. Delsaux, who was
the sale would no longer proceed. Delsaux himself later sent a letter dated merely the representative of ESAC (the majority stockholder of EC) had no
May 22, 1987, confirming that the ESAC Regional Office had decided not to authority to bind the latter. The CA pointed out that Delsaux was not even a
proceed with the sale of the subject land. member of the board of directors of EC. Moreover, the Litonjuas failed to
prove that an agency by estoppel had been created between the parties.
When apprised of this development, the Litonjuas, through counsel, wrote
EC, demanding payment for damages they had suffered on account of the ISSUES:
aborted sale. EC, however, rejected their demand. The Litonjuas then filed a 1. Won there was a perfected contract of sale. NO
complaint for specific performance and damages against EC (now the Eterton 2. Won Marquez needed a written authority from respondent
Multi-Resources Corporation) and the Far East Bank & Trust Company, and before the sale can be perfected. YES
ESAC in the RTC of Pasig City. 3. Won Glanville and Delsaux have the necessary authority to sell
the subject properties, or at the very least, were knowingly
Petitioner’s contention: permitted by respondent Eternit to do acts within the scope of an
Insisted that they had accepted the counter-offer of respondent EC and that apparent authority, and thus held them out to the public as
before the counter-offer was withdrawn by respondents, the acceptance was possessing power to sell the said properties. NO
made known to them through real estate broker Marquez. They asserted
that there was no need for a written authority from the Board of Directors of RULING:
EC for Marquez to validly act as broker/middleman/intermediary. As broker, The petition has no merit.
Marquez was not an ordinary agent because his authority was of a special
and limited character in most respects. His only job as a broker was to look It was the duty of the petitioners to prove that respondent EC had decided to
for a buyer and to bring together the parties to the transaction. They aver sell its properties and that it had empowered Adams, Glanville and Delsaux
that what is important and decisive was that Marquez was able to or Marquez to offer the properties for sale to prospective buyers and to
communicate both the offer and counter-offer and their acceptance of accept any counter-offer. Petitioners likewise failed to prove that their
respondent EC’s counter-offer, resulting in a perfected contract of sale. counter-offer had been accepted by respondent EC, through Glanville and
Petitioners posit that the testimonial and documentary evidence on record Delsaux. It must be stressed that when specific performance is sought of a
amply shows that Glanville, who was the President and General Manager of contract made with an agent, the agency must be established by clear,
respondent EC, and Delsaux, who was the Managing Director for ESAC Asia, certain and specific proof.
had the necessary authority to sell the subject property or, at least, had been
allowed by respondent EC to hold themselves out in the public as having the Section 23 of Batas Pambansa Bilang 68, otherwise known as the
power to sell the subject properties. Corporation Code of the Philippines, provides that indeed, a corporation is a
juridical person separate and distinct from its members or stockholders and
Also, they averred that Marquez acted merely as a broker or go-between and is not affected by the personal rights, obligations and transactions of the
not as agent of the corporation; hence, it was not necessary for him to be latter. It may act only through its board of directors or, when authorized
empowered as such by any written authority. They further claimed that an either by its by-laws or by its board resolution, through its officers or agents
agency by estoppel was created when the corporation clothed Marquez with in the normal course of business. The general principles of agency govern
apparent authority to negotiate for the sale of the properties. However, the relation between the corporation and its officers or agents, subject to
since it was a bilateral contract to buy and sell, it was equivalent to a the articles of incorporation, by-laws, or relevant provisions of law.
perfected contract of sale, which the corporation was obliged to Under Section 36 of the Corporation Code, a corporation may sell or convey
consummate. its real properties, subject to the limitations prescribed by law and the
Constitution.
(Note: there was negotiation, counter-offer, good faith, deposited the
money) The property of a corporation, however, is not the property of the
stockholders or members, and as such, may not be sold without express
authority from the board of directors. Physical acts, like the offering of the
properties of the corporation for sale, or the acceptance of a counter-offer of

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prospective buyers of such properties and the execution of the deed of sale vessel "Richard Rey" from Isabela, Leyte, to Pier 10, North Harbor, Manila.
covering such property, can be performed by the corporation only by They arrived on the same date.
officers or agents duly authorized for the purpose by corporate by-laws or
by specific acts of the board of directors. Absent such valid Columbia engaged the services of Glodel for the release and withdrawal of
delegation/authorization, the rule is that the declarations of an individual the cargoes from the pier and the subsequent delivery to its
director relating to the affairs of the corporation, but not in the course of, warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for
or connected with, the performance of authorized duties of such director, the use of its delivery trucks to transport the cargoes to Columbia’s
are not binding on the corporation. warehouses/plants in Bulacan and Valenzuela City.

While a corporation may appoint agents to negotiate for the sale of its real The goods were loaded on board twelve (12) trucks owned by Loadmasters,
properties, the final say will have to be with the board of directors through driven by its employed drivers and accompanied by its employed truck
its officers and agents as authorized by a board resolution or by its by-laws. helpers. Six (6) truckloads of copper cathodes were to be delivered to
An unauthorized act of an officer of the corporation is not binding on it Balagtas, Bulacan, while the other six (6) truckloads were destined for
unless the latter ratifies the same expressly or impliedly by its board of Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato
directors. Any sale of real property of a corporation by a person purporting were duly delivered in Columbia’s warehouses there. Of the six (6) trucks en
to be an agent thereof but without written authority from the corporation is route to Balagtas, Bulacan, however, only five (5) reached the destination.
null and void. The declarations of the agent alone are generally insufficient One (1) truck, loaded with 11 bundles or 232 pieces of copper cathodes,
to establish the fact or extent of his/her authority. failed to deliver its cargo.

By the contract of agency, a person binds himself to render some service or Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but
to do something in representation on behalf of another, with the consent or without the copper cathodes. Because of this incident, Columbia filed with
authority of the latter. Consent of both principal and agent is necessary to R&B Insurance a claim for insurance indemnity in the amount of
create an agency. The principal must intend that the agent shall act for him; ₱1,903,335.39. After the requisite investigation and adjustment, R&B
the agent must intend to accept the authority and act on it, and the intention Insurance paid Columbia the amount of ₱1,896,789.62 as insurance
of the parties must find expression either in words or conduct between indemnity.
them.
R&B Insurance, thereafter, filed a complaint for damages against both
An agency may be expressed or implied from the act of the principal, from Loadmasters and Glodel before the RTC. It sought reimbursement of the
his silence or lack of action, or his failure to repudiate the agency knowing amount it had paid to Columbia for the loss of the subject cargo. It claimed
that another person is acting on his behalf without authority. Acceptance by that it had been subrogated "to the right of the consignee to recover from
the agent may be expressed, or implied from his acts which carry out the the party/parties who may be held legally liable for the loss."
agency, or from his silence or inaction according to the circumstances.
Agency may be oral unless the law requires a specific form. However, to Loadmasters argument:
create or convey real rights over immovable property, a special power of it cannot be considered an agent of Glodel because it never represented the
attorney is necessary. Thus, when a sale of a piece of land or any portion latter in its dealings with the consignee.
thereof is through an agent, the authority of the latter shall be in writing,
otherwise, the sale shall be void. Glodel’s argument:
Argues that its relationship with Loadmasters is that of Charter wherein the
In this case, the petitioners as plaintiffs below, failed to adduce in evidence transporter (Loadmasters) is only hired for the specific job of delivering the
any resolution of the Board of Directors of respondent EC empowering merchandise. Thus, the diligence required in this case is merely ordinary
Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, diligence or that of a good father of the family, not the extraordinary
for and in its behalf, the eight parcels of land owned by respondent EC diligence required of common carriers.
including the improvements thereon. The bare fact that Delsaux may have
been authorized to sell to Ruperto Tan the shares of stock of respondent R&B Insurance:
ESAC, on June 1, 1997, cannot be used as basis for petitioners’ claim that he As to the relationship between Loadmasters and Glodel, it contends that a
had likewise been authorized by respondent EC to sell the parcels of land. contract of agency existed between the two corporations.

Such board resolution is not a mere formality but is a condition sine qua RTC:
non to bind respondent EC. Held Glodel liable for damages for the loss of the subject cargo and
dismissing Loadmasters’ counterclaim for damages and attorney’s fees
It appears that Marquez has no authority to bind the principal by signing a against R&B Insurance. Both R&B Insurance and Glodel appealed to the CA.
contract of sale. Indeed, an authority to find a purchaser of real property
does not include an authority to sell. CA:
Considering that appellee is an agent of appellant Glodel, whatever liability
The transactions and the various communications inter se were never the latter owes to appellant R&B Insurance Corporation as insurance
submitted to the Board of Directors of respondent EC for ratification. indemnity must likewise be the amount it shall be paid by appellee
Loadmasters.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioners. Hence, Loadmasters filed the present petition for review on certiorari before
this Court presenting the following:

Case #7 Loadmasters Custom Services, Inc. v. Glodel (639 SCRA 69) ISSUES:
1. Under the set of facts established and undisputed in the case, can
FACTS: petitioner Loadmasters be legally considered as an Agent of
On August 28, 2001, R&B Insurance issued a Marine Policy in favor of respondent Glodel?
Columbia to insure the shipment of 132 bundles of electric copper cathodes 2. Who between Glodel and Loadmasters, is liable to pay R&B
against All Risks. On August 28, 2001, the cargoes were shipped on board the Insurance for the amount of the indemnity it paid Columbia?

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RULING:
Subrogation is the substitution of one person in the place of another with Case #8 Westmont Investment Corp. v. Amos Francia (661 SCRA 787)
reference to a lawful claim or right, so that he who is substituted succeeds
to the rights of the other in relation to a debt or claim, including its
remedies or securities. Doubtless, R&B Insurance is subrogated to the rights FACTS:
of the insured to the extent of the amount it paid the consignee under the Sometime in 1999, Francia was enticed by Ms. Lalaine Alcaraz, the bank
marine insurance, as provided under Article 2207 of the Civil Code. manager of Westmont Bank, Meycauayan, Bulacan Branch, to make an
investment with Wincorp, the bank’s financial investment arm, as it was
As subrogee of the rights and interest of the consignee, R&B Insurance has offering interest rates that were 3% to 5% higher than regular bank interest
the right to seek reimbursement from either Loadmasters or Glodel or both rates. Due to the promise of a good return of investment, he was convinced
for breach of contract and/or tort. to invest. He even invited his sister, Cecilia Zamora and his brother, Benjamin
Francia, to join him. Eventually, they placed their investment in the amounts
At this juncture, the Court clarifies that there exists no principal-agent of ₱ 1.4M and ₱ 2.5M with Wincorp in consideration of a net interest rate of
relationship between Glodel and Loadmasters, as erroneously found by the 11% over a 43-day spread. Thereafter, Wincorp, through Westmont Bank,
CA. Article 1868 of the Civil Code provides: "By the contract of agency a issued Official Receipts, evidencing the said transactions.
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 When the 43-day placement matured, the Francias wanted to retire their
latter." The elements of a contract of agency are: (1) consent, express or investments but they were told that Wincorp had no funds. Instead, Wincorp
implied, of the parties to establish the relationship; (2) the object is the "rolled-over" their placements and issued Confirmation Advices extending
execution of a juridical act in relation to a third person; (3) the agent acts as a their placements for another 34 days. The said confirmation advices
representative and not for himself; (4) the agent acts within the scope of his indicated the name of the borrower as Pearlbank. Constrained, they
authority. demanded from Pearlbank their investments. There were several attempts to
settle the case, but all proved futile.
Accordingly, there can be no contract of agency between the parties.
Loadmasters never represented Glodel. Neither was it ever authorized to Wincorp’s argument:
make such representation. It is a settled rule that the basis for agency is Never negated the established facts because defendant-appellant Wincorp’s
representation, that is, the agent acts for and on behalf of the principal on claim was that it received the money of plaintiffs-appellees but it merely
matters within the scope of his authority and said acts have the same legal acted as an agent of plaintiffs-appellees and that the actual borrower of
effect as if they were personally executed by the principal. Such mutual plaintiffs-appellees’ money is defendant-appellee PearlBank. Hence,
intent is not obtaining in this case. defendant-appellant Wincorp alleges that it should be the latter who must
be held liable to the plaintiffs-appellees.
What then is the extent of the respective liabilities of Loadmasters and
Glodel? Each wrongdoer is liable for the total damage suffered by R&B Wincorp insists that the CA should have based its decision on the express
Insurance. Where there are several causes for the resulting damages, a party terms, stipulations, and agreements provided for in the documents offered
is not relieved from liability, even partially. It is sufficient that the negligence by the Francias as the legal relationship of the parties was clearly spelled out
of a party is an efficient cause without which the damage would not have in the very documents introduced by them which indicated that it merely
resulted. brokered the loan transaction between the Francias and Pearlbank. Wincorp
would want the Court to rule that there was a contract of agency between it
At the outset, it is well to resolve the issue of whether Loadmasters and and the Francias with the latter authorizing the former as their agent to lend
Glodel are common carriers to determine their liability for the loss of the money to Pearlbank. According to Wincorp, the two Confirmation Advices
subject cargo. Under Article 1732 of the Civil Code, common carriers are presented as evidence by the Francias and admitted by the court, were
persons, corporations, firms, or associations engaged in the business of competent proof that the recipient of the loan proceeds was Pearlbank.
carrying or transporting passenger or goods, or both by land, water or air for
compensation, offering their services to the public. RTC:
Rendered a decision in favor of the Francias and held Wincorp solely liable to
Based on the aforecited definition, Loadmasters is a common carrier because them.
it is engaged in the business of transporting goods by land, through its
trucking service. Loadmasters and Glodel, being both common carriers, are CA: affirmed with modification the ruling of the RTC with modification.
mandated from the nature of their business and for reasons of public policy,
to observe the extraordinary diligence in the vigilance over the goods ISSUE:
transported by them according to all the circumstances of such case, as The core issue in this case is whether or not the CA is correct in finding
required by Article 1733 of the Civil Code. Thus, in case of loss of the goods, Wincorp solely liable to pay the Francias the amount of ₱ 3,984,062.47 plus
the common carrier is presumed to have been at fault or to have acted interest of 11% per annum.
negligently. This presumption of fault or negligence, however, may be
rebutted by proof that the common carrier has observed extraordinary Ruling:
diligence over the goods. The Court is not persuaded.

Both are still liable for tort under the provisions of Article 2176 of the Civil In a contract of agency, a person binds himself to render some service or to
Code on quasi-delicts. A tort may arise despite the absence of a contractual do something in representation or on behalf of another with the latter’s
relationship. The allegation of negligence on the part of the defendant consent. It is said that the underlying principle of the contract of agency is
should be sufficient to establish a cause of action arising from quasi-delict. to accomplish results by using the services of others – to do a great variety
The petition is PARTIALLY GRANTED. Judgment is rendered declaring of things. Its aim is to extend the personality of the principal or the party for
petitioner Loadmasters Customs Services, Inc. and respondent Glodel whom another acts and from whom he or she derives the authority to act. Its
Brokerage Corporation jointly and severally liable to respondent R&B basis is representation.
Insurance Corporation.
Significantly, the elements of the contract of agency are: (1) consent,
express or implied, of the parties to establish the relationship; (2) the object
is the execution of a juridical act in relation to a third person; (3) the agent

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acts as a representative and not for himself; (4) the agent acts within the Sprint alleged that Soriamont and Ronas failed to pay rental fees for the
scope of his authority. subject equipment. Later on, Sprint was subsequently informed by Ronas of
the purported loss of the subject equipment and despite demands,
In this case, the principal-agent relationship between the Francias and Soriamont and Ronas failed to pay the rental fees for the subject equipment,
Wincorp was not duly established by evidence. The records are bereft of any and to replace or return the same to Sprint.
showing that Wincorp merely brokered the loan transactions between the
Francias and Pearlbank and the latter was the actual recipient of the money On the other hand, Soriamont admitted therein to having a lease agreement
invested by the former. Pearlbank did not authorize Wincorp to borrow with Sprint, but only for the period 21 October 1993 to 21 January 1994. It
money for it. Neither was there a ratification, expressly or impliedly, that it denied entering into an ELA with respondent Sprint on 17 December 1993 as
had authorized or consented to said transaction. alleged in the Complaint. Soriamont further argued that it was not a party-in-
interest in the case, since it was PTS and Rebson Trucking that withdrew the
As to Pearlbank, records bear out that the Francias anchor their cause of subject equipment from the container yard of Sprint. Ronas was likewise not
action against it merely on the strength of the subject Confirmation Advices a party-in-interest in the case since his actions, assailed in the Complaint,
bearing the name "PearlBank" as the supposed borrower of their were executed as part of his regular functions as an officer of Soriamont.
investments. Apparently, the Francias ran after Pearlbank only after learning RTC ruled in favor of Sprint, finding Soriamont liable for the claim of Sprint,
that Wincorp was reportedly bankrupt. The Francias were consistent in while absolving Ronas and Papa from any liability.
saying that they only dealt with Wincorp and not with Pearlbank. It bears
noting that even in their Complaint and during the pre-trial conference, the On appeal the CA further found that the ELA covered the period 21 October
Francias alleged that they did not have any personal knowledge if Pearlbank 1993 to 21 January 1994, but it contained an automatic renewal clause. The
was indeed the recipient/beneficiary of their investments. CA affirmed the decision of the trial court.

Although the subject Confirmation Advices indicate the name of Pearlbank as ISSUES:
the purported borrower of the said investments, said documents do not bear 1. WON there is an agency relationship between Soriamont and PTS.
the signature or acknowledgment of Pearlbank or any of its officers. This 2. Assuming that there is an agency relationship, WON PTS is liable
cannot prove the position of Wincorp that it was Pearlbank which received for the loss of the subject equipment, since PTS acted beyond its
and benefited from the investments made by the Francias. There was not
authority as agent per Article 1897 of the Civil Code.
even a promissory note validly and duly executed by Pearlbank which would
in any way serve as evidence of the said borrowing. The fact that the name
of defendant-appellee PearlBank was printed in the Confirmation Advices RULING:
as the actual borrower does not automatically makes defendant-appellee 1. Yes. The SC affirmed the decision of the CA and the RTC which
PearlBank liable to the plaintiffs-appellees as nothing therein shows that sustained the contention of Sprint that PTS was authorized by
defendant-appellee PearlBank adhered or acknowledged that it is the Soriamont to secure possession of the subject equipment from
actual borrower of the amount specified therein. Sprint, pursuant to the existing ELA between Soriamont and
Sprint. The authorization issued by Soriamont to PTS established
Another significant point which would support the stand of Pearlbank that it an agency relationship, with Soriamont as the principal and PTS as
was not the borrower of whatever funds supposedly invested by the Francias
an agent. Resultantly, the actions taken by PTS as regards the
was the fact that it initiated, filed and pursued several cases against Wincorp,
questioning, among others, the latter’s acts of naming it as borrower of subject equipment were binding on Soriamont, making the latter
funds from investors. liable to Sprint for the unpaid rentals for the use, and damages for
the subsequent loss, of the subject equipment.
WHEREFORE, the petition is DENIED.
It is true that a person dealing with an agent is not authorized,
under any circumstances, to trust blindly the agents statements as
to the extent of his powers. Such person must not act negligently
Case #9 Soriamont v. Sprint Transport (592 SCRA 622)
but must use reasonable diligence and prudence to ascertain
whether the agent acts within the scope of his authority. The
TOPIC: Burden of Proof in Agency: Persons dealing with an assumed agent settled rule is that persons dealing with an assumed agent are
are bound at their peril; and if they would hold the principal liable, they must bound at their peril; and if they would hold the principal liable,
ascertain not only the fact of agency, but also the nature and extent of they must ascertain not only the fact of agency, but also the
authority, and in case either is controverted, the burden of proof is upon nature and extent of authority, and in case either is controverted,
them to prove it. the burden of proof is upon them to prove it. Sprint has
successfully discharged this burden.
FACTS:
Petitioner Soriamont is a domestic corporation providing services as a Soriamont, though, avers that the aforequoted ELA was only for
receiving agent for line load contractor vessels. Patrick Ronas (Ronas) is its 21 October 1993 to 21 January 1994, and no longer in effect at
general manager. Respondent Sprint is a domestic corporation engaged in the time the subject pieces of equipment were reportedly
transport services. Its co-respondent Ricardo Cruz Papa (Papa) is engaged in withdrawn and lost by PTS. This contention of Soriamont is
the trucking business under the business name Papa Transport Services without merit, given that the same ELA expressly provides for the
(PTS). automatic renewal

Soriamont and Sprint entered into a lease agreement (Equipment Lease There being no showing that the ELA was terminated by either
Agreement) where Sprint agreed to lease a number of chassis units to party, then it was being automatically renewed in accordance
Soriamont for the transfer of container vans. with the afore-quoted paragraph 24. It was, therefore, totally
regular and in conformity with the ELA that PTS and Rebson
With authorization letters issued by Ronas on behalf of Soriamont, PTS and Trucking should appear before Sprint in June 1996 with
another trucker, Rebson Trucking were able to withdraw from the container authorization letters, issued by Soriamont, for the withdrawal of
yard of Sprint, two chassis units (subject equipment). the subject equipment.

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2. No. The burden falls upon Soriamont to prove its affirmative Case #11 Filipinas Life Assurance Co. vs. Pedroso (G.R. No. 159489.
allegation that PTS acted in any manner in excess of its authority February 4, 2008)
as agent, thus, resulting in the loss of the subject equipment. To
DOCTRINE: When the agent exceeds his authority, the agent becomes
recall, the subject equipment was withdrawn and used by PTS
personally liable for the damage. But even when the agent exceeds his
with the authority of Soriamont. And for PTS to be personally authority, the principal is still solidarily liable together with the agent if the
liable, as agent, it is vital that Soriamont be able to prove that PTS principal allowed the agent to act as though the agent had full powers.
damaged or lost the said equipment because it acted contrary to
or in excess of the authority granted to it by Soriamont. As the FACTS:
Court of Appeals and the RTC found, however, Soriamont did not 1. Respondent Teresita O. Pedroso is a policyholder of a 20-year
adduce any evidence at all to prove said allegation. Given the lack endowment life insurance issued by petitioner Filipinas Life
Assurance Company (Filipinas Life).
of evidence that PTS was in any way responsible for the loss of the
2. Pedroso claims Renato Valle was her insurance agent since 1972
subject equipment, then, it cannot be held liable to Sprint, or and Valle collected her monthly premiums.
even to Soriamont as its agent. In the absence of evidence 3. Upon maturity of Pedroso’s subsequent investments, Valle would
showing that PTS acted contrary to or in excess of the authority take back from Pedroso the corresponding yellow-colored agent’s
granted to it by its principal, Soriamont, this Court cannot merely receipt he issued to the latter.
presume PTS liable to Soriamont as its agent. The only thing 4. However, when Pedroso tried to withdraw her investment, Valle
proven was that Soriamont, through PTS, withdrew the two did not want to return some P17,000 worth of it.
5. With the assistance of their lawyer, they went to Filipinas Life
chassis units from Sprint, and that these have never been
Escolta Office to collect their respective investments, and to
returned to Sprint. inquire why they had not seen Valle for quite some time. But their
attempts were futile. Hence, respondents filed an action for the
recovery of a sum of money.
Case #10 J. Philippine Marine, Inc. v. NLRC (561 SCRA 675)

TOPIC: Lawyer-client relation is many respects one of agency.
ISSUE: WON Filipinas Life to be jointly and severally liable with its Agent
(Renato Valle) to the respondents.

FACTS: RULING:
Respondent Warlito E. Dumalaog who served as cook aboard vessels plying 1. YES. Filipinas Life, as the principal, is liable for obligations
overseas, filed a complaint before the NLRC against petitioners — manning contracted by its agent Valle.
agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its 2. By the contract of agency, a person binds himself to render some
foreign principal Norman Shipping Services — for unpaid money claims, service or to do something in representation or on behalf of
moral and exemplary damages, and attorney's fees. Respondent's total claim another, with the consent or authority of the latter.
against petitioners was P864,343.30 plus P117,557.60 representing interest 3. The general rule is that the principal is responsible for the acts of
and P195,928.66 representing attorney's fees. its agent done within the scope of its authority, and should bear
the damage caused to third persons.
Labor Arbiter Fe Superiaso-Cellan dismissed respondent's complaint for lack 4. When the agent exceeds his authority, the agent becomes
of merit. On appeal, the NLRC reversed the Labor Arbiter's decision. personally liable for the damage. But even when the agent
During the pendency of the case before the Supreme Court, respondent, exceeds his authority, the principal is still solidarily liable together
against the advice of his counsel, entered into a compromise agreement with with the agent if the principal allowed the agent to act as though
petitioners. He thereupon signed a Quitclaim and Release subscribed and the agent had full powers.
sworn to before the Labor Arbiter. 5. In other words, the acts of an agent beyond the scope of his
authority do not bind the principal, unless the principal ratifies
ISSUE: them, expressly or impliedly. Ratification in agency is the adoption
1. WON the act of Dumalaog in entering into a compromise or confirmation by one person of an act performed on his behalf
agreement without the assistance of a counsel is proper. by another without authority.

RULING: Case #12 Eurotech Industrial Technologies, Inc. vs. Cuizon (G.R. No.
1. Yes. The act of Dumalaog in entering into a compromise 167552. April 23, 2007)
agreement without a lawyer is proper. The Supreme Court held
DOCTRINE: Article 1897 declares that the principal is liable in cases when the
that the relation of attorney and client is in many respects one of
agent acted within the bounds of his authority. Under this, the agent is
agency, and the general rules of agency apply to such relation. completely absolved of any liability. The second part of the said provision
The acts of an agent are deemed the acts of the principal only if presents the situations when the agent himself becomes liable to a third
the agent acts within the scope of his authority. The party when he expressly binds himself OR he exceeds the limits of his
circumstances of this case indicate that respondent's counsel is authority without giving notice of his powers to the third person.
acting beyond the scope of his authority in questioning the
compromise agreement. FACTS:
1. Petitioner is engaged in the business of importation and

distribution of various European industrial equipment for
Dumalaog has undoubtedly the right to compromise a suit without the
customers here in the Philippines.
intervention of his lawyer cannot be gainsaid, the only qualification being
2. It has as one of its customers Impact Systems Sales ("Impact
that if such compromise is entered into with the intent of defrauding the
Systems") which is a sole proprietorship owned by respondent
lawyer of the fees justly due him, the compromise must be subject to the
ERWIN Cuizon (ERWIN).
said fees. In the case at bar, there is no showing that respondent intended to
3. Respondent EDWIN is the sales manager of Impact Systems and
defraud his counsel of his fees.
was impleaded in the court a quo in said capacity.

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4. Subsequently, respondents sought to buy from petitioner one unit ISSUE: WON CA correctly dismissed the complaint against Cadag (Agent of
of sludge pump valued at ₱250,000.00 with respondents making a Sps. Tan).
down payment of ₱50,000.00.
5. Respondent EDWIN and Alberto de Jesus, general manager of RULING:
petitioner, executed a Deed of Assignment of receivables in favor 1. YES. There is neither allegation nor evidence that Cadag exceeded
of petitioner (Eurotech) his authority, all his acts are considered as those of his principal,
the spouses Tan, who are, therefore, the ones answerable for
ISSUE: such acts.
• WON Edwin Cuizon, as Agent of Impact Systems Sales, exceeded 2. The Court finds no error on the part of the CA in ruling that it is a
his authority when he signed the Deed of Assignment thereby basic principle in civil law, on relativity of contracts, that contracts
binding himself personally to pay the obligations to petitioner. can only bind the parties who had entered into it and it cannot
(TN: It boils down to WON Edwin Cuizon is a real party in interest) favor or prejudice third persons. Contracts take effect only
between the parties, their successors in interest, heirs and
RULING: assigns.
1. NO. As we declare that respondent EDWIN acted within his 3. In other words, respondent’s cause of action was the breach of
authority as an agent (Presence of Principal-Agency Relationship), contract committed by the spouses Tan. Cadag is not a party to
who did not acquire any right nor incur any liability arising from this contract. Neither did he enter into any contract with
the Deed of Assignment, it follows that he is not a real party in respondent regarding the construction of the subject house.
interest who should be impleaded in this case. A real party in Hence, considering that respondent’s cause of action was breach
interest is one who "stands to be benefited or injured by the of contract and since there is no privity of contract between him
judgment in the suit, or the party entitled to the avails of the and Cadag, there is no obligation or liability to speak about and
suit." In this respect, we sustain his exclusion as a defendant in thus no cause of action arises. Clearly, Cadag, not being privy to
the suit before the court a quo. the transaction between respondent and the spouses Tan, should
2. There is, therefore, no doubt in our mind that respondent not be made to answer for the latter’s default.
EDWIN’s participation in the Deed of Assignment was "reasonably
necessary" or was required in order for him to protect the
Case #14 Doles vs. Angeles (G.R. No. 149353. June 26, 2006)
business of his principal. Had he not acted in the way he did, the
business of his principal would have been adversely affected and
he would have violated his fiduciary relation with his principal. DOCTRINE:
3. The underlying principle of the contract of agency is to accomplish For an agency to arise, it is not necessary that the principal personally
results by using the services of others – to do a great variety of encounter the third person with whom the agent interacts. The law in fact
things like selling, buying, manufacturing, and transporting. contemplates, and to a great degree, impersonal dealings where the
4. It is said that the basis of agency is representation, that is, the principal need not personally know or meet the third person with whom her
agent acts for and on behalf of the principal on matters within the agent transacts: precisely, the purpose of agency is to extend the personality
scope of his authority and said acts have the same legal effect as if of the principal through the facility of the agent.
they were personally executed by the principal.
FACTS:
1. Ma. Aura Tina Angeles (respondent) filed with the RTC a
complaint for Specific Performance with Damages against Jocelyn
Case #13 Tan vs. GVT Engineering Services (G.R. No. 153057. August 7,
B. Doles (petitioner).
2006)
2. Respondent alleged that petitioner was indebted to the former in
the concept of a personal loan amounting to P405,430.00
DOCTRINE: The essence of agency being the representation of another, it is representing the principal amount and interest.
evident that the obligations contracted are for and on behalf of the principal. 3. Petitioner, then defendant, denied that she borrowed money
A consequence of this representation is the liability of the principal for the from respondent, and averred that, she referred her friends to
acts of his agent performed within the limits of his authority that is respondent whom she knew to be engaged in the business of
equivalent to the performance by the principal himself who should answer lending money in exchange for personal checks through her
therefor. capitalist Arsenio Pua.
4. She alleged that her friends, borrowed money from respondent
FACTS: and issued personal checks in payment of the loan; that the
1. The spouses George and Susan Tan (spouses Tan) entered into a checks bounced for insufficiency of funds.
contract with G.V.T. Engineering Services (G.V.T.), through its
owner/manager Gerino Tactaquin (Tactaquin) for the construction ISSUE: WON Angeles-Respondent is estopped to deny that she herself acted
of their residential house at Ifugao St., La Vista, Quezon City. as agent of a certain Arsenio Pua, her disclosed principal.

2. The contract price was P1,700,000.00. Since the spouses Tan have
no knowledge about building construction, they hired the services RULING:
of Engineer Rudy Cadag (Cadag) to supervise the said 1. YES. Respondent is estopped to deny that she herself acted as
construction. agent of a certain Arsenio Pua, her disclosed principal. She is also
estopped to deny that petitioner acted as agent for the alleged
3. In the course of the construction, the spouses Tan caused several debtors, the friends whom she (petitioner) referred. Based on the
changes in the plans and specifications and ordered the deletion cross-examination.
of some items in G.V.T.’s scope of work. This brought about 2. Agency may even be implied from the words and conduct of the
differences between the spouses Tan and Cadag, on one hand, parties and the circumstances of the particular case.
and Tactaquin, on the other. Subsequently, the latter stopped the 3. The fact or extent of authority of the agents may not, as a general
construction of the subject house. rule, be established from the declarations of the agents alone, if
one professes to act as agent for another, she may be estopped to
deny her agency both as against the asserted principal and the

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third persons interested in the transaction in which he or she is 4. It was on 1 July 1985 and 10 March 1986 that a Prospecting
engaged. Permit and EP 133, respectively, were issued to MMC. Considering
4. It is evident from the record that petitioner merely refers actual these facts, there is no possibility that MMC or SEM could have
borrowers and then collects and disburses the amounts of the acquired a perfected mining claim under the auspices of the
loan upon which she received a commission; and that respondent Philippine Bill of 1902. Whatever mining rights MMC had that it
transacts on behalf of her "principal financier", a certain Arsenio invalidly transferred to SEM cannot, by any stretch of imagination,
Pua. If their respective principals do not actually and personally be considered "mining rights" as contemplated under the
know each other, such ignorance does not affect their juridical Philippine Bill of 1902 and immortalized in McDaniel and Gold
standing as agents, especially since the very purpose of agency is Creek Mining.
to extend the personality of the principal through the facility of 5. It is evident that what MMC had over the disputed area during
the agent. the assignment was an exploration permit. Clearly, the right that
5. In view of the two agency relationships, petitioner and SEM acquired was limited to exploration, only because MMC was
respondent are not privy to the contract of loan between their a mere holder of an exploration permit.
principals. Since the sale is predicated on that loan, then the sale 6. Even assuming arguendo that SEM obtained the rights attached in
is void for lack of consideration. EP 133, said rights cannot be considered as property rights
protected under the fundamental law.
7. An exploration permit does not automatically ripen into a right to
Case #15 Apex Mining Co., Inc. vs. Southeast Mindanao Gold Mining extract and utilize the minerals; much less does it develop into a
Corp., et al. (G.R. No. 152613 & 152628. November 20, 2009) vested right.
8. The transfer of the said permit to SEM was without legal effect
because it was done in contravention of Presidential Decree No.
FACTS: 463 which requires prior approval from the proper authority.
1. The assignment of Exploration Permit (EP) 133 in favor of SEM Simply told, SEM holds nothing for it to be entitled to conduct
violated one of the conditions stipulated in the permit, i.e., that mining activities in the disputed mineral land.
the same shall be for the exclusive use and benefit of Marcopper
Mining Corporation (MMC) or its duly authorized agents.
Case #16 Amon Trading Corp. vs. CA (G.R. No. 158585 December 13,
2. Since SEM did not claim or submit evidence that it was a
2005)
designated agent of MMC, the latter cannot be considered as an
agent of the former that can use EP 133 and benefit from it.
3. It also ruled that the transfer of EP 133 violated Presidential DOCTRINE: One factor which most clearly distinguishes agency from other
Decree No. 463, which requires that the assignment of a mining legal concepts is control; one person - the agent - agrees to act under the
right be made with the prior approval of the Secretary of the control or direction of another - the principal. Indeed, the very word
Department of Environment and Natural Resources (DENR). "agency" has come to connote control by the principal. The control factor,
4. Moreover, the Assailed Decision pointed out that EP 133 expired more than any other, has caused the courts to put contracts between
by non-renewal since it was not renewed before or after its principal and agent in a separate category.
expiration.
5. Thus, it was held in the Assailed Decision that it is now within the On the part of the principal, there must be an actual intention to appoint or
prerogative of the Executive Department to undertake directly the an intention naturally inferable from his words or actions and on the part of
mining operations of the disputed area or to award the the agent, there must be an intention to accept the appointment and act on
operations to private entities including petitioners Apex and it, and in the absence of such intent, there is generally no agency.
Balite, subject to applicable laws, rules and regulations, and
provided that these private entities are qualified. FACTS:
6. Moreover, Apex asks this Court to order the Mines and 1. Private respondent Tri-Realty is a developer and contractor with
Geosciences Board (MGB) to accept its application for an projects in Bulacan and Quezon City.
exploration permit. 2. Sometime in February 1992, private respondent had difficulty in
purchasing cement needed for its projects.
ISSUE/S: 3. Lines & Spaces, represented by Sanchez, informed private
1. Whether Southeast Mindanao Mining Corp. acquired a vested respondent that it could obtain cement to its satisfaction from
right over the disputed area, which constitutes a property right petitioners, Amon Trading Corporation and its sister company,
protected by the Constitution. Juliana Marketing.
2. WON the transfer or assignment of Exploration Permit (EP) 133 by 4. There were deliveries to private respondent from Amon Trading
MMC to SEM was validly made without violating any of the terms Corporation and Juliana Marketing of 3,850 bags and 3,000 bags,
and conditions set forth in PD 463 and EP 133. respectively, during the period from April to June 1992. However,
the balance of 2,200 bags from Amon Trading Corporation and
3,000 bags from Juliana Marketing, or a total of 5,200 bags, was
not delivered.
RULING: 5. Left high and dry, with news reaching it that Eleanor Sanchez had
1. NO. MMC or SEM Did Not Have Vested Rights Over the Diwalwal already fled abroad, private respondent filed this case for sum of
Gold Rush Area. money against petitioners and Lines & Spaces.
2. In the instant cases, SEM does not aver or prove that its mining
rights had been perfected and completed when the Philippine Bill ISSUE/S:
of 1902 was still the operative law. 1. WON there was a contract of agency between lines and spaces
3. Surely, it is impossible for SEM to successfully assert that it AND respondent. (NO)
acquired mining rights over the disputed area in accordance with 2. WON petitioners and respondent has privity of contract. (NO)
the same bill, since it was only in 1984 that MMC, SEM’s
predecessor-in-interest, filed its declaration of locations and its
prospecting permit application in compliance with Presidential
Decree No. 463.

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RULING: 330, Revised Administrative Code) for instance the owners of
1. NO. Neither Eleanor Sanchez nor Lines & Spaces was an agent for property unlawfully sold by him on execution.
private respondent, but rather a supplier for the latter’s cement 2. In the light of section 330 of the Administrative Code we think the
needs. deputy may be liable where he acts in his own name or is guilty of
2. Without doubt, no vinculum could be said to exist between active malfeasance or possibly where he exceeds the limits of his
petitioners and private respondent. agency. In this case it is clear from the certificate of sale attached
3. By analogy, the words "Lines & Spaces/Tri-Realty" mean that to the complaint as Annex C that Dineros acted all the time in the
effect shall be given to both Lines & Spaces and Tri-Realty or that name of the Ex-Officio Provincial Sheriff of Iloilo; and no
Lines & Spaces and Tri-Realty may be used interchangeably. allegations of misfeasance are made.
Hence, petitioners were not remiss when they believed Eleanor 3. According to the Court, “[t]his is not the first time an action is
Sanchez’s representation that "Lines & Spaces/Tri-Realty" refers dismissed for the reason that the agent — instead of his principal
to just one entity. There was, therefore, no error attributable to — was made the party defendant.
petitioners when they refunded the value of the undelivered bags
of cement to Lines & Spaces only.
4. Primarily, there was no written contract entered into between
petitioners and private respondent for the delivery of the bags of Case #23 Sereno vs. CA (G.R. No. 130423. November 18, 2002)
cement.
5. Indeed, without any contract or any hard evidence to show any
privity of contract between it and petitioners, private FACTS:
respondent’s claim against petitioners lacks legal foothold. 1. Leonida Quilatan delivered pieces of jewelry to petitioner Virgie
Serona to be sold on commission basis. If not sold, petitioner shall
remit payment or return the pieces of jewelry to Quilatan, both
Case #17 Yu Eng Cho vs. Pan American World Airways, Inc. (G.R. No. within 30 days from receipt of the items.
123560. March 27, 2000) 2. Unknown to Quilatan, petitioner had entrusted the jewelry to one
Marichu Labrador for the latter to sell on commission basis. When
petitioner was not able to collect payment from Labrador, she
Case #18 Commercial Bank & Trust Company vs. Republic Armored failed to pay her obligation to Quilatan. Subsequently, Quilatan
Car Services (G.R. No. L-18223-24. June 29, 1963) sent a formal demand]letter to petitioner for failure to settle her
obligation.
3. Petitioner was found guilty of estafa by the trial court. Petitioner
argues that the prosecution failed to establish the elements of
Case #19 Philippine Charter Insurance Corp. vs. Explorer Maritime
Co., et al. (G.R. No. 175409. September 7, 2011) estafa as penalized under the RPC. In particular, she submits that
she neither abused the confidence reposed upon her by Quilatan
nor converted or misappropriated the subject jewelry; that her
Case #20 Maritime Agencies & Securities vs. CA (G.R. No. 77638 July giving the pieces of jewelry to a sub-agent for sale on commission
12, 1990) basis did not violate her undertaking with Quilatan. Moreover,
petitioner delivered the jewelry to Labrador under the same
terms upon which it was originally entrusted to her. It was
Case #21 Goldstar Mining vs. Lim-Jimena (G.R. No. L-25301 established that petitioner had not derived any personal benefit
October 26, 1968) from the loss of the jewelry. Consequently, it cannot be said that
she misappropriated or converted the same.

Case #22 Lorca vs. Dineros (G.R. No. L-10919. February 28, 1958)
ISSUE: Whether or not the Petitioner committed estafa.

RULING:
FACTS: 1. No, the Petitioner did not commit the crime of estafa through
1. Pursuant to a writ of execution issued in a civil case, Dineros as conversion or misappropriation by delivering the jewelry to a sub-
Deputy Sheriff and in the name of the Sheriff sold at public agent for sale on commission basis.
auction the property attached therein, disregarding the third- 2. It must be pointed out that the law on agency in our jurisdiction
party claim of Lorca who asserted ownership over said property. allows the appointment by an agent of a substitute or sub-agent
2. Dineros, in his answer, denied liability, pointing out, that he had in the absence of an express agreement to the contrary between
merely acted for and on behalf of Provincial Sheriff, Cipriano the agent and the principal. In the case at bar, the appointment of
Cabaluna. Labrador as petitioners sub-agent was not expressly prohibited by
3. The action for damages filed by Plaintiff Lorca against Deputy Quilatan, as the acknowledgment receipt, Exhibit B, does not
Sheriff Jose S. Dineros was dismissed by Hon. Pantaleon Pelayo, contain any such limitation. Neither does it appear that petitioner
Judge of Iloilo, on the ground that it is the Sheriff who is was verbally forbidden by Quilatan from passing on the jewelry to
responsible, if at all — not this deputy. another person before the acknowledgment receipt was executed
4. Appellant argues that the complaint should not have been or at any other time. Thus, it cannot be said that petitioners act of
dismissed since the court could just have included the Sheriff as entrusting the jewelry to Labrador is characterized by abuse of
party defendant. confidence because such an act was not proscribed and is, in fact,
legally sanctioned.
ISSUE: Whether or not the dismissal of the case is proper. 3. In the case at bar, it was established that the inability of petitioner
as agent to comply with her duty to return either the pieces of
RULING: jewelry or the proceeds of its sale to her principal Quilatan was
1. Yes. The dismissal is proper. The Sheriff is liable to third persons due, in turn, to the failure of Labrador to abide by her agreement
on the acts of his deputy, in the same manner that the principal is with petitioner. Notably, Labrador testified that she obligated
responsible for the acts of his agent, that is why he is required to herself to sell the jewelry in behalf of petitioner also on
post a bond for "the benefit of whom it may concern," (Section commission basis or to return the same if not sold. In other

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words, the pieces of jewelry were given by petitioner to Labrador
to achieve the very same end for which they were delivered to
her in the first place. Consequently, there is no conversion since
the pieces of jewelry were not devoted to a purpose or use
different from that agreed upon.


Case #24 Santos v Buenconsejo (G.R. No. L-20136. June 23, 1965)

FACTS:
1. Lot No. 1917 covered by Original Certificate of Title No. RO-3848
(25322) was originally owned in common by Anatolio
Buenconsejo and Lorenzo Bon and Santiago Bon. Anatolio
Buenconsejo's rights, interests and participation over the portion
abovementioned were transferred and conveyed to Atty. Tecla
San Andres Ziga, awardee in the corresponding auction sale
conducted by said Sheriff in connection with the execution of the
decision of the Juvenile Delinquency and Domestic Relations
Court in Civil Case No. 25267.
2. On December 26, 1961 and by a certificate of redemption issued
by the Provincial Sheriff of Albay, the rights, interest, claim and/or
or participation which Atty. Tecla San Andres Ziga may have
acquired over the property in question by reason of the
aforementioned auction sale award, were transferred and
conveyed to the herein petitioner in his capacity as Attorney-in-
fact of the children of Anatolio Buenconsejo, namely, Anastacio
Buenconsejo, Elena Buenconsejo and Azucena Buenconsejo (Exh.
C).
3. It would appear, also, that petitioner Santos had redeemed the
aforementioned share of Anatolio Buenconsejo, upon the
authority of a special power of attorney executed in his favor by
the children of Anatolio Buenconsejo; that relying upon this
power of attorney and redemption made by him, Santos now
claims to have acquired the share of Anatolio Buenconsejo in the
aforementioned Lot No. 1917.
4. Petitioner Santos now seeks the reversal of an order of the CFI of
Albay, denying his petition for the cancellation of OCT No. RO-
3848 (25322), issued in the name of Anatolio Buenconsejo,
Lorenzo Bon and Santiago Bon, and covering Lot No. 1917.

ISSUE: Whether or not Petitioner validly acquired the subject property

RULING:
1. No. Petitioner's claim is clearly untenable, for: (1) said special
power of attorney authorized him to act on behalf of the children
of Anatolio Buenconsejo, and, hence, it could not have possibly
vested in him any property right in his own name; (2) the children
of Anatolio Buenconsejo had no authority to execute said power
of attorney, because their father is still alive and, in fact, he and
his wife opposed the petition of Santos; (3) in consequence of said
power of attorney (if valid) and redemption, Santos could have
acquired no more than the share pro indiviso of Anatolio
Buenconsejo in Lot No. 1917, so that petitioner cannot — without
the conformity of the other co-owners (Lorenzo and Santiago
Bon), or a judicial decree of partition issued pursuant to the
provisions of Rule 69 of the new Rules of Court (Rule 71 of the old
Rules of Court) which have not been followed By Santos —
adjudicate to himself in fee simple a determinate portion of said
Lot No. 1917, as his share therein, to the exclusion of the other
co-owners.







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CA – affirmed the RTC’s decision which dismissed the complaint for
II. KINDS OF AGENCY specific performance and damages thereat commenced by the
petitioner against the herein respondents

Case #1 Angeles v. Phil National Railways, (G.R. No. 150128. August ISSUE/S:
31, 2006) • WON Lizette Angeles is considered as assignee of Romualdez.
(NO)
DOCTRINE: A power of attorney must be strictly construed and pursued. The • WON the CA erred in affirming the trial court's holding that
instrument will be held to grant only those powers which are specified petitioner and his spouse, as plaintiffs a quo, had no cause of
therein, and the agent may neither go beyond nor deviate from the power of action as they were not the real parties-in-interest in this case.
attorney. (NO. – TN: It all boils down to the authorization letter given by Romualdez
authorizing Lizette Angeles to withdrawal of scrap or unserviceable rails)
Where agency exists, the third party's (in this case, PNR's) liability on a
contract is to the principal and not to the agent and the relationship of the RULING:
third party to the principal is the same as that in a contract in which there is 1. Upon scrutiny of the subject Romualdez's letter to Atty. Cipriano
no agent. Normally, the agent has neither rights nor liabilities as against the Dizon, it is at once apparent that Lizette was to act just as a
third party. He cannot thus sue or be sued on the contract. Since a contract representative of Romualdez in the withdrawal of rails, and not an
may be violated only by the parties thereto as against each other, the real assignee.
party-in-interest, either as plaintiff or defendant in an action upon that 2. The legal situation is, however, different where an agent is
contract must, generally, be a contracting party. constituted as an assignee. In such a case, the agent may, in his
own behalf, sue on a contract made for his principal, as an
FACTS: assignee of such contract.
1. The respondent Philippine National Railways (PNR) informed a 3. The rule requiring every action to be prosecuted in the name of
certain Gaudencio Romualdez (Romualdez) that it has accepted the real party-in-interest recognizes the assignment of rights of
the latters offer to buy the PNRs scrap/unserviceable rails located action and also recognizes that when one has a right assigned to
in Pampanga. him, he is then the real party-in-interest and may maintain an
2. After paying the stated purchase price, Romualdez addressed a action upon such claim or right.
letter to Atty. Cipriano Dizon, PNRs Acting Purchasing Agent. 4. If Lizette was without legal standing to sue and appear in this
case, there is more reason to hold that her petitioner husband,
Dear Atty. Dizon: either as her conjugal partner or her heir, is also without such
standing.
This is to inform you as President of San Juanico Enterprises, that I 5. In the absence of statute, no form or method of execution is
have authorized the bearer, LIZETTE R. WIJANCO xxx, to be my required for a valid power of attorney; it may be in any form
lawful representative in the withdrawal of the clearly showing on its face the agents authority. A power of
scrap/unserviceable rails awarded to me. attorney is only but an instrument in writing by which a person, as
principal, appoints another as his agent and confers upon him the
For this reason, I have given her the ORIGINAL COPY of the authority to perform certain specified acts on behalf of the
AWARD, xxx which will indicate my waiver of rights, interests and principal.
participation in favor of LIZETTE R. WIJANCO. 6. The written authorization itself is the power of attorney, and this
is clearly indicated by the fact that it has also been called a letter
Thank you for your cooperation. of attorney. Its primary purpose is not to define the authority of
the agent as between himself and his principal but to evidence
Very truly yours, the authority of the agent to third parties with whom the agent
(Sgd.) Gaudencio Romualdez deals. The letter under consideration is sufficient to constitute a
power of attorney. Except as may be required by statute, a power
3. The PNR granted said request and allowed Lizette to withdraw of attorney is valid although no notary public intervened in its
scrap/unserviceable rails in Tarlac instead. However, the PNR execution.
subsequently suspended the withdrawal in view of what it
considered as documentary discrepancies coupled by reported
pilferages of over P500,000.00 worth of PNR scrap properties in Case #2 Jimenez vs. Rabot (G.R. No. L-12579. July 27, 1918)
Tarlac.
4. Consequently, the spouses Angeles demanded the refund of the
amount of P96,000.00. The PNR, however, refused to pay, alleging DOCTRINE: The purpose in giving a power of attorney is to substitute the
that as per delivery receipt duly signed by Lizette, 54.658 metric mind and hand of the agent for the mind and hand of the principal; and if the
tons of unserviceable rails had already been withdrawn which, at character and extent of the power is so far defined as to leave no doubt as to
P2,100.00 per metric ton, were worth P114,781.80, an amount the limits within which the agent is authorized to act, and he acts within
that exceeds the claim for refund. those limits, the principal cannot question the validity of his act.
5. The spouses Angeles filed suit against the PNR and its corporate
secretary, Rodolfo Flores, among others, for specific performance FACTS:
and damages before the RTC of Quezon City. 1. This action was instituted by the plaintiff, Gregorio Jimenez, to
recover from the defendant, Pedro Rabot, a parcel of land
RTC – Sps. Angeles are not the real parties-in-interest rendered situated in the municipality of Alaminos, in the Province of
judgment dismissing their complaint for lack of cause of action. As held Pangasinan.
by the court, Lizette was merely a representative of Romualdez in the 2. Jimenez wrote his sister a letter from Vigan in which he informed
withdrawal of scrap or unserviceable rails awarded to him and not an her that he was pressed for money and requested her to sell one
assignee to the latter's rights with respect to the award. of his parcels of land and send him the money in order that he
might pay his debts. This letter contains no description of the land

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to be sold other than is indicated in the words "one of my parcels
of land". Case #3 City-Lite vs. CA (G.R. No. 138639. February 10, 2000)
3. Acting upon this letter Nicolasa approached the defendant Pedro
Rabot, and the latter agreed to buy the parcel in question for the DOCTRINE: When the sale of a piece of land or any interest therein is
sum of P500. Two hundred and fifty peso were paid at once, with through an agent, the authority of the latter shall be in writing; otherwise,
the understanding that a deed of conveyance would be executed the sale shall be void (Art. 1874).
when the balance should be paid. Nicolasa admits having received
this payment of P250 at the time stated; but there is no evidence FACTS:
that she sent any of it to her brother. 1. Respondent F.P. HOLDINGS was the registered owner of a parcel
4. About one year later Gregorio came down to Alaminos and of land situated along E. Rodriguez Avenue, Quezon City (known
demanded that his sister should surrender this piece of land to as the "Violago Property" or the "San Lorenzo Ruiz Commercial
him, it being then in her possession. She refused upon some Center,"). This property was offered for sale to the general public
pretext or other to do so; and as a result Gregorio, in conjunction through the circulation of a sales brochure indicating Meldin Al G.
with others of his brothers and sisters, whose properties were Roy and Metro Drug Inc as “contact persons”.
also in the hands of Nicolasa, instituted an action in the CFI for the 2. CITY-LITE expressed its desire to purchase the entire front lot of
purpose of recovering their land from her control. This action was the said property. The following day, CITY-LITE's officers and Atty.
decided favorably to the plaintiffs (Jimenez) upon August 12, Mamaril (CITY-LITE’s counsel) met with Roy at the Manila
1913; and no appeal was taken from the judgment. Mandarin Hotel (Makati) to consummate the transaction. After
5. Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and some discussions, the parties finally reached an agreement and
delivered to Pedro Rabot a deed purporting to convey to him the Roy agreed to sell the property to CITY-LITE provided only that the
parcel of land which is the subject of this controversy. The deed latter submit its acceptance in writing to the terms and conditions
recites that the sale was made in consideration of the sum of of the sale. Such letter of acceptance was conveyed by Atty.
P500, the payment of which is acknowledged. Mamaril and CITY-LITE that afternoon.
6. Pedro Rabot went into possession, and the property was found in 3. However, for some reason or another and despite demand,
his hands at the time when final judgment was entered in favor of respondent F.P. HOLDINGS refused to execute the corresponding
the plaintiffs in the action above mentioned. It will thus be seen deed of sale in favor of CITY-LITE of the front lot of the property.
that Pedro Rabot acquired possession under the deed from Hence, CITY-LITE instituted a complaint against F.P. HOLDINGS
Nicolasa during the pendency of the litigation appear that he was originally for specific performance and damages. However, during
at the time cognizant of that circumstance. the pendency of the suit, the property was transferred to
VIEWMASTER and a new title was issued on its name.
ISSUE/S:
• WON the authority conferred on Nicolasa by the letter was RTC QC favored CITY-LITE and ordered F.P HOLDINGS to execute a deed
sufficient to enable her to bind her brother. (YES. The authority of sale in CITY-LITE’s favor.
expressed in the letter is sufficient.) CA - Reversed the ruling of the RTC.
• WON the act performed by Nicolasa Jimenez was within the scope
of the authority which had been conferred upon her (YES) ISSUE: WON a contract of sale was perfected between CITY-LITE and F.P.
HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug. (Simply,
RULING: WON Roy and Metro drug have the authority to sell the property)
1. There is ample authority to the effect that a person may by a
general power of attorney an agent to sell "all" the land possessed RULING:
by the principal, or all that he possesses in a particular city, 1. No, the Civil Code requires that an authority to sell a piece of land
county, or state. shall be in writing. Art. 1874 of the Civil Code provides: "When the
2. IN the present case the agent was given the power to sell either of sale of a piece of land or any interest therein is through an agent,
the parcels of land belonging to the plaintiff. We can see no the authority of the latter shall be in writing; otherwise, the sale
reason why the performance of an act within the scope of this shall be void”.
authority should not bind the plaintiff to the same extent as if he 2. The absence of authority to sell can be determined from the
had given the agent authority to sell "any or all" and she had written memorandum issued by respondent F.P. HOLDINGS'
conveyed only one. President requesting Metro Drug's assistance in finding buyers for
3. It is well-settled in the jurisprudence of England and the United the property. Meldin Al G. Roy and/or Metro Drug, therefore, was
States that when the owner, or his agent, comes to make a only a contact person with no authority to conclude a sale of the
contract to sell, or a conveyance to effect a transfer, there must property.
be a description of the property which is the subject of the sale or 3. For lack of a written authority to sell the "Violago Property" on
conveyance. This is necessary of course to define the object of the the part of Meldin Al G. Roy and/or Metro Drug, the sale should
contract. be declared null and void. Therefore, the sale could not produce
4. The general rule here applicable is that the description must be any legal effect as to transfer the subject property from its lawful
sufficiently definite to identify the land either from the recitals of owner, F.P. HOLDINGS, to any interested party including
the contract or deed or from external facts referred to in the petitioner CITY-LITE.
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.
5. The principle embodied in these decisions is not, in our opinion,
applicable to the present case, which relates to the sufficiency of
the authorization, not to the sufficiency of the contract or
conveyance.


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ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration.
Case #4 Cosmic Lumber vs. CA (G.R. No. 114311 November 29, 3. It is therefore clear that by selling to respondent Perez a portion
1996) of petitioner's land through a compromise agreement, Villamil-
Estrada acted without or in obvious authority. The sale ipso jure is
DOCTRINE: When the sale of a piece of land or any interest thereon is consequently void. So is the compromise agreement. This being
through an agent, the authority of the latter shall be in writing; otherwise, the case, the judgment based thereon is necessarily void.
the sale shall 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. A special power of attorney is necessary to enter into any Case #5 San Juan Structural Steel vs. CA (G.R. No. 129459.
contract by which the ownership of an immovable is transmitted or acquired September 29, 1998)
either gratuitously or for a valuable consideration.

FACTS: FACTS:
1. COSMIC LUMBER CORPORATION (CLC), through its General - San Juan Structural and Steel Fabricators, Inc. alleged that it entered into an
Manager, executed a Special Power of Attorney appointing Paz G. agreement with Motorich Sales Corporation for the transfer to it of a parcel
Villamil-Estrada as attorney-in-fact “to initiate, institute and file of land, through the latter’s treasurer, Nenita Gruenberg. The subject of the
any court action for the ejectment of third persons and/or sale was a parcel of land owned by Motorich. San Juan advanced P100k to
squatters” on the lot that CLC owned and “to appear at the pre- Nenita as earnest money.
trial conference and enter into any stipulation of facts and/or
compromise agreement so far as it shall protect the rights and - On the day agreed upon on which Nenita was supposed to deliver the title
interest of the corporation in the aforementioned lots”. By virtue of the land to Motorich, Nenita did not show up. Nenita and Motorich did
of the SPA, Villamil-Estrada, instituted an action for the ejectment not heed the subsequent demand of San Juan to comply with the contract
of private respondent Isidro Perez in RTC Dagupan. hence San Juan sued Motorich. Motorich, in its defense, argued that it is not
2. Subsequently, Villamil-Estrada and Perez entered into a bound by the acts of its treasurer, Nenita, since her act in contracting with
Compromise Agreement stipulating that Perez will pay plaintiff San Juan was not authorized by the corporate board.
(CLC), through its attorney-in-fact (Villamil-Estrada), a sum
P26,640.00 and in turn, plaintiff will recognize the ownership and - San Juan raised the issue that Nenita was actually the wife of the President
possession of the Perez over a portion of the said lot. Such of Motorich; that Nenita and her husband owns 98% of the corporation’s
compromise agreement was approved by the RTC. capital stocks; that as such, it is a close corporation and that makes Nenita
3. Although the decision became final and executory, it was not and the President as principal stockholders who do not need any
executed within the 5-year period from date of its finality. Thus, authorization from the corporate board.
respondent filed a complaint to revive the judgment.
4. CLC asserts that it was only when the summons for the revival of RTC Ruling: Dismissed both the Complaint and the Counterclaim filed by the
judgment was served upon it that it came to know of the parties
compromise agreement entered into between Villamil-Estrada
and Perez. Thus, CLC sought the annulment of the decision of the CA Ruling: AFFIRMED WITH MODIFICATION ordering defendant-appellee
trial court before the CA on the ground that the compromise Nenita Lee Gruenberg to REFUND or return to plaintiff-appellant the
agreement was void because Attorney-in-fact Villamil-Estrada did downpayment of P100,000.00 which she received from plaintiff-appellant
not possess the authority to sell or was she armed with a Board
Resolution authorizing the sale of its property. She was merely RULING:
empowered to enter into a compromise agreement in the No. A corporation is a juridical person separate and distinct from its
recovery suit she was authorized to file against persons squatting stockholders or members. Accordingly, the property of the corporation is not
on the subject lot. the property of its stockholders or members and may not be sold by the
5. CA, however, dismissed the complaint on the basis of its finding stockholders or members without express authorization from the
that not one of the grounds for annulment, namely, lack of corporations board of directors. a corporation may act only through its board
jurisdiction, fraud or illegality was shown to exist. of directors, or, when authorized either by its bylaws or by its board
resolution, through its officers or agents in the normal course of business.
ISSUE: WON the compromise agreement entered by the Attorney-in-fact and The general principles of agency govern the relation between the
the respondent valid. corporation and its officers or agents, subject to the articles of incorporation,
bylaws, or relevant provisions of law.
RULING:
1. No. The authority granted to Villamil-Estrada under the SPA was Thus, this Court has held that a corporate officer or agent may represent and
explicit and exclusionary: for her to institute any action in court bind the corporation in transactions with third persons to the extent that the
to eject all persons found on CLC’s lots and for this purpose, to authority to do so has been conferred upon him, and this includes powers
appear at the pre-trial and enter into any stipulation of facts which have been intentionally conferred, and also such powers as, in the
and/or compromise agreement but only insofar as this was usual course of the particular business, are incidental to, or may be implied
protective of the rights and interests of petitioner in the property. from, the powers intentionally conferred, powers added by custom and
Nowhere in this authorization was Villamil-Estrada granted usage, as usually pertaining to the particular officer or agent, and such
expressly or impliedly any power to sell the subject property nor a apparent powers as the corporation has caused persons dealing with the
portion thereof. officer or agent to believe that it has conferred. Articles 1874 and 1878 of the
2. When the sale of a piece of land or any interest thereon is Civil Code of the Philippines provides:
through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to ART. 1874. When a sale of a piece of land or any interest therein is through
execute a contract for the sale of real estate must be conferred in an agent, the authority of the latter shall be in writing; otherwise, the sale
writing and must give him specific authority. A special power of shall be void.
attorney is necessary to enter into any contract by which the

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ART. 1878 Special powers of attorney are necessary in the following case: CA Ruling:
x x x x x x x x x Reversed and set aside the decision of the Regional Trial Court and rendered
(5) To enter any contract by which the ownership of an immovable is a new one ORDERING appellee spouses Claudio and Lydia delos Reyes to
transmitted or acquired either gratuitously or for a valuable consideration; immediately vacate the 300 square meter portion of that land covered by
TCT No. T-17932 which they presently occupy and to turn over possession
In the case at bar, Respondent Motorich categorically denies that it ever thereof to the appellants.
authorized Nenita Gruenberg, its treasurer, to sell the subject parcel of land.
Consequently, petitioner had the burden of proving that Nenita Gruenberg The Court of Appeals ruled that the contract of sale cannot be upheld, mainly
was in fact authorized to represent and bind Motorich in the transaction. because Renato Gabriel, as vendor, did not have the legal capacity to enter
Petitioner failed to discharge this burden. and to give consent to the agreement, he, being neither the authorized agent
(of Daluyong Gabriel) nor the owner of the property subject of the sale.

Case #6 Delos Reyes vs. CA (G.R. No. 129103. September 3, 1999) ISSUE: Whether or not the sale of land through an agent is valid

FACTS: RULING:
- Daluyong Gabriel, the registered owner of a 5,010 square meter parcel of No. Renato Gabriel was neither the owner of the subject property nor a duly
land situated in Barrio Magugpo, Tagum, Davao del Norte, sent his son designated agent of the registered owner (Daluyong Gabriel) authorized to
Renato Gabriel to Tagum reportedly to take over from Maria Rita G. de Rey sell subject property in his behalf, and there was also no sufficient evidence
as administrator of the said parcel of land. adduced to show that Daluyong Gabriel subsequently ratified Renatos act. In
this connection it must be pointed out that pursuant to Article 1874 of the
- Upon agreement of the parties, the contract between de los Reyes and Civil Code, when the sale of a piece of land or any interest therein is through
Maria Rita was novated and replaced by a Contract of Lease executed by and an agent, the authority of the latter shall be in writing; otherwise the sale
between RENATO GABRIEL and Lydia de los Reyes. The term of the lease was shall be void. In other words, for want of capacity (to give consent) on the
changed to 6 years from and after June 15, 1985 or up to June 15, 1991; part of Renato Gabriel, the oral contract of sale lacks one of the essential
receipt of the payment in advance of the total rental amount of 14,400.00
was acknowledged by Lessor Renato Gabriel. requisites for its validity prescribed under Article 1318, supra and is therefore
null and void abinitio.
- During the effectivity of the lease contract, Lydia verbally agreed to buy 300
square meters of Daluyong Gabriels registered property, at 300 per square
Case #7 AF Realty v. Dieselman Freight (G.R. No. 111448. January
meter or for a total amount of P90,000.00. No deed of sale was executed
16, 2002)
covering the transaction. Purchaser Lydia de los Reyes however proceeded
with the construction of a two-storey commercial building on the said 300
square meter lot after obtaining a building permit from the Engineers Office FACTS:
in Tagum. - Dieselman is a domestic corporation and a registered owner of a parcel of
commercial lot located at Barrio Ugong, Pasig City, Metro Manila.
- Upon knowing that spouses Claudio and Lydia de los Reyes were
constructing a two-storey building on a portion of his land, Daluyong Gabriel, - Manuel C. Cruz, Jr., a member of the board of directors of Dieselman, issued
through his lawyer, to the De los Reyes couple demanding that they cease an Authority To Sell Real Estate" to Cristeta N. Polintan, a real estate broker,
and desist from continuing with their construction and to immediately vacate authorizing Polintan "to look for a buyer/buyers and negotiate the sale" of
the premises, asserting that the construction was unauthorized and that the lot at P3,000.00 per square meter. Cruz, Jr. has no written authority from
their occupancy of the subject portion was not covered by any lease Dieselman to sell the lot.
agreement.
- Cristeta Polintan authorized Felicisima Noble to sell the same lot. Felicisima
- Claudio and Lydia de los Reyes explained that they are the innocent party Noble then offered for sale the property to AF Realty) at P2,500.00 per
who entered into the lease agreement and subsequent sale of subject square meter.
portion of land in good faith and upon the assurance made by the former
administratrix, Maria Rita G. Rey, her nephew Tony Rey, Mrs. Fe S. Gabriel - Zenaida Ranullo, board member and vice-president of AF Realty, accepted
and Mr. Daluyong Gabriel himself that Renato Gabriel is the new the offer and issued a check in the amount of P300,000.00 payable to the
administrator authorized to enter into such agreements involving the subject order of Dieselman. The amount of P300,000.00 represents the partial
property. payment of the property but refundable within two weeks should AF Realty
disapprove Ranullo's action on the matter.
- Daluyong Gabriel commenced an action against spouses Claudio and Lydia
de los Reyes for the recovery of the subject portion of land before the RTC. - AF Realty confirmed its intention to buy the lot. Hence, Ranullo asked
Daluyong maintained that his son Renato was never given the authority to Polintan for the board resolution of Dieselman authorizing the sale of the
lease nor to sell any portion of his land as his instruction to him (Renato) was property. However, Polintan could only give Ranullo the original copy of TCT
merely to collect rentals. No. 39849, the tax declaration and tax receipt for the lot, and a photocopy of
the Articles of Incorporation of Dieselman.
RTC Ruling:
Daluyong Gabriel, Renato Gabriel, Maria Luisa Esteban and Maria Rita G. - Manuel F. Cruz, Sr., president of Dieselman, acknowledged receipt of the
Bartolome are hereby ordered to execute a Deed of Conveyance and other said P300,000.00 as "earnest money" but required AF Realty to finalize the
necessary documents in favor of Claudio delos Reyes and Lydia delos Reyes. sale at P4,000.00 per square meter. AF Realty replied that it has paid an
The trial court held that the oral contract of sale was valid and enforceable initial down payment of P300,000.00 and is willing to pay the balance.
stating that while it is true that at the time of the sale, Renato Gabriel was
not the owner and that it was Daluyong Gabriel who was the registered - However, on August 13, 1988, Mr. Cruz, Sr. terminated the offer and
owner of the subject property, Daluyong Gabriel knew about the transaction demanded from AF Realty the return of the title of the lot earlier delivered
and tacitly authorized his son Renato Gabriel (whom he earlier designated as by Polintan.
administrator of his 5,010 square meter registered property) to enter into it.

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- Claiming that there was a perfected contract of sale between them, AF RTC – Denied Yun’s complaint because based on PAGCORs charter, it
Realty filed with the Regional Trial Court, Branch 160, Pasig City a complaint has no authority to lease any portion of the gambling tables to a private
for specific performance (Civil Case No. 56278) against Dieselman and Cruz, party like ABS Corporation, therefore the Junket Agreement is void,
Jr. Dieselman alleged that there was no meeting of the minds between the consequently, the mutual rights and obligations of the parties to this
parties in the sale of the property and that it did not authorize any person to case would be resolved based on agency and estoppel.
enter into such transaction on its behalf.
CA – Affirmed the RTC’s decision because the Junket Agreement, being
- Meanwhile, on July 30, 1988, Dieselman and Midas Development void from the beginning, cannot give rise to an implied agency case.
Corporation (Midas) executed a Deed of Absolute Sale of the same property. Article 1883 of the Civil Code applies only to a situation where the
agent is authorized by the principal to enter into a particular
RTC Ruling: The lower court ruled that the acts of Cruz, Jr. bound Dieselman transaction, but instead of contracting on behalf of the principal, the
in the sale of the lot to AF Realty. agent acts in his own name. The CA concluded that no such legal fiction
existed between PAGCOR and ABS Corporation. Representation is the
CA Ruling: Court of Appeals reversed the judgment of the trial court holding basis of agency but unfortunately for petitioner none is found in this
that since Cruz, Jr. was not authorized in writing by Dieselman to sell the case.
subject property to AF Realty, the sale was not perfected.
ISSUE/S:
ISSUE: Whether or not the Dieselman is bound by the acts of Cruz, Jr. 1. WON there was an implied agency or agency by estoppel between
ABS Corp and PAGCOR?
RULING:
No. It is undisputed that respondent Cruz, Jr. has no written authority from RULING:
the board of directors of respondent Dieselman to sell or to negotiate the 1. NEITHER. Article 1869 of the Civil Code states that implied agency
sale of the lot, much less to appoint other persons for the same purpose. is derived from the acts of the principal, from his silence or lack of
Respondent Cruz, Jr.s lack of such authority precludes him from conferring action, or his failure to repudiate the agency, knowing that
any authority to Polintan involving the subject realty. Necessarily, neither another person is acting on his behalf without authority.
could Polintan authorize Felicisima Noble. Clearly, the collective acts of 2. There is no implied agency in this case because PAGCOR did not
respondent Cruz, Jr., Polintan and Noble cannot bind Dieselman in the hold out to the public as the principal of ABS Corporation.
purported contract of sale. Moreover, when a sale of piece of land or any PAGCORs actions did not mislead the public into believing that an
interest therein is through an agent, the authority of the latter shall be in agency can be implied from the arrangement with the junket
writing; otherwise, the sale shall be void. Considering that respondent Cruz, operators, nor did it hold out ABS Corporation with any apparent
Jr., Cristeta Polintan and Felicisima Ranullo were not authorized by authority to represent it in any capacity. The Junket Agreement
respondent Dieselman to sell its lot, the supposed contract is void. Being a was merely a contract of lease of facilities and services.
void contract, it is not susceptible of ratification. 3. In an agency by estoppel, there is no agency at all, but the one
assuming to act as agent has apparent or ostensible, although not
real, authority to represent another. Apparent authority is based
Case #8 Yun Kwan Byung vs. Philippine Amusement Gaming on estoppel and can arise from two instances. First, the principal
Corporation (G.R. No. 163553, Dec. 11, 2009) may knowingly permit the agent to hold himself out as having
such authority, and the principal becomes estopped to claim that
DOCTRINE: Implied agency is derived from the acts of the principal, from his the agent does not have such authority. Second, the principal may
silence or lack of action, or his failure to repudiate the agency, knowing that clothe the agent with the indicia of authority as to lead a
another person is acting on his behalf without authority. In an agency by reasonably prudent person to believe that the agent actually has
estoppel, there is no agency at all, but the one assuming to act as agent has such authority.
apparent or ostensible, although not real, authority to represent another. 4. An agency by estoppel, which is similar to the doctrine of
The law makes no presumption of agency and proving its existence, nature apparent authority requires proof of reliance upon the
and extent is incumbent upon the person alleging it. representations, and that, in turn, needs proof that the
representations predated the action taken in reliance There can
FACTS: be no apparent authority of an agent without acts or conduct on
1. PAGCOR launched its Foreign Highroller Marketing Program the part of the principal and such acts or conduct of the principal
(Program) to invite patrons from foreign countries to play at the must have been known and relied upon in good faith and as a
dollar pit of designated PAGCOR-operated casinos under specified result of the exercise of reasonable prudence by a third person as
terms and conditions and industry practice. claimant, and such must have produced a change of position to its
2. The Korean-based ABS Corporation availed of the Program and in detriment. Such proof is lacking in this case.
a letter-agreement (Junket Agreement) agreed to bring in foreign 5. The basis for agency is representation, that is, the agent acts for
players to play at the designated casinos (Casino Filipino). and on behalf of the principal on matters within the scope of his
3. Petitioner (Yun), a Korean national was one of those brought into authority and said acts have the same legal effect as if they were
the Philippines by ABS Corporation and is a junket player who personally executed by the principal. On the part of the principal,
played in the dollar pit exclusively leased by ABS Corporation for there must be an actual intention to appoint or an intention
its junket players. naturally inferable from his words or actions, while on the part of
4. Yun alleges that he came to the Philippines four times to play for the agent, there must be an intention to accept the appointment
high stakes at the Casino Filipino. and act on it. Absent such mutual intent, there is generally no
5. Yun was able to accumulate gambling chips worth US$2.1 million agency.
but when he presented them to PAGCOR for encashment, 6. In the entire duration that petitioner played in Casino Filipino, he
PAGCOR refused to redeem them. was dealing only with ABS Corporation, and availing of the
6. Yun filed a complaint for a sum of money before the RTC Manila, privileges extended only to players brought in by ABS Corporation.
Branch 13. 7. Furthermore, PAGCOR, in posting notices stating that the players
7. Yun contends that an implied agency existed between PAGCOR are playing under special rules, exercised the necessary
and ABS Corporation. precaution to warn the gaming public that no agency relationship
exists.

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8. The law makes no presumption of agency and proving its particular place, would be ordinarily deemed a general agent. A
existence, nature and extent is incumbent upon the person special agent is one authorized to do some particular act or to act
alleging it. upon some particular occasion. A scrutiny of the document
embodying the agreement between the petitioners and the
respondent deduce that the 'latter was instituted as a general
Case #9 Siasat v. IAC (G.R. No. L-67889 October 10, 1985) agent. The power granted to the respondent was so broad that it
practically covers the negotiations leading to, and the execution
DOCTRINE: The principal has the power to revoke the authority of his agent of, a contract of sale of petitioners' merchandise with any entity
at will, in the absence of a contract fixing the duration of the agency or organization.
however, the principal cannot deprive his agent of the commission agreed 2. YES. The revocation of agency could not prevent Teresita from
upon by canceling the agency and, thereafter, dealing directly with the earning her commission because it came too late, the contract of
buyer. sale having been already perfected and partly executed. The
principal cannot deprive his agent of the commission agreed upon
FACTS: by cancelling the agency and, thereafter, dealing directly with the
1. Teresita convinced then Department of Education and Culture, to buyer.
purchase one million pesos worth of national flags for the use of 3. The decision of the respondent court is hereby MODIFIED. The
public schools throughout the country. petitioners are ordered to pay the respondent the amount of ONE
2. Respondent Teresita Nacianceno was authorized to represent HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY
United Flag Industry to deal with any entity or organization, FOUR PESOS (P140,994.00) as her commission on the second
private or government in connection with the marketing of their delivery of flags with legal interest from the date of the trial
products-flags and all its accessories and to be paid the court's decision.
commission of 30%.
3. On October 16, 1974, the first delivery of 7,933 flags was made by
the United Flag Industry (United Flag). Case #10 Dominion Insurance v. CA (G.R. No. 129919. February 6,
4. On October 17, 1974, the respondent's authority to represent the 2002)
United Flag was revoked by petitioner Primitivo Siasat, Owner and
Gen. Manager of United Flag. DOCTRINE: When a special power of attorney is required for the agent to do
5. It was found out by the court that Siasat, after receiving the a certain act, the agent, in the performance of such act, must comply with
payment of P469, 980 for the first delivery, tendered the amount the specifications embodied in the special power of attorney giving him
of P23,900.00 or five percent (5%) of the amount received, to the authority to do such.
Teresita as payment of her commission. Teresita protested but
was forced to accept it after Siasat assured her that they would FACTS:
pay the commission in full after they delivered the other half of 1. Rodolfo Guevarra instituted a civil case in RTC Pampanga, for the
the order. recovery of a sum of money against Dominion Insurance. He
6. Teresita later on learned that petitioner Siasat had already sought to recover P156,473.90, which he claimed to have
received payment for the second delivery of 7,833 flags. When advanced in his capacity as manager of Dominion to satisfy claims
she confronted the petitioners, they vehemently denied receipt of filed by Dominion’s clients.
the payment, at the same time claiming that the respondent had 2. Dominion denied any liability to Guevarra.
no participation whatsoever with regard to the second delivery of
flags and that the agency had already been revoked. RTC – Granted Guevarra’s complaint and ordered Dominion was to pay
7. Teresita filed an action in the Court of First Instance of Manila to Guevarra the P156,473.90 claimed as the total amount advanced by the
recover the following commissions: 25%, as balance on the first latter in the payment of the claims of Dominion’s clients.
delivery and 30%, on the second delivery. CA – Affirmed the RTC’s decision.
8. Siasat contend that the authorization making the respondent the
petitioner's representative merely states that she could deal with ISSUE/S:
any entity in connection with the marketing of their products for a 1. WON Guevarra acted within his authority as agent for Dominion?
commission of 30%; that there was no specific authorization for 2. WON Guevarra is entitled to reimbursement of amounts he paid
the sale of 15,666 Philippine flags to the Department; and that the out of his personal money in settling the claims of several
revocation of agency effected by the parties with mutual consent insured?
on October 17, 1974, therefore, forecloses the respondent's claim
of 30% commission on the second transaction. RULING:
A. NO.
RTC – Granted Teresita’s complaint. 1. A perusal of the “Special Power of Attorney” would show that Dominion
IAC – Affirmed the RTC’s decision. and Guevarra intended to enter into a principal-agent relationship.

ISSUE/S: 2. Guevarra’s authority to settle claims is embodied in the Memorandum of
1. WON Teresita is a general agent of United Flag? Management Agreement which enumerated the scope of Guevarra’s duties
2. WON Teresita is entitled to the commission for the second and responsibilities including his authority to pay the claim of the insured,
delivery? but the payment shall come from the revolving fund or collection in his
possession. By advancing his own money to satisfy claims filed by Dominion’s
RULING: clients, Guevarra clearly acted outside of his authority.
1. YES. An agent may be (1) universal: (2) general, or (3) special. A
universal agent is one authorized to do all acts for his principal B. YES.
which can lawfully be delegated to an agent. A general agent is 1. Under the law on agency, Guevarra may not be reimbursed from
one authorized to do all acts pertaining to a business of a certain petitioner Dominion but his right to recovery may still be justified under the
kind or at a particular place, or all acts pertaining to a business of general law on Obligations and Contracts.
a particular class or series. An agent who is empowered to
transact all the business of his principal of a particular kind or in a

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2. Having deviated from the instructions of the Dominion, the expenses that
Guevarra incurred in the settlement of the claims of the insured may not be
Case #12 Bank of PI v. De Coster (G.R. No. L-23181. March 16, 1925)
reimbursed from petitioner Dominion. This conclusion is in accord with
Article 1918, Civil Code, which states that:
Principal - Respondent wife/Gabriela De Coster
The principal is not liable for the expenses incurred by the agent in the Agent - husband/Jean Poizat
following cases:
(1) If the agent acted in contravention of the principals instructions, FACTS:
unless the latter should wish to avail himself of the benefits 1. December 29, 1921, Husband, acting as agent of respondent wife
derived from the contract. via special power of attorney, made a promissory note for Php
292,000 to BPI payable within 1 year with a 9% interest per
3. The petition is DENIED and the decision of the CA and that of the RTC are annum.
MODIFIED in that petitioner is ordered to pay respondent Guevarra the 2. To secure payment, husband executed chattel mortgage to BPI
amount of P112,672.11 representing the total amount advanced by the latter over the steamers, machinery, and materials belonging to Poizat
in the payment of the claims of petitioners clients. Vegetable Oil Mills (company owned by husband) and also
delivered to BPI a mortgage on a real property situated in Manila.
3. Real property was subject to a prior mortgage in favor of La Orden
Case #11 PNB v. Sta. Maria (G.R. No. L-24765. August 29, 1969) de Dominicos.
4. Note in question is long past due and so, plaintiff filed an action in
Principal - Defendant Sta Maria Siblings (emphasis on Valeriana) CFI Manila to take immediate possession of the property
Agent - Dr. Maximo Sta Maria 5. April 24, 1924, La Orden/Dominican Fathers appeared in the suit
and pleaded that husband and wife have also not paid the
FACTS: principal nor interests stipulated in December 1921.
1. Defendant Maximo obtained sugar crop loans from plaintiff PNB 6. CFI Manila declared defendants in default and rendered opinion
under a special power of attorney executed in his favor by his 6 that both BPI and Dominican Fathers be paid by defendants.
brothers and sisters. 7. Respondent wife filed a suit praying that she be absolved;
2. Said loans were mortgaged with a 16-odd hectare land jointly contending that she has been residing in Paris from 1908 to April
owned by the defendant and siblings. 1924 and that her husband executed the mortgage transactions
3. Valeriana, one of the siblings, executed a special power of without her consent.
attorney to Maximo authorizing him to borrow money and
mortgage any real estate owned by her. ISSUE: WON transactions entered by husband as agent of his wife were valid
4. By virtue of 2 powers of attorney, Maximo applied for 2 separate
crop loans and as security of the loans, Maximo executed, in his RULING: NO.
name, two chattel mortgages guaranteed by surety bonds
executed Associated Insurance & Surety Co., in favor of plaintiff Paragraph 5 of the power of attorney authorizes the husband “to loan or
PNB borrow any sums of money or fungible things, etc.” - This should be
5. Records show that securities included the land owned by the Sta construed to mean that the husband had power only to loan his wife’s
Maria siblings. money and to borrow money for or on account of his wife as her agent and
6. Plaintiff Bank filed a case for collection if unpaid balances against attorney in fact. That does not carry with it or imply that he had the legal
Maximo and his siblings. right to make his wife liable as surety for the pre-existing debt of a third
7. RTC ruled in favor of PNB, ordering defendants to pay jointly and person.
SEVERALLY.
8. Siblings (except Maximo and his surety) appealed The foregoing are clauses in the power of attorney upon which the bank
relies for the authority of the husband to execute promissory notes for and
ISSUE: WON siblings can be held personally liable for the payment of on behalf of his wife as her agent. No provision in either of them which
Maximo’s obligations authorizes or empowers him to make his wife liable as a surety for a pre-
existing debt.
RULING: NO, siblings, except Valeriana, cannot be held liable.
The fact that an agent failed and neglected to perform his duties and to
Defendants, except Valeriana, only granted Maximo authority to mortgage represent the interests of his principal is not a bar to the principal obtaining
property owned by them and not the authority to contract for any other legal relief for the negligence of her agent, provided that the application for
loans in their names or behalf. Thus, defendants’ liability is that the real such a relief is duly and properly made under the provisions of section 113.
estate will be foreclosed and sold but they cannot be held personally liable.
It is very apparent from the face of the instrument that the whole purpose
The Bank failed to require Maximo to present additional special power of and intent of the power of attorney was to empower and authorize the
authority, from his other siblings, authorizing him to borrow money. He only husband to look after and protect the interests of the wife and for her and in
had additional SPA issued by Valeriana. her name to transact any and all of her business. But nowhere does it
provide or authorize him to make her liable as a surety for the payment of
Defendant siblings did not ratify nor benefit from the acts of Maximo which the preexisting debt of a third person.
means there can be NO ESTOPPEL.
Thus, judgment of CFI, as to wife, is reversed and set aside. As to bank, case
Thus, RTC judgment reversed and set aside. Defendant siblings’ liability is is remanded to lower court. As to Dominican fathers, judgment cannot be
only up to real estate foreclosure; Valeriana is declared jointly, not solidarily, sustained.
liable.



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• This decision was reversed by the Supreme Court of the Philippines and
Case #13 Hodges v. Salas (G.R. No. L-42958. October 21, 1936) thereafter reversed by the Supreme Court of the United States and affirming
the judgment of the trial court and was thereafter satisfied by the defendant
Principal - Defendant Salas by returning the shares evidenced by certificates.
Agent - Yulo/Defendant’s brother in law
• Subsequently, it was found out, that from the date of the Fraudulent sale,
FACTS: the defendant collected the dividends earned by said shares amounting to a
1. On September 2, 1923, the defendants executed a power of total of P19,200, which sum the defendant retained and refused to pay over
attorney in favor of their brother-in-law Felix S. Yulo to enable to the plaintiff.
him to obtain a loan and secure it with a mortgage on the real
property described in transfer certificate of title No. 3335. The • After demand upon and refusal by the defendant, the plaintiff began this
power of attorney was registered in the registry of deeds of the action for the recovery of said sum.
Province of Occidental Negros.
2. Acting under said power of attorney, Felix S. Yulo, on March 27, • The plaintiff then again instituted a separate action which was ruled in
1926, obtained a loan of P28,000 from the plaintiff, binding his favor of the plaintiff for the said sum of P19,200, with interest thereon at the
principals jointly and severally to pay it within ten (10) years, rate of 6 per cent per annum from the date of the filing of the complaint.
together with interest thereon at 12 per cent per annum payable
annually in advance, to which effect he signed a promissory note • Both parties excepted to this judgment and filed motions for a new trial,
for said amount and executed a deed of mortgage of the real and the court upon the hearings modified its judgment by allowing
property described in transfer certificate of title No. 3335 and the defendant to offset against plaintiff's judgment interest on P14,159.29 at the
improvements thereon consisting in concrete buildings. rate of 6 per cent per annum from the 10th day of October, 1903, to the 12th
3. The sum of P28,000 was not delivered to Felix S. Yulo, but by day of January, 1904.
agreement between him and the plaintiff, was applied to Yulo’s
personal debts to plaintiff Hodges (Php 10, 188.29) Trial Court Ruling: The trial court found in favor of the plaintiff, declaring the
4. The defendants failed to pay at maturity the interest stipulated, sale of the stock to have been fraudulently obtained and setting aside the
which would have been paid one year in advance. sale absolutely, as is indicated by that portion of its opinion heretofore
5. Action was brought by the plaintiff to foreclose the real estate quoted. On the appeal to the Supreme Court of the United States the
mortgage. fraudulent character of the representations by which the plaintiff had been
6. CFI Negros Occidental absolved defendants contending that held induced to part with her stock was fully affirmed after a thorough
that the loan and the mortgage were usurious and illegal for two consideration of the facts and circumstances of the case and the judgment of
reasons: First, because the plaintiff charged compound interest the trial court setting aside the sale on the ground of fraud was affirmed in
notwithstanding the fact that it had not been stipulated, and every particular.
second, because the plaintiff charged interest yearly in advance in
accordance with the agreement ISSUE:
Whether or Not the plaintiff had been deprived of the shares of stock in
ISSUE: WON agent was authorized to borrow money for personal use question by false and fraudulent representations and fraudulent
concealment on the part of the defendant, or of his agents?
RULING: NO.
RULING:
The pertinent clauses of the power of attorney from which may be • YES. The fraudulent sale having been made to him, it is unquestionable that
determined the intention of the principals in authorizing their agent to he became responsible to the plaintiff from that moment forward. So far as
obtain a loan, securing it with their real property, were quoted at the the responsibility of the defendant was concerned, it is of no consequence
beginning of the decision. The terms thereof are limited; the agent was who actually collected and retained the dividends. The plaintiff had a right to
thereby authorized only to borrow any amount of money which he deemed look to the defendant and to him alone.
necessary. There is nothing, however, to indicate that the defendants had
likewise authorized him to convert the money obtained by him to his • The judgment of the trial court, as affirmed by the Supreme Court of the
personal use. With respect to a power of attorney of special character, it United States, set aside the sale as fraudulent, and, therefore, by necessary
cannot be interpreted as also authorizing the agent to use the money as he result, the title to the shares of stock in question passed to the plaintiff if it
pleased, particularly when it does not appear that such was the intention of be conceded that the title ever legally passed from her.
the principals, and in applying part of the funds to pay his personal
obligations, he exceeded his authority. In cases like the present one, it should • The delivery of those shares to her by the defendant under that judgment
be understood that the agent was obliged to turn over the money to the was an admission of her title as declared by the court and was a delivery of
principals or, at least, place it at their disposal possession in pursuance of that declaration of ownership. Under the
decisions referred to, as between the parties thereto, the plaintiff was legally
the owner of said stock from the time when she was fraudulently deprived of
Case #14 Strong v. Gutierrez Rupide (G.R. No. L-7154 it until the time it was returned to her as fully and as completely as she was
February 21, 1912) after the adjudication of the title and return of the stock itself. Whoever,
therefore, during that period collected the dividends upon the said stock
FACTS: took from the plaintiff something which belonged to her.
• Eleanor Erica Strong, was the owner of 800 shares of the capital stock of
the Philippine Sugar Estates Development Company, Limited, that was Case #15 Katigbak v. Tai Hung Co. (G.R. No. L-29917. December 29,
thereafter found to have been obtained fraudulently by Francisco Gutierrez 1928
Repide.

• Plaintiff’s commenced an action asking that the fraudulent sale be declared DOCTRINE: While it is true that a power of attorney not recorded in the
null and void and that they be returned to her, which was ruled in her favor. registry of deeds is ineffective in order that an agent or attorney-in-fact may
validly perform acts in the name of his principal, and that any act performed
by the agent by virtue of said power with respect to the land is ineffective

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against a third person who, in good faith, may have acquired a right thereto, Barreto Po Ejap prevents the sale made by the latter of the litigated land in
it does, however, bind the principal to acknowledge the acts performed by favor of Jose M. Katigbak from being recorded in the registry of deeds, it is
his attorney-in-fact regarding said property not ineffective to compel Tecsi to acknowledge said sale.

FACTS: • The record contains many indications that Po Tecsi was not unaware of said
Principal: Po Tecsi sale. His several letters complaining of the pressing demands of his brother
Agent: Gabino Barreto Po Ejap Gabino Barreto Po Ejap to send him the rents of the land, his promises to
Buyer: Katigbak send them to him, and the remittance of the same were a tacit
acknowledgment that he occupied the land in question no longer as an
• Po Ejap was the owner of the land in litigation. owner but only as lessee.

• In November 1921, Po Tecsi executed a general power of attorney in favour • The sale made on November 22, 1923, by Gabino Barreto Po Ejap, as
of his brother Po Ejap. attorney-in-fact of Po Tecsi, in favor of Jose M. Katigbak of the land in
question is valid
• In April 1923, Po Ejap sold the land in litigation with its improvements to his
brother Po Tecsi. • By virtue whereof, and with the modifications above indicated, the
judgment appealed from is affirmed, without special pronouncement as to
• In November 1923, Po Ejap, making use of the power conferred on him by costs. So ordered.
his brother Po Tecsi, sold absolutely the aforesaid land with its
improvements to herein plaintiff-appellee Katigbak.
Case #16 Chua v. IAC (G.R. No. 70909 January 5, 1994)
• Notwithstanding said sale Po Tecsi remained in possession of said property
and leased a part of said land to Uy Chia for a period of five years from
October 1, 1923. The contract drawn up to that end was recorded in the
Case #17 Dungo vs. Lopena (G.R. No. L-18377 December 29, 1962)
proper certificate of title

• In February 1927, Po Tecsi’s son Po Sun Suy was appointed administrator of Doctrine: Although the Civil Code expressly requires a special power of
the estate of Po Tecsi. attorney in order that one may compromise an interest of another, it is
neither accurate nor correct to conclude that its absence renders the
• In May 1927, Katigbak sold the property in question to Po Sun Boo, Po compromise agreement void. In such a case, the compromise is merely
Ejap’s son who then informed Po Sun Suy and Po Ching about the purchase unenforceable. This results from its nature is a contract. It must be governed
and that they were to deal with him concerning the payment of their rents: by the rules and the law on contracts.
Po Sun Suy as administrator of Po Tecsi who continued renting the property
in which stood Po Ching’s store. FACTS:
1. Petitioner Anastacio Duñgo and one Rodrigo S. Gonzales purchased 3
• As Po Tecsi had not paid part of the rent due until his death, and Po Sun parcel of land from the respondents Adriano Lopena and Rosa Ramos with
Suy had not paid the rent due from his father's death until Katigbak the agreement that the balance of P241,804.00 would be paid in 6 monthly
transferred the ownership of the property to Po Sun Boo on May 23, 1927, installments.To secure the payment, petitioners executed over the same 3
Katigbak filed an action in CFI-Manila for the recovery of said rent which parcels of land Deed of Real Estate Mortgage in favor of the respondent
amounts to P45,280, first against the commercial firm Tai Hing Company, and Adriano Lopena and Rosa Ramos.
later against the members of said firm, Po Sun Suy and Po Ching, by an
amendment to the original complaint. 2. Respondents Adriano Lopena and Rosa Ramos, filed a complaint for the
foreclosure of the aforementioned real estate mortgage with the Court of
• Po Sun Suy, as the judicial administrator of the estate of Po Tecsi, filed an First Instance of Rizal the Hon. Judge Andres Reyes, presiding. Meanwhile,
intervention praying that judgment be rendered against plaintiff Katigbak, there were 2 other civil cases filed in the same lower court against the same
declaring him not to be the owner of the property and therefore, not entitled defendants Anastacio Duñgo and Rodrigo S. Gonzales.
to the rents of the property in question
3. Before the cases could be tried, a compromise agreement dated January
• Po Sun Suy and Po Ching contended that Po Ejap was not authorized under 15, 1960 was submitted to the lower court for approval. It was signed by
the power executed by Po Tecsi to sell said land, for the reason that said herein respondents Adriano Lopena and Rosa Ramos on one hand, and
power had been executed before Po Ejap sold said land to Po Tecsi. Rodrigo S. Gonzales, on the other. It was not signed by the herein petitioner.
However, Rodrigo S. Gonzales represented that his signature was for both
COURT OF FIRST INSTANCE himself and the herein petitioner. Moreover, Anastacio Duñgo's counsel of
• Question of Ownership being raised by the intervenors. record, Atty. Manuel O. Chan, the same lawyer who signed and submitted for
• The power is general and authorizes Gabino Po Ejap to sell any kind of him the answer to the complaint, was present at the preparation of the
realty "belonging" (pertenezcan) to the principal. The use of the subjunctive compromise agreement and this counsel affixed his signature thereto.
"pertenezcan" (might belong) and not the indicative "pertenecen" (belong),
means that Po Tecsi meant not only the property he had at the time of the 4. May 3, 1960, a so-called Tri-Party Agreement was drawn. The signatories
execution of the power, but also such as he might afterwards have during the to it were Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales as
time it was in force. debtors, Adriano Lopena and Rosa Ramos (herein respondents) as creditors,
and, one Emma R. Santos as pay or.
ISSUE: Whether or Not Po Ejap was authorized to sell the land in question
given that the power of agency was executed before the said land was 5. August 31, 1960, Anastacio Duñgo filed a motion to set aside all the
owned by Po Tecsi ? proceedings on the ground that the compromise agreement dated January
15, 1960 was void ab initio with respect to him because he did not sign the
RULING: same. Upon denial of the said motion to set aside, Anastacio Duñgo filed a
• YES. In the present case, while it is true that the non-registration of the Notice of Appeal from the order of August 31, 1960 approving the
power of attorney executed by Po Tecsi in favor of his brother Gabino foreclosure sale of August 25, 1960, as well as the order of December 14,

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1960, denying his motion to set aside. Soon thereafter, the lower court FACTS:
dismissed the appeal. (CFI RIZAL) 1. In 1967, HI Cement Corporation was granted authority to operate mining
facilities in Bulacan. However, the areas allowed for it to explore cover areas
ISSUE/S: which were also being explored by Ignacio Vicente, Juan Bernabe, and
(1) Was the compromise agreement of January 15, 1960, the Order of the Moises Angeles. And so a dispute arose between the three and HI Cement as
same date approving the same, and, all the proceedings subsequent thereto, neither side wanted to give up their mining claims over the disputed areas.
valid or void insofar as the petitioner herein is concerned? YES
(2) Did the lower court abuse its discretion when it dismissed the appeal of 2. Eventually, HI Cement filed a civil case before CFI Bulacan against the
the herein petitioner? NO three. During pre-trial, the possibility of an amicable settlement was
explored where HI Cement offered to purchase the areas of claims of Vicente
RULING: et al at the rate of P0.90 per square meter. Vicente et al however wanted
Although the Civil Code expressly requires a special power of attorney in P10.00 per square meter.
order that one may compromise an interest of another, it is neither accurate
nor correct to conclude that its absence renders the compromise agreement 3. In 1969, the lawyers of HI Cement agreed to enter into a compromise
void. In such a case, the compromise is merely unenforceable. This results agreement with the three whereby commissioners shall be assigned by the
from its nature is a contract. It must be governed by the rules and the law on court for the purpose of assessing the value of the disputed areas of claim.
contracts. An assessment was subsequently made pursuant to the compromise
agreement and the commissioners recommended a price rate of P15.00 per
ART. 1403. The following contracts are unenforceable, unless they are square meter.
ratified:
4. One of the lawyers of HI Cement, Atty. Francisco Ventura, then notified
(1) Those entered into in the name of another person by one who has been the Board of Directors of HI Cement for the approval of the compromise
given no authority or legal representation, or who has acted beyond his agreement. But the Board disapproved the compromise agreement hence
powers; Atty. Ventura filed a motion with the court to disregard the compromise
agreement.
The ratification of the compromise agreement was conclusively established
by the Tri-Party Agreement of May 1960. It is to be noted that the 5. Vicente et al naturally assailed the motion. Vicente et al insisted that the
compromise agreement was submitted to and approved by the lower court compromise agreement is binding because prior to entering into the
January 15, 1960. Now, the Tri-Party Agreement referred itself to that order compromise agreement, the three lawyers of HI Cement declared in open
when it stipulated thus: court that they are authorized to enter into a compromise agreement for HI
Cement; that one of the lawyers of HI Cement, Atty. Florentino Cardenas, is
“WHEREAS, the MAYOR, hereby submits and binds herself to the force and an executive official of HI Cement; that Cardenas even nominated one of the
effect of the order dated January 15, 1960, of the Court of First Instance of commissioners; that such act ratified the compromise agreement even if it
Pasig, Rizal, Branch which order is hereby made an integral part of this was not approved by the Board.
agreement as Annex "A".l”
6. HI Cement, in its defense, averred that the lawyers were not authorized
The Tri-Party Agreement was an instrument intended to render effective the and that in fact there was no special power of attorney executed in their
compromise agreement. It merely complemented an ratified the same. That favor for the purpose of entering into a compromise agreement.
a third person was involved in it is inconsequential. Nowhere in the new
agreement may the release of the herein petitioner be even inferred. 7. Judge Ambrosio Geraldez ruled in favor of HI Cement.

The compromise agreement was validity and enforceable against the herein ISSUE: Whether or not a compromise agreement entered into by a lawyer
petitioner, it follows that the lower court committed no abuse of discretion purportedly in behalf of the corporation is valid without a written authority.
when it dismissed the appeal of the herein petitioner.
RULING: NO.
1. The Compromise Agreement dated January 30, 1969 was signed only by
Case #18 Vicente vs. Geraldez (G.R. No. L-32473 July 31, 1973) the lawyers for petitioners and by the lawyers for private respondent
corporation. It is not disputed that the lawyers of respondent corporation
DOCTRINE: had not submitted to the Court any written authority from their client to
1. Special powers of attorney are necessary, among other cases, in the enter into a compromise.
following: to compromise and to renounce the right to appeal from a
judgment.1 Attorneys have authority to bind their clients in any case by any The Rules3 "require, for attorneys to compromise the litigation of their
agreement in relation thereto made in writing, and in taking appeals, and in clients, a special authority. And while the same does not state that the
all matters of ordinary judicial procedure, but they cannot, without special special authority be in writing the court has every reason to expect that, if
authority, compromise their clients' litigation, or receive anything in not in writing, the same be duly established by evidence other than the self-
discharge of their clients' claims but the full amount in cash. serving assertion of counsel himself that such authority was verbally given
him."
2. The Rules "require, for attorneys to compromise the litigation of their
clients, a special authority. And while the same does not state that the 2. In private respondent's "Reply to Defendant Bernabe's Answer Dated
special authority be in writing the court has every reason to expect that, if November 8, 1969," said counsels categorically denied that they ever
not in writing, the same be duly established by evidence other than the self- represented to the court that they were authorized to enter into a
serving assertion of counsel himself that such authority was verbally given compromise. In any event, assuming arguendo that they did, such a self-
him." serving assertion cannot properly be the basis for the conclusion that the
respondent corporation had in fact authorized its lawyers to compromise the
3. Law specifically requires that "juridical persons may compromise only in litigation.
the form and with the requisites which may be necessary to alienate their
property." 3. Whatever authority the officers or agents of a corporation may have is
derived from the board of directors, or other governing body, unless

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conferred by the charter of the corporation. A corporation officer's power as RULING: YES.
an agent of the corporation must therefore be sought from the statute, the
charter, the by-laws, or in a delegation of authority to such officer, from the In this is a case where 132 checks made out in the name of the Insular Drug
acts of board of directors, formally expressed or implied from a habit or Co., Inc., were brought to the branch office of the Philippine National Bank in
custom of doing business. In the case at bar no provision of the charter and Iloilo by Foerster, a salesman of the drug company, Foerster's wife, and
by-laws of the corporation or any resolution or any other act of the board of Foerster's clerk. The bank could tell by the checks themselves that the money
directors of HI Cement Corporation has been cited, from which We could belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his
reasonably infer that the administrative manager had been granted expressly clerk.
or impliedly the power to bind the corporation or the authority to
compromise the case. Absent such authority to enter into the compromise, When the bank credited those checks to the personal account of Foerster
the signature of Atty. Cardenas on the agreement would be legally and permitted Foerster and his wife to make withdrawals without there
ineffectual. being made authority from the drug company to do so, the bank made itself
responsible to the drug company for the amounts represented by the checks.
4. In order to ratify the unauthorized act of an agent and make it binding on
the corporation, it must be shown that the governing body or officer The bank could relieve itself from responsibility by pleading and proving that
authorized to ratify had full and complete knowledge of all the material facts after the money was withdrawn from the bank it passed to the drug
connected with the transaction to which it relates.9 It cannot be assumed company which thus suffered no loss, but the bank has not done so. Much
also that Atty. Cardenas, as administrative manager of the corporation, had more could be said about this case, but it suffices to state in conclusion that
authority to ratify. For ratification can never be made "on the part of the bank will have to stand the loss occasioned by the negligence of its agents.
corporation by the same persons who wrongfully assume the power to make
the contract, but the ratification must be by the officer or governing body
having authority to make such contract and, as we have seen, must be with Case #20 Equitable PCIBank vs. Ku (G.R. No. 142950. March 26,
full knowledge." 2001)


Case #19 Insular Drug Co. v. National Bank (G.R. No. L-38816 FACTS:
November 3, 1933) 1. Respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku
Giok Heng, as Vice-President/General Manager of the same corporation
incurred a loan from Equitable PCI. As a security, they mortgaged their
DOCTRINE: The right of an agent to indorse commercial paper is a very property a residential house and lot located in La Vista, Quezon City.
responsible power and will not be lightly inferred. A salesman with authority
to collect money belonging to his principal does not have the implied 2. When respondents failed to pay the loan, Equitable foreclosed the
authority to indorse checks received in payment. Any person taking checks property extrajudicially and was issued a certificate of sale after winning in
made payable to a corporation, which can act only by agent does so at his the foreclosure sale. On the other hand, respondent failed to redeem the
peril, and must same by the consequences if the agent who indorses the property.
same is without authority
3. Petitioner instituted an action before MeTC- decision in favor of them; RTC
FACTS: dismissed the case for no merit; CA agreed with Rosita rendered a decision
1. The Insular Drug Co., Inc., is a Philippine corporation with offices in the City enjoining the eviction of respondent from the premises.
of Manila.
4. Petitioner filed a motion for extension and it was granted by SC.
2. U.E. Foerster was formerly a salesman of drug company for the Islands of
Panay and Negros. Foerster also acted as a collector for the company. He was 5. Rosita argued that the said petition is defective because the bank alleged
instructed to take the checks which came to his hands for the drug company in its petition that it received a copy of the CA decision on April 25, 2000,
to the Iloilo branch of the Chartered Bank of India, Australia and China and however, the copy "was duly delivered to and received by Joel Rosales
deposit the amounts to the credit of the drug company. Instead, the checks (Authorized Representative) on April 24, 2000."
were in that bank placed in the personal account of Foerster. Some of the
checks were drawn against the Bank of Philippine National Bank. After the ISSUE:
indorsement on the checks was written "Received payment prior Whether Joel Rozales can be considered an agent of the bank counsel and
indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel thus service to him is service to the Bank.
Padilla, Manager. As a consequence of the indorsements on checks the
amounts therein stated were subsequently withdrawn by U. E., Foerster and RULING:
Carmen E. de Foerster. Yes. An agency may be express but it may also be implied from the acts of
the principal, from his silence, or lack of action, or his failure to repudiate the
3. The Insular Drug Company claims that it never received the face value of agency, knowing that another person is acting on his behalf without
132 checks here in the question covering a total of P18,285.92. authority. Likewise, acceptance by the agent may also be express, although it
may also be implied from his acts which carry out the agency, or from his
4. The Court of First Instance of Manila requiring bank to pay to the Insular silence or inaction according to the circumstances.
Drug Co., Inc., the sum of P18,285.92 with legal interest and costs.The record
consists of the testimony of Alfred Von Arend, President and Manager of the In this case, Joel Rosales averred that "[o]n occasions when I receive mail
Insular Drug Co., Inc., and of exhibits obtained from the Philippine National matters for said law office, it is only to help them receive their letters
Bank showing transactions of U.E. Foerster with the bank. promptly," implying that counsel had allowed the practice of Rosales
receiving mail in behalf of the former. There is no showing that counsel had
5. Bank argues that the drug company was never defrauded at all. Further, objected to this practice or took steps to put a stop to it.
bank, to the effect that Foerster had implied authority to indorse all checks
made out in the name of the Insular Drug Co., Inc., has even less force.

ISSUE: WON Philippine National Bank as agent, liable.

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