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Case Digests for Discussion Purposes

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ARTICLE 1868 Case No. 10
Topic: Relation of third party with principal and agent

G.R. No. 120465. September 9, 1999
WILLIAM UY and RODEL ROXAS, petitioners, vs. COURT OF
AUTHORITY, respondents.


William Uy and Rodel Roxas (petitioners) are agents authorized to
sell 8 parcels of land in Benguet.
Uy and Roxas offered to sell the parcels of land to NHA for a
housing project. 1989, NHA passed a resolution approving the
acquisition of said lands, and they executed Deeds of Absolute
HOWEVER, only 5 out of 8 lands were paid for by NHA because
of a report from DENR that the remaining area is located at an
active landslide area and are therefore not conducive for housing.
1991, NHA issued a resolution canceling the sale of the remaining
lands and offered P1.225 million to the landowners as daos
1992, Uy and Roxas filed a complaint for damages against NHA.
RTC: cancellation was justified, but awarded the amount offered
by NHA as damages.
CA: affirmed the decision, but deleted the award.

Whether or not Uy and Roxas are real parties in interest;
Whether or not, as agents, Uy and Roxas can maintain an action
against a third party.

HELD: No, they are not parties in interest because theyre merely agents
of their principal.

RATIO: An action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced. Uy and Roxas
are not parties to the contract of sale between their principals and
NHA. They are mere agents of the owners of the land subject of the
sale. As agents, they only render some service or do something in
representation or on behalf of their principals. The rendering of such
service did not make them parties to the contracts of sale executed in
behalf of the latter. Since a contract may be violated only by the parties
thereto as against each other, the real parties-in-interest, either as
plaintiff or defendant, in an action upon that contract must, generally,
either be parties to said contract.

Uy and Roxas, likewise, have not shown that they are assignees of their
principals to the subject contracts.

NOTE: It is only when an agent is constituted as an assignee that he, in
his own behalf, may sue on a contract made for his principal.

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ARTICLE 1868 Case No. 22
Topic: Nature of relation between principal and agent

G. R. No. 129919. February 6, 2002
AUSTRIA, respondents.


Rodolfo S. Guevarra instituted Civil Case No. 8855 for sum of money,
seeking to recover the sum of P156,473.90 against Dominion
Insurance Corporation.
Guevarra claimed to have advanced in his capacity as manager of DIC
to satisfy certain claims filed by DICs clients.
DIC denied any liability to Guevarra and asserted a counterclaim for
1991, DIC filed a third-party complaint against Fernando Austria, who,
at the time relevant to the case, was its Regional Manager for Central
Luzon area.
After repeated postponements filed by both parties, DIC was declared
in default by the RTC.
RTC issued a decision; the dispositive portion is read as:
o WHEREFORE, premises considered, judgment is hereby
rendered ordering:
1. Dominion Insurance Corporation to pay [Guevarra] the sum of
P156,473.90 representing the total amount advanced by [DIC] in
the payment of the claims of [Guevarra]s clients;
2. [DIC] to pay [Guevarra] P10,000.00 as and by way of attorneys
3. The dismissal of the counter-claim of the [DIC] and the third-
party [Austria] complaint;
4. [DIC] to pay the costs of suit.
DIC brought the case up to the CA; CA affirmed the decision of the RTC.
Hence this case.

Whether or not Guevarra acted within his authority as agent for DIC;
Whether or not Guevarra is entitled to reimbursement of amounts he paid
out of his personal money in settling the claims of several insured.

NO, because his authority as agent does not grant such powers (a special
power of attorney is required);
YES, because this case falls squarely under the general law on
obligations and contracts.

RATIO: A perusal of the Special Power of Attorney would show that DIC
(represented by third-party defendant Austria) and Guevarra intended to enter
into a principal-agent relationship. Despite the word special in the title of the
document, the contents reveal that what was constituted was actually a general
agency. [Refer to the original case for the said contract stipulations]

The instruction of DIC as the principal could not be any clearer. Guevarra was
authorized to pay the claim of the insured, but the payment shall come from the
revolving fund or collection in his possession.

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 DIC.

Article 1918, Civil Code: The principal is not liable for the expenses incurred by
the agent in the following cases:
(1) If the agent acted in contravention of the principals instructions, unless the
latter should wish to avail himself of the benefits derived from the contract;
xxx xxx xxx

HOWEVER, while the law on agency prohibits respondent Guevarra from
obtaining reimbursement, his right to recover may still be justified under the
general law on obligations and contracts.

Article 1236, second paragraph, Civil Code, provides: Whoever pays for
another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only
insofar as the payment has been beneficial to the debtor.

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ARTICLE 1868 Case No. 46
Topic: Agency vs. Lease Services

G.R. No. L-7089 August 31, 1954
DOMINGO DE LA CRUZ, plaintiff-appellant, vs. NORTHERN
THEATRICAL ENTERPRISES INC., ET AL., defendants-appellees.


In 1941 the Northern Theatrical Enterprises (NTE), operated a
movie house in Laoag, Ilocos Norte, and among the persons
employed by it was Domingo De La Cruz, hired as a special guard.
A gate crasher, whom he stopped from entering the premises,
attacked him with a bolo. To defend himself, he shot the gate-
crasher with the revolver issued to him.
For the killing, De la Cruz was charged with homicide twice which
were both dismissed.
In both criminal cases De la Cruz employed a lawyer to defend
De la Cruz demanded from his former employer reimbursement of
his expenses but was refused, after which he filed the present
action against the movie corporation and the three members of its
board of directors, to recover not only the amounts he had paid his
lawyers but also moral damages said to have been suffered, due
to his worry, his neglect of his interests and his family as well in the
supervision of the cultivation of his land, a total of P15,000.
CFI rejected De la Cruz theory.

ISSUE: Whether or not De la Cruz is an agent of NTE.

HELD: NO, he is a mere employee of NTE.

RATIO: The relationship between NTE and De la Cruz was not that of
principal and agent because the principle of representation was in no
way involved. De la Cruz was not employed to represent the NTE in its
dealings with third parties. He was a mere employee hired to perform a
certain specific duty or task, that of acting as special guard and staying
at the main entrance of the movie house to stop gate crashers and to
maintain peace and order within the premises.

If the employer is not legally obliged to give, legal assistance to its
employee and provide him with a lawyer, naturally said employee may
not recover the amount he may have paid a lawyer hired by him.
(NOTE: That is during those days. I am in the opinion that this is no
longer the case now.)

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ARTICLE 1868 Case No. 58
Topic: Agency vs. Brokerage

G.R. No. 113074 January 22, 1997
ALFRED HAHN, petitioner, vs. COURT OF APPEALS and
(BMW), respondents.


Alfred Hahn is a Filipino citizen doing business under the name
and style "Hahn-Manila." On the other hand, BMW is a nonresident
foreign corporation existing under the laws of the former Federal
Republic of Germany.
On March 7, 1967, Hahn executed in favor of BMW a "Deed of
Assignment with Special Power of Attorney".
Per the agreement, the parties "continue[d] business relations as
has been usual in the past without a formal contract."
BUT on February 16, 1993, in a meeting with a BMW
representative and the president of Columbia Motors Corporation
(CMC), Jose Alvarez, Hahn was informed that BMW was arranging
to grant the exclusive dealership of BMW cars and products to
CMC, which had expressed interest in acquiring the same.
On February 24, 1993, Hahn received confirmation of the
information from BMW which, in a letter, expressed dissatisfaction
with various aspects of Hahn's business, mentioning among other
things, decline in sales, deteriorating services, and inadequate
showroom and warehouse facilities, and petitioner's alleged failure
to comply with the standards for an exclusive BMW dealer.
Nonetheless, BMW expressed willingness to continue business
relations with Hahn on the basis of a "standard BMW importer"
contract, otherwise, it said, if this was not acceptable to Hahn,
BMW would have no alternative but to terminate Hahn's exclusive
dealership effective June 30, 1993.
Hahn protested, claiming that the termination of his exclusive
dealership would be a breach of the Deed of Assignment. Hahn
insisted that as long as the assignment of its trademark and device
subsisted, he remained BMW's exclusive dealer in the Philippines
because the assignment was made in consideration of the
exclusive dealership.
BMW terminated Hahns exclusive dealership, and suggested that
Hahn and CMC jointly import and distribute BMW cars in the
Thus, Hahn filed a complaint for specific performance and
damages, application for temporary restraining order and for writs
of preliminary, mandatory and prohibitory injunction against BMW.
RTC granted said prayers.
BMW CONTENTIONS: BMW moved to dismiss the case,
contending that the trial court did not acquire jurisdiction over it
through the service of summons on the Department of Trade and
Industry, because it (BMW) was a foreign corporation and it was
not doing business in the Philippines. It contended that the
execution of the Deed of Assignment was an isolated transaction;
that Hahn was not its agent because the latter undertook to
assemble and sell BMW cars and products without the
participation of BMW and sold other products; and that Hahn was
an indentor or middleman transacting business in his own name
and for his own account.
HAHNs CONTENTIONS: BMW was doing business in the
Philippines through him as its agent, as shown by the fact that
BMW invoices and order forms were used to document his
transactions; that he gave warranties as exclusive BMW dealer;
that BMW officials periodically inspected standards of service
rendered by him; and that he was described in service booklets
and international publications of BMW as a "BMW Importer" or
"BMW Trading Company" in the Philippines.
CA enjoined the RTC from further deciding the case.
CA ruling: dismissed the complaint.

ISSUE: Whether or not Hahn is an agent of BMW.

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HELD: YES, Hahn is an agent of BMW and not a broker.

RATIO: Hahn claimed he took orders for BMW cars and transmitted
them to BMW. Upon receipt of the orders, BMW fixed the down payment
and pricing charges, notified Hahn of the scheduled production month
for the orders, and reconfirmed the orders by signing and returning to
Hahn the acceptance sheets. Payment was made by the buyer directly
to BMW. Title to cars purchased passed directly to the buyer and Hahn
never paid for the purchase price of BMW cars sold in the Philippines.
Hahn was credited with a commission equal to 14% of the purchase
price upon the invoicing of a vehicle order by BMW. Upon confirmation
in writing that the vehicles had been registered in the Philippines and
serviced by him, Hahn received an additional 3% of the full purchase
price. Hahn performed after-sale services, including, warranty services,
for which he received reimbursement from BMW.

This arrangement shows an agency. An agent receives a commission
upon the successful conclusion of a sale. On the other hand, a
broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made.

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ARTICLE 1874 Case No. 94
Topic: Sale of land thru agent

G.R. No. L-9608 August 7, 1915
DIEGO LIAN, plaintiff-appellee, vs. MARCOS P. PUNO, ET
AL., defendants-appellants.


Lian was the owner of a certain parcel of land particularly
described in paragraph 2 of the complaint.
Lian executed the following document, which conferred upon
Puno the power, duties and obligations therein contained:
I, Diego Lian, of age, married, a resident of Daet, Province of
Ambos Camarines, Philippine Islands, and at the present time
temporarily residing in this city of Tarlac, capital of the Province of
Tarlac, P.I., set forth that I hereby confer sufficient power, such as
the law requires, upon Mr. Marcos P. Puno, likewise a resident of
this city of Tarlac, capital of the Province of Tarlac, in order that in
my name and representation he may administer the interest I
possess within this municipality of Tarlac, purchase, sell, collect
and pay, as well as sue and be sued before any authority, appear
before the courts of justice and administrative officers in any
proceeding or business concerning the good administration and
advancement of my said interests, and may, in necessary cases,
appoint attorneys at law or attorneys in fact to represent him.
That in June, 1911, Puno, for the sum of P800, sold and delivered
said parcel of land to the other defendants
Lian alleges that the said document (Exhibit A) did not confer
upon Puno the power to sell the land and prayed that the sale be
set aside; that the land be returned to him, together with damages.
RTC ruled in favor of Lian.

ISSUE: Whether or not the sale was valid as performed by Puno as
an agent of Linan.
HELD: YES, it was a valid sale.

RATIO: The words administer, purchase, sell etc. has equal force
with each other. There seemed to be no good reason for saying that
Puno had authority to administer and not to sell when to sell was
advantageous to the plaintiff in the administration of his affairs. In
reaching this conclusion, the Court took into account the fact that the
plaintiff delayed his action to annul said sale from June 1911 until
February 15, 1913.

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ARTICLE 1878 Case No. 118
Topic: Sale of land thru agent

G.R. No. 167812 December 19, 2006
JESUS M. GOZUN, plaintiff, vs. JOSE TEOFILO T. MERCADO a.k.a.
DON PEPITO MERCADO, defendants-appellants.


In the local elections of 1995, Mercado vied for the gubernatorial
post in Pampanga. Upon his request, Gozun, owner of JMG
Publishing House, a printing shop located in San
Fernando, Pampanga, submitted to Mercado draft samples and
price quotation of campaign materials.
According to Gozun, Mercados wife approved the price quotation.
Given the urgency and limited time to do the job order, Gozun
availed of the services and facilities of Metro Angeles Printing and
of St. Joseph Printing Press, owned by his daughter
Jennifer Gozun and mother Epifania Macalino Gozun,
FOCUS: on March 31, 1995, Mercados sister-in-
law, Lilian Soriano (Lilian) obtained from Gozun cash advance of
P253,000 allegedly for the allowances of poll watchers who were
attending a seminar and for other related expenses. Lilian
acknowledged on Gozuns 1995 diary receipt of the amount.
Gozun later sent respondent a Statement of Account in the total
amount of P2,177,906 itemized as follows: P640,310 for JMG
Publishing House; P837,696 for Metro Angeles Printing; P446,900
for St. Joseph Printing Press; and P253,000, the cash advance
obtained by Lilian.
On August 11, 1995, Mercados wife partially paid P1,000,000 to
Gozun who issued a receipt.
Despite repeated demands and Mercados promise to pay, he
failed to settle the balance of his account to Gozun.
Gozun thus filed a case before the RTC of Angeles.
To which Mercado answers and denied having transacted with
Gozun or entering into any contract for the printing of campaign
materials. He alleged that the various campaign materials
delivered to him were represented as donations from his family,
friends and political supporters. He added that all contracts
involving his personal expenses were coursed through and signed
by him to ensure compliance with pertinent election laws.
RTC decided in favor of Gozun.
HOWEVER, CA reversed the RTC ruling.

ISSUE: Whether or not Lilian Soriano acted as an agent of Mercado.

HELD: NO, she was not clothed with such authority.

RATIO: 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
are declared unenforceable, unless they are ratified.

Gozuns testimony failed to categorically state, however, whether the
loan was made on behalf of Mercado or of his wife. While Gozun claims
that Lilian was authorized by Mercado, the statement of account marked
as Exhibit A states that the amount was received by Lilian in behalf of
Mrs. Annie Mercado.

It bears noting that Lilian signed in the receipt in her name alone, without
indicating therein that she was acting for and in behalf of Mercado. She
thus bound herself in her personal capacity and not as an agent of
Mercado or anyone for that matter.

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ARTICLE 1878 Case No. 130
Topic: To convey or acquire immovables

G.R. No. 141323 June 8, 2005

B. PELAYO, petitioners, vs. MELKI
E. PEREZ, respondent.


David Pelayo through a Deed of Absolute Sale executed a deed of
sale and transferred to Melki Perez two parcel of agricultural lands.
Loreza Pelayo and another one whose signature is eligible
witnesses such execution of deed.
Loreza signed only on the third page in the space provided for
witnesses, as such, Perez application was denied.
Perez asked Loreza to sign on the first and should pages of the
deed of sale but she refused.
He then filed a complaint for specific performance against the
Pelayo spouses.
The spouses moved to dismiss the complaint on the ground for
lack of marital consent as provided by Art. 166 of the Civil Code.
RTC: petition of Perez was denied.
CA: Perez contention was meritorious.

ISSUE: Whether or not the deed of sale was null and void for lack of
marital consent.

HELD: NO, it is merely voidable.

RATIO: Under Art 173, in relation to Art166, both of the NCC, which
was still in effect on January 11, 1988 when the deed in question was
executed, the lack of marital consent to the disposition of conjugal
property does not make the contract void ab initio but merely violable.

Lorenza, by affixing her signature to the Deed of Sale on the space
provided for witnesses, is deemed to have given her implied consent to
the contract of sale.

Sale is a consensual contract that is perfected by mere consent, which
may either be express or implied. A wifes consent to the husbands
disposition of conjugal property does not always have to be explicit or
set forth in any particular document, so long as it is shown by acts of the
wife that such consent or approval was indeed given.

In the present case, although it appears on the face of the deed of sale
that Lorenza signed only as an instrumental witness, circumstances
leading to the execution of said document point to the fact that Lorenza
was fully aware of the sale of their conjugal property and consented to
the sale.