Case Compilation Jan 29 Part 2

FOR January 29

G. Kinds of Agency

I. Manner of Constitution

Equitable v. Ku (March 26, 2001)
Kapunan, J. | GR No. 142950 | Implied Agency
SUMMARY: There was an ejectment case. The CA decision was sent to the building of the petitioner’s counsel. It was received by a person
(Joel Rosales) who would occasionally receive mail for them. A day beyond the reglementary period, they filed their motion for extension.
Petitioners argue that Joel Rosales was not their agent, so receipt by him should not be binding on them. However, the SC disagreed saying
that there was an implied agency. Still, the SC saw fit to suspend their rules.
DOCTRINE:
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 agency, knowing that another person is acting on his behalf without 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 silence or inaction according to the
circumstances.
FACTS
1. respondent Rosita Ku, as treasurer of Noddy Dairy Products, Inc., and Ku Giok Heng, as Vice-President/General Manager of the same
corporation, mortgaged the subject property to the Equitable Banking Corporation to secure Noddy Inc.s loan to Equitable. The property, a
residential house and lot located in La Vista, Quezon City, was registered in respondents name.
2. Noddy, Inc. subsequently failed to pay the loan so petitioner to foreclosed the property extrajudicially where it was also the winning bidder.
Respondent failed to redeem the property. A new TCT was issued in pet’s name.
3. Petitioner instituted an action for ejectment against respondents father Ku Giok Heng. Petitioner alleged that it allowed Ku Giok Heng to
remain in the property on the condition that the latter pay rent which he didnt pay. Ku Giok Heng denied that there was any lease agreement
over the property.
4. the MeTC rendered a decision in favor of petitioner and ordered Ku Giok Heng to vacate. It ruled that the defendant had not established
his right for his continued possession of or stay in the premises acquired by the plaintiff thru foreclosure, the title of which had been duly
transferred in the name of the plaintiff.
5. Ku Giok Heng did not appeal the decision of the MeTC. Instead, he and his daughter, respondent Rosita Ku, filed action before the RTC to
nullify the decision of the MeTC.
6. RTC dismissed the complaint and ordered the execution of the MeTC decision.
7. Respondent filed in the CA special civil action for certiorari. She contended that she was not made a party to the ejectment suit and was,
therefore, deprived of due process. The CA agreed and rendered a decision enjoining the eviction of respondent from the premises.
8. On May 10, 2000, Equitable PCI Bank filed in this Court a motion for an extension of 30 days from May 10, 2000 or until June 9, 2000 to
file its petition for review of the CA decision. The motion alleged that the Bank received the CA decision on April 25, 2000. The Court granted

the motion for a 30-day extension counted from the expiration of the reglementary period and conditioned upon the timeliness of the filing of
the motion for extension.
9. On June 13, 2000, Equitable Bank filed its petition, contending that there was no need to name respondent Rosita Ku as a party in the

action for ejectment since she was not a resident of the premises nor was she in possession of the property.
ISSUES and HELD

1. WON Rosita could be affected by the ejectment proceedings in which she was not made a party—— (YES)
2. WON the petition was defective for having been filed beyond the reglementary period ---- (YES but the SC disregarded the
period.)
RATIO
1.
Generally, no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment
rendered by the court. Nevertheless, a judgment in an ejectment suit is binding not only upon the defendants in the suit but also against those

not made parties thereto, if they are:

a) trespassers, squatters or agents of the defendant fraudulently occupying the property to frustrate the judgment;
b) guests or other occupants of the premises with the permission of the defendant;
c) transferees pendente lite;
d) sub-lessees;
e) co-lessees; or
f) members of the family, relatives and other privies of the defendant.
Thus, even if respondent were a resident of the property, a point disputed by the parties, she is nevertheless bound by the judgment of
the MeTC in the action for ejectment despite her being a non-party thereto. Respondent is the daughter of Ku Giok Heng, the defendant in
the action for ejectment.
2.
Resp claims that the petition is defective. The bank alleged in its petition that it received a copy of the CA decision on April 25,
2000. A Certification issued by the Manila Central Post Office reveals, however, that the copy was duly delivered to and received by Joel
Rosales (Authorized Representative) on April 24, 2000. Petitioners motion for extension to file this petition was filed on May 10, 2000, 16
days from the petitioners receipt of the CA decision (April 24, 2000) and 1 day beyond the reglementary period for filing the petition for review
(May 9, 2000).
Petitioner however maintains its honest representation of having received a copy of the decision on April 25, 2000. Appended as
Annex A to petitioners Reply is an Affidavit executed by Joel Rosales where he states that - he is an employeeUnique Industrial & Allied
Services, Inc and that Under the contract of services between the Bank and Unique, it is his official duty and responsibility to receive and
pick-up from the Manila Central Post Office the various mails, letters, correspondence, and other mail matters intended for the banks various
departments and offices at Equitable Bank Building. While he is not an employee of the law office, he occasionally receives mail matters for
said law office to help them receive their letters promptly. He received the CA letter on April 24, erroneously marked that he received it on
April 25, and it was transmitted to the law office on April 27.
Petitioner argues that receipt on April 25, 2000 by Joel Rosales, who was not an agent of its counsels law office, did not constitute
notice to its counsel, as required by Sections 2 and 10, Rule 13 of the Rules of Court.
Petitioner submits that actual receipt by its counsel was on April 27, 2000, not April 25, 2000. Following the argument to its logical
conclusion, the motion for extension to file the petition for review was even filed 2 days before the lapse of the 15-day reglementary period.
The Affidavit of Joel Rosales states that he is not the constituted agent of Curato Divina Mabilog Nedo Magturo Pagaduan Law Office.
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 agency, knowing that another person is acting on his behalf without 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 silence or inaction according to the
circumstances. In this case, Joel Rosales averred that on occasions when I receive mail matters for said law office, it is only to help them
receive their letters promptly, implying that counsel had allowed the practice of Rosales receiving mail in behalf of the former. There is no
showing that counsel had objected to this practice or took steps to put a stop to it.
However, the SC here chose to suspend its own rules considering the merits of the petition.
DISPOSITIVE
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The decision of the Court of Appeals is REVERSED.

Atty. Calibo vs CA and Dr. Pablo Abella (Jan. 29, 2001)
Quisimbing | GR No. 120528 | Kinds of Agency - Manner of Constitution

SUMMARY:
Respondent Pablo Abella owned a tractor to use in his farm. One day he gave it to his son Mike to keep in
his garage for safekeeping. Mike was in arrears for the payment of his monthly rent and utilities cost. To
secure the payment of his debt, he pledged the tractor to Calibo, his landlord. When Pablo came to
reclaim his tractor Calibo demanded payment first so Pablo left empty handed. Calibo argued that a
principal-agency may be implied from the alleged acquiescence of Pablo but following an action filed for
replevin, the SC held that no agency relation existed.

DOCTRINE:
For an agency relationship to be deemed implied (in accordance with Art. 1869), the principal must know
that another person is acting on his behalf without authority

FACTS
1. 25JAN1979 - Abella purchased an MF 210 agricultural tractor which he used in his farm in
Dagohoy, Bohol.
2. OCT/NOV1985 - his son, Mike, rented for residential purposes the house of Calibo in Tagbilaran
City
3. OCT1986 - Pablo pulled out his tractor from his farm and left it in the safekeeping of his son who
kept it in the garage of the house he was leasing from Calibo
4. Mike had initially religiously paid for rentals but in NOV1986 he stopped. Calibo learned the next
month that Mike never paid for his electric and water consumption which Calibo was duty-bound to
shoulder. Calibo confronted him about his arrearages and Mike told him that he would only be
staying until the end of DEC1986. Mike also assured him that he would settle his accounts and
offered the tractor as security, even asking Calibo to help him find a buyer for the tractor so he
could pay sooner.
5. JAN1987 - when a new tenant moved into the house, Calibo had the tractor moved to the garage
of his father’s house also in Tagbilaran City.
6. Calibo thrice went to Mike’s address in Cebu City to collect payment but was not able to talk to
Mike who was reportedly out of town. On his third trip, he informed them that there was a buyer
for the tractor but this sale did not push through.
7. Calibo was finally able to confront Mike who reassured Calibo that the tractor would guarantee his
payment and this was the last time Calibo saw or heard from Mike.
8. 22NOV1988 - Pablo came to take possession of the tractor and was then informed that it was
being used as security for Mike’s obligation. He offered to pay with a check for P2000 and
postdated checks to cover the utilities but Calibo would only accept it if a promissory note was
also executed to cover the utilities. Pablo wasn’t amenable and left without the tractor.
9. Pablo instituted an action for replevin, claiming ownership of the tractor and seeking to recover its
possession. TC ruled in his favor.
10. CA affirmed: Mike could not have validly pledged the subject tractor to Calibo since he wasn’t the
owner, neither was he authorized to pledge it. It also cannot be considered a deposit since the
primary purpose of a deposit is only safekeeping.

P: even if Mike wasn’t the owner, a principal-agent relationship may be implied between Mike and Pablo
since the latter failed to repudiate the agency knowing that his son was acting on his behalf without
authority when he pledged the tractor. Under 1911 NCC, Pablo is bound by the pledge even if went beyond
the granted authority since he allowed his son to act as though he had full powers

ISSUES and HELD
1. w/n a principal-agent relationship may be implied — NO

RATIO
1. in a contract of pledge, the creditor is given the right to retain the debtor’s movable property in his
possession or in that of a third person to whom it has been delivered until the debt is paid.
○ for this contract to be valid, it’s necessary that (1) the pledge is constituted to secure the
fulfilment of a principal obligation (2) the pledgor be the absolute owner of the thing
pledged (3) the person constituting the pledge has the free disposal of his property and in
the absence thereof, that he be legally authorized for the purpose
○ HERE Mike was not the absolute owner of the tractor. It was left with him for safekeeping.
Since the 2nd requisite is missing, no valid pledge.
1. there was no agency
○ as stated by the CA: for an agency relationship to be deemed implied (in accordance with
Art. 1869), the principal must know that another person is acting on his behalf without
authority. HERE, Pablo said that the he only left the tractor with Mike for safekeeping.
Mike then clearly acted without Pablo’s authority and knowledge
○ 1911 mandates that the principal is solidarily liable with the agent if the former allowed
the latter to act as though he had full powers
■ since Pablo wasn’t aware that Mike pledged the tractor, he couldn’t have allowed
Mike to pledge it as if he had full powers to do so.
○ No valid deposit
■ in a contract of deposit, a person receives an object belonging to another for
safekeeping. Calibo himself stated that he received the tractor as a form of
security. This therefore is not a deposit.
○ Calibo had no right to refuse the delivery of the tractor to its lawful owner who had every
right to repossess it.

DISPOSITIVE
WHEREFORE, the instant petition is DENIED for lack of merit, and the decision of the Court of Appeals in
CA-G.R. CV No. 39705 is AFFIRMED. Costs against petitioner.

DE LA PENA(December 19, 2006)
Torres | GR No. L-5486 | Kinds of Agency - Implied

SUMMARY: Federico Hidalgo administered certain properties of the deceased father of the plaintiff by
virtue of a power of attorney. He had to leave the Philippines due to a serious illness and was cosntrained
to abandon his role as agent. Hence, he turned over the administration to his cousin Antonio. He did so
without the prior consent of the principal. However, he did inform the principal of the same through a letter
but the latter did not respond nor take any other action. The court ruled that the agency of the defendant
was renounced and that he cannot be made liable for the results of the administration of the succeeding
agents. It ruled that an implied agency was created in favor of Antonio through the silence of the principal
despite his knowledge of the circumstances.

DOCTRINE: The implied agency is founded on the lack of contradiction or opposition, which constitutes
simultaneous agreement on the part of the presumed principal to the execution of the contract, while in
the management of another's business there is no simultaneous consent, either express or implied, but a
fiction or presumption of consent because of the benefit received.

FACTS
1. Before the deceased embarked for Spain, he executed a notarized power of attorney in favor of Federico
Hidalgo, and 3 others, so that, as his agents, they might represent him and administer, various properties
he owned in Manila
2. After several years Federico wrote the deceased requesting him to designate a person who might
substitute him
3. Federico stated that the deceased did not even answer his letters, to approve or object to the former's
accounts, and did not designate another person who might substitute
4. For health reasons, Federico was obliged to go to Spain, and, on preparing for his departure, he
rendered the accounts of his administration through a letter( March 22 ,1894)
a. he informed the deceased of his intended departure and of his having turned over the
administration to his cousin, Antonio Hidalgo, upon whom he had conferred a general power of
attorney, but asking, in case that this was not sufficient, that the deceased send a new power of
attorney
5. the administration of the property mentioned, from the time its owner left these Islands and returned to
Spain, lasted from November 18, 1887, to January 7, 1904
a. from Nov. 18, 1887, to Dec. 31, 1893 by his agent, Federico, under power of attorney;
b. from Jan. 1, 1894, to Sep 1902, by Antonio
c. from Oct, 1902, to Jan 7, 1904, by Francisco
6. The original complaint was filed by the plaintiff Jose dela Peña y De Ramon (Jose) against Federico,
Antonio, and Francisco Hidalgo, the 3 persons who had successively administered the property of Jose de
la Peña y Gomiz( deceased);
7. Jose, as the judicial administrator of the estate of his father Jose de la Peña y Gomiz, filed a 2nd
amended complaint solely against Federico
8. CFI ruled in favor of the plaintiff for the sum of P13,606.19 and legal interest from the date of the filing
of the complaint on May 24, 1906, and the costs of the trial.
9. Federico filed a motion for new trial, alleging the discovery of new evidence. (Granted)
10. Jose filed a third amended complaint alleging four causes of action
11. After the new trial was held, the court found that Federico owed the plaintiff the amount of P37084.93
but that the latter had owed the plaintiff the amount of P10,155 which he is entitled to deduct from his
debt.

ISSUES and HELD
1. WON an implied agency was created in favor of Antonio Hidalgo--- (YES)
2. WON Federico should be made liable for for the results of the administration after he had
turned over the same to Antonio Hidalgo--- (NO)

RATIO
1. in spite of the denial of the plaintiff and of his averment of his not having found the original letter of
March 22, 1894, justice demands that it be concluded that this letter, was sent to, and was received by
the deceased during his lifetime
a. on the introduction of a copy thereof by the Federico at the trial, it was admitted without
objection
b. In its transmittal, the last partial accounts of Federico's administration and the general resume
of balances were included
c. the plaintiff found among his deceased father's papers the said resume. this shows that it was
received by the deceased together with the March 22, 1894 letter,
d. Father Gomiz, affirms that he saw among the papers of the deceased, several letters of
Federico, the dates of which ran from 1890 to 1894;
e. it is also shown by the record that Federico positively asserted that the said letter was the only
one that he wrote to the deceased during the year 1894;
2. it is deduced that the deceased was informed of the departure of his agent and of the latter's having
turned over the administration of the property to Antonio Hidalgo, and of his agent's the defendant's
petition that he send a new power of attorney to the substitute.
3. Although in the March 22, 1894 letter, the word "renounce" was not employed in connection with the
agency or power of attorney executed in his favor, from the procedure followed by the agent, Federico
Hidalgo, it is logically inferred that he had definitely renounced his agency,
4. This renouncement was confirmed by the subsequent procedure
a. the principal Peña did not disapprove the designation of Antonio Hidalgo, nor did he appoint
another, nor send a new power of attorney to the same,
b. the record contains no proof that Federico, since he left these Islands and until he returned,
took any part in the administration of the principal's property
6. From all of these it is perfectly concluded that Antonio Hidalgo acted in the matter of the administration
of the property virtue of an implied agency derived from the latter, in accordance with the provisions of
article 1710 of the Civil Code.
7. The proof of the tacit consent of the principal, consists in his inaction for 9 years, knowing the
circumstances
8. Consequently the second administrator must be considered as a legitimate agent of the principal, as a
result of the tacit agreement on the latter's part, and the previous agent, who necessarily abandoned and
ceased to hold his position, as completely free and clear from the consequences and results of the
second administration, continued by a third party and accepted by his principal;
9. In the power of attorney executed by the deceased, in favor of Federico Hidalgo, no authority was
conferred upon the latter by his principal to substitute the power or agency in favor of another person;
a. The designation of Antonio Hidalgo was not made as a result of substitution of the power of
attorney executed by Peña in favor of the defendant,
b. the general power of attorney which Federico Hidalgo had left, executed in favor of his cousin
Antonio, was so executed in his own name and for his own affairs, and not in the name of the
deceased.
10.The defendant Federico Hidalgo is only liable for the results and consequences of his administration
during the period when the said property was in his charge,
11. With respect to the responsibility contracted by the defendant, as regards the payment of the balance
shown by the accounts rendered by him, it is not enough that the agent should have satisfactorily
rendered the accounts pertaining to his trust, but it is also indispensable that it be proved that he had
paid to his principal, or to the owner of the property administered, the balance resulting from his accounts.
a. This balance, which was allowed in the judgment appealed from, amounts to P6,774.50,
according to the proofs adduced at the trial.
b. It was the imperative duty of Federico, to transmit this sum to his principal, as the final
balance of the accounts of his administration, and by his failure to do so and by delivery of the
said sum to his successor, he acted improperly, and must pay the same

DISPOSITIVE
The judgment appealed from, together with that part thereof relative to the statement it contains
concerning the equivalence between the Philippine peso and the Mexican peso, is affirmed in so far as it
is in agreement with the findings of this decision, and the said judgment is reversed in so far as it is not in
accordance herewith. No special finding is made as to costs assessed in either instance, and to the
plaintiff is reserved any right that he may be entitled to enforce against Antonio Hidalgo.

DOMINGA CONDE vs. THE HONORABLE COURT OF APPEALS
December 15, 1982
|G.R. No. L-40242 | Kinds of Agency (Implied)

SUMMARY:
Margarita, Bernardo, Dominga (Condes) sold the land with right to repurchase within 10 years from date of
sale to Pasagui (married to Pio Altera). Son in law (Paciente Cordero) of Pio Altera later Memorandum of
Repurchase in representation of his father-in-law Pio Altera to Dominga Conde. Pio Altera much later on,
after the execution of that MOR, sold the disputed land to Ramon and Catalina Condes (also one of the
Condes’ heirs). Dominga filed for quieting of title against the respondents. Lower court decided in favor of
the respondents which was upheld by CA. SC reverse and set aside the decision and ruled in favor of
Dominga.

DOCTRINE:

An implied agency maybe held to have been created from silence or lack of action, or one’s failure to
repudiate the agency.

FACTS:
1. April 1938- Margarita, Bernardo, Dominga Conde, as heirs of Santiago Conde, sold with right of
repurchase, within ten (10) years from said date, a parcel of agricultural land to Casimira Pasagui,
(married to Pio Altera)
2. April 1945- Memorandum of Repurchase was executed by Paciente Cordero in favor Dominga Conde
who said to have paid the repurchase money by herself. Neither of the vendees-a-retro, Pio Alteria nor
Casimiri Pagui, signed the MOR. Paciente claimed that it’s Pio was very ill at that time and mother in law
was in Manila
3. June 1965- Pio sold the same land to Condes- Ramon and Catalina which triggered Dominga to file
for quieting of title and declaration of ownership in favor of the respondents.
4. Argument of respondents: the document signed by Paciente was merely to show that he has no
objection to the repurchase. That Paciente did not actually received the repurchase money in as much as
he no authority from his parents-in-law to do the same.
5. Lower Court decided for the respondents and this was affirmed by CA reasoning that the document
doesn’t show that Paciente was specifically authorized to act for and on behalf of Pio Altera.

ISSUES and HELD:

Whether or not Dominga Conde validly repurchase the lot? YES.

RATIO:

There is no question that neither of the vendees-a-retro signed the "Memorandum of Repurchase", and
that there was no formal authorization from the vendees for Paciente Cordero to act for and on their
behalf.
Of significance, however, is the fact that from the execution of the repurchase document in 1945,
possession, which heretofore had been with the Alteras, has been in the hands of petitioner as stipulated
therein. Land taxes have also been paid for by petitioner yearly from 1947 to 1969. If, as opined by both
the Court a quo and the Appellate Court, petitioner had done nothing to formalize her repurchase, by the
same token, neither have the vendees-a-retro done anything to clear their title of the encumbrance therein
regarding petitioner's right to repurchase. No new agreement was entered into by the parties as stipulated
in the deed of pacto de retro, if the vendors a retro failed to exercise their right of redemption after ten
years. If, as alleged, petitioner exerted no effort to procure the signature of Pio Altera after he had
recovered from his illness, neither did the Alteras repudiate the deed that their son-in-law had signed.
Thus, an implied agency must be held to have been created from their silence or lack of action, or their
failure to repudiate the agency.

Private respondents Ramon and Catalina Conde, to whom Pio Altera sold the disputed property in 1965,
assuming that there was, indeed, such a sale, cannot be said to be purchasers in good faith. The contract
in the name of the Alteras specifically contained the condition that it was subject to the right of repurchase
within 10 years from 1938. Although the ten-year period had lapsed in 1965 and there was no annotation
of any repurchase by petitioner, neither had the title been cleared of that encumbrance. The purchasers
were put on notice that some other person could have a right to or interest in the property. It behooved
Ramon Conde and Catalina Conde to have looked into the right of redemption inscribed on the title, and
particularly the matter of possession, which, as also admitted by them at the pre-trial, had been with
petitioner since 1945.

DISPOSITIVE

Court of Appeals is hereby REVERSED and SET ASIDE, and petitioner is hereby declared the owner of the
disputed property.

II. According to Form

GOZUN v. MERCADO (December 19, 2006)
Carpio Morales | GR No. 167812 | Kinds of Agency - Implied

SUMMARY: Respondent’s sister-in-law, Lilian, obtained a cash advance from the petitioner. Petitioner
claims that Lilian acted as the respondent’s agent. The Court ruled for the respondent on this issue. It
stated that a special power of attorney is necessary for an agent to borrow money. The requirement of
special power of attorney may be established by evidence if it is not written. Petitioner failed to prove it as
his statement failed to state if Lilian was an agent of the respondent or of the respondent’s wife. The
receipt of the cash advance was also signed by Lilian only.

DOCTRINE: Generally, the agency may be oral, unless the law requires a specific form. However, a special
power of attorney is necessary for an agent to borrow money, unless it be urgent and indispensable for the
presentation of the things which are under administration. The requirement of special power of attorney
refers to the nature of the authorization and not to its form. If the special authority is not written, then it
must be duly established by evidence.

FACTS
1. Respondent Teofilo Mercado aka Don Pepito ran for a gubernatorial post in the 1995 local elections in
Pampanga.
2. Upon respondent’s request, petitioner Jesus Gozun, owner of JMG Publishing house, submitted to
respondent draft samples and price quotation of campaign materials.
3. Petitioner claims that respondent’s wife told him that respondent already approved the quotation and
that petitioner could already start printing the campaign materials. Petitioner also availed of the services
of the publishing houses of her daughter and mother due to the urgency of the matter.
4. Meanwhile, respondent’s sister-in-law, Lilian Soriano, obtained from petitioner a cash advance of
P253,000 allegedly for allowances of poll watchers who were attending a seminar. Lilian acknowledged
receipt of the amount in the diary of the petitioner.
5. Petitioner later sent the respondent a Statement of Account amounting to P2,177,906 including the
cash advance obtained by Lilian, accounts from the publishing houses of the petitioner’s mother and
daughter..
6. Respondent’s wife partially paid the petitioner P1,000,000
7. Despite repeated demands and respondent’s promise to pay, respondent failed to settle the balance of
his account to petitioner.
8. Petitioner filed a complaint against the respondent. Respondent denied having transacted with the
petitioner or entering into any contract. He alleged that the campaign materials were donations. He added
that all contracts involving his personal expenses were coursed through and signed by him. Respondent
also denied giving Lilian the authority to obtain the cash advance, as well as receiving the case advance.
9. RTC: Ruled for the petitioner
10. CA: Reversed RTC. No evidence that shows that Lilian was authorized to borrow money on
respondent’s behalf. On the monetary claims for the other publishing houses, the two publishing houses
were not impleaded as parties and it was not shown that the petitioner was authorized to prosecute the
same in their behalf. For the claims of the petitioner, since respondent’s wife paid him, it has already
been settled.

ISSUES and HELD
1. WON there was no evidence, other than the petitioner’s testimony to prove that Lilian was
authorized by the respondent to receive the cash advance from the petitioner (YES)

RATIO
1. Contracts entered into in the name of another person by one who has been given no authority or legal
representation or who has acted beyond his powers are classified as unauthorized contracts and declared
unenforceable, unless they are ratified.

2. Generally, the agency may be oral, unless the law requires a specific form. However, a special power of
attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent and
indispensable for the presentation of the things which are under administration. Therefore, in this case,
the special power of attorney is necessary.

3. In Lim Pin v. Liao Tian et. al., it was held that the requirement of special power of attorney refers to the
nature of the authorization and not to its form. If the special authority is not written, then it must be duly
established by evidence. In this case, petitioner failed to establish it by evidence.

> Petitioner submits that his testimony is sufficient to establish that respondent has authorized Lilian to
obtain a loan from him. However, petitioner’s testimony failed to state whether the loan was made on
behalf of the respondent or of his wife. The statement of account also stated that the amount was
received by Lilian in behalf of Mrs. Annie Mercado.
> Petitioner also submits that respondent informed him that he had authorized Lilian to obtain the loan.
Hence, following Macke v. Camps, while holds that one who clothes another with apparent authority as his
agency, and holds him out to public as such, respondent cannot be permitted to deny the authority. The
court found, however, that the receipt Lilian signed was in her name alone. She thus bound herself in her
personal capacity and not as an agent.

DISPOSITIVE
The decision of the CA was reversed. Respondent was asked to pay total cost of printing materials only.
Amount advanced by Lilian was not included.

MACTAN-CEBU

Mactan-Cebu International Airport v. Unchuan
Mendoza, J. | GR No. 182537 | Kinds of Agency; According to form; written

SUMMARY:

Unchuan bought land from co-owners. He subsequently found out that Atanacio, a co-owner of the land
supposedly acting as atty-in-fact of all the co-owners, sold the land to CAA (predecessor of petitioner MCIAA).
SC ruled that the sale between Atanacio and CAA was valid only as to Atanacio’s own share, but void with
respect to the other heirs because there was no written authority required under NCC 1874.

DOCTRINE:

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall
be in writing; otherwise, the sale 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, either to conduct the
general business of the principal or to execute a binding contract containing terms and conditions which are
in the contract he did execute. A special power of attorney is necessary to enter into any contract by which
the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration.
The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell
must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act
mentioned. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so
express the powers of the agent in clear and unmistakable language. When there is any reasonable doubt
that the language so used conveys such power, no such construction shall be given the document.

FACTS
1. Lots No. 4810-A and 4810-B were registered under the names of the heirs of Eugenio Godinez.
2. Unchuan purchased from the heirs the Lots through several deeds of sale.
3. However, Unchuan found out that Atanacio Godinez, the supposed attorney-in-fact of all the
registered owners and their heirs, already sold both lots to Civil Aeronautics Administration (CAA),
the predecessor of MCIAA;
4. Unchuan filed a complaint for Partial declaration of nullity alleging that he is the rightful owner of the
subject lot as the sale to CAA was null and void because
1. the registered owners and their heirs did not authorize Atanacio to sell their undivided
shares in the subject lots in favor of CAA;
2. that no actual consideration was paid;
3. that the deed of absolute sale did not bear the signature of the CAA representative;
4. and that his predecessors-in-interest merely tolerated the possession by CAA and, later, by
MCIAA
5. MCIAA filed an MTD on the ground of laches but this was denied.
6. The RTC ruled for Unchuan and held that Atanacio was not legally authorized to act as the
attorney-in-fact of his brothers and sisters and to transact on their behalf because he was not clothed
with a special power of attorney granting him authority to sell the disputed lots. CA affirmed this.
7. MCIAA filed an MR on the basis of newly discovered evidence
1. certified true copy of the Deed of Absolute Sale executed between Atanacio Godinez and the
Republic, represented by CAA, with the signature of then Administrator Caldoza showing
that the vendee consented to the sale;
2. certified true copy of the Joint Affidavit of Confirmation of Sale of Alloted Shares Already
Adjudicated and Quitclaim executed by the other heirs who did not sign the Deed of Partition
acknowledging the sale;
3. certified true copy of the Provincial Voucher with attachments showing that there was
payment of the purchase price.
8. CA denied MCIAA’s MR, ruling that there was no competent evidence to prove that all of the
registered owners gave their consent to the sale through their attorney-in-fact or that the CAA
through its authorized representative gave his approval to the sale or that there was consideration.

ISSUES and HELD
1. WON the sale transaction executed between Atanacio, acting as an agent of his fellow registered
owners, and the CAA was void (YES, IT WAS PARTIALLY VOID)

They were represented without a written authority from them in violation of the requirement under NCC 1874
and 1878(5)

(SEE DOCTRINE)

Without a special power of attorney specifying his authority to dispose of an immovable, Atanacio could not
be legally considered as the representative of the other registered co-owners of the properties in question.
Therefore, the sale between CAA and Atanacio could not be a valid source of obligation

The other heirs could not have given their consent as required under NCC1475 because there was no
meeting of the minds among the other registered co-owners who gave no written authority to Atanacio to
transact on their behalf. Therefore, no contract was perfected insofar as the portions or shares of the other
registered co-owners or their heirs were concerned.

The court cannot give any weight to the documents mentioned in Fact 7(2), which supposedly give the
impression that the heirs ratified the sale of the subject lots in favor of CAA. A void contract produces no
effect either against or in favor of anyone and cannot be ratified.

HOWEVER, the sale is not void as to Atanacio’s own share because under NCC 493, a co-owner is to free
dispose of his pro indiviso share as well as the fruits and other benefits arising from that share,
independently of the other co-owners. Although the sale transaction insofar as the other heirs of the
registered owners was void, the sale insofar as the extent of Atanacio's interest is concerned, remains valid.

DISPOSITIVE

WHEREFORE, the petition is PARTIALLY GRANTED. The November 29, 2007 Decision and the March 25,
2008 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 01306 are AFFIRMED with MODIFICATION.
Accordingly, the dispositive portion of the decision should read as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered declaring that:
a The Deed of Sale signed by Atanacio Godinez alienating the lands denominated as Lot No.
4810-A and Lot No. 4810-B in favor of MCIAA's predecessor-in-interest is VALID, insofar as his
undivided share in the said lots is concerned, but VOID, insofar as the undivided shares of the
other registered owners, who did not sign the deed, are concerned; and

b Plaintiff Richard E. Unchuan is the true and legal owner of portions of Lot No. 4810-A and
Lot No. 4810-B consisting of One Hundred Forty Nine Thousand Nine Hundred Thirty (149,930)
Square Meters.
The Register of Deeds of Lapu-Lapu City is hereby ordered to annotate in OCT No. RO-1173 the respective
rights of Richard E. Unchuan and the Mactan-Cebu International Airport Authority in the said property.

The Mactan-Cebu International Airport Authority is ordered to initiate expropriation proceedings over the
undivided portions of Lots No. 4810-A and 4810-B covering the said 149,930 Square Meters.

In the meantime, Mactan-Cebu International Airport Authority is ordered to pay the sum of P20.00 per square
meter per month as rental for the use of the property reckoned from the time of the filing of the complaint
until its final payment for the same.

PATRIMONIO

YOSHIZAKI

Sally Yoshizaki, Petitioner, vs. Joy Training Center of Aurora, Inc., Respondents
G.R. No. 174978; July 31, 2013

Facts:
● Richard and Linda Johnson were members of Joy Training’s Board of Trustees who sold the real
properties, a wrangler jeep, and other personal properties in favor of the spouses Sally and Yoshio
Yoshizaki. Joy Training filed an action for cancellation of sales alleging that the spouses Johnson
is without the requisite authority from the Board of Directors.
● The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the real
properties and it authorized he spouses Johnson to sell the real properties. It recognized that
there were only five actual members of the board of trustees; consequently, a majority of the
board of trustees validly authorized the sale. It also ruled that the sale of personal properties was
valid because they were registered in the spouses Johnson’s name.
● The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect to the sale
of real properties. It also ruled that the resolution is void because it was not approved by a
majority of the board of trustees.

Issue: Was there a contract of agency to sell the real properties between Joy Training and the spouses
Johnson?

Ruling:
● The SC ruled that there was no contract of agency between Joy Training and the spouses Johnson
to sell the parcel of land with its improvements.
● Art. 1868 of the Civil Code defines a contract of agency as a contract whereby a person “binds
himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter.” It may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority.
● In this case, the presented evidence did not convince the SC of the existence of the contract of
agency to sell the real properties. The certification is a mere general power of attorney which
comprises all of Joy training.
● Art. 1877 of CC clearly states that an agency couched in general terms comprises only acts of
administration, even if the principal should state that he withholds no power or that the agent may
execute such acts as he may authorize as general and unlimited management.

SPOUSES ALCANTARA
Spouses Alcantara v Nido (Apr. 19, 2010)
Carpio, J.|Gr 165133|Kinds of Agency: According to Form: Written
Summary: Nido accepted the Spouses offer to purchase a portion of the land owned by her daughter.
When the spouses defaulted, Nido filed a complaint for recovery of the possession of the land. Spouses
argued that a contract entered into by an agent involving a piece of land, without written authority is merely
voidable. SC disagreed and held that the CC explicitly requires written authority before an agent can sell
immovable property, and any contract entered into without the written authority is void.
Doctrine: Art 1874 explicitly requires written authority before an agent can sell an immovable property. A
special power of attorney is also necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired for a valuable consideration.
Facts:
1. Brigida Nido's daughter, Revelen, owned a parcel of land in Cardona, Rizal.
2. In 1984, Brigida Nido accepted the offer of the Spouses Alcantara to purchase a 200 sqm.
portion of this parcel of land.
3. The Spouses paid P3k as down payment and the balance to be paid in installment.
4. The spouses paid P17,500 before defaulting on their installment payments.
5. Nido, filed a complaint for recovery of possession with damages against the Spouses with the
RTC.
6. RTC and CA ruled that the Revelen owns the lot and Nido's authority to sell was not in writing but
merely verbal, therefore the sale is void under Art 1874.
7. In this petition, the Spouses contends that the sale by an agent who has no written authority is
not void, but merely voidable. Being voidable, the contract may be ratified, and the contract to sell
was established by Nido's admission during pre-trial conference.
1. Counterclaim: specific performance.
Issue:
1. WON the contract entered into, in representation of her daughter is void? Yes
Held:
1. Art 1874 explicitly requires a written authority before an agent can sell an immovable property.
1. In this case, there is no proof that Nido's written authority to sell the lots.
1. In fact, during pre-trial, Spouses Alcantara admitted they only found out that
Revelen was the owner of the lot during the hearing of the case.
2. Consequently, the sale by Nido without written authority is void and produces no effect
and cannot be ratified.
3. A special power of attorney is also necessary to enter into any contract in which the
ownership of an immovable is transmitted or acquired for valuable consideration. Without
any authority in writing, Nido cannot validly sell the lot, therefore any sale is void.
4. General power of Attorney which was executed 1994, authorizing Nido to enter into any
contract on behalf of Revelen cannot be the basis of the written authority to sell, since it
was executed and acknowledged in the US, and was not certified by an officer in the
foreign service of the Philippines in the US. Therefore the document has no probative
value.
5. Spouses Alcantara are not entitled to specific performance. For there to be specific
performance of a contract made with an agent, the agency must be established by clear,
certain and specific proof. In this case, there is absence of proof that Revelen authorized
Nido to sell the lot.

ESTATE OF LINO OLAGUER

* Petition for Review on Certiorari which assails the Decision of the CA which modified the Decision of the
RTC and upheld the validity of the sales of properties to respondent Emiliano M. Ongjoco.

FACTS:
The Plaintiffs are the legitimate children of the Spouses Lino and defendant Olivia Olaguer. Lino died so
Olivia was appointed administrator pursuant to a will. Later, Olivia remarried with Jose Olaguer.
Olivia and Jose proceeded to simulate a sale of the lots included in the estate some of which were bought
by Respondent Ongjoco. The Plaintiffs now seeks to annul the sales of real property and/or cancellation of
titles.
RTC in favor of Plaintiffs. CA modifies the RTC decision with respect to Ongjoco.
Petitioners agree with the pronouncement of the trial court that respondent Ongjoco could not have been a
buyer in good faith since he did not bother to verify the title and the capacity of his vendor to convey the
properties involved to him. Knowing that Olivia P. Olaguer owned the properties in 1973 and that he
merely dealt with Jose A. Olaguer as an agent in January 1976, Ongjoco should have ascertained the
extent of Joses authority, as well as the title of Virgilio as the principal and owner of the properties.
Petitioners likewise cite the following incidents that were considered by the trial court in declaring that
respondent was a buyer in bad faith, namely: (1) that Virgilio Olaguer executed an affidavit wherein he
denied having bought any property from the estate of Lino Olaguer, and that if there are documents
showing that fact, he does not know how they came about; (2) that the power of attorney referred to by
Jose A. Olaguer as his authority for the sale of Lots 1 and 2 (formerly Lots 76-B and 76-C) was not
presented or offered in evidence.

Respondent Ongjoco, on the other hand, invokes the ruling of the Court of Appeals that he was an
innocent purchaser for value. His adamant stance is that, when he acquired the subject properties, the
same were already owned by Virgilio Olaguer. Respondent insists that Jose A. Olaguer was duly authorized
by a written power of attorney when the properties were sold to him (Ongjoco). He posits that this fact
alone validated the sales of the properties and foreclosed the need for any inquiry beyond the title to the
principal. All the law requires, respondent concludes, is that the agents authority be in writing in order for
the agents transactions to be considered valid.

ISSUE: Whether or not Ongjoco can be considered an innocent purchaser for value? PARTIALLY.

HELD:
Respondent Ongjocos posture is only partly correct.

According to the provisions of Article 1874 of the Civil Code on Agency, when the sale of a piece of land or
any interest therein is made through an agent, the authority of the latter shall be in writing. Absent this
requirement, the sale shall be void. Also, under Article 1878, a special power of attorney is necessary in
order for an agent to enter into a contract by which the ownership of an immovable property is transmitted
or acquired, either gratuitously or for a valuable consideration.

We note that the resolution of this case, therefore, hinges on the existence of the written power of
attorney upon which respondent Ongjoco bases his good faith.

When Lots Nos. 1 and 2 were sold to respondent Ongjoco through Jose A. Olaguer, the Transfer
Certificates of Title of said properties were in Virgilios name. Unfortunately for respondent, the power of
attorney that was purportedly issued by Virgilio in favor of Jose Olaguer with respect to the sale of Lots
Nos. 1 and 2 was never presented to the trial court. Neither was respondent able to explain the omission.
Other than the self-serving statement of respondent, no evidence was offered at all to prove the alleged
written power of attorney. This of course was fatal to his case.

As it stands, there is no written power of attorney to speak of. The trial court was thus correct in
disregarding the claim of its existence. Accordingly, respondent Ongjocos claim of good faith in the sale of
Lots Nos. 1 and 2 has no leg to stand on.

As regards Lots Nos. 76-D, 76-E, 76-F and 76-G, Ongjoco was able to present a general power of attorney
that was executed by Virgilio Olaguer. While the law requires a special power of attorney, the general
power of attorney was sufficient in this case, as Jose A. Olaguer was expressly empowered to sell any of
Virgilios properties; and to sign, execute, acknowledge and deliver any agreement therefor. Even if a
document is designated as a general power of attorney, the requirement of a special power of attorney is
met if there is a clear mandate from the principal specifically authorizing the performance of the act. The
special power of attorney can be included in the general power when the act or transaction for which the
special power is required is specified therein.

On its face, the written power of attorney contained the signature of Virgilio Olaguer and was duly
notarized. As such, the same is considered a public document and it has in its favor the presumption of
authenticity and due execution, which can only be contradicted by clear and convincing evidence.

No evidence was presented to overcome the presumption in favor of the duly notarized power of attorney.
Neither was there a showing of any circumstance involving the said document that would arouse the
suspicion of respondent and spur him to inquire beyond its four corners, in the exercise of that reasonable
degree of prudence required of a man in a similar situation. We therefore rule that respondent Ongjoco
had every right to rely on the power of attorney in entering into the contracts of sale of Lots Nos. 76-D to
76-G with Jose A. Olaguer.

With respect to the affidavit of Virgilio Olaguer in which he allegedly disavowed any claim or participation in
the purchase of any of the properties of the deceased Lino Olaguer, we hold that the same is rather
irrelevant. The affidavit was executed only on 1 August 1986 or six years after the last sale of the
properties was entered into in 1980. In the determination of whether or not a buyer is in good faith, the
point in time to be considered is the moment when the parties actually entered into the contract of sale.

Furthermore, the fact that Lots Nos. 76-D to 76-G were sold to respondent Ongjoco twice does not warrant
the conclusion that he was a buyer in bad faith. While the said incidents might point to other obscured
motives and arrangements of the parties, the same do not indicate that respondent knew of any defect in
the title of the owner of the property.

As to the petition filed by Jose A. Olaguer for the issuance of a second owners copy of the title to Lot No.
76-D, after the property was already sold to respondent Ongjoco, the same does not inevitably indicate
that respondent was in bad faith. It is more likely that Jose A. Olaguer was merely compiling the
documents necessary for the transfer of the subject property. Indeed, it is to be expected that if the title to
the property is lost before the same is transferred to the name of the purchaser, it would be the
responsibility of the vendor to cause its reconstitution.

In sum, we hold that respondent Emiliano M. Ongjoco was in bad faith when he bought Lots Nos. 1 and 2
from Jose A. Olaguer, as the latter was not proven to be duly authorized to sell the said properties.

However, respondent Ongjoco was an innocent purchaser for value with regard to Lots Nos. 76-D, 76-E, 76-F and
76-G since it was entirely proper for him to rely on the duly notarized written power of attorney executed in favor
of Jose A. Olaguer.

WEE

Oesmer v. Paraiso
Chico-Nazario, J. / G.R. No. 157493, February 5, 2007 / Written Form of Agency

SUMMARY:
A contract to sell was entered into by Paraiso Development Corp and 6, of the 8, Oesmer siblings who
were owners of a real property. The Contract to Sell was first signed by 2 of the siblings, Ernesto and
Enriquita, who originally meet with representatives of Paraiso. Later, the contract was subsequently signed
by 4 of the siblings. They affixed their signatures but contested its validity later contending that Ernesto
and Enriqueta had no written authority to sell the property, hence, they contended that the contract was
invalid as they did not authorize Ernesto to act as their agent in a written document. They also contend
that the contract to sell was merely a unilateral promise to sell coupled with option money. Issue: Is the
contract to sell valid even without written authority of other co-owners for one of them to sell the property
on their behalf? Supreme Court: A written authority is no longer necessary in order to sell shares in
parcels of land because when the principals affixed their signatures on the Contract to Sell as they were
not selling their shares through an agent but, rather, they were selling the same directly and in their own
right.

DOCTRINES:

1. The law itself explicitly requires a written authority before an agent can sell an immovable. The
conferment of such an authority should be in writing, in as clear and precise terms as possible.

2. A written authority is no longer necessary in order to sell shares in parcels of land because when the
principals affixed their signatures on the Contract to Sell they were not selling their shares through an
agent but, rather, they were selling the same directly and in their own right.

FACTS:

1. Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed Oesmer
together with Adolfo Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and the
co-owners of undivided shares of two parcels of agricultural and tenanted land.

2. Said lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion
Durumpili.

3. When the spouses Oesmer died, petitioners, together with Adolfo and Jesus, acquired the lots as heirs
of the former by right of succession. Paraiso Development Corporation is engaged in the real estate
business.

4. In March 1989, one Rogelio Paular, brought along petitioner Ernesto to meet with a certain Sotero Lee,
President of respondent Paraiso Development Corporation. The said meeting was for the purpose of
brokering the sale of petitionersâ properties to Respondent Corporation.

5. Pursuant to the said meeting, a Contract to Sell was drafted by the Executive Assistant of Lee. On 1
April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell.

6. A check in the amount of P100,000.00, payable to Ernesto, was given as option money. Sometime
thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to Sell. However, two
of the brothers, Adolfo and Jesus, did not sign the document.

7. Oesmer siblings, through a letter, informed the respondent company of their intention to rescind the
Contract to Sell and to return the amount of P100,000.00 given by respondent as option money.

8. Respondent did not respond to the aforesaid letter.

9. Subsequently, the petitioners, together with Adolfo and Jesus, filed a Complaint for Declaration of
Nullity or for Annulment of Option Agreement or Contract to Sell with Damages contending that Ernesto
and Enriqueta had no written authority to sell the property, hence, they contended that the contract was
invalid as they did not authorize Ernesto to act as their agent in a written document.

10. Trial Court: Ruled in favor of Paraiso. Oesmer siblings filed an MR. MR was subsequently denied by
trial court. Oesmer siblings appealed to CA.

11. CA affirmed trial court ruling.

ISSUES:

1. Whether the supposed Contract to Sell is really a unilateral promise to sell without consideration
distinct from the price, and hence, void.

2. Whether the consideration of P100K paid is an option money.

3. Whether the contract to sell valid even without written authority of other co-owners for one of them to
sell the property on their behalf?

HELD:

1. NO, it is indeed a Contract to Sell. The sum of P100,000.00 was part of the purchase price. Although
the same was denominated as "option money," it is actually in the nature of earnest money or down
payment when considered with the other terms of the contract. Doubtless, the agreement is not a mere
unilateral promise to sell, but, indeed, it is a Contract to Sell.

2. Earnest Money. In the instant case, the consideration of P100,000.00 paid by respondent to
petitioners was referred to as "option money." However, a careful examination of the words used in the
contract indicates that the money is not option money but earnest money. "Earnest money" and "option
money" are not the same but distinguished thus: (a) earnest money is part of the purchase price, while
option money is the money given as a distinct consideration for an option contract; (b) earnest money is
given only where there is already a sale, while option money applies to a sale not yet perfected; and, (c)
when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives
option money, he is not required to buy, but may even forfeit it depending on the terms of the option.

3. Yes. The law itself explicitly requires a written authority before an agent can sell an immovable. The
conferment of such an authority should be in writing, in as clear and precise terms as possible. It is worth
noting that petitioners’ signatures are found in the Contract to Sell. The Contract is absolutely silent on the
establishment of any principal-agent relationship as the sale of the subject parcels of land. Thus, the
Contract to Sell, although signed on the margin by the other co-owners is not sufficient to confer authority
on the other to act as their agent in selling their shares in the properties in question.

Despite the co-owner’s lack of written authority from the five petitioners to sell their shares in the subject
parcels of land, the supposed Contract to Sell remains valid and binding upon the latter. All the co-owners
signed the document.

Therefore, a written authority is no longer necessary in order to sell their shares in the subject parcels of
land because, by affixing their signatures on the Contract to Sell, they were not selling their shares
through an agent but, rather, they were selling the same directly and in their own right.

REGINA DIZON ET AL, v. CA, OVERLAND EXPRESS LINES (2007)
J. Martinez | GR No.122544 | Kinds of Agency –According to form (written)

SUMMARY:

Respondent Overland Express lines (OEL) entered into a 1-year contract of lease with option to buy at
P3,000 per square meter. Thereafter the lease would be shall be on a per month basis at P3,000 per
month. After the 1 year period of the lease which expired May 1975, in June 1976 the lease was
increased to P8,000 per month. Upon the failure of OEL to pay te increased rental, petitioners filed a case
for ejectment. Respondents allege that there was a perfected contract of sale when agent Alice Dizon
accepted their payment of P300,000. Petitioners allege that there was no agency between the co-owners
of the land and Alice.

The City Court ordered OEL to vacate the land. On Appeal the IAC held that there was a conditional
contract of sale and that OEL had a right as a vendee to the land. The SC held that there was no perfected
sale since the 1 year option to buy has already expired and after such expiration it is held that the option
to buy clause is not instituted with the election of the payment of monthly rentals. More importantly, there
was no agency beteween Alice and the Dizon’s since there was no proof presenting this to be so.

DOCTRINE:

ART. 1874 – When a sale of a piece of land or any interest therein is through an agent, the authority of the
latter shall be in writing; otherwise the sale shall be void.

Art 1475 – The contract of sale is perfected at the moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form of contracts

FACTS
1. On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a
Contract of Lease with Option to Buy with petitioners1 (lessors) involving a 1,755.80 square
meter parcel of land situated at corner MacArthur Highway and South "H" Street, Diliman,
Quezon City.
2. The term of the lease was for one (1) year commencing from May 16, 1974 up to May 15,
1975.
3. During this period, private respondent was granted an option to purchase for the amount of
P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a
monthly rental of P3,000.00.
4. For failure of private respondent to pay the increased rental of P8,000.00 per month effective
June 1976, petitioners filed an action for ejectment on November 10, 1976 before the then
City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII.
5. On November 22, 1982, the City Court rendered judgment ordering private respondent to
vacate the leased premises and to pay the sum of P624,000.00 representing rentals in
arrears and/or as damages.
1. On appeal, respondent Court of Appeals rendered a decision upholding the jurisdiction of the City
Court of Quezon City in the ejectment case. It also concluded that there was a perfected contract
of sale between the parties on the leased premises and that pursuant to the option to buy
agreement, private respondent had acquired the rights of a vendee in a contract of sale.
2. It opined that the payment by private respondent of P300,000.00 on June 20, 1975 as partial
payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which
an official receipt was issued, was the operative act that gave rise to a perfected contract of sale,
and that for failure of petitioners to deny receipt thereof, private respondent can therefore assume
that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in
their behalf.
3. The Court of Appeals went further by stating that in fact, what was entered into was a "conditional
contract of sale" wherein ownership over the leased property shall not pass to the private
respondent until it has fully paid the purchase price.
4. Since private respondent did not consign to the court the balance of the purchase price and
continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in
monthly rentals until full payment of the purchase price.

ISSUES and HELD

1. WON Petitioners Dizon had a right to evict Overland Express Lines? - YES
2. (TOPIC) WON there was a perfected contract thru payment to Alice Dizon? - NO

RATIO
1. Petitioners have established a right to evict private respondent from the subject premises for
non-payment of rentals. The term of the Contract of Lease with Option to Buy was for a period
of one (1) year during which the private respondent was given an option to purchase said
property at P3,000.00 square meter. After the expiration thereof, the lease was for
P3,000.00 per month. However, since the rent was paid on a monthly basis, the period of
lease is considered to be from month to month in accordance with Article 1687 of the New
Civil Code.
When private respondent failed to pay the increased rental of P8,000.00 per month in June 1976,
the petitioners had a cause of action to institute an ejectment suit against the former with the
then City Court.
Having failed to exercise the option within the stipulated one-year period, private respondent
cannot enforce its option to purchase anymore.

1. Private respondent gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous
presumption that the said amount tendered would constitute a perfected contract of sale pursuant
to the contract of lease with option to buy.

There was no valid consent by the petitioners (as co-owners of the leased premises) on the
supposed sale entered into by Alice A. Dizon, as petitioners' alleged agent, and private
respondent. The basis for agency is representation and a person dealing with an agent is put upon
inquiry and must discover upon his peril the authority of the agent.

As provided in Article 1868 of the New Civil Code, there was no showing that petitioners
consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her
transaction with private respondent.

The most prudent thing private respondent should have done was to ascertain the extent of the
authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on
the basis of a supposed agency.

DISPOSITIVE

Petitions are GRANTED. The decision of the Court of Appeals are hereby REVERSED and SET ASIDE.

CITYLITE REALTY

CITY-LITE REALTY CORPORATION v. CA (Feb. 10, 2000)
BELLOSILLO., J. | GR No. 138639|Kinds of Agency - According to Form

Summary: CITY LITE was interested in buying the land FP holdings was selling. They were in contact with a
certain Roy in buying the said property. The sale did not push thru – the deed was not transferred. City lite
filed for specific performance. The RTC ruled for City lite but the CA ruled for the defendants saying that
Roy was not an agent of FP holdings. The SC sustained the ruling.

Doctrine: the Civil Code requires that an authority to sell a piece of land shall be in writing. The absence of
authority to sell can be determined from the written memorandum issued by respondent F. P. HOLDINGS'
President requesting Metro Drug's assistance in finding buyers for the property.

Facts:
· Respondent FP holdings was the registered owner of known as the "Violago Property" or the "San
Lorenzo Ruiz Commercial Center,"
o The property was offered for sale the general public through the circulation of a sales
brochure
o The front portion of the property consisting of 9,192 square meters is the subject of
this litigation.
· CITY-LITE conveyed its interest to purchase a portion or one-half (1/2) of the front lot of the "Violago
Property." to Meldin Al Roy who sent the brochure to City lite. In response they their letter of intent to
but the land to Metro Drug (attn.: Meldin Al Roy)
o Apparently, Roy subsequently informed CITY-LITE's representative that it would take
time to subdivide the lot and respondent F. P. HOLDINGS was not receptive to the
purchase of only half of the front lot. After a few days, Atty. Mamaril wrote Metro Drug
expressing CITY-LITE's desire to buy the entire front lot of the subject property instead
of only half thereof provided the asking price of P6,250.00/square meter was
reduced and that payment be in installment for a certain period.
o A counter offer by Roy was made
§ . The price shall be P6,250.00/square meter or a total of P57,450,000.00; 2.
The above purchase price shall be paid to the owner as follows: (a) P15.0
Million downpayment; (b) balance payable within six (6) months from date of
downpayment without interest.
· After some discussions, the parties finally reached an agreement and Roy agreed to sell the property
to CITY-LITE provided only that the latter submit its acceptance in writing to the terms and conditions
of the sale
· However, for some reason or another and despite demand, respondent F. P. HOLDINGS refused to
execute the corresponding deed of sale in favor of CITY-LITE
· protecting its interest as vendee of the property in suit, CITY-LITE registered an adverse claim to the
title of the property with the Register of Deeds
· CITY-LITE's counsel demanded in writing that Metro Drug comply with its commitment to CITY-LITE by
executing the proper deed of conveyance of the property under pain of court action.
· in a move to amicably settle with CITY-LITE, met with the latter's officers during which he offered
properties located in Caloocan City and in Quezon Boulevard, Quezon City, as substitute for the
property, but CITY-LITE refused the offer because "it did not suit its business needs.
· F. P. HOLDINGS filed for the cancellation of the adverse claim,
· RTC-Br. 84 of Quezon City dismissed F. P. HOLDINGS' petition declaring that CITY-LITE's adverse claim
had factual basis and was not "sham and frivolous."
· Following the dismissal of F. P. HOLDINGS' petition for the cancellation of the adverse claim, CITY-LITE
instituted a complaint against F. P. HOLDINGS originally for specific perfomance and damages and
caused the annotation of the second notice of lis pendenson the new certificate of title.
· RTC: favored CITY-LITE ordering F. P. HOLDINGS to execute a deed of sale of the property in favor of
CITY-LITE
· MR was filed by Viewmaster (the subsequent buyer of the lot) questioning its ruling that a perfected
contract of sale existed between CITY-LITE and F. P. HOLDINGS as there was no definite agreement
over the manner of payment of the purchase price, citing in support thereof Toyota Shaw Inc. v. Court
of Appeals.
· MR was denied
· CA: reversed. because of lack of a definite agreement on the manner of paying the purchase price and
that respondents Metro Drug and Meldin Al G. Roy were not authorized to sell the property to
CITY-LITE, and that the authority of Roy was only limited to that of a mere liaison or contact person.
ISSUE: whether a contract of sale was perfected between petitioner CITY-LITE and respondent F. P.
HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug -- NO
· Art. 1874 of the Civil Code provides: "When the sale of a piece of land or any interest therein is
through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void."
· Petitioner anchors the authority of Metro Drug and Meldin Al G. Roy on (a) the testimonies of
petitioner's three (3) witnesses and the admissions of Roy and the lawyer of Metro Drug; (b) the sales
brochure specifying Meldin Al G. Roy as a contact person; (c) the guard posted at the property saying
that Metro Drug was the authorized agent; and, (d) the common knowledge among brokers that Metro
Drug through Meldin Al G. Roy was the authorized agent of F. P. HOLDINGS to sell the property.
· the Civil Code requires that an authority to sell a piece of land shall be in writing. The absence of
authority to sell can be determined from the written memorandum issued by respondent F. P.
HOLDINGS' President requesting Metro Drug's assistance in finding buyers for the property.
o Memorandun said: "We will appreciate Metro Drug's assistance in referring to us
buyers for the property. Please proceed to hold preliminary negotiations with
interested buyers and endorse formal offers to us for our final evaluation and
appraisal.
o Meldin Al G. Roy and/or Metro Drug was only a contact person with no authority to
conclude a sale of the property. In fact, a witness for petitioner even admitted that
Roy and/or Metro Drug was a mere broker, and Roy's only job was to bring the parties
together for a possible transaction.
· the sale could not produce any legal effect as to transfer the subject property from its lawful owner, F.
P. HOLDINGS, to any interested party including petitioner CITY-LITE.

JIMENEZ

III. Extent of business covered

(a) General

PRIMITIVO SIASAT AND MARCELINO SIASAT v. IAC (October 10, 1985)
GUTTIEREZ, JR., J. | GR No. L-67889| Kinds of Agency - Extent of Business Covered, General

SUMMARY: Nacianceno facilitated the purchase of Philippine flags worth P1M by the Government from the
manufacturer UFI. Siasat, owner of UFI, agreed through a document for Nacianceno to represent them in
all dealings. After the transaction was made, Siasat cancelled the agency and deprived Nacianceno of her
commission. Court ruled that the wording of said document reveal that Nacianceno was a general agent of
UFI. Court pointed out that, the principal cannot deprive his agent of the commission agreed upon by
cancelling the agency and, thereafter, dealing directly with the buyer.

DOCTRINE: A general agent is one authorized to do all acts pertaining to a business of a certain kind or at
a particular place, or all acts pertaining to a business of a particular class or series. He has usually
authority either expressly conferred in general terms or in effect made general by the usages, customs or
nature of the business which he is authorized to transact.

An agent, therefore, who is empowered to transact all the business of his principal of a particular kind or
in a particular place, would, for this reason, be ordinarily deemed a general agent.

FACTS
1. Teresita Nacianceno convinced officials of the then Department of Education and Culture to
purchase without public bidding, P1M worth of national flags for the use of public schools
throughout the country. She was able to expedite the approval by hand-carrying the different
indorsements from one office to another.
2. When Nancianceno was informed by the Chief of the Budget Division of the Department that the
purchase orders could not be released unless a formal offer to deliver the flags was first
submitted for approval, she contacted the owners of the United Flag Industry.
3. After the transaction, a document was drawn up where Primitivo Siasat (owner) agreed for
Nacianceno to represent them to deal with any entity or organization. For the latter’s service, she
will be entitled to a 30% commission.
“This is to formalize our agreement for you to represent United Flag Industry to deal with
any entity or organization, private or government in connection with the marketing of our
products-flags and all its accessories.
For your service, you will be entitled to a commission of thirty (30%) percent.”
4. On Oct. 26, 2974, the first delivery of flags was made by UFI. The next day, Nacianceno’s
authority to represent UFI was revoked by Siasat. Nacianceno only received 5% commission from
the first delivery. For the second delivery, she received nothing.
5. Nacianceno then filed an action in the CFI to recover 25%, as balance on the first delivery, and
30%, on the second delivery.
6. Trial court ruled in favor of Nacianceno and ordered Siasat to pay the said commissions. IAC
affirmed.
7. Petitioner’s argument: (1) the authorization making Nacianceno their representative merely states
that she could deal with any entity in connection with the marketing of their products for a 30%
commission. There was no specific authorization for the sale of the said Philippine flags; (2) There
were two transactions involved evidenced by separate purchase orders and separate delivery
receipts. After the revocation of agency was affected, Nacianceno can no longer claim the
commission on the second transaction.

ISSUES and HELD
1. WON Nacianceno was an agent of Siasat ----(YES)
2. WON there were two transactions involved ---- (NO)

RATIO
1.
a. An agent may be (1) universal: (2) general, or (3) special.
i. A universal; agent is one authorized to do all acts for his principal which can
lawfully be delegated to an agent. So far as such a condition is possible, such an
agent may be said to have universal authority.
ii. See doctrine.
iii. A special agent is one authorized to do some particular act or to act upon some
particular occasion. lie acts usually in accordance with specific instructions or
under limitations necessarily implied from the nature of the act to be done.
b. By virtue of the document embodying the agreement between the parties, it is clear that
Nacianceno was instituted as a general agent.
i. General words were employed in the agreement that no restrictions were intended
as to the manner the agency was to be carried out or in the place where it was to
be executed.
ii. The power granted to the respondent was so broad that it practically covers the
negotiations leading to, and the execution of, a contract of sale of petitioners'
merchandise with any entity or organization.
c. The agency was not entered into under fraudulent misrepresentation (petitioners alleged
that respondent would not disclose the agency with which she was supposed to transact).
If this was true, petitioners should have limited the authority given to the respondent. It is
impossible that they could be so careless after being in the business for fifteen years.

2. Evidence show that there was only one transaction.
a. Out of the total budget of the Department, P1M is for the purchase of national flags. The
allocation and release of the funds was divided into three. The first allotment was released in the
second quarter. However, due to the necessity of furnishing all public schools with the Philippine
flag, the immediate release of the programmed allotments were requested. These circumstances
explain why two purchase orders and two deliveries had to be made on one transaction.
b. If the contracts were separate and distinct from one another, the whole or at least a substantial
part of the government's supply procurement process would have been repeated. In this case,
what were issued were mere indorsements for the release of funds and authorization for the next
purchase.
c. Thus, Nacianceno is entitled for the commission from the second delivery. The revocation of
agency could not prevent the respondent from earning her commission because as the trial court
opined, it came too late, the contract of sale having been already perfected and partly executed.
d. The principal cannot deprive his agent of the commission agreed upon by cancelling the agency
and, thereafter, dealing directly with the buyer.

*There is no reason why a shocking 30% of the taxpayers' money should go to an agent or facilitator who
had no flags to sell and whose only work was to secure and handcarry the indorsements of education and
budget officials.

DOMINION INSURANCE CORP. v. CA (2002)
Pardo, J. | GR No. 129919 | Extent of business covered – General

SUMMARY:
Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought
to recover sums he had advanced in his capacity as manager. Dominion denied any liability to Guevarra.
RTC ruled that Dominion was to pay Guevarra. CA affirmed. SC also ruled that Dominion should pay
Guevarra, but not under the law on agency, but the law on obligations and contracts. This is because
Guevarra deviated from the instructions of Dominion under which he would have had authority to settler
the latter’s claims, i.e. to pay through the revolving fund. Nevertheless, recovery may be made under Art.
1236.

DOCTRINE:
When a special power of attorney is required for the agent to do a certain act, the agent, in the
performance of such act, must comply with the specifications embodied in the special power of attorney
giving him authority to do such.

Here, a special power of attorney was needed for Guevarra to settle the claims of Dominion’s clients. And
for this purpose, there was a memorandum. However, the memorandum stated that Guevarra was to
settle the claims using the money in a revolving fund. Guevarra did not comply with this, so e expenses
Guevarra incurred in the settlement of the claims of the insured my not be reimbursed from Dominion, at
least under the law of agency.

FACTS
1. Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion
Insurance. He sought to recover P156,473.90, which he claimed to have advanced in his capacity as
manager of Dominion to satisfy claims filed by Dominion’s clients. Dominion denied any liability to
Guevarra and asserted a counterclaim for premiums allegedly unremitted by the latter.
2. The pre-trial conference never pushed through despite being scheduled and postponed nine times
over the course of six months. Finally, the case was called again for pre-trial and Dominion and counsel
failed to show up. The trial court declared Dominion in default and denied any reconsideration.
3. On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90
claimed as the total amount advanced by the latter in the payment of the claims of Dominion’s clients.
The CA affirmed.

ISSUES and HELD
1. WON Guevarra acted within his authority as agent for Dominion – NO
2. WON Guevarra is entitled to reimbursement – YES

RATIO
1. A perusal of the “Special Power of Attorney” would show that Dominion and Guevarra intended to
enter into a principal-agent relationship. Despite the word “special,” the contents of the document reveal
that what was constituted was a general agency. The agency comprises all the business of the principal,
but, couched in general terms, is limited only to acts of administration. A general power permits the agent
to do all acts for which the law does not require a special power.
Art. 1878 enumerates the instances when a special power of attorney is required, including (1) to make
such payments as are not usually considered as acts of administration; (15) any other act of strict
dominion.
The payment of claims is not an act of administration. The settlement of claims is not included among the
acts enumerated in the Special Power of Attorney, neither is it of a character similar to the acts
enumerated therein. A special power of attorney would have been required before Guevarra could settle
the insurance claims of the insured.
Guevarra’s authority to settle claims is embodied in the Memorandum of Management Agreement which
enumerated the scope of Guevarra’s duties and responsibilities. However, the Memorandum showed the
instruction of Dominion that payment of claims shall come from a revolving fund. Having deviated from the
instructions of the principal, the expenses that Guevarra incurred in the settlement of the claims of the
insured may not be reimbursed from Dominion.

2. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right to
recovery may still be justified under the general law on Obligations and Contracts, particularly, Art.
1236[1].

3. In this case, when the risk insured against occurred, Dominion’s liability as insurer arose. This
obligation was extinguished when Guevarra paid such claims. Thus, to the extent that the obligation of
Dominion had been extinguished, Guevarra may demand reimbursement from his principal. To rule
otherwise would result in unjust enrichment of Dominion.

DISPOSITIVE
Dominion is ordered to pay Guevarra P112,6762.11, representing the total amount advanced by the latter
in the payment of the claims of the former’s clients, minus the amount in the revolving fund and the
outstanding balance and remittance.

[1] Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation, unless there is a stipulation to the contrary

WOODCHILD

SHOPPER’S PARADISE

Shopper’s Paradise Realty and Development Corp. vs Efren Roque (Jan. 13 , 2004)
Vitug | GR No. 148775 | Kinds of Agency – Extend of Business Covered - Special

DOCTRINE: Article 1878 of the Civil Code expresses that a special power of attorney is necessary to lease
any real property to another person for more than one year. The lease of real property for more than one
year is considered not merely an act of administration but an act of strict dominion or of ownership. A
special power of attorney is thus necessary for its execution through an agent

FACTS
1. Dec. 23 1993 - Dr. Roque leased land in Plaza Novaliches, QC (2k sqm) for 25 years to P corp. Land
registered in Roque’s name w/ TCT covering it.
· Reservation Payment of P250K made
· Memorandum of Agreement (MOA) for construction, development and operation of a commercial
building as well: 250K downpayment
· BOTH LEASE CONTRACT AND MOA NOTARIZED AND TO BE NOTATED ON THE TCT W/IN 60D FROM
DEC. 23. 1993 (so until Feb. 23 1994) è DR. ROQUE DIED FEB. 10
· Nov. 3 1994 - Efren Roque one of the surviving children, thru letter, advised P corp. to desist
2. Feb 12 1995 - Efren Roque filed to annul the contract and the MOA alleging that he was the absolute
owner by virtue of donation inter vivos by his parents on Dec. 26 1978 à was only registered May 11 1994
however
· BUT the donation was in a public instrument notarized on the same day of the
donation
· Dr. Roque onlyy had mere administration while Efren was in the US
3. RTC: CONTRACT VALID
· Registration is needed to make the Deed of Donation binding on 3rd persons. è When Dr. Roque
entered into lease contract w/ P, Donation wasn’t registered
· Efren Roque also knew of the lease since before he registered the Donation, he had met officers of
P corp.
· Efren also can’t be a 3rd person to the Lease contract since he is the son of Dr. Roque and 1311
states: contracts take effect not only between the parties themselves but also between their assigns
and heirs è Contract here is already perfected and partially executed (the 500K already paid)
4. CA REVERSED: CONTRACT INVALID
· Agreed w, RTC about needing registration to bind HOWEVER, P Corp. knew about the prior donation
and such actual knowledge had the effect of registration.
· Based on testimony by Atienza
o Informed by Dr. Roque that the property would be given to his 3 sons, the other land is
in his name only coz Efren was still in the US
5. P ARG: presumption of GF not overturned + R is barred by laches and estoppel from denying the
contracts

ISSUES and HELD
1. WON the contract was valid? NO

RATIO
· Yes donation is valid even tho unregistered BUT needs to be registered to be binding on 3rd persons
o Donation is a mode of acquiring ownership; effective transfer of title over the property
from donor to donee
· Law requires it to be contained in a public document, specifying the property and value of the
charges w/c donee must satisfy
o Title of ownership not registered shall not prejudice 3rd persons
· Sec. 51 (PD 1529 – Property Registration Decree) = The act of registration shall be the operative
act to convey or affect the land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of Deeds for the province or city
where the land lies
o A person dealing with registered land can safely rely on correctness of certificate w/ no
need to go beyond to determine condition of the property
o BUT where such party has knowledge of prior existing interest tho unregistererd, his
knowledge of such would have the effect of registration as regards to him
· IN THIS CASE: P corp. was found to have knowledge of the donation at the time it entered into the
2 agreements w/ Dr. Roque à P’s representatives apprised of the fact
· CONTRACT OF AGENCY – agent acts in representation or in behalf of another w/ consent of the
latter
o 1878 – SPA is necessary to lease any real property to another person for more than 1
year.
o Lease for more than 1 year is considered an act of ownership/strict dominion, not merely
administration è SPA is necessary for its execution through an agent
· Not laches/estoppel
o Laches in its real sense, is the failure or neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned or declined to assert it
o R learned of contracts in Feb. 1994, assailed it through letter in Nov. 1994 of the
same year = NO LACHES
o The essential elements of estoppel in pais, in relation to the party sought to be
estopped, are: 1) a clear conduct amounting to false representation or concealment
of material facts or, at least, calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party subsequently attempts
to assert; 2) an intent or, at least, an expectation, that this conduct shall influence, or
be acted upon by, the other party; and 3) the knowledge, actual or constructive, by
him of the real facts è SC SAID NONE OF THIS HERE

DISPOSITIVE: Petition is DENIED. CA DECISION AFFIRMED

VELOSO
VELOSO v. COURT OF APPEALS (August 21, 1996)
Torres, J. | 260 SCRA 593 | Kinds of agency - special

SUMMARY: Petitioner seeks the reconveyance of property and annulment of documents after a TCT under
his name was cancelled and another one was issued under the name of the respondent who bought the
property from petitioner’s wife who presented of a general power of attorney. Petitioner denies knowledge
of the sail and asserts that his signature was forged. The Court held that the sale is valid since the buyer
is an innocent purchaser for value who merely relied on the general power of attorney. The wife’s
possession of the certificate of title was deemed a conclusive authority from petitioner.

DOCTRINE: Where the general power of attorney expressly authorizes the agent or attorney in fact the
power to sell, there is no need to execute a separate and special power of attorney.

FACTS
1. Petitioner Francisco Veloso was the owner of a 177sqm. parcel of land situated in Tondo, Manila. the
title was registered under the name Francisco Veloso. Subsequently, it was cancelled and a new TCT was
issued in the name of Aglaloa B. Escario on May 24, 1988 upon the sale made by petitioner’s wife who
presented a general power of attorney.
2. Veloso filed an action for annulment of documents, reconveyance of property alleging that he was the
absolute owner of the property and he never authorized anybody, not even his wife to sell it.
3. He alleged that he was in possession of the title but when his wife, Irma, left for abroad, he found out
that his copy was missing. He then verified with the Registry of Deeds of Manila and there he discovered
that his title was already cancelled in favor of defendant Aglaloma Escario.
a. The transfer of property was supported by a General Power of Attorney and Deed of Absolute Sale,
executed by Irma Veloso, wife of the petitioner and appearing as his attorney-in-fact, and Escario.
Petitioner asserts that he never signed a deed and his signature was forged.
b. Defendant Escario however alleged that she was a buyer in good faith and denied knowledge of any
irregularity.
4. The trial court adjudged Escario as the owner after she was deemed an innocent purchaser for value
and the GPA was held valid and sufficient since there was no need for an SPA when the special power was
already mentioned in the general one.
a. The TC held that Irma’s possession and production of the certificate of title was deemed a conclusive
authority from the plaintiff to the Register of Deeds to enter a new certificate. CA affirmed the decision in
toto.

ISSUES and HELD
1. WON the sale of the property is valid.—YES

RATIO
1. The assailed power of attorney was valid and regular on its face. It was notarized and as such, it
carries the evidentiary weight conferred upon it with respect to its due execution. While it is true that it
was denominated as a general power of attorney, a perusal thereof revealed that it stated an authority to
sell.
2. There was no need to execute a separate and special power of attorney since the general power of
attorney had expressly authorized the agent or attorney in fact the power to sell the subject property. The
SPA attorney can be included in the general power when it is specified therein the act or transaction for
which the special power is required.
3. The private respondent was an innocent purchaser for value. Respondent relied on the power of
attorney presented by petitioner’s wife, Irma. Being the wife of the owner and having with her the title of
the property, there was no reason for the private respondent not to believe in her authority. Moreover, the
power of attorney was notarized and as such, carried with it the presumption of its due execution.
4. The Court held that even if the signature was indeed forged, respondent’s interest is protected being
an innocent purchaser for value and the principle of equitable estoppel applies.

DISPOSITIVE
Petition DENIED.

IV. As to effects

SARGASSO CONSTRUCTION & DEVELOPMENT CORPORATION/PICK
& SHOVEL, INC./ATLANTIC ERECTORS, INC. (JOINT VENTURE) v. PHILIPPINE PORTS AUTHORITY (July 5, 2010)
Mendoza, J. | GR No. 170530 | Kinds of agency; as to effects, ostensible or representative

SUMMARY: Petitioners as a joint venture was awarded to construct Pier 2 and the rock causeway for the
port of San Fernando. Subsequently, it offered to undertake the reclamation project which was part of the
overall plan for the Northwest Luzon Growth Quadrangle. The bid was a bit high so the general manager of
PPA counter-offered for a lower price but subject to board approval. Subsequently, GM for PPA signed a
Notice of Award for the reclamation project in favor of the petitioners. The Board, however, disapproved
since the awarded project and the proposed undertaking were totally different. This board action was not
communicated to the petitioners and when they tried to amend their proposal for re-approval, there was no
action on the part of the board. Hence, the plaintiffs filed a complaint for specific performance and
damages. The Court held that the GM alone was not authorized to bind the government and that there was
not perfection of contract.

DOCTRINE:
Apparent authority ("holding out" theory or doctrine of ostensible agency) – is the power to affect the legal
relations of another person by transactions with third persons arising from the other's manifestations to
such third person such that the liability of the principal for the acts and contracts of his agent extends to
those which are within the apparent scope of the authority conferred on him, although no actual authority
to do such acts or to make such contracts has been conferred.

The existence of apparent authority may be ascertained through: (1) the general manner in which the
corporation holds out an officer or agent as having the power to act or, in other words, the apparent
authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular
nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary
powers.

FACTS
1. Petitioners as a joint venture, was awarded the construction of Pier 2 and the rock causeway for the
port of San Fernando, La Union, (SF, LU) after a public bidding conducted by PPA. The port construction
was in pursuance of the development of the Northwest Luzon Growth Quadrangle. Adjacent to Pier 2 is an
area intended for the reclamation project as part of the overall port development plan.
2. Mr. Melecio J. Go, Executive Director of the consortium, sent a letter offering to undertake the
reclamation project as an extra work to its existing construction of Pier 2 and Rock Causeway for a price of
P36,294,857.03.
3. However the defendant did not accept such offer but gave a counter-offer of P30,794,230.89, subject
to the approval of higher authority.
4. On August 26, 1993, a Notice of Award signed by PPA General Manager Rogelio Dayan was sent to
plaintiff for the phase I Reclamation Contract in the amount of P30,794,230.89 and instructing it to "enter
into and execute the contract agreement with this Office" and to furnish the documents representing
performance security and credit line. The contract had further conditions.[1]
5. The award of the negotiated contract as additional or supplemental project in favor of plaintiff was
intended "to save on the mobilization/demobilization costs and some items as provided for in the original
contract." Hence, then General Manager Carlos L. Agustin presented for consideration by the PPA Board of
Directors the contract proposal for the reclamation project.
6. The Board, however, disapproved the proposal as there was no strong legal basis for Management to
award the supplemental contract through negotiation. The Board noted that the Pier 2 Project was
basically for the construction of a pier while the supplemental agreement refers to reclamation. Thus there
is no basis to compare the terms and conditions of the reclamation project with the original contract (Pier
2 Project) of Sargasso.
7. It appears that PPA did not formally advise the plaintiff of the Board's action on their contract proposal.
As plaintiff learned that the Board was not inclined to favor its Supplemental Agreement, Mr. Go wrote
General Manager Agustin requesting that the same be presented again to the Board meeting for approval.
However, there was no reply.

RTC:
8. Hence, plaintiff filed a complaint for specific performance and damages.
9. Plaintiffs prayer, among others was to direct the defendant to comply with its undertaking under the
Notice of Award.
10. Defendant PPA answered that the alleged Notice of Award has already been properly revoked when the
Supplemental Agreement which should have implemented the award was denied approval by defendant's
Board of Directors.

RTC: Ordered the defendant to execute a contract in favor of the plaintiff for the reclamation of the area
between the Timber Pier and Pier 2 located at SF, LU. With regard to the issue on the perfection of the
contract, the court ruled that the "higher authority adverted to does not necessarily mean the Board of
Directors (Board). In the case of the PPA, the power to enter into contracts is not only vested on the Board
of Directors, but also to the manager citing Section 9 (III) of P.D. No. 857. Further, the tenor of the Notice
of Award implied that respondent's general manager had been empowered by its Board of Directors to
bind respondent by contract. MR denied.

2004 Decision
11. On July 30, 2004, the Court rendered an en banc decision granting respondent's petition on a liberal
interpretation of the rules of procedure, and ordering the CA to conduct further proceedings.

CA Decision
12. Reversed the TC. It ruled that the power of the general manager "to sign contracts" is different from
the Board's power "to make or enter (into) contracts" Moreover, the disapproval of the contract on a
ground other than the general manager's lack of authority rather inconsequential because Executive Order
380 expressly authorized the governing boards of GOCCs to enter into negotiated infrastructure contracts
involving not more than P50M. The CA further noted that the Notice of Award was only one of those
documents that comprised the entire contract and, therefore, did not in itself evidence the perfection of a
contract.

ISSUES and HELD
1. WON the general manager of PPA is vested with authority to enter into a contract for and on behalf
of PPA. --- (NO)
2. WON a contract has been perfected --- (NO)

RATIO
Contracts to which the government is a party are generally subject to the same laws and regulations which
govern the validity and sufficiency of contracts between private individuals. A government contract,
however, is perfected only upon approval by a competent authority, where such approval is required.

Conformably to a fundamental principle in agency, the acts of such agents in entering into agreements or
contracts beyond the scope of their actual authority do not bind or obligate the Government. The moment
this happens, the principal-agent relationship between the Government and the contracting officer ceases
to exist. The approval of the contract by a higher authority is usually required by law or administrative
regulation as a requisite for its perfection.

Under Article 1881 of the Civil Code, the agent must act within the scope of his authority to bind his
principal. P.D. 857 likewise states that one of the corporate powers of respondent's Board of Directors is
to exercise all the powers of a corporation under the Corporation Law. On the other hand, the law merely
vests the general manager the general power to sign contracts and to perform such other duties as the
Board may assign. Therefore, unless respondent's Board validly authorizes its general manager, the latter
cannot bind respondent PPA to a contract.

The petitioner failed to present competent evidence to prove that the respondent's general manager
possessed such actual authority delegated either by the Board of Directors, or by statutory provision. The
authority of government officials to represent the government in any contract must proceed from an
express provision of law or valid delegation of authority. Without such actual authority being possessed by
PPA's general manager, there could be no real consent, much less a perfected contract, to speak of.

Lastly, petitioner's invocation of the doctrine of apparent authority is misplaced. This doctrine, in the realm
of government contracts, has been restated to mean that the government is NOT bound by unauthorized
acts of its agents, even though within the apparent scope of their authority. Under the law on agency,
however, "apparent authority" is defined as the power to affect the legal relations of another person by
transactions with third persons arising from the other's manifestations to such third person such that the
liability of the principal for the acts and contracts of his agent extends to those which are within the
apparent scope of the authority conferred on him, although no actual authority to do such acts or to make
such contracts has been conferred.

Apparent authority, or what is sometimes referred to as the "holding out" theory, or doctrine of ostensible
agency, imposes liability, not as the result of the reality of a contractual relationship, but rather because
of the actions of a principal or an employer in somehow misleading the public into believing that the
relationship or the authority exists. The existence of apparent authority may be ascertained through (1) the
general manner in which the corporation holds out an officer or agent as having the power to act or, in
other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in
his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the
scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its
favor or in favor of other parties. Apparent authority is determined only by the acts of the principal and not
by the acts of the agent. The principal is, therefore, not responsible where the agent's own conduct and
statements have created the apparent authority.

In this case, not a single act of respondent, acting through its Board of Directors, was cited as having
clothed its general manager with apparent authority to execute the contract with it.

DISPOSITIVE
WHEREFORE, the petition is DENIED.

[1] a. that "fendering of Pier No. 2 Port of San Fernando, and the Port of Tabaco is completed before the
approval of the contract for the reclamation project."
b. [that] "the acceptance by the contractor that mobilization/demobilization cost shall not be included in
the contract and that escalation shall be reckoned upon approval of the Supplemental Agreement."

Professional Services v. CA (Feb 11, 2008)
Ostensible Agency
SUMMARY:
Dr. Ampil and Dr. Fuentes of Medical City operated on Natividad Agana. Two pieces of gauze were lost during the surgery.
After, Natividad would experience excruciating pain. The two gauzes were retrieved from her vagina months later, badly
infecting her. The Aganas filed a complaint and the RTC found PSI (owner of Medical City) liable with the doctors. PSI
appealed alleging the lack of employee-employer relationship. SC ruled that PSI is also liable based on the Doctrine of
Apparent Authority (ostensible agency) and Corporate Negligence.
DOCTRINE:
Under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed
the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the
particular business, is justified in presuming that such agent has authority to perform the particular act in question.
FACTS
1. Natividad Agana was admitted at Medical City because of difficulty of bowel movement and bloody anal discharge. Dr.
Ampil diagnosed her to be suffering from cancer of the sigmoid.
2. Dr. Ampil, assisted by the medical staff of Medical City, performed an anterior resection. During the surgery, he found that
the malignancy in her sigmoid area had spread to her left ovary, necessitating the removal of certain portions of it.
3. Dr. Ampil obtained the consent of Atty. Enrique Agana, (husband) to permit Dr. Juan Fuentes, to perform hysterectomy
upon Natividad. Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over, completed the
operation and closed the incision.
4. In the corresponding Record of Operation the attending nurses entered these remarks: sponge count lacking 2,
announced to surgeon searched done sic but to no avail continue for closure.
5. After a couple of days, Natividad complained of excruciating pain in her anal region. On consultation, the doctors told her
that the pain was the natural consequence of the surgery.
6. Natividad, accompanied by her husband, went to the US to seek further treatment. After four 4 months of consultations
and laboratory examinations, Natividad was told that she was free of cancer. Hence, she was advised to return to the
Philippines. Natividad flew back to the Philippines, still suffering from pains.
7. Two weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Dr. Ampil was informed and
proceeded to Natividads house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. Dr.
Ampil then assured Natividad that the pains would soon vanish.
8. The pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined, Dr.
Ramon Gutierrez detected the presence of a foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in
width. The gauze had badly infected her vaginal vault.
9. Natividad and her husband filed a complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes.
10. RTC found PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable. CA affirmed the judgment with modification
dismissing complaint against Dr. Fuentes.
11. PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari.
12. The Court rendered a Decision holding that PSI is jointly and severally liable with Dr. Ampil for the following reasons:
- first, there is an employer-employee relationship between Medical City and Dr. Ampil. For the purpose of
apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians;
- second, PSIs act of publicly displaying in the lobby of the Medical City the names and specializations of its
accredited physicians, including Dr. Ampil, estopped it from denying the existence of an employer-employee relationship
between them under the doctrine of ostensible agency or agency by estoppel; and
- third, PSIs failure to supervise Dr. Ampil and its resident physicians and nurses and to take an active step in
order to remedy their negligence rendered it directly liable under the doctrine of corporate negligence.
In MR, PSI contends that the Court erred in finding it liable under Article 2180 of the Civil Code, there being no
employer-employee relationship between it and its consultant. PSI also argues that the doctrine of ostensible agency or
agency by estoppel cannot apply because spouses Agana failed to establish one requisite of the doctrine- that Natividad
relied on the representation of the hospital in engaging the services of Dr. Ampil. Also, that the doctrine of corporate
negligence is misplaced because the proximate cause of Natividads injury was Dr. Ampils negligence.
ISSUES and HELD

1. WON an employer-employee relationship exists between Agana and Medical City as t hold PSI liable for tort
——YES)
RATIO
PSI merely offered a general denial of responsibility, maintaining that consultants, like Dr. Ampil, are independent
contractors, not employees of the hospital. Even assuming that Dr. Ampil is not an employee of Medical City, but an
independent contractor, still the said hospital is liable to the Aganas based on the Apparent Authority (ostensilble agency)
and Corporate Negligence
APPARENT AUTHORITY -
The doctrine of apparent authority essentially involves two factors to determine the liability of an independent
contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes described as an inquiry whether the hospital acted
in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an
employee or agent of the hospital. In this regard, the hospital need not make express representations to the patient that the
treating physician is an employee of the hospital; rather a representation may be general and implied. The doctrine of
apparent authority is a specie of the doctrine of estoppel.
Estoppel rests on this rule: Whether a party has, by his own declaration, act, or omission, intentionally and deliberately led
another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it.
HOWEVER, PSI argues that the doctrine of apparent authority cannot apply to these cases because spouses Agana failed
to establish proof of their reliance on the representation of Medical City that Dr. Ampil is its employee. SC disagrees. Atty.
Agana categorically testified that one of the reasons why he chose Dr. Ampil was that he knew him to be a staff member of
Medical City, a prominent and known hospital.
Clearly, PSI is estopped from passing the blame to Dr. Ampil. Its act of displaying his name and those of the other
physicians in the public directory at the lobby of the hospital amounts to holding out to the public that it offers quality medical
service through the listed physicians. This justifies Atty. Aganas belief that Dr. Ampil was a member of the hospitals staff.
Under the doctrine of apparent authority, the question in every case is whether the principal has by his voluntary act placed
the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the
particular business, is justified in presuming that such agent has authority to perform the particular act in question.
CORPORATE NEGLIGENCE -
The duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician.
This is because the modern hospital now tends to organize a highly-professional medical staff whose competence and
performance need also to be monitored by the hospital commensurate with its inherent responsibility to provide quality
medical care. Such responsibility includes the proper supervision of the members of its medical staff. Accordingly, the
hospital has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the
physicians practicing in its premises.
Not only did PSI breach its duty to oversee or supervise all persons who practice medicine within its walls, it also
failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the
negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article
2176.
DISPOSITIVE
WHEREFORE, we DENY PSIs motion for reconsideration with finality.

Cosmic Lumber v. CA and Isidro Perez (Nov. 29, 1996)
Bellosillo | GR No. 114311 | Kinds of Agency - As to effects: simple or commission

SUMMARY:
P executed a SPA appointing Villamil-Estrada as atty-in-fact to handle the suit to eject squatters from its
property. Pursuant to this she entered into a compromise agreement with Isidro Perez selling him the
portion of the lot occupied by him. P later refuted the sale saying that she wasn’t authorized to enter into
such an agreement, her authority being limited to ejecting the occupants. The court held that agents must
be expressly granted the authority to sell real estate in writing for such agreements to be valid. Having
exceeded the scope of her authority, the agreement is void.

DOCTRINE:
For the principal to confer the right upon an agent to sell real estate, a power of attorney must express
such powers of the agent in clear and unmistakable language. when there is any reasonable doubt that
the language used conveys such powers no construction shall be given the document.

FACTS
1. Cosmic Lumber (P) through its General Manager executed a Special Power of Attorney appointing
Paz Villamil-Estrada as attorney-in-fact to handle any court action for the ejectment of squatters
from 2 of their lots so that the corporation could take possession of the lot
2. by virtue of her power of attorney, she instituted an action for the ejectment of Isidro Perez (R) and
the recovery of the lot. Following this, they entered into a compromise agreement which was
subsequently approved:
○ R would pay P P26,640 for having stayed on the land for several years. In return, P would
recognize ownership and possession of R by virtue of the compromise agreement.
1. though the decision had become final and executory, the compromise agreement wasn’t executed
within the 5-year period agreed upon allegedly due to the failure of P to produce the owner’s
duplicate copy of Title needed to segregate the portion sold to R from the lot to be used by P
1. R filed a complaint to revive the judgment
2. P asserted that it was only when summons was served for the revival of judgment that they came
to know of the compromise agreement. They then sought annulment of the decision approving the
compromise agreement on the ground that it was void because: (1) atty-in-fact didn’t have the
authority to divest P of its ownership over any portion of its property (2) her authority was confined
to the institution and filing of the ejectment case and to cause the eviction of the squatters (3)
though the SPA mentioned her power to enter into a compromise agreement, this was limited to
the eviction of squatters in order that “the corporation may take material possession of the entire
lot (4) the alleged consideration of the agreement was never received by P (5) R acted in bad faith
in the execution of the agreement knowing that the atty-in-fact didn’t have the authority (6)
disposal of corporate property requires a board resolution of its directors
3. TC dismissed the complaint, held that the alleged nullity of the compromise judgment due to lack
of authority may be raised as a defense in the execution of the compromise judgment since it
doesn’t bind P but not as a ground for annulment of judgment because it doesn’t affect the
jurisdiction of the TC and doesn’t amount to extrinsic fraud

P: TC decision is void because the compromise agreement upon which it was based is void since
Attorny-in-fact Villamil-Estrada didn’t possess the authority to sell, neither did she have a Board Resolution
authorizing the sale of its property. She was merely empowered to enter into a compromise agreement in
the recovery suit she was authorized to file for the purpose of ejecting third persons/squatters so they
could remove their houses and vacate the premises so the corp. could take possession of the entire lot

ISSUES and HELD
1. w/n the compromise agreement was void having been entered into by the atty-in-fact with no
authority to do so (and if consequently the TC compromise decision was void) — YES
2.
RATIO
1. the authority granted to Villamil-Estrada under the SPA was explicit and exclusionary: for her to
institute any action in court to eject all persons found on Lots 9127 and 443 so that P could take
material possession thereof and for this purpose, to appear at the pre-trial and enter into any
stipulation of facts and/or compromise agreement but only insofar as this was protective of the
rights and interests of P in the property.
○ nowhere in this authorization was she granted any power to sell the property or a portion
thereof
○ neither can a conferment of the power to sell be validly inferred from the specific authority
to enter into a compromise agreement because of the explicit limitation fixed by the
grantor (P) that the compromise shall on be to protect its rights and interests in the lots
○ alienation by sale of an immovable certainly isn’t protective of the right of P to physically
possess the same especially when it was sold for P80/square meter which was less than
its assessed value of P250/square meter and considering that they never received the
proceeds of the sale
○ when the sale of a piece of land is through an agent, the authority of the agent shall be in
writing otherwise the sale is 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 to
conduct the general business of the principal or to execute a binding contract with terms
and conditions which are in the contract he did execute.
○ a SPA is necessary to enter into any contract by which the ownership of an immovable is
transmitted or acquired gratuitously or for a valuable consideration. In order to enable an
agent to sell, such authority must expressly mention a sale or that a sale is a necessary
ingredient of the act.
○ For the principal to confer the right upon an agent to sell real estate, a power of attorney
must express such powers of the agent in clear and unmistakable language. when there
is any reasonable doubt that the language used conveys such powers no construction
shall be given the document.
○ therefore, by selling a portion of P’s land through a compromise agreement,
Villamil-Estrada acted without authority. The sale is void and so is the agreement and the
judgment.

DISPOSITIVE
WHEREFORE, the petition is GRANTED. The decision and resolution of respondent Court of Appeals dated
29 October 1993 and 10 March 1994, respectively, as well as the decision of the Regional Trial Court of
Dagupan City in Civil Case No. D-7750 dated 27 November 1985, are NULLIFIED and SET ASIDE. The
"Compromise Agreement" entered into between Attorney-in-fact Paz G. Villamil-Estrada and respondent
Isidro Perez is declared VOID. This is without prejudice to the right of petitioner to pursue its complaint
against private respondent Isidro Perez in Civil Case No. D-7750 for the recovery of possession of a
portion of Lot No. 443.
SO ORDERED.

PH ALUMINUM WHEELS INC. vs. FASGI ENTERPRISES INC.
Vitug | GR No. 137378 |Oct. 12, 2000

SUMMARY : PAWI’s lawyer entered into a settlement on its behalf regarding a case that FASGI had filed
against it in the United States. When PAWI failed to comply with the terms, FASGI asked that the
judgment of the US court be enforced in the Philippines. PAWI opposed, arguing that its lawyer
acted without authority in entering into the settlement. The Court found for FASGI.

DOCTRINE
In this jurisdiction, it is clear that an attorney cannot, without a client's authorization, settle the action or
subject matter of the litigation even when he honestly believes that such a settlement will best serve his
client's interest.
It is an accepted rule that when a client, upon becoming aware of the compromise and the judgment
thereon, fails to promptly repudiate the action of his attorney, he will not afterwards be heard to complain
about i

FACTS
1. Philippine Aluminum Wheels, Inc. (PAWI) entered into a distributorship agreement with FASGI whereby
FASGI would sell PAWI’s wheels in the US.
2. When the wheels arrived, FASGI found out that they did not comply with the specifications outlined in
the distributorship agreement.
3. FASGI eventually sued in a California court. During the pendency of the case, PAWI and FASGI entered
into a contract aimed at rescinding the contract and thus ending the dispute.
4. PAWI failed to comply with its end of the bargain, prompting FASGI to continue with the case. Still
wanting to avoid protracted litigation, PAWI and FASGI entered into a “Supplemental Settlement
Agreement” in November 1980. The agreement was signed by FASGI’s President and PAWI’s counsel, Mr.
Thomas Ready.
5. PAWI again defaulted on its obligations, prompting FASGI to file a Stipulation of Judgment against FASGI
in the California court. The judgment attained finality, and when FASGI failed to have the judgment
satisfied in the United States, filed a petition for enforcement of foreign judgment in the Philippines.
6. The trial court dismissed the petition on the grounds that it ignored the reciprocal obligations of the
parties (PAWI was obliged to return the purchase price of the wheels, but FASGI was not obliged to return
the goods) and that the settlement agreement was entered into without PAWI’s authorization.
7. The CA reversed the TC, hence this appeal by PAWI, who claims that because Mr. Thomas Ready, its
counsel, was not authorized to enter into the settlement, the judgment born of that settlement should not
be given effect.

ISSUES and HELD
1. Was the settlement agreement entered into with PAWI’s authority? – YES. It never assailed the
settlement until FASGI tried to enforce it.

RATIO
1. The rules of comity, utility, and convenience of nations have given birth to a custom whereby final
judgments of competent foreign courts are given effect, provided, among others, that fraud has
not been used to procure the judgment.
2. It is an accepted rule that when a client, upon becoming aware of the compromise and the
judgment thereon, fails to promptly repudiate the action of his attorney, he will not afterwards be
heard to complain about it.
3. The agreement was lodged in the California case on 26 Nov 1980. If indeed Mr. Ready was not
authorized to execute the agreement, PAWI could have disclaimed the agreement right away.
4. Instead, one year later, PAWI sent a communication to FASGI where it even confirmed the terms
entered into by Mr. Ready on its behalf.
5. PAWI was not prejudiced by the agreement. It was saved from having to pay a large amount of
damages and incurring litigation expenses, which would have happened in the event of a full-blown
trial.

DISPOSITIVE
CA Affirmed. The foreign judgment in favor of FASGI is enforced.

NICHIMEN CORPORATION (MANILA BRANCH) vs. THE HON. COURT OF APPEALS, THE HON. COURT OF TAX
APPEALS AND THE HONORABLE COMMISSIONER OF INTERNAL REVENUE
March 6, 2002
|G.R. No. 139674| Kinds of Agency (as to effects- simple or commission)

SUMMARY:

Nichimen Corporation was assessed deficiency tax- income tax, fixed tax, expanding withholding tax and
percentage tax in the amount of Php 1,092,459.94 by the CIR. It questioned the said assessment but
eventually paid under protest. Nichimen is specifically questioning the assessment for percentage tax
(broker’s tax) claiming that it is not a broker for its head office in Japan. CIR maintained the assessment
and this was upheld by CTA on the basis of Revenue Memorandum Order defining the activities of a
commercial broker. SC affirmed the decision appealed.

DOCTRINE:

A broker, in general, is a middleman who acts for others, on a commission, negotiating contracts relative
to property with the custody of which he has no concern; he is, in more ways than one, an agent of both
parties. His task is to bring the parties together and to get them to come to an agreement. A basic
characteristic of a broker is that he acts not for himself, but for a third person, regardless of whether the
fee paid to him is a fixed amount, regular or not, or whether the act performed by him can be performed by
the principal or not

FACTS:
1. Nichimen Corporation- resident foreign corporation, organized and existing under the laws of
Japan, authorized to do business in the Philippines. It maintains a Manila branch for its PH customers.
2. CIR sent a demand letter for deficiency tax for income tax, fixed tax, expanding withholding tax and
percentage tax wit TOTAL amount of Php 1,092,459.94. Through Nichimen’s auditor, it managed to
withdrew assessment for “fixed tax” but the rest had to be paid.
3. Nichimen continued the opposition to broker’s tax.
Arguments: it is merely liaising for its Head Office. The Head Office then allocates certain amounts to the
petitioner (Branch) to cover its operating requirements for the liaising activities it does.The amount
allocated to the Branch is considered income attributable to the Branch. (basically that it’s not a broker)
4. CIR’s argument: It is a commercial broker thus must pay broker’s tax.

ISSUES and HELD:

Whether or not the deficiency tax assessment by CIR is valid?

RATIO:

A commercial broker based on Revenue Audit Memorandum Order No. 1-86, par. 3, subpar. 3.2., to wit:

"3. Branch Operation and Consequences

"3.2. The branch solicits purchase orders from local buyers, relays the information to its home office, the
home office solicits prospective sellers abroad and eventually received compensation for services
rendered.

"In the second type of operation: (i) the branch shall be considered `a commercial broker’ or indentor; (ii)
its share from compensation as allocated by its home office shall be subject to commercial broker gross
receipts tax; (iii) the branch shall provide itself with corresponding fixed tax as a commercial broker; and
(iv) pay income on its share of the compensation."

The Notes to Financial Statements submitted by the petitioner no less which demonstrate that it had been
receiving compensations and commissions from its home office, the Nichimen Corporation in Japan, over
and above its fixed periodical subsidy. These compensations and commissions, by petitioner’s own
description, represented income computed at certain percentages of invoice amounts of import-export
transactions in the Philippines of the petitioner and others, and import-export transactions in the
Philippines of certain affiliates of the Nichimen Corporation (Japan) and other parties. These are clearly
indicative of acts of a commercial broker.

A broker, in general, is a middleman who acts for others, on a commission, negotiating contracts relative
to property with the custody of which he has no concern; he is, in more ways than one, an agent of both
parties. His task is to bring the parties together and to get them to come to an agreement. A basic
characteristic of a broker is that he acts not for himself, but for a third person, regardless of whether the
fee paid to him is a fixed amount, regular or not, or whether the act performed by him can be performed by
the principal or not. Strictly, a commission merchant differs from a broker in that he may buy and sell in
his own name without having to disclose his "principal," for which purpose, the goods are placed in his
possession and at his disposal, features that are not true in the case of a broker. The commission
merchant thus maintains a relation not only with the parties but also with the property subject matter of
the transaction. A dealer buys and sells for his own account.

The deficiency broker’s tax was based on sales consummated between customers in the Philippines and
manufacturers abroad, other than petitioner itself; the sales were said to have resulted from the liaising
services rendered by its Philippine branch of Nichimen Corporation.

DISPOSITIVE: Petition is DENIED.

V. Compensation

TAN v. HEIRS OF YAMSON (October 24, 2012)
Mendoza | GR No. 163182 | Kinds of Agency – Compensation - Compensated

SUMMARY: Petitioners obtained the services of respondent Yamson for them to be able to sell their 7 lots
to satisfy their debt. An Authority to Look for Buyer/Buyers was issued to Yamson for this matter. Yamson
found a buyer named Chua. Chua only bought 2 out of the 7 lots. The remaining 5 lots were transferred to
the creditor of the petitioners to satisfy their debt. When Yamson was asking for his commission, the
petitioners refused to pay him stating that the agreement was for him to sell all 7 lots. Court ruled for
respondent Yamson stating that the Authority to Look for Buyer/Buyers did not contain a condition that
Yamson must sell all 7 lots for him to be entitled to a commission.

DOCTRINE: An agent is entitled to the commission in accordance with the terms of the contract of agency

FACTS
1. Petitioners (all surnamed Tan) were owners of seven parcels of land. In order to meet their unpaid
obligations to a certain Philip Lo, they decided to sell their properties.
2. They issued the Authority to Look for Buyer/Buyers to respondent Yamson to facilitate their search for
prospective buyers.
3. Yamson informed petitioners in writing that he found an interested buyer, Oscar Chua. The letter was
signed by petitioner Annie Tan to acknowledge registration of Chua as Yamson’s buyer.
4. Two lots were sold to Kimhee Realty Corporation, represented by Chua. The five remaining lots were
transferred to Lo to settle petitioners’ outstanding obligations.
5. Yamson demanded his commission but the petitioners refused to pay him. Petitioners contend that it
was them who introduced Yamson to Chua, and the agreement was for Yamson to sell all the seven lots
which he failed to accomplish.
6. RTC: Ruled for Yamson. Allegation of petitioners that Yamson was tasked to sell all lots was not put
into writing. Neither did the Authority to Look for Buyer/Buyers reflect any such agreement.
7. CA: Affirmed RTC.
8. Yamson died pending the resolution of the case before the SC
9. PETITIONERS: They were already aware that Chua wanted to buy two lots only. They engaged the
services of Yamson to convince Chua to purchase all seven lots. The Authority to Look for Buyer/Buyers
clearly shows that their agreement with Yamson was for him to look for buyers who were willing to
purchase all seven lots.

ISSUES and HELD
WON Yamson was entitled to the payment by petitioners of his broker’s commission (YES)

RATIO
1. Plain reading of the Authority to Look for Buyer/Buyers reveals that nowhere in the said document is it
indicated that the sale of all seven lots was a prerequisite to the payment by petitioners of Yamson’s
commission. According to Sec., Rule 130 of the Rules of Court, when the terms of an agreement have
been reduced to writing, it is considered as containing all the terms agreed upon and there can be,
between the parties and their successors in interest, no evidence of such terms other than the contents of
the written agreement.

2. Petitioners offered no other testimony but their own. Their sole witness was petitioner Annie Tan

DISPOSITIVE
Petition dismissed

URBAN BANK

PH HEALTH-CARE

SANCHEZ

Sanchez v Medicard

Facts
● Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special corporate agent and they gave him a
commission based on the "cash brought in." In 1988, through petitioner's efforts, Medicard and Unilab executed a
Health Care Program Contract. Unilab paid Medicard P4,148,005.00 representing the premium for one (1) year.
Medicard then handed petitioner 18% of said amount or P746,640.90 representing his commission.
● Again, through petitioner's initiative, the agency contract between Medicard and Unilab was renewed for another
year. Prior to the expiration of the renewed contract, Medicard proposed an increase of the premium which Unilab
rejected "for the reason that it was too high". Medicard then asked Sanchez to reduce his commission should the
contract be renewed ( 3 renewal )but the latter did not agree. In a letter dated October 3, 1990, Unilab confirmed
rd
its decision not to renew the health program. Meanwhile, in order not to prejudice its personnel by the termination
of their health insurance, Unilab negotiated with Dr. Montoya and other officers of Medicard, to discuss new ways in
order to continue the insurance coverage. Under the new scheme, Unilab shall pay Medicard only the amount
corresponding to the actual hospitalization expenses incurred by each personnel plus 15% service fee. Medicard did
not give petitioner any commission under the new scheme.
● Aggrieved, Petitioner demanded from Medicard payment of P338,000.00 as his commission plus damages, but the
latter refused to heed his demand.

Issues: Whether or not the contract of agency between Medicard and Sanchez has been revoked in order to entitle Sanchez to a
commission--YES.

Held:
● Yes the Contract of Agency has been revoked, thus the petitioner is not entitled to any commission. It is dictum
that in order for an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply
means that the measures employed by him and the efforts he exerted must result in a sale. Based on the facts, it
may be recalled that through petitioner's efforts, Medicard was able to enter into a Contract with Unilab, two times;
however, before the expiration of the renewed contract, Unilab rejected the proposal. Medicard then requested
petitioner to reduce his commission should the contract be renewed on its third year, but he was obstinate. It is
clear that since petitioner refused to reduce his commission, Medicard directly negotiated with Unilab, thus
revoking its agency contract with petitioner. Such revocation is authorized by Article 1924 of the Civil Code which
provides: "The agency is revoked if the principal directly manages the business entrusted to the agent, dealing
directly with third persons."
● Moreover, as found by the lower courts, petitioner did not render services to Medicard, his principal, to entitle him
to a commission. There is no indication from the records that he exerted any effort in order that Unilab and
Medicard, after the expiration of the Health Care Program Contract, can renew it for the third time. In fact, his
refusal to reduce his commission constrained Medicard to negotiate directly with Unilab. We find no reason in law
or in equity to rule that he is entitled to a commission.

INLAND REALTY
Inland Realty Investments v CA (June 9, 1997)
Hermosisima, J. | Gr. No. 76969 | Kinds of Agency: According to Form: Compensation: Compensated
Summary: Inland Realty had an agency contract with Gregorio Araneta to sell its shares of stock In
Architect's Bldg. Inc. This contract was only for 30 days which was extended several times. Inland
introduced Stanford as a prospective buyer, however Stanford made a counter offer which was not
accepted by Araneta. 1 yr and 5 months after Inland's agency contract expired, Stanford bought Araneta's
shares. A month later, Inland Realty demanded from Araneta its brokers commission of 5% of the sale, but
this was denied by Araneta. Inland filed a complaint to collect their fee, but the SC held that Inland failed
to show any evidence of its involvement in the negotiation of the sale, and given the lapse of the period of
1 year and 5 months since the expiration of its agency contract, Inland was not the efficient procuring
cause in bringing about the sale and is not entitled to the fee.
Doctrine: An agent is entitled to broker's commission, even after the expiration of the agency contract, if it
were the efficient procuring cause in the bringing about the sale.
Facts:
1. Sept. 15, 1975, Gregorio Araneta granted Inland Realty a 30 day authority to sell its 9,800 shares
of stock in Architects' Bldg.
2. Inland Realty then sent proposal letters to prospective buyers, and one of them was Stanford
Microsystems.
3. Stanford Microsystems made a counter proposal to buy the 9,800 shares at P1,000 per share,
and P4.9 M to be payable in five years.
4. Inland realty presented the counter-proposal to Gregorio Araneta, but was told that it was too low
and suggested that Inland try to improve the price and terms of payment.
5. The authority to sell was extended several times, the last time being on Dec 2, 1975 for 30 days.
6. On July 8, 1977, the shares of stock was sold to Stanford Microsystem for P13.5M.
7. After the sale, Inland Realty demanded from Araneta for payment of their 5% brokers commission
for a total amount of P675k, which was denied by the defendants.
8. Inland Realty filed a complaint to collect their unpaid broker's commission.
9. TC and CA dismissed the complaint on the ground that the sale was consummated 1 year and 5
months after the agency contract expired.
10. In this petition, Inland Realty claims that regardless of whether or not their agency contract
expired, they are automatically entitled to their broker's commission merely upon introducing the
Stanford to Araneta.
Issue:
1. WON Petitioner is entitled to brokers commission, even after the agency contract had expired, for
introducing the prospective buyer? No
Ratio:
1. Inland was unable to show that they performed substantial acts that led to the consummation of
the sale to Stanford during the subsistence of the agency contract.
1. Therefore, given the lack of evidence of its involvement in the negotiations between
Stanford and Araneta, and the lapse of the period of more than 1 yr and 5 months, Inland
is not entitled to the brokers commission since it was not the efficient procuring cause in
bringing about the sale.

PRATS V. CA

FACTS:

Defendant Doronilla was the registered owner of 300 hectares of land situated in Montalban, Rizal. He
had for sometime tried to sell his aforesaid 300 hectares of land and for that purpose had designated
several agents; that at one time, he had offered the same property to the Social Security System but failed
to consummate any sale; that his offer to sell to the Social Security System having failed, defendant
Doronila on February 14, 1968 gave the plaintiff an exclusive option and authority in writing to negotiate
the sale of his aforementioned property, which exclusive option and authority the plaintiff caused to be
published in the Manila Times on February 22, 1968.

That on July 18, 1968, the Social Security Commission passed Resolution No. 738, approving the
purchase of defendant Doronila's 300 hectares of land in Montalban, Rizal at a price of P3.25 per square
meter or for a total purchase price of Nine Million Seven Hundred Fifty Thousand Pesos (P9,750,000.00),
appropriating the said amount for the purpose and authorizing the SSS Administrator to sign the necessary
documents to implement the said resolution; that defendant Doronila has received the full purchase price
for his 300 hectares of land in the total amount of P9,750,000.00, which amount he deposited in his
bank Account No. 0012-443 with the defendant Philippine National Bank; that on September 17, 1968,
the plaintiff presented his statement to, and demanded of defendant Doronila the payment of his
processional fee as real estate broker as computed under the agreement; that notwithstanding such
demand, the defendant Doronila, refused to pay the professional fees due him.

Defendant Doronila alleged that when the plaintiff offered the answering defendant's property to the Social
Security System on May 6, 1968, said defendant had already offered his property to, and had a closed
transaction or contract of sale of, said property with the Social Security System; that the letter agreement
had become null and void because defendant Doronila had not received any written offer from any
prospective buyers of the plaintiff during the agreed period of 60 days until the last day of the
authorization which was April 13, 1968 counting from February 14, 1968; that it is not true that plaintiff
brought together defendant Doronila and the officials of the Social Security System to take up the
purchase price of defendant Doronila's property for the simple reason that the plaintiff's offer was P6.00
per square meter and later on reduced to P4.50 per square meter because the SSS Chairman had already
a closed transaction with the defendant Doronila at the price of P3.25 per square meter and that the offer
of the plaintiff was refused by the officials of the Social Security System; and that defendant Doronila did
not answer the statement of collection of the plaintiff because the latter had not right to demand the
payment for services not rendered according to the agreement of the parties.

ISSUE: W/N CA was incorrect in reversing the RTC and dismissing the complaint?

HELD:

CA Decision : In any event, since it has been found that the authority of appellee expired on June 2, 1968,
rather than June 12, 1968 as the lower court opined, the inquiry would be whether up to that time, a
written offer was made by appellee in behalf of the SSS. The stipulation is clear on this point. There
should be a written offer by the prospective buyer or by appellee for or in their behalf, and that if no such
written offer is made until the last day of the authorization, the option and authority shall expire and
become null and void. Note that the emphasis is placed on the need of a written offer to save the
authority from an automatic termination on the last day of the authorization. We note such emphasis with
special significance in receive of the condition relative to automatic extension of not more than 15 days if
negotiations have been started. The question then is when are negotiations deemed started In the light of
the provisions just cited, it should be when a response is given by the prospective buyer showing fits
interest to buy the property when an offer is made by the seller or broker and make an offer of the price.
Strictly, therefore, prior to May 29, 1968, there were no negotiations yet started within contemplation of
the letter-agreement of brokerage (Exh. A). Nevertheless appellant extended appellee's exclusive authority
to on May 18, 1968 (par. 10, Stipulation of Facts; R.A. p. 89), which was automatically extended by 15
days under their agreement, to expire on June 2, 1968, if the period extended up to May 18, 1968 a
necessary authority. For, it may even be considered as taking the of the 15-days automatic extension,
since appellee's pretension is that negotiations have been started within the original period of 60 days.
Appellant in fixing the expiry date on June 2, 1968, has thus made a liberal concession in favor of
appellee, when he chose not to the extension up to May 18, 1968 as the automatic extension which
ougth to have been no more than 15 days, but which he stretched twice as long.

SC Decision (MR): The Court has noted on the other hand that Doronila finally sold the property to the Social
Security System at P3.25 per square meter which was the very same price counter-offered by the Social Security
System and accepted by him in July, 1967 when he alone was dealing exclusively with the said buyer long before
Prats came into the picture but that on the other hand Prats' efforts somehow were instrumental in bringing them
together again and finally consummating the transaction at the same price of P3.25 square meter, although such
finalization was after the expiration of Prats' extended exclusive authority. Still such price was higher than that
stipulated in the exclusive authority granted by Doronila to Prats.
Under the circumstances, the Court grants in equity the sum of One Hundred Thousand Pesos (P100,000.00) by
way of compensation for his efforts and assistance in the transaction, which however was finalized and
consummated after the expiration of his exclusive authority and sets aside the P10,000.00 — attorneys' fees award
adjudged against him by respondent court.

REYES

Henry v. Velasco
Trent, J. / G.R. No. L-10120 / July 22, 1916 / Compensation

SUMMARY:

Velasco, an administrator of the estate of Mariano Velasco, entered into a contract with a A.H. Henry, a
broker, to sell and lease certain livery business and the premises belonging to the estate of Mariano
Velasco. Upon finding a seller, Jose Velasco tried to cancel his contract with Henry. Henry is seeking
recovery from his services and obligation against the estate of Mariano Velasco. Issue: Can the obligation
by the administrator be charged to the estate? Supreme Court: No. The contract made between the
administrator does not bind the estate to such an extent that the administrator can maintain an action
against it and recover a judgment which is binding upon it.

DOCTRINE:

A contract made between the administrator does not bind the estate to such an extent that the
administrator can maintain an action against it and recover a judgment which is binding upon it.

FACTS:

1.Jose Velasco, as the administrator of the estate of Mariano Velasco, entered into a contract with the A.
H. Henry wherein the Henry agreed to effect the sale and lease of a certain livery business and the
premises used therein belonging to the estate.

2. Henry was to receive P8,000 obtained for the business if the buyer would rent the premises for P250
per month.

3. Henry began to negotiate for the sale and lease of this property, the authority conferred upon him for
this purpose was suspended for a few days by the appellant, but soon thereafter the latter directed the
plaintiff to go forward with the negotiations in accordance with the contract.

4. Henry presented a buyer who was willing to pay P9,000 for the business, but offered only P200 rent for
the premises.

5. Velasco finally accepted this offer, making the sale for himself and later tried to cancel his contract with
Henry.

6. Trial court ruled that the contract was abrogated, but allowed recovery for the services rendered in the
amount above stated.

ISSUE:

Whether the estate or the administrator, should be charged with the obligation entered by an
administrator?

HELD:

No. The contract made between the administrator and the lawyer does not bind the estate to such an
extent that the lawyer can maintain an action against it and recover a judgment which is binding upon it.

In such a case the creditor has two remedies: He can prosecute an action against the administrator as an
individual. If judgment is rendered against the administrator and it is paid by him, when he presents his
final account to the Court of First Instance as such administrator he can include the amount so paid as an
expense of administration. The creditor can also present a petition in the proceeding relating to the
settlement of the estate, asking that the court, after notice to all persons interested, allow his claim and
direct the administrator to pay it as an expense of administration. Whichever course is adopted the heirs
and other persons interested in the estate will have a right to inquire into the necessity for making the
contract and the value of the work performed by the attorney.

Contracts of executors and administrators, although made in the interest and for the benefit of the estate
they represent, if made upon a new and independent consideration moving between their promise and
themselves, are their personal contracts, which do not bind the estate, and they must be sued on these
contracts in their individual and not in their representative capacity.

NICANOR BUCTON v. RURAL BANK OF EL SALVADOR INC., MISAMIS ORIENTAL (2014)
J. Del Castillo | GR No.179625 | Power to Sell v. Power to Mortgage

SUMMARY:

Bucton is the owner of a parcel of land in CDO. Concepcion borrowed the title on the pretext that it will be
shown to an interested buyer. However, Concepcion executed a loan with RBOES using the said title.
When Buctan found that her land was illegally mortgaged, she filed a claim to annul the foreclosure
proceedings on her lot. The bank claims that there was no irregularity in the mortgage of the loan and that
the SPA used by Concepcion was not forged.

The RTC sustained Bucton that the SPA was forged. The CA reversed the RTC decision and declared that
there was nothing irregular in the banks foreclosure proceedings.

The SC held that the mere fact that the agent was authorized to mortgage the property is not sufficient to
bind the principal, unless the deed was executed and signed by the agent for and on behalf of his principal

Petition was granted in favor of Bucton and the CA was reversed.

DOCTRINE:

ART. 1879 – A special power to sell excludes the power to mortgage; and a special power to mortgage
does not include the power to sell.

“A mortgage executed by an authorized agent who signed in his own name without indicating that he acted
for and on behalf of his principal binds only the agent and not the principal.”

FACTS
1. Petitioner alleged that she is the owner of a parcel of land, covered by Transfer Certificate of
Title (TCT) No. T-3838, located in Cagayan de Oro City.
2. That on June 6, 1982, Concepcion borrowed the title on the pretext that she was going to
show it to an interested buyer.
3. Concepcion obtained a loan in the amount of ₱30,000.00 from respondent bank; that as
security for the loan, Concepcion mortgaged petitioner’s house and lot to respondent bank
using a SPA allegedly executed by petitioner in favor of Concepcion.
4. Concepcion failed to pay the loan and petitioner’s house and lot were foreclosed by
respondent sheriff without a Notice of Extra-Judicial Foreclosure or Notice of Auction Sale; and
that petitioner’s house and lot were sold in an auction sale in favor of respondent bank.
5. Respondent bank denied the allegation of petitioner that the SPA was forged and averred that
on June 22, 1987, petitioner went to the bank and promised to settle the loan of Concepcion
before September 30, 1987.
6. As to the alleged irregularities in the foreclosure proceedings, respondent bank asserted that
it complied with the requirements of the law in foreclosing the house and lot. By way of
cross-claim, respondent bank prayed that in the event of an adverse judgment against it,
Concepcion, its co-defendant, be ordered to indemnify it for all damages.
1. On February 23, 1998, the RTC issued a Decision sustaining the claim of petitioner that the SPA
was forged as the signatures appearing on the SPA are different from the genuine signatures
presented by petitioner. The RTC opined that the respondent bank should have conducted a
thorough inquiry on the authenticity of the SPA considering that petitioner’s residence certificate
was not indicated in the acknowledgement of the SPA.
2. The CA found no cogent reason to invalidate the SPA, the Real Estate Mortgage, and Foreclosure
Sale as it was not convinced that the SPA was forged. The CA declared that although the
Promissory Note and the Real Estate Mortgage did not indicate that Concepcion was signing for
and on behalf of her principal, petitioner is estopped from denying liability since it was her
negligence in handing over her title to Concepcion that caused the loss. The CA emphasized that
under the Principle of Equitable Estoppel, where one or two innocent persons must suffer a loss,
he who by his conduct made the loss possible must bear it.

ISSUES and HELD

1. WON Petitioner is liable for the executed mortgage to the bank by his agent Concepcion? - NO

RATIO
1. As early as the case of Philippine Sugar Estates Development Co. v. Poizat, we already ruled that
"in order to bind the principal by a deed executed by an agent, the deed must upon its face
purport to be made, signed and sealed in the name of the principal."
2. In other words, the mere fact that the agent was authorized to mortgage the property is not
sufficient to bind the principal, unless the deed was executed and signed by the agent for and on
behalf of his principal.
3. Similarly, in this case, the authorized agent failed to indicate in the mortgage that she was acting
for and on behalf of her principal.
4. The Real Estate Mortgage, explicitly shows on its face, that it was signed by Concepcion in her
own name and in her own personal capacity. In fact, there is nothing in the document to show that
she was acting or signing as an agent of petitioner. Thus, consistent with the law on agency and
established jurisprudence, petitioner cannot be bound by the acts of Concepcion.
5. Concepcion, on the other hand, is liable to pay respondent bank her unpaid obligation under the
Promissory Note dated June 11, 1982, with interest. As we have said, Concepcion signed the
Promissory Note in her own personal capacity; thus, she cannot escape liability. She is also liable
to reimburse respondent bank for all damages, attorneys' fees, and costs the latter is adjudged to
pay petitioner in this case.

DISPOSITIVE

The Petition is hereby GRANTED. The Resolution of the Court of Appeals are hereby REVERSED and SET
ASIDE.

BICOL
Bicol Savings Loan v CA (1989)
J. Melencio-Herrera | GR No. 85302 | Power to Sell v. Power to Mortgage

SUMMARY Juan de Jesus executed a SPA in favour of his son, Jose, to negotiate and mortgage his parcel
of land in Naga City. So Jose obtained a loan from Bicol Savings & Loan Association and secured its
payment by executing a deed of mortgage on the parcel of land. The deed of mortgage contained a
stipulation that in case of default of payment, the Bank would have a right to extrajudicially foreclose the
mortgage property. Juan de Jesus defaulted in payment until he died. Consequently, the Bank
extrajudicially foreclosed the mortgaged property. The heirs of Juan de Jesus tried to recover the property,
arguing that the SPA given to Jose was only to MORTGAGE the property, and not to FORECLOSE or SELL it.
RTC ruled for the Bank. The CA reversed and applied Article 1879 of the CC, which says that the power to
mortgage excludes the power to sell. However, the SC held that Article 1879 does not apply to this case.

DOCTRINE The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary
stipulation supported by the same cause or consideration for the mortgage and forms an essential or
inseparable part of that bilateral agreement.
The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent
contract, and NOT an auction sale resulting from extrajudicial foreclosure.

FACTS
· Juan de Jesus: owner of a parcel of land in Naga City
· March 1976: De Jesus executed a Special Power of Attorney in favor of his son, Jose de
Jesus, "To negotiate, mortgage my real property in any bank either private or public entity
preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon
between the bank and my attorney-in-fact."
· So Jose obtained a loan of P20k from Bicol Savings & Loan Association (bank)
o To secure payment, Jose executed a deed of mortgage on the real property referred to
in the SPA, which contained the following stipulation:
§ b) If at any time the Mortgagor shall refuse to pay the obligations herein
secured, or any of the amortizations of such indebtedness when due, or to
comply with any of the conditions and stipulations herein agreed .... then all
the obligations of the Mortgagor secured by this Mortgage, all the
amortizations thereof shall immediately become due, payable and defaulted
and the Mortgagee may immediately foreclose this mortgage in accordance
with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as
amended, or Act No. 1508. For the purpose of extrajudicial foreclosure, the
Mortgagor hereby appoints the Mortgagee his attorney-in-fact to sell the
property mortgaged.
· Juan de Jesus died.
· Because his loan wasn’t paid, the Bank extrajudicially foreclosed the mortgage. At the public
auction, it was sold to the Bank as the highest bidder.
· Jose & heirs of de Jesus failed to redeem the property within 1 year from the date of the
registration of the Provisional Certificate of Sale.
o So a Definite Certificate of Sale was issued in favor of the bank
· However, heirs still negotiated with the bank for the repurchase of the property.
· Offers & counter offers were made but no agreement was reached.
· So the Bank sold the property instead to other parties in installments. Conditional deeds of
sale were executed between the bank and these parties. A Writ of Possession prayed for by
the bank was granted by the RTC.
· 31 January 1983: Heirs filed a Complaint with COFI Naga City for the annulment of the
foreclosure sale or for the repurchase by them of the property.
· COFI dismissed the case and ruled that:
o The title of the bank over the mortgaged property had become absolute upon the
issuance and registration of the Definite Certificate of Sale in its favour
o Also, heirs were guilty of laches by failing to act until 31 January 1983. (Almost 3
years!)
· CA reversed, applying Article 1879 of the Civil Code
o Foreclosure proceedings & auction sale = NULL & VOID because the special power to
mortgage did not include the power to sell
§ SPA only gave Jose authority to mortgage de Jesus’s property—NOT to
extrajudicially foreclose the mortgage and sell the mortgaged property
§ Also, bank should have resorted to judicial foreclosure.
· Hence this petition for review on certiorari by the Bank.

ISSUE: WoN Jose (as agent of de Jesus) exceeded the scope of his authority in agreeing to a stipulation in
the mortgage deed that Bank could extrajudicially foreclose the mortgaged property – NO
· Article 1879 of the Civil Code: “A special power to sell excludes the power to mortgage; and a
special power to mortgage does not include the power to sell.”
· THIS ARTICLE DOES NOT APPLY HERE!
· Because the sale proscribed by a special power to mortgage under Article 1879 is a voluntary
and independent contract, and NOT an auction sale resulting from extrajudicial foreclosure,
which is precipitated by the default of a mortgagor.
o If the mortgagor did not default in the first place, then there would be no foreclosure.
· Perez v PNB: The stipulation granting an authority to extrajudicially foreclose a mortgage is an
ancillary stipulation supported by the same cause or consideration for the mortgage and forms
an essential or inseparable part of that bilateral agreement.
· The power to foreclose is not an ordinary agency that contemplates exclusively the
representation of the principal by the agent but is primarily an authority conferred upon the
mortgagee for the latter's own protection. That power survives the death of the mortgagor.
· Besides, the right of the Bank to extrajudicially foreclose the property did not depend on the
authorization/stipulation in the deed of mortgage – it is already recognized in Section 7, Rule
86 of the ROC, which grants to a mortgagee 3 remedies that can be alternatively pursued in
case the mortgagor dies:
o (1) to waive the mortgage and claim the entire debt from the estate of the mortgagor
as an ordinary claim
o (2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim
o (3) to rely on the mortgage exclusively, foreclosing the same at any time before it is
barred by prescription, without right to file a claim for any deficiency.
· It doesn’t matter if the authority to foreclose was granted by an attorney-in-fact and not by the
mortgagor personally.
· The stipulation forms an essential part of the mortgage contract.
o No creditor will agree to enter into a mortgage contract without that stipulation.
Because it’s designed to protect him!

PETITION GRANTED. CA DECISION SET ASIDE. EXTRAJUDICIAL FORECLOSURE AND REGISTRATION OF
DEEDS OF SALE AND WRIT OF POSSESSION IN BANK’S FAVOR- VALID

----- OBLIGATIONS OF THE AGENT

A. Fiduciary Relations

SEVERINO

THOMAS

PALMA v. CRISTOBAL (1946)
Perfecto, J. | GR No. L-49219 | Obligations of the agent – Fiduciary relations
FACTS
1. 1909 – After registration proceedings under Act 496, an OCT was issued in the names of Pablo
Palma and his wife Luisa Cristobal.
2. 1923 – Said OCT was cancelled by virtue of CFI decree, but was later substituted by another
certificate of title also in the name of Palma and his wife.
3. 1928 – Due to his wife's death, a new certificate was issued in Palma's name only.
4. Palma sought at first to eject Cristobal from a parcel of land in Tondo (TCT of w/c registered to
Palma), filing a complaint before MTC Manila. Cristobal raised the question of ownership, and the case
was dismissed.
5. Palma then filed another complaint before CFI Manila praying he be declared owner of the land
and for Cristobal to be ordered to restore its possession to him and remove his house.
6. CFI dismissed the case, and when the case was brought to the CA it was similarly dismissed.
· CA concluded that the parcel of land in question is a community property held by Palma in trust for
the real owners (respondent Cristobal being an heir of one of them), the registration having been made in
accordance with an understanding between the co-owners, by reason of the confidence they had in
Palma and his wife.
· This confidence, close relationship, and the fact that co-owners were receiving their shares in the
rentals, were the reasons why no step had been taken to partition the property.
· Before the death of Palma's wife, she called her husband and enjoined him to give her co-owners
their shares and he told her not to worry about it because he would.
· The CA also invoked SC rulings which declared that the registration of the property in the name of the
trustees in possession thereof, must be deemed to have been effected for the benefit of the principal/
cestui que trust.
· Thus this appeal by certiorari.
ISSUES AND HELD

1. WON the CA erred in dismissing the case – NO
RATIO
Palma contends that if he did commit fraud, Cristobal was in fact a part of it, but the SC held that the fact
that Cristobal has been a party to the deception which resulted in Palma's securing in his name the title to
a property not belonging to him, is not a valid reason for changing the legal relationship between the latter
and its true owners to such an extent as to let them lose their ownership to a person trying to usurp it.
Cristobal is not barred because his appearance as attorney for petitioner was not a misrepresentation
which would induce Palma to believe that he recognized Palma as the sole owner of the property in
controversy. The misrepresentation could deceive the court and outsiders, because they were not aware
of the understanding between the co-owners that the property be registered in the name of Palma.
Palma then claimed that even granting the property was owned by several co-owners he now owns it
because of prescription. This theory holds no water because, according to the pronouncement of the CA,
Palma held the property and secured its the registration in his name in a fiduciary capacity, and it is
elementary that a trustee cannot acquire by prescription the ownership of a property entrusted to him. The
position of a trustee is of representative nature. His position is the position of a cestui que trust. It is
logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to
the benefit of his principal.
The relations of an agent to his principal are fiduciary and in regard to property forming the subject matter
of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal. His
position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be
allowed to create in himself an interest in opposition to that of his principal or cestui que trust.

B. General Obligations

C. Specific Obligations

BPI

HSBC

RAMOS v. CAOIBES (Feb 26, 1954)
Jugo, J. | 94 Phil Reports 440 | Obligations of agent - specific

DOCTRINE: An agency is terminated, among other causes, by the death of the principal or of the agent.

FACTS
1. Aug 16, 1948, Concepcion Ramos executed before a notary public two documents:
(1) a SPA which reads as follows:
That I, Concepcion Ramos Dipusoy xxx appoint Mr. Benigno A. Caoibes, xxx
my true and lawful attorney-in-fact xxx to collect any amount due me from the Philippine War Damage
Commission, regarding my claim filed for my properties that were lost during the last war in Balayan,
Batangas, to cash checks, warrants and to sign receipts, vouchers, documents which shall be necessary
to the said purpose.
(2) and an affidavit of the following tenor:
That in case payment of any amount or amounts collected from the Philippine War
Damage Commission, my nephew and at the same time attorney-in-fact, shall give my Teopista
Vda. de Basa one-half (½), of the corresponding amount and the other half (½) shall be given to
my nephew and niece Mr. and Mrs. Benigno A. Caoibes.
2. Ramos died on Aug 19, 1948, leaving a will in which she ordered that the credits due to her be
distributed among the children of the deceased Antonino Ramos, namely, Consolacion, Ramon, Socorro
and Cirila.
3. One year before she died, Concepcion Ramos filed with the War Damage Commission a claim which
was identified as No. 411773.
4. Aug 31, 1948, the Commission issued check No. 348444, in the amount of P501.62, payable to the
deceased Concepcion Ramos.
i.This check was returned to the Commission and substituted by the latter which check No.
564614, on Nov 10, 1948, for the same amount, but payable to Benigno A. Caoibes, who had presented
to said entity the SPA and the Affidavit, in order to exchange the first check No. 564614, which he cashed
for himself.
5. Said 2 documents were presented to the Commission by Caoibes after the death of Concepcion.
6. The administratrix, Consolacion L. Ramos discovered the collection made by Caoibes. She filed a
motion with the CFI Batangas asking that Caoibes be ordered to deposit the sum of P501.62 with the
clerk of court.
7. Caoibes' Answer: (1) he was willing to deliver to the clerk the money but only the sum of P250.81; (2)
by virtue of the 2 documents, he had the right to retain, for himself, half of the sum of P501.62.
8. CFI Batangas ordered Caoibes to deposit the P250.81 with the Clerk of Court, to be at the disposal of
the administratrix and the other parties in this intestate proceedings.
9. Consolacion Ramos filed a MR, which was denied by the order of the court.
10. Hence this appeal.

ISSUES and HELD
1. WON Caoibes is entitled to retain the ½ of the amount collected from the PH War Damages
Commission – NO

RATIO
1. Caoibes, as agent, had the obligation to deliver the amount collected by virtue of the SPA to his
principal, Concepcion, or, after her death, to the administratrix of her estate, Consolacion. There is
absolutely no cession of rights made in favor of Caoibes in the SPA, and under A1711 of the OCC(which
was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless
the agent is a professional agent. There is no proof that Caoibes was such.
2. Furthermore, according to A1732 of said Code, an agency is terminated, among other causes, by the
death of the principal or of the agent. When Caoibes made use of the power of attorney, his principal,
Concepcion was already dead.
3. Coming now to the Affidavit, the alleged document of donation, it should be noted that it is not a
donation of real but of personal property and is governed by A632 of the OCC, which reads as follows:
4. The alleged donation was made in writing but it has not been accepted in the same form, and
consequently, has no validity. It cannot be considered a donation upon valuable consideration, for no
services nor any valuable consideration had passed from the donees to the donor. The mere fact that
Caoibes collected the claim from the War Damage Commission is not such a service as to require
compensation. Caoibes did not even prepare the claim.
5. Donations of personal property may be made verbally or in writing.
6. Verbal donation requires the simultaneous delivery of the gift. In the absence of this requisite the
donation shall produce no effect, unless made in writing and accepted in the same form.

DISPOSITIVE
In view of the foregoing, the order appealed from is reversed and Benigno A. Caoibes is ordered to deposit
with the Clerk of Court of Batangas the sum of P501.62 to be at the disposal of the administratrix in her
capacity as such, without pronouncement as to costs. So ordered.

PEOPLE OF THE PHILIPPINES v. BULU CHOWDURY (February 15, 2000)
Puno, J. | GR No. 129577-80 | Obligations of the agent; specific obligations

SUMMARY: Defendant was charged with the crime of illegal recruitment. He was an employee of Craftrade
Overseas Developers in the business of employing factory workers in South Korea. Chowdury’s job was to
interview applicants and required them to submit some documents and to undergo a seminar. The three
complainants underwent processing and paid required amounts. However, the company failed to employ
them. Apparently, the license of Craftrade to recruit workers for abroad had already expired. The trial court
convicted Chowdury of the offence charged.

The Court reversed and held that Chowdury was a mere employee who was not aware that the company is
without authority to recruit.

DOCTRINE: An employee of a company or corporation engaged in illegal recruitment may be held liable as
principal, together with his employer, if it is shown that he actively and consciously participated in illegal
recruitment.

FACTS:
1. In November 1995, Bulu Chowdury and Josephine Ong were charged before the Regional Trial Court
of Manila with the crime of illegal recruitment in large scale.
2. Chowdury was arrested while Ong remained at large.
3. During trial, the prosecution established through testimonies of private complainants Aser Sasis,
Estrella Calleja and Melvin Miranda that sometime in 1994, they applied with Craftrade Overseas
Developers for employment as factory workers in South Korea.
4. Chowdury interviewed them and he required them to submit some documents and to undergo a
seminar. After private complainants submitted their requirements to Craftrade, each of them were required
to pay a processing/placement fee ranging from P20,000.00 to P25,000.00.
5. Sasis paid the partial amount of P16,000.00 while Calleja and Miranda paid the full amount to Ong
who issued the corresponding receipts.
6. Craftrade failed to deploy them to Korea for employment.
7. The Labor Employment Officer also testified that the license of Craftrade to recruit workers for abroad
had expired on December 15, 1993.
8. For his defense, Chowdury claimed that he was just a mere employee of Craftrade.

RTC:
9. However, the trial court convicted Chowdury for the offense charged and the penalty of life
imprisonment was imposed upon him.

ISSUES and HELD:
1. WON accused-appellant knowingly and intentionally participated in the commission of the crime
charged --- (NO)

RATIO:
The first sentence of Section 6 of RA 8042 provides that the persons who may be held liable for illegal
recruitment are the principals, accomplices and accessories. An employee of a company or corporation
engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown
that he actively and consciously participated in illegal recruitment. The culpability of the employee,
therefore, is hinged on his knowledge of the offense and his active participation in its commission. Where
it is shown that the employee was merely acting under the direction of his superiors and was unaware that
his acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of his
employer.

Upon examination of the records, however, the prosecution failed to prove that accused-appellant was
aware of Craftrade's failure to register his name with the POEA and that he actively engaged in recruitment
despite this knowledge. The obligation to register its personnel with the POEA belongs to the officers of
the agency. A mere employee of the agency cannot be expected to know the legal requirements for its
operation. The evidence at hand showed that accused-appellant carried out his duties as interviewer of
Craftrade believing that the agency was duly licensed by the POEA and he, in turn, was duly authorized by
his agency to deal with the applicants in its behalf. Accused-appellant in fact confined his actions to his
job description. He merely interviewed the applicants and informed them of the requirements for
deployment, but he never received money from them. Their payments were received by the agency's
cashier, Josephine Ong. Furthermore, he performed his tasks under the supervision of its president and
managing director.

Hence, the prosecution failed to prove beyond reasonable doubt accused-appellant's conscious and active
participation in the commission of the crime of illegal recruitment.

His conviction, therefore, was without basis and he was acquitted of the crime charged.

DISPOSITIVE
The assailed decision of the Regional Trial Court is REVERSED and SET ASIDE.

Olaguer v. Purugganan
GR No. 158907 | Article 1889
SUMMARY:
Petitioner is a shareholder in a company who used to hold a high position. He also happened to be an activist during the Marcos regime. In
anticipating his impending arrest by the military, he asked 3 men to sell his shares so that his family will be provided for while he is away.
When he was finally released, he found out that his shares have been transferred to one of the men he entrusted said shares with. He
alleged that he has been defrauded, but the SC ruled against his favor finding that his agent only acted within the authority conferred upon
him, and that such actions were for the principal’s (i.e., the petitioner’s) benefit. More importantly, the Court found that petitioner has indeed
consented to the agent’s actions.
DOCTRINE:
It is a general rule that a power of attorney must be strictly construed; the instrument will be held to grant only those powers that are
specified, and the agent may neither go beyond nor deviate from the power of attorney. However, the rule is not absolute and should not be
applied to the extent of destroying the very purpose of the power. If the language will permit, the construction that should be adopted is that
which will carry out instead of defeat the purpose of the appointment. Clauses reconciled so as to give effect to the instrument in accordance
with its genera intent or predominant purpose. Furthermore, the instrument should always be deemed to give such powers as essential or
usual in effectuating the express powers.
It is, indeed, a familiar and universally recognized doctrine that a person who undertakes to act as agent for another cannot be permitted to
deal in the agency matter on his own account and for his own benefit without the consent of his principal, freely given, with full knowledge of
very detail known to the agent which might affect the transaction. The prohibition against agents purchasing property in their hands for sale
or management is, however, clearly, not absolute. It does not apply where the principal consents to the sale of the property in the hands of
the agent or administrator.
FACTS
Petitioner Eduardo B. Olaguer filed a Complaint before the trial court against respondents Purugganan and Locsin to declare
as illegal the sale of the shares of stock, to restore to the petitioner full ownership of the shares, and payment of damages.
He alleged that
● Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of stock of Businessday
Corporation with a total par value of ₱600,000.00.
● Petitioner was active in the political opposition against the Marcos dictatorship.
● Anticipating the possibility arrest and detainment by the Marcos military, Locsin, Joaquin, and Hector Holifeña had
an unwritten agreement that, in the event that petitioner was arrested, they would support his family by the
continued payment of his salary.
● Petitioner also executed an SPA appointing as his attorneys-in-fact Locsin, Joaquin and Hofileña for the purpose of
selling or transferring petitioner’s shares of stock.
● Petitioner agreed to execute the SPA in order to cancel his shares of stock, even before they are sold, for the
purpose of concealing that he was a stockholder of Businessday, in the event of a military crackdown.
● Petitioner was arrested by the Marcos military for allegedly committing arson. During his detention, respondent
Locsin ordered respondent Purugganan to cancel the petitioner’s shares in the books of the corporation and to
transfer them to respondent Locsin’s name.
● As part of his scheme to defraud the petitioner, respondent Locsin sent Rebecca Fernando, an employee of
Businessday to pretend to borrow Certificate of Stock No. 100 to use it as collateral for Businessday’s loan with
the National Investment and Development Corporation. When Fernando returned it, the word "cancelled" was
already written. When the petitioner became upset, Fernando explained that this was merely a mistake committed
by respondent Locsin’s secretary.
● During the trial, petitioner admitted that from 1980 to 1982, Businessday made regular deposits, each amounting to
₱10,000.00, to the Metropolitan Bank and Trust Company accounts of Manuel and Genaro Pantig, petitioner’s
in-laws. The deposits were made on every 15th and 30th of the month. Petitioner alleged that these funds

consisted of his monthly salary. After receiving a total of ₱600,000.00, the payments stopped.

● Thereafter, respondent Locsin and Fernando went to ask petitioner to endorse and deliver the rest of his stock
certificates to respondent Locsin, but petitioner refused.
● When he was released from detention, petitioner discovered that he was no longer registered as stockholder of
Businessday in its corporate books (now registered in Locsin’s name).
On the other hand, Locsin alleges that
● Petitioner approached him and requested him to sell, and, if necessary, buy petitioner’s shares of stock in
Businessday, to assure support for petitioner’s family in the event that something should happen to him,
particularly if he was jailed, exiled or forced to go underground.
● He denied that he made any arrangements to continue paying the petitioner’s salary in the event of the latter’s
imprisonment.
● When petitioner was detained, respondent Locsin tried to sell petitioner’s shares, but nobody wanted to buy them.
Petitioner’s reputation as an oppositionist resulted in the poor financial condition of Businessday and discouraged
any buyers for the shares of stock
● Respondent Locsin decided to buy the shares himself. Although the capital deficiency suffered by Businessday
1awphi1.net
caused the book value of the shares to plummet below par value, respondent Locsin, nevertheless, bought the
shares at par value.
● However, he had to borrow from Businessday the funds he used in purchasing the shares from petitioner, and had
to pay the petitioner in installments of ₱10,000.00 every 15th and 30th of each month.
RTC ruled for Locsin and held

● that petitioner had intended to sell the shares of stock to anyone, including respondent Locsin, in order to provide
for the needs of his family should he be jailed or forced to go underground
● the SPA drafted by the petitioner empowered respondent Locsin, and two other agents, to sell the shares for such
price and under such terms and conditions that the agents may deem proper.
● petitioner consented to have respondent Locsin buy the shares himself.
● petitioner, through his wife, received from respondent Locsin the amount of ₱600,000.00 as payment for the shares
of stock.
ISSUES and HELD

W/N there was a perfected sale between Olaguer and Locsin over the shares – YES.
a. Olaguer avers that there was no valid sale because Locsin exceeded his authority under the SPA. He said it is only limited to the
following conditions: 1) in the event of his absence and incapacity, and 2) for the limited purpose of applying the proceeds of the
sale to pay for his subsisting obligations w/ the companies adverted to in the SPA. He says that the SPA should be strictly
construed: the word “absence” according to Art. 381, NCC and the word “incapacity” according to Art. 38, NCC. He claims that his
arrest and detention ARE NOT among the instances covered by the terms “absence and incapacity”
● He’s WRONG. While the SPA should be strictly construed, it shouldn’t be read in such a way that would defeat its very purpose.
He will be creating an absurd, if not impossible, situation if the SPA is to be read the way he proposes. (Read the Doctrine above
for a longer explanation)
● Note that Art. 381 (on “absence”) only applies IF NO AGENT has been appointed, but in this case there was—Locsin, the
respondent—w/c means that there was no need for the Court to appoint one for him.
● If Art. 38 (on “incapacity”) would be applied here, then Olaguer would have to be a minor, an imbecile, a deaf-mute, or a
prodigal before the SPA becomes operative. LOL
● Also, there was no proof that he was indebted to Businessday so condition #2 above (1.a.) is far-fetched.
1. W/N Olaguer gave his consent to the sale of the shares to Locsin – YES.
a. Olaguer says records failed to show that he gave his consent to the sale of shares to Locsin for P600k.
● He’s WRONG again. He did receive the proceeds THROUGH his WIFE and in-laws W/OUT ANY PROTEST or COMPLAINT. It
was only 4 years after 1982 when he demanded the return of the shares.
● Under the SPA, Locsin was authorized to negotiate the terms and conditions of the sale including the manner of payment, thus, he
didn’t deviate from his authority when he deposited the money to Olaguer’s in-laws as the latter alleges. Besides, it makes sense.
They were hiding from the military, of course, they shouldn’t use their own bank accounts. This act of Locsin was then
advantageous to Olaguer, w/c means he didn’t exceed his authority (an agent’s act is not an excess of his authority if it is done for
the principal’s advantage)
1. W/N the money received by his wife was his salary. – NO.
● As already pointed out by the CA, the money didn’t correspond to his actual salary
● The wife didn’t receive money all throughout his absence, in fact, after receiving the P600k, payments stopped.
● Besides, if the money was salary, then it would be a void donation from the Businessday because he was getting paid w/out
actually working (it would be void because a donation exceeding 5k should be accepted in writing, Art. 748)
1. W/N Locsin was the proper party to the sale and not Businessday – YES.
● Locsin already explained why the payor in the checks was Businessday—he got cash advances from the Businessday which is
what he used to buy Olaguer’s shares.
● Kindly read the 2 paragraph of the Doctrine above for the 2 point in this issue
nd nd
● It Is clear that Olaguer knew of the transaction, agreed to the purchase price of 600k, and had in fact facilitated the implementation
by providing Locsin information on his in-laws’ bank account. (Olaguer’s wife and son even provided Locsin w/ receipts)
1. W/N the sale was valid although the cancellation of the shares was irregular.
a. The shares were transferred in the name of Locsin, w/out Olaguer delivering to him his certificates of stock.
● But it would be unfair to consider the sale invalid because it was Olaguer’s fault—he failed to deliver the shares to their rightful
buyer (Locsin) which is a breach of his duty as a seller.
● The cancellation of his name from the stock and transfer book, even before the sahres were actually sold, had been done with his
consent.
● Even the subsequent sale of the shares in favor of Locsin had been done with his consent.
DISPOSITIVE PORTION
IN VIEW OF THE FORGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of the CA, affirming the validity of
the sale of the shares of stock in favor of respondent Locsin. No costs.

In re H. V. Bamberger (April 7, 1924)
Ostrand | 49 Phil. 962 | Obligations of the Agent; Specific Obligations: Art. 1891 - “to render accounts”

SUMMARY:
Bamberger was the attorney of S. M. Berger & Co in a case for a sum of money. Following this he took
possession of the property attached by the sheriff in the case and disposed of some of it, collecting a
total of P2,178.82 from the debtors of the opposing party in the case. He thereafter refused to render an
accounting to his employer/principal of the sums received. Court held that he was guilty of professional
malpractice.

DOCTRINE:
Attorneys are bound to promptly account to their clients for money or property received by them and the
fact that an attorney has a lien for fees on money in his hands does not relieve him from liability

FACTS (as found during Bamberger’s disbarment proceedings for malpractice)
1. Bamberger was attorney for the plaintiff in a case entitled S. M. Berger vs Enrique de Valera
regarding a sum of money
2. Bamberger took possession of the personal property attached by the sheriff in the case and other
personal property not attached and disposed of a certain amount of steel bars which de Valera
deposited
3. Bamberger admitted in his answer that he disposed of 83 twins of canned peas at the price of 10
centavos per tin and a case of catchup at P10 without authorization
4. while all the merchandise was in his possession, he collected and received P2,178.82 from
debtors of Enrique de Valera (such as King Chio) or for having disposed of some merchandise. He
also admitted to being accountable for P1,187 to S. M. Berger & Co.
5. he has since refused to render an accounting to S. M. Berger nor has he been willing to deliver to
his client the money collected. His excuse was that he was not given a list of merchandise taken
because Mr. Berger took the receipt of King Chio and certain notes in connection with King Chio’s
account

ISSUES and HELD
1. if he should be suspended from the practice of law — YES

RATIO
1. first, his excuse was declared inadmissible:
a. it was found that he was actually furnished with a list of merchandise and that he made a
note in his book of the merchandise turned over
b. evidence shows that he never asked Mr. Berger for the receipts and notes he needed for
his accounting and that Mr. Berger would’ve furnished it had he asked
c. if it was true that he couldn’t give a complete accounting in regard to King Chio’s account
without such papers and notes, it doesn’t make sense that he prepared and
acknowledged before a notary a document which is an assignment of the account owed to
King Chio…
2. whether Bamberger, after deducting proper attorney’s fees owed his client any sum of money isn’t
to be decided here but in another proceeding
3. attorneys are bound to promptly account to their clients for money or property received by them and
the fact that an attorney has a lien for fees on money in his hands does not relieve him from liability
a. notwithstanding repeated demands on the part of his client, Bamberger has for several
years failed to render an accounting of the money received by him on behalf of his client
and the excuses offered for this failure are inadequate
b. he is clearly guilty of professional misconduct in failing to account to S. M. Berger & Co.
for money received by him as their attorney

DISPOSITIVE
It is therefore ordered that H. V. Bamberger be and he hereby is suspended from his office of lawyer for
the period of six months beginning with the date upon which he is notified of this order.

DOMINGO vs DOMINGO
Makasiar |GR. No. L-30573 |Oct. 29, 1971

SUMMARY Agent received “propina” or gift from a prospective buyer for persuading his principal to agre to
a lower price. SC ruled this is a breach of trust, and that agent’s commission must be forfeited.

DOCTRINE
An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee,
without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal
and forfeits his right to collect the commission from his principal, even if the principal does not suffer any
injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a
gratuitous one, or that usage or custom allows it; because the rule is to prevent the possibility of any
wrong, not to remedy or repair an actual damage

FACTS
1. Principal Vicente granted agent Gregoria (a real estate broker) the exclusive agency to sell his lot for
P176,954, with a commission of 5%.
2. Gregorio authorized Teofilo Purisima to look for a buyer, promising 1⁄2 of the 5% commission.
3. Teofilo introduced buyer Oscar de Leon to agent Gregorio.
4. Oscar submitted a written offer which was very much lower than the asking price of principal Vicente.
5. Principal Vicente directed agent Gregorio to tell Oscar to raise his offer.
6. After several conferences, Oscar raised his offer to P109,000.
7. Principal Vicente agreed to the said amount, and demanded Oscar to issue a check worth P1,000 as
earnest money. Vicente advanced P300 to agent Gregorio for the earnest money received.
8. Principal Vicente asked for an additional P1,000 as earnest money, but instead of paying cash, the
agreement was amended to the effect that Oscar will vacate his house on Denver Street, which will
become part of the purchase price. (he used the house as payment)
9. Oscar gave a gift or “propina” worth P1,000 to agent Gregorio for succeeding in persuading Vicente to
sell his lot at a lower price. This gift was not disclosed to Vicente.
10. Oscar then told Gregorio that, since he did not receive his money from his brother in the US, he was
giving up the negotiation including the earnest money earlier paid.
11. Agent Gregorio “sensed something fishy,” and went to Vicente. There, Gregorio found out about the
house being sold as payment for the lot.
12. Gregorio demanded his 5% commission from the sale.

ISSUES and HELD
Is agent Gregorio entitled to the 5% commission? – NO.. Breach of trust when he did not render a full
account of his transactions with the buyer.
RATIO
Non-disclosure of account is breach of trust.
1. Article 1891: “Every agent is bound to render an account of his transactions and to deliver to the
principal whatever he may have received by virtue of the agency, even though it may not be owing to the
principal. Every stipulation exempting the agent from the obligation to render anaccount shall be void.”
2. Article 1909: “The agent is responsible not only for fraud, but also for negligence...”
3.The provisions demand the utmost good faith, fidelity, honesty, candor and fairness on the part of the
agent to his principal.
4. The law imposes upon the agent the absolute obligation to make a full disclosure to his principal of all
his transactions relevant to the agency.
5. This is not a technical or arbitrary rule, but a rule founded on the highest and truest principle of morality
as well as of the strictest justice.
6.. An agent who takes a secret profit in the nature of a bonus is guilty of a breach of his loyalty to his
principal.
7. By taking such gift or propina, the agent thereby assumes a position wholly inconsistent with that of
being an agent for his principal, who has the right to treat his insofar as his commission is concerned, as
if no agency had existed
8. In this case, agent Gregorio’s acceptance of the monetary gift corrupted hisduty to serve the interests
only of his principal. As a consequence, instead ofexerting his best to persuade the prospective buyer
Oscar to purchase the property on the most advantageous terms as requested by his principal, Gregorio
succeeded in persuading his principal to accept the counter offer.
9. Article 1891 admits of exceptions, none of which are found in this case:
§ Exception 1: if the agent only acted as a middleman with the task of merely bringing together
the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of
the transaction.
§ Exception 2: if the agent had informed the principal of the gift he received, and his principal did
not object.

DISPOSITIVE
Gregorio must forfeit his right to the commission, and return the part of the commission he
received form his principal (the P300 from the earnest money of P1,000).

CORAZON L. ESCUETA, assisted by her husband EDGAR ESCUETA, IGNACIO E. RUBIO, THE HEIRS OF LUZ R.
BALOLOY, namely, ALEJANDRINO R. BALOLOY and BAYANI R. BALOLOY vs. Rufina Lim
January 24, 2007
|G.R. No. 137162| Obligations of the Agent (as to their substitute)

SUMMARY:
Rufina Lim bought the hereditary shares of Ignacio Rubio and Heirs of Baloloy. Earnest money was paid
and it was agreed that balance of the purchase price will be paid upon surrender of their respective
certificate titles. However, subsequently, both Rubio and Heirs of Baloloy refused to deliver the said
certificate titles. Corazon Escueta came into the picture because Rubio said to have executed a simulated
deed of sale in her favor involving the said lots in spite of entering the previous contract of sale with Lim.
Rufina filed an action to remove cloud or quiet title of the disputed lands. Trial court ordered Baloloys to
execute the Deed of Sale in favor of Lim while it dismissed the complaint against Escueta and Rubio.
Upon appeal, CA affirmed decision as to Baloloys but reversed that pertaining to the latter. The contract of
sale was upheld by CA and Rubio was ordered to execute it in favor of respondent, Lim. SC affirmed CA’s
ruling.

DOCTRINE:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he
shall be responsible for the acts of the substitute:

1) When he was not given the power to appoint one x x x.

FACTS:
1. Rufina Lim bought hereditary shares (10 lots) of Ignacio Rubio and Heirs of Luz Baloloy. Contract of
sale was executed in her favor. Earnest money (down payment) was paid and the remaining balance was
agreed to be payable upon the presentation of such individual certificates.
2. Both Rubio and Heirs of Baloloy subsequently refused to receive half of the DP and deliver the
certificate titles.
3. Rufina Lim filed an action to remove cloud on, or quiet title to, real property, with preliminary
injunction and issuance of [a hold-departure order] from the Philippines against Ignacio E. Rubio
4. Rubio, meanwhile, executed a simulated deed of sale in favor of Corazon Escueta and this raised
doubts to the over Lim’s title.

5. Heirs of Baloloy’s arguments: Lim has no cause of action because the subject contract of sale has
no more force and effect as far as the Baloloys are concerned, since they have withdrawn their offer to sell
for the reason that respondent failed to pay the balance of the purchase price as orally promised on or
before May 1, 1990.

6. Escueta and Rubio’s defense: Lim has no cause of action, because Rubio has not entered into a
contract of sale with her; that he has appointed his daughter Patricia Llamas to be his attorney-in-fact and
not in favor of Virginia Rubio Laygo Lim who was the one who represented him in the sale of the disputed
lots in favor of Rufina Lim; that the P100,000 he received from Rufina Lim is her payment for a simple
transaction by way of a loan.

ISSUES and HELD:
1. Whether or not CA erred in denying the petition for relief from judgment filed by the Baloloys? NO.
2. Whether or not Ignacio Rubio is bound by the contract of sale between Virginia Lim (the substitute
that Rubio’s appointed attorney in fact appointed to contract with respondent) and Rufina Lim. YES.
3. Whether or not the contract of sale executed between Rubio and Escueta is valid. NO.

RATIO:

1. Baloloys failed to appear in pre-trial. Pre-trial is mandatory. The notices of pre-trial had been sent
to both the Baloloys and their former counsel of record. Defense interposed by Baloloys that they did not
receive notices re the pre trial order was belied by the fact that what the Baloloys’ former counsel has
alleged in their Motion to Lift Order of In Default is the belated receipt of Bayani Baloloy’s special power of
attorney in favor of their former counsel- not that they have not received the notice or been informed of the
scheduled pre-trial. Not having raised the ground of lack of a special power of attorney in their motion, they
are now deemed to have waived it.

2. Article 1892 of the Civil Code provides:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he
shall be responsible for the acts of the substitute:

1) When he was not given the power to appoint one x x x.

Applying the above-quoted provision to the special power of attorney executed by Ignacio Rubio in favor of
his daughter Patricia Llamas, it is clear that she is not prohibited from appointing a substitute. By
authorizing Virginia Lim to sell the subject properties, Patricia merely acted within the limits of the
authority given by her father, but she will have to be "responsible for the acts of the sub-agent,"19 among
which is precisely the sale of the subject properties in favor of respondent.

Even assuming that Virginia Lim has no authority to sell the subject properties, the contract she executed
in favor of respondent is not void, but simply unenforceable (if not ratified), under the second paragraph of
Article 1317 of the Civil Code.

Ignacio Rubio merely denies the contract of sale. He claims, without substantiation, that what he received
was a loan, not the down payment for the sale of the subject properties. His acceptance and encashment
of the check, however, constitute ratification of the contract of sale and "produce the effects of an express
power of agency." His action necessarily implies that he waived his right of action to avoid the contract,
and, consequently, it also implies the tacit, if not express, confirmation of the said sale effected" by
Virginia Lim in favor of respondent.

Similarly, the Baloloys have ratified the contract of sale when they accepted and enjoyed its benefits. "The
doctrine of estoppel applicable to petitioners here is not only that which prohibits a party from assuming
inconsistent positions, based on the principle of election, but that which precludes him from repudiating
an obligation voluntarily assumed after having accepted benefits therefrom. To countenance such
repudiation would be contrary to equity,and would put a premium on fraud or misrepresentation."

Thus, Virginia Lim validly executed a contract of sale with Rufina Lim that must be enforced. All elements
of a valid contract under Art1458 are present. Earnest money paid served as a proof of perfection of the
contract.
3. Ignacio Rubio could no longer sell the subject properties to Corazon Escueta, after having sold them
to respondent. “In a contract of sale, the vendor loses ownership over the property and cannot recover it
until and unless the contract is resolved or rescinded x x x." The records do not show that Ignacio Rubio
asked for a rescission of the contract. What he adduced was a belated revocation of the special power of
attorney he executed in favor of Patricia Llamas. "In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the
contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as
no demand for rescission of the contract has been made upon him either judicially or by a notarial act.

DISPOSITIVE: Petition DENIED.

BALTAZAR v. OMBUDSMAN ET. AL. (December 6, 2006)
Velasco, Jr. | GR No. 136433 | Specific Obligations of the Agent – “responsibility for acts of his substitute”

SUMMARY: Paciencia Regala owns a 7-hectare fishpond. His attorney-in-fact Faustino R. Mercado leased
the fishpond to Eduardo Lapid. Lessee Lapid in turn sub-leased it to Rafael Lopez. Respondent Ernesto
Salenga was hired by Eduardo Lapid as a fishpond watchman. Eventually, sub-lessee Lopez re-hired him.
Respondent sent a demand letter for unpaid salaries and non-payment of harvest shares. His request was
left unheeded. Respondent then filed a complaint before the DARAB. Prior to the resolution of the case,
Baltazar, an alleged nephew of attorney-in-fact Mercado alleging that respondent Salenga and the other
officials of DAR for violation of RA 3019. The Ombudsman dismissed the petition prompting Baltazar to file
a petition before the Court. The Court ruled that Baltazar did not have legal standing to pursue the case.
Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented a
Special Power of Attorney. However, such SPA is unavailing for Faustino Mercado is an agent himself and
as such, he cannot further delegate his agency to another. An agent cannot delegate to another the same
agency.

DOCTRINE: An agent cannot delegate to another the same agency. A power once delegated cannot be
re-delegated (potestas delegate non delegare potest). Re-delegation of the agency would be detrimental to
the principal as the second agent has no privity of contract with the former. Civil Code only allows for
substitute, not re-delegation.

FACTS
1. Paciencia Regala owns a 7-hectare fishpond. His attorney-in-fact Faustino R. Mercado leased the
fishpond to Eduardo Lapid. Lessee Lapid in turn sub-leased it to Rafael Lopez.
2. Respondent Ernesto Salenga was hired by Eduardo Lapid as a fishpond watchman. Eventually,
sub-lessee Lopez re-hired him.
3. Respondent Salenga sent a demand letter to Rafael Lopez and Lourdes Lapid for unpaid salaries and
non-payment of the 10% share in the harvest.
4. Sub-lessee Lopez responded stating that during the last two months of the sub-lease, he had given his
rights over the fish pond to Mario Palad and Ambit Perez.
5. Respondent filed a complaint before the Provincial Agrarian Reform Adjudication Board (PARAB).
6. Eventually, respondent amended his complaint to include an issuance of a TRO and preliminary
injunction. During the hearing, only respondent appeared. Thus, Ilao Jr., the Provincial Adjudicator of
DARAB, granted the TRO.
7. The board sheriff supervised the harvest in accordance with the request of respondent Salenga.
Defendants Lopez and Lapid received their respective shares while respondent Salenga was given his
share under protest.
8. Pending resolution of the agrarian reform case, the case at bench was instituted by petitioner Antonio
Baltazar, an alleged nephew of attorney-in-fact Mercado alleging that respondent Salenga and the other
officials of DAR for violation of RA 3019. Petitioner charged private respondents of conspiracy through the
issuance of the TRO which allowed respondent Salenga to retain possession of the fishpond, operate it,
harvest the produce, and keep the sales under safekeeping of other private respondents. Moreover, it was
alleged that PARAB had no jurisdiction to hear the case as there was no tenancy relationship.
9. Ombudsman: dismissed the petition

ISSUES and HELD
WON Baltazar had legal standing to pursue the instant petition (NO)

RATIO
Real party in interest is the party who stands to be benefited or injured by the judgment in the suit or the
party entitled to the avails of the suit.

- The records show that the petitioner is a non-lawyer appearing for himself and conducting the
litigation in person. In so far as the complaint before the Ombudsman, the law allows complaints by any
person before the Ombudsman. However, filing before the Court is another matter. A non-lawyer may only
be able to conduct litigation in person and appear for oneself only when he is a part to a legal controversy
according to the Rules of Court.
- Petitioner is not a real party in interest because he is a stranger to the agrarian reform case. He is
the nephew of the attorney-in-fact of the owner of the fishpond.
- Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented
a Special Power of Attorney. However, such SPA is unavailing for the following reasons:
a. Faustino Mercado is an agent himself and as such, he cannot further delegate his agency to another.
An agent cannot delegate to another the same agency. A power once delegated cannot be re-delegated
(potestas delegate non delegare potest). Re-delegation of the agency would be detrimental to the principal
as the second agent has no privity of contract with the former.
b. The Civil Code allows for a substitute but the SPA clearly delegates the agency to petitioner to pursue
the case, and not merely act as a substitute.
- The petition was not pursued as a public suit in assailing an allegedly illegal official action
- Even if it was considered as a public suit, petitioner has not adequately shown that he is entitled to
seek judicial protection. Petitioner has not made out a sufficient interest in the vindication of public order
and security relief as a citizen or taxpayer.

DISPOSITIVE
Petition dismissed.

MEDEZONA

METROPOLITAN BANK AND TRUST

AUSTRIA

Austria v. Court of Appeals 31 SCRA 527, G.R. No. L-29640 (June 10, 1971)

Facts:
● Maria G. Abad received from Guillermo Austria one (1) pendant with diamonds to be sold on commission basis or to
be returned on demand.
● Maria Abad while walking home, two men snatched her purse containing jewelry and cash, and ran away.
● Thus, Abad failed to return the jewelry or pay its value notwithstanding demands.
● Austria filed an action against Abad and Abad’s husband for recovery of the pendant or of its value, and damages.
● Abad raised the defense that the alleged robbery had extinguished their obligation.

Issue/s:
1. Whether or not in a contract of agency (consignment of good for sole) it is necessary that there be prior conviction for
robbery before the loss of the article shall exempt the consignee from liability for such loss. No.
1.1.To avail of the exemption granted in the law, it is not necessary that the persons responsible for the occurrence
should be found or punished, it would only be sufficient to establish that the enforceable event, the robbery in this
case did take place without any concurrence fault on the debtor’s part, and this can be done by preponderance of
evidence.
1.2.A court finding that a robbery has happened would not necessary mean that those accused in the criminal
action should be found guilty of the crime; nor would a ruling that those actually accused did not commit the
robbery be inconsistent with a finding that a robbery did take place.

2. Whether or not Abad was negligent. No.
2.1.In 1961, when the robbery in question did take place, for at that time criminality had not by far reached the
levels attained in the present day. The diligence that Abad portrayed when she went home before she was robbed
was not a sign of negligence on her part.

INTERNATIONAL FILMS (CHINA)
International Films (China) v Lyric Film Exchange (Nov. 19, 1936)
Villa-Real, J. | Gr. No. L-42465 | Obligations of the agent: Specific obligations: liability for fraud and
negligence
Summary: International Films leased to Lyric Films the film "Monte Carlo Madness." After the last showing
of the film, Lyric Film tried to return the film to International Films, however Gabelman, International Films
agent, asked Lyric Film to deposit it in their safety vault since Int. Films does not have their own safety
vault yet. Lyric Films agreed to deposit it in their safety vault under Gabelman's responsibility since it was
not covered by Lyric Films insurance, and they were also authorized to show the film at other places.
Gabelman was replaced by Lazarus Joseph, and Lazarus tried to collect the film from Lyric Films, however
Lyric did not return it since it was scheduled to be shown elsewhere. Lazarus agreed to the exhibition,
however, the warehouse storing the film burned down. Int. Films filed a complaint to recover the loss of
the film from Lyric Film. SC held that Lyric Film is not liable for the destruction, since the agreement
between Gabelman and Lyric was a subagency, and as a subagent, it was not instructed by the principal to
insure the film, therefore it was not part of the obligation imposed upon it.
Doctrine: The subagent is not obliged to fulfill more than the mandate of the principal and to answer for
damages caused to the principal by his failure to do so.
Facts:
1. Bernard Gabelman was the Philippines agent of International Films by virtue of a power of attorney
executed in his favor.
2. International Films leased the film "Monte Carlo Madness" through Bernard Gabelman to Lyric
Film Exchange.
1. To be shown in different places for 30% of the receipts.
2. One of the conditions of the contract was that Lyric Film Exchange would answer for the
loss of the film, whatever the cause.
3. After the last showing of the film, Vicente Albo, the chief of the film department of Lyric Film
Exchange, asked Bernard Gabelman how to return the film.
4. Gabelman asked to deposit the film in the vault of Lyric Film Exchange since International Film did
not yet have its own safety vault.
5. Vicente Albo agreed to deposit under Gabelman's responsibility since the film is not covered by
Lyrics insurance, and they also had a verbal agreement that Lyric Film could show the film Monte
Carlo Madness elsewhere.
6. Bernard Gabelman left International Films and was succeeded by Lazarus Joseph.
7. Lazarus asked Lyric Film for the return of Monte Carlo Madness, but this was refused since it was
still supposed to be shown elsewhere.
8. Lazarus agreed to the exhibition, however, the bodega where the film was being stored burned
down.
9. International FIlms filed a complaint against Lyric Films to recover the loss of the film.
Issue:
1. WON Lyric Film is responsible to International Films for the destruction of the film? No
Ratio:
1. There is preponderence of evidence to show that verbal agreement between Gableman and Albo
was that the film “Monte Carlo Madness” would remain deposited in the safety vault under the
responsibility of Gabelman, and that Lyric Films, as his subagent, could show it in theaters. (Int
Films received 5% up to a certain amount, and 15% in excess of the amount)
2. The verbal contract between Gabelman and Vicente Albo was a sub-agency, which means that
Lyric Film is not civilly liable for the destruction of the film because as a mere subagent, it was not
obliged to fulfill more than the contents of the mandate and to answer for the damages caused to
the principal by his failure to do so.
3. The fact that the film was not insured against fire does not constitute fraud or negligence since,
as a subagent, it received no instruction from its principal to insure the film therefore it was not
part of the obligation imposed upon it.

D. Liabilities

ACE NAVIGATION v FGU Insurance

*Appeal under Rule 45 seeking to reverse CA decision ordering Petitioner , jointly and severally with
CARDIA LIMITED, to pay Respondents the sum of money.

FACTS:

On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port
China, 8,260 metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila
and delivered to its consignee, Heindrich Trading Corp. (HEINDRICH). The subject shipment was insured
with respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER).

On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However,
upon inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was
found that out of the 165,200 bags of cement, 43,905 bags were in bad order and condition. Unable to
collect the sustained damages in the amount of P1,423,454.60 from the shipper, CARDIA, and the
charterer, REGENCY, the respondents, as co-insurers of the cargo, each paid the consignee, HEINDRICH,
the amounts of P427,036.40 and P284,690.94, respectively, and consequently became subrogated to all
the rights and causes of action accruing to HEINDRICH.

Respondents filed a complaint for damages against the following defendants.

RTC dismissed the complaint.

CA found PAKARTI, SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the respondents'
claim, with the remaining 30% to be shouldered solidarily by CARDIA and its agent, ACENAV. Finding that
the parties entered into a time charter party, not a demise or bareboat charter where the owner completely
and exclusively relinquishes possession, command and navigation to the charterer, the CA held PAKARTI,
SHINWA, KEE YEH and its agent, SKY, solidarily liable for 70% of the damages sustained by the cargo.
This solidarity liability was borne by their failure to prove that they exercised extraordinary diligence in the
vigilance over the bags of cement entrusted to them for transport. On the other hand, the CA passed on
the remaining 30% of the amount claimed to the shipper, CARDIA, and its agent, ACENAV, upon a finding
that the damage was partly due to the cargo's inferior packing.

ISSUE: Whether or not it may be held liable to the respondents for 30% of their claim? NO.

HELD:

A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent, describing the
freight so as to identify it, stating the name of the consignor, the terms of the contract for carriage, and
agreeing or directing that the freight to be delivered to the order or assigns of a specified person at a
specified place." It operates both as a receipt and as a contract. As a receipt, it recites the date and place
of shipment, describes the goods as to quantity, weight, dimensions, identification marks and condition,
quality, and value. As a contract, it names the contracting parties, which include the consignee, fixes the
route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the
parties. As such, it shall only be binding upon the parties who make them, their assigns and heirs.
In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI;
and (c) the consignee HEINDRICH. However, by virtue of their relationship with PAKARTI under separate
charter arrangements, SHINWA, KEE YEH and its agent SKY likewise became parties to the bill of lading.
In the same vein, ACENAV, as admitted agent of CARDIA, also became a party to the said contract of
carriage.

The respondents, however, maintain that ACENAV is a ship agent and not a mere agent of CARDIA, as
found by both the CA and the RTC.

Article 586 of the Code of Commerce provides:
ART. 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves
that the amount claimed was invested therein. By ship agent is understood the person entrusted with the
provisioning of a vessel, or who represents her in the port in which she may be found.
Records show that the obligation of ACENAV was limited to informing the consignee HEINDRICH of the
arrival of the vessel in order for the latter to immediately take possession of the goods. No evidence was
offered to establish that ACENAV had a hand in the provisioning of the vessel or that it represented the
carrier, its charterers, or the vessel at any time during the unloading of the goods. Clearly, ACENAV's
participation was simply to assume responsibility over the cargo when they were unloaded from the vessel.
Hence, no reversible error was committed by the courts a quo in holding that ACENAV was not a ship agent
within the meaning and context of Article 586 of the Code of Commerce, but a mere agent of CARDIA, the
shipper.

On this score, Article 1868 of the Civil Code states:
ART. 1868. By the contract of agency, a person binds himself to render some service or to do something
in representation or on behalf of another, with the consent or authority of the latter.
Corollarily, Article 1897 of the same Code provides that an agent is not personally liable to the party with
whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving
such party sufficient notice of his powers.

Both exceptions do not obtain in this case. Records are bereft of any showing that ACENAV exceeded its
authority in the discharge of its duties as a mere agent of CARDIA. Neither was it alleged, much less
proved, that ACENAV's limited obligation as agent of the shipper, CARDIA, was not known to HEINDRICH.
Furthermore, since CARDIA was not impleaded as a party in the instant suit, the liability attributed upon it
by the CA on the basis of its finding that the damage sustained by the cargo was due to improper packing
cannot be borne by ACENAV. As mere agent, ACENAV cannot be made responsible or held accountable for
the damage supposedly caused by its principal.

Accordingly, the Court finds that the CA erred in ordering ACENAV jointly and severally liable with CARDIA to pay
30% of the respondents' claim.

NATIONAL POWER CORP.

PHILIPPINE PRODUCTS COMPANY vs. PRIMATERIA SOCIETE ANONYME POUR LE COMMERCE EXTERIEUR
BENGZON, C.J. / G.R. No. L-17160 / November 29, 1965 /
Liabilities to Third Person

SUMMARY:

Primateria Societe Anonyme Pour Le Commerce Exterieur (Primateria Zurich, a sociedad anonima formed
in Zurich), through Alexander Baylin, entered into an agreement with Philippine Products Company (PPC)
whereby it was agreed that from 1951 to 1953, PPC shall ship copra products abroad. Apparently,
Primateria Zurich was not licensed by the Securities and Exchange Commission to do business in the
Philippines. Primateria Zurich also failed to pay its obligations amounting to P31,009.71. PPC sued
Primateria Zurich and it impleaded Baylin, Primateria Philippines, and one Jose Crame, the latter three
being impleaded as agents of Primateria Zurich. The lower court ruled in favor PPC but it absolved Baylin,
Crame, and Primateria Philippines. PPC appealed as it insists that Baylin et al should be liable as agents
because under. Section 68 and 69 of the Corporation Law, the agents of foreign corporations not licensed
to transact in the Philippines shall be personally liable for contracts made in their (foreign corporation’s)
behalf. Issue: Can Baylin et al be held liable as alleged agents of Primateria Zurich? Supreme Court: No.
PPC was not able to prove that Primateria Zurich, a sociedad anonima, is a foreign corporation. And as a
sociedad anonima, Primateria Zurich is not a corporation under our Corporation Law. As such, Sections 68
and 69 cannot be invoked in order to make the alleged agents of Primateria Zurich be liable. PPC will have
to enforce the judgment against Primateria Zurich alone.

DOCTRINE:

Agents of a sociedad anonima cannot exceed authority and be held personally liable made in the sociedad
anonima’s behalf.

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless
he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice
of his powers.

FACTS:

1. Primateria Societe Anonyme Pour Le Commerce Exterieur (hereinafter referred to as Primateria Zurich)
is a foreign juridical entity and, at the time of the transactions with PPC, had its main office at Zurich,
Switzerland and was then engaged in "Transactions in international trade with agricultural products,
particularly in oils, fats and oil-seeds and related products."

2. On October 24, 1951, Primateria Zurich, through defendant Alexander B. Baylin, entered into an
agreement with plaintiff Philippine Products Company, whereby the latter undertook to buy copra in the
Philippines for the account of Primateria Zurich, during "a tentative experimental period of one month from
date."

3. The contract was renewed by mutual agreement of the parties to cover an extended period up to
February 24, 1952, later extended to 1953.

4. During such period, PPC caused the shipment of copra to foreign countries, pursuant to instructions
from defendant Primateria Zurich, thru Primateria (Phil.) Inc. — referred to hereafter as Primateria
Philippines — acting by defendant Alexander G. Baylin and Jose M. Crame, officers of said corporation.

5. As a result, the total amount due to the plaintiff as of May 30, 1955, was P33,009.71.

6. Primateria Zurich failed to pay the amount due.

7. CFI Manila found Primateria Zurich solely liable but it absolved Baylin, Crame, and Primateria Philippines
which were agents of Primateria Zurich.

8. PPC appealed as it insists that Baylin et al should be liable as agents because under. Section 68 and
69 of the Corporation Law, the agents of foreign corporations not licensed to transact in the Philippines
shall be personally liable for contracts made in their (foreign corporation’s) behalf.

ISSUE:

Whether its agents may be held personally liable on contracts made in the name of the sociedad anonima
with third persons in the Philippines?

HELD:

Primateria Zurich was not duly proven to be a foreign corporation; nor that a societe anonyme ("sociedad
anomima") is a corporation; and that failing such proof, the societe cannot be deemed to fall within the
prescription of Section 68 of the Corporation Law.

PPC could recover from both the principal (Primateria Zurich) and its agents. It has been given judgment
against the principal for the whole amount.

And as a sociedad anonima, Primateria Zurich is not a corporation under our Corporation Law. As such,
Sections 68 and 69 cannot be invoked in order to make the alleged agents of Primateria Zurich be liable.
PPC will have to enforce the judgment against Primateria Zurich alone.

DEVELOPMENT BANK
DBP v. CA, AND THE ESTATE OF JUAN DANS
J. Quiazon | GR No.L-109937 | Liabilities to third persons (1994)

SUMMARY:

Juan Dans, who was 76 years old, applied for a loan with DBP. He was asked by the bank to obtain a
mortgage redemption insurance with DBP MRI. From the reduced approved loan of P300,000, DBP
deducted premium payment on behalf of DBP MRI on August 20, 1987. Jose Dans however died on
September 3. On Sept. 23, DBP MRI notified DBP that Dans was ineligible for MRI coverage. DBP refunded
the premium but ir was refused by the wife of Dans who asserted the full claim on the insurance.

TC and CA held that DBP was liable and absolved DBP MRI. The SC held that DBP was liable because it
exceeded the scope of its agency with DBP MRI.

DOCTRINE:

Under Article 1897 of the Civil Code of the Philippines, "the agent who acts as such is not personally
liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of his powers."

FACTS
1. In May 1987, Juan B. Dans, together with his wife Candida, his son and
daughter-in-law, applied for a loan of P500,000.00 with the Development Bank of
the Philippines (DBP), Basilan Branch.
2. As the principal mortgagor, Dans, then 76 years of age, was advised by DBP
to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage
Redemption Insurance Pool (DBP MRI Pool).
3. A loan, in the reduced amount of P300,000.00, was approved by DBP on
August 4, 1987 and released on August 11, 1987.
4. From the proceeds of the loan, DBP deducted the amount of P1,476.00 as
payment for the MRI premium. On August 15, 1987, Dans accomplished and
submitted the "MRI Application for Insurance" and the "Health Statement for DBP
MRI Pool."
5. On August 20, 1987, the MRI premium of Dans, less the DBP service fee of
10 percent, was credited by DBP to the savings account of the DBP MRI Pool.
Accordingly, the DBP MRI Pool was advised of the credit.
6. On September 3, 1987, Dans died of cardiac arrest. The DBP, upon notice,
relayed this information to the DBP MRI Pool.
7. On September 23, 1987, the DBP MRI Pool notified DBP that Dans was not
eligible for MRI coverage, being over the acceptance age limit of 60 years at the
time of application.
8. The DBP offered to refund the premium of P1,476.00 which the deceased had
paid, but Candida Dans refused to accept the same, demanding payment of the
face value of the MRI or an amount equivalent to the loan. She, likewise, refused
to accept an ex gratia settlement of P30,000.00, which the DBP later offered.
9. On February 10, 1989, respondent Estate, through Candida Dans as
administratrix, filed a complaint with the Regional Trial Court, Branch I, Basilan,
against DBP and the insurance pool for "Collection of Sum of Money with
Damages.".
10. Respondent Estate alleged that Dans became insured by the DBP MRI Pool
when DBP, with full knowledge of Dans' age at the time of application, required
him to apply for MRI, and later collected the insurance premium thereon.
11. On March 10, 1990, the trial court rendered a decision in favor of respondent
Estate and against DBP. The DBP MRI Pool, however, was absolved from liability,
after the trial court found no privity of contract between it and the deceased. The
trial court declared DBP in estoppel for having led Dans into applying for MRI and
actually collecting the premium and the service fee, despite knowledge of his age
ineligibility.
12. The DBP appealed to the Court of Appeals. In a decision dated September 7,
1992, the appellate court affirmed in toto t he decision of the trial court.

ISSUES and HELD

1. WON there is a perfected contract with DPB MRI POOL? – NO
2. WON DBP is liable? - YES

RATIO
1. Under the aforementioned provisions, the MRI coverage shall take effect: (1) when the
application shall be approved by the insurance pool; and (2) when the full premium is paid
during the continued good health of the applicant. These two conditions, being joined
conjunctively, must concur.
2. Undisputably, the power to approve MRI applications is lodged with the DBP MRI Pool.
The pool, however, did not approve the application of Dans. There is also no showing that
it accepted the sum of P1,476.00, which DBP credited to its account with full knowledge
that it was payment for Dan's premium. There was, as a result, no perfected contract of
insurance; hence, the DBP MRI Pool cannot be held liable on a contract that does not
exist.
3. On the other hand In dealing with Dans, DBP was wearing two legal hats: the first as a
lender, and the second as an insurance agent.
4. As an insurance agent, DBP made Dans go through the motion of applying for said
insurance, thereby leading him and his family to believe that they had already fulfilled all
the requirements for the MRI and that the issuance of their policy was forthcoming.
5. The DBP is not authorized to accept applications for MRI when its clients are more
than 60 years of age.
6. Under Article 1897 of the Civil Code of the Philippines, "the agent who acts as such is
not personally liable to the party with whom he contracts, unless he expressly binds
himself or exceeds the limits of his authority without giving such party sufficient notice of
his powers."
7. Knowing all the while that Dans was ineligible for MRI coverage because of his
advanced age, DBP exceeded the scope of its authority when it accepted Dan's
application for MRI by collecting the insurance premium, and deducting its agent's
commission and service fee.
8. The liability of an agent who exceeds the scope of his authority depends upon whether
the third person is aware of the limits of the agent's powers. There is no showing that
Dans knew of the limitation on DBP's authority to solicit applications for MRI.

DISPOSITIVE

The decision of the Court of Appeals in CA is MODIFIED and petitioner DBP is ORDERED: (1) to
REIMBURSE respondent Estate of Juan B. Dans the amount of P1,476.00 with legal interest from the date
of the filing of the complaint until fully paid; and (2) to PAY said Estate the amount of P50,000.00 as
moral damages and the amount of P10,000.00 as attorney's fees. With costs against petitioner.
MACIAS
MACIAS and CO. vs. WARNER, BARNES, and CO. (March 9, 1922)
JOHNS, J. | G.R. No. 16492 | Liabilities

Summary: Macias applied for and obtained 4 insurance policies against loss by fire to various insurance
companies. While policies were in force, Macias’ property was damaged by fire and use of water to put out
said fire. Macias made a claim for damages under its policies but could not agree as to amount of loss
sustained. Defendants motioned for new trial but was denied. SC held that this is a case of disclosed
principal (the different insurance companies) and disclosed agent, as the contracts explicitly state that
Macias was dealing with the insurance companies, and not the agent (not even a party to the contract),
therefore Macias should go after the insurance companies directly and not their agent.
Doctrine: The policies on their face shows that the defendant was the agent of the respective companies,

and that it was acting as such agent in dealing with the plaintiff. That in the issuance and delivery of the
policies, the defendant was doing business in the name of, acting for, and representing, the respective
insurance companies
Facts
· Plaintiff corporation is duly registered and domiciled in Manila – importer of textures and commercial
articles for wholesale
· Defendant corporation is a corporation duly licensed to do business in the Philippine Islands, and is
the resident agent of insurance companies “The China Fire Insurance Company, Limited, of Hong
Kong”, “The Yangtsze Insurance Association Limited, of Shanghai”, and “The State Assurance
Company, Limited, or Liverpool”
· Plaintiff applies for 4 policies against the loss of fire:
o Policy 4143 – 12,000 – Rosario Vizcarra paid P102 for insuring against or damage by
fire certain merchandise. “The company agrees with the insured that, if the property
above described, or any party thereof, shall be destroyed or damaged by fire – the
company will pay not exceeding the amount of the policy” – later duly assigned to
plaintiff
o Policy 4382 – 15,000 – issued by the same company to, and in the name of, plaintiff
o Policy 326 – 10,000 – issued to, and in the name of the plaintiff by the Yang Tsze
Insurance Association, limited, and recited that the premium of P125 was paid by
plaintiff to the association and that in event of loss by fire, “the funds and property of
the said association shall be subject and laible to pay reinstate, or make good to the
said assured – such loss or damage as shall be occasioned by fire to the property –
not exceeding the amount of the policy
§ In the event of loss “the funds and property of the said association shall be
subject and liable to pay, reinstate, or make good to the said assured, their
heirs, executors, or administrators, such loss or damage as shall be
occasioned by fire or lightning to the property insured
o Policy 796111 – 8,000 – issued by the States Assurance Company for a premium of
P100 – “the company agrees with the insured that in the event of loss by fire between
certain dates, the company will, out of its capital, stock and funds, pay the amount of
such loss or damage.”
· While the policies were in force, loss occurred in which the insured property was damaged by fire and
the use of water resulting from the fire
· Plaintiff made a claim for damages under policies but could not agree on the amount of loss
sustained – sold the insured property in damaged condition, and brought this action against
respondent in its capacity as agents, to recover the difference between the amount of the policies and
the amount realized in the sale of the property
o First cause – P23, 052.99
o Second cause – P9,857.15
· Answer – defendant is the resident agent of the insurance companies. Defendant please certain
provisions in the policies and alleged that plaintiff failed and refused to deliver any claim in writing
specifying the articles or items of property damages or destroyed and of the alleged amount of the
loss or damage caused thereto
o They were at all times ready to pay on behalf of the insurance companies
· Defendants prays judgment for costs
· Before the trial, counsel for the defendant objected to the introduction of any evidence in the case,
and moved "that judgment be entered for the defendant on the pleadings upon the ground that it
appears from the averment of the complaint that the plaintiff has had no contractual relations with the
defendant, and that the action has not been brought against the real party in interest."
· The objection and motion was overruled and exception duly taken.
· After trial the court found that there was due the plaintiff from the three insurance companies
p18,493.29 with interest thereon at the rate of 6 per cent per annum, from the date of the
commencement of the action, and costs,
o It is, therefore, ordered that judgment be entered against Warner, Barnes & Co., Ltd.,
in its capacity as agent and representative in the Philippine Islands for The China fire
Insurance Company, Ltd., The Yang-Tsze Insurance Association, Ltd., and The State
Assurance Co., Ltd., for the payment to the plaintiff, E. Macias & Co., of the sum of
P18,493.29, the amount of this judgment to be prorated by Warner, Barnes & Co.,
among the three insurance companies above-mentioned by it represented, in
proportion to the interest insured by each of said three insurance companies,
according to the policies issued by them in favor of the plaintiff, and sued upon in this
action.
· The defendant then filed a motion to set aside the judgment and for a new trial, which was overruled
and exception taken.

Issue: WON this is a case of a disclosed agent and a disclosed principal? YES
· The material facts are not in dispute it must be conceded that the policies in question were issued
by the different insurance companies, through the defendant as their respective agent; that they were
issued in consideration of a premium which was paid by the insured to the respective companies for
the amount of the policies, as alleged; that the defendant was, and is now, the resident agent in
Manila of the companies, and was authorized to solicit and do business for them as such agent; that
each company is a foreign corporation. The principal office and place business of the The China Fire
Insurance Company is at Hongkong; of The Yang-Tsze Insurance Association is at Shanghai; and of
The State Assurance Company is at Liverpool. As such foreign corporations they were duly authorized
and licensed to do insurance business in the Philippine Islands, and, to that end and for that purpose,
the defendant corporation, Warner, Barnes & Co., was the agent of each company.
· The policies on their face shows that the defendant was the agent of the respective companies, and
that it was acting as such agent in dealing with the plaintiff. That in the issuance and delivery of the
policies, the defendant was doing business in the name of, acting for, and representing, the
respective insurance companies
· Policies expressly recite that, in the event of a loss, the respective companies agree to compensate
the plaintiff for the amount of the loss. the defendant company did not insure the property of the
plaintiff, or in any manner agree to pay the plaintiff the amount of any loss.
· Plaintiff's contracts are with the insurance companies, and are in writing, and the premiums were
paid to the insurance companies, and are in writing, and the premiums were paid to the insurance
companies and the policies were issued by, and in the name of, the insurance companies, and on the
face of the policy itself, the plaintiff knew that the defendant was acting as agent for, and was
representing, the respective insurance companies in the issuance and deliver of the policies.
· An insurance agent as such is not responsible for, and does not have, any control over the corpus or
estate of the corporate property, as does an executor, administrator, or receiver. Subject only to the
order of the court, such officers are legal custodians and have actual possession of the corporate
property. It is under their control and within their jurisdiction.
· plaintiff seeks to recover from the defendant, an action could be maintained against the cashier of
any bank on every foreign draft which he signed for, and on behalf of, the bank.
· When analyzed, that is nothing more than a statement that the companies were ready and willing to
prorate the amount when the losses were legally ascertained. Again, there is not claim or pretense
that Warner, Barnes & Co. had any authority to act for, and represent the insurance companies in the
pending action, or to appear for them or make any admission which would bind them. As a local agent,
it could not do that without express authority. That power could only exercised by an executive officer
of the company, or a person who was duly authorized to act for, and represent, the company in legal
proceedings, and there is no claim or pretense, either express or implied, that the defendant has any
such authority.
· Plaintiff's own evidence shows that any cause of action it may have is against the insurance
companies which issued the policies.

Case Compilation Jan 29 Part 2

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FOR January 29

ISSUES and HELD

not made parties thereto, if they are:

ISSUES and HELD

WHEREFORE, we DENY PSIs motion for reconsideration with finality.

ISSUES AND HELD

On the other hand, Locsin alleges that

RTC ruled for Locsin and held

ISSUES and HELD

Doctrine: The policies on their face shows that the defendant was the agent of the respective companies,

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