CASES ON AGENCY Agency; agency by estoppel.

The doctrine of estoppel is based upon the grounds o f public policy, fair dealing, good faith and justice, and its purpose is to for bid one to speak against his own act, representations, or commitments to the inj ury of one to whom they were directed and who reasonably relied thereon. The doc trine of estoppel springs from equitable principles and the equities in the case . It is designed to aid the law in the administration of justice where without i ts aid injustice might result. It has been applied by this Court wherever and wh enever special circumstances of a case so demand. Based on the events and circumstances surrounding the issuance of the assailed o rders, this Court rules that MEGAN is estopped from assailing both the authority of Atty. Sabig and the jurisdiction of the RTC. While it is true, as claimed by MEGAN, that Atty. Sabig said in court that he was only appearing for the hearin g of Passi Sugars motion for intervention and not for the case itself, his subseq uent acts, coupled with MEGANs inaction and negligence to repudiate his authority , effectively bars MEGAN from assailing the validity of the RTC proceedings unde r the principle of estoppel. Megan Sugar Corporation v. Regional Trial Court of Iloilo, Br. 68, Dumangas, Iloilo; New Frontier Sugar Corp., et al., G.R. No. 17 0352. June 1, 2011 Agency; doctrine of apparent authority. The Court finds that the signature of Ab cede is sufficient to bind PRHC. As its construction manager, his very act of si gning a letter embodying the P 36 million escalation agreement produced legal ef fect, even if there was a blank space for a higher officer of PHRC to indicate a pproval thereof. At the very least, he indicated authority to make such represen tation on behalf of PRHC. On direct examination, Abcede admitted that, as the co nstruction manager, he represented PRHC in running its affairs with regard to th e execution of the aforesaid projects. Abcede had signed, on behalf of PRHC, oth er documents that were almost identical to the questioned letter-agreement. PRHC does not question the validity of these agreements; it thereby effectively admi ts that this individual had actual authority to sign on its behalf with respect to these construction projects. Philippine Realty and Holding Corp. vs. Ley Cons t. and Dev. Corp./Ley Cons. and Dev. Corp. vs. Philippine Realty and Holding Cor p., G.R. No. 165548/G.R. No. 167879. June 13, 2011 Agency. The sale of the DMCI shares made by EIB is null and void for lack of aut hority to do so, for petitioners never gave their consent or permission to the s ale. Moreover, Article 1881 of the Civil Code provides that the agent must act wi thin the scope of his authority. Pursuant to the authority given by the principal , the agent is granted the right to affect the legal relations of his principal b y the performance of acts effectuated in accordance with the principals manifesta tion of consent. In the case at bar, the scope of authority of EIB as agent of p etitioners is to retain, apply, sell or dispose of all or any of the clients [peti tioners] property, if all or any indebtedness or other obligations of petitioners to EIB are not discharged in full by petitioners when due or on demand in or towa rds the payment and discharge of such obligation or liability. The right to sell or dispose of the properties of petitioners by EIB is unequivocally confined to payment of the obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares to buy back the KKP shares, it paid the pro ceeds to the vendees of said shares, the act of which is clearly an obligation t o a third party and, hence, is beyond the ambit of its authority as agent. Such act is surely illegal and does not bind petitioners as principals of EIB. Pacifi c Rehouse Corporation, et al. vs. EIB Securities, Inc.;G.R. No. 184036, October 13, 2010. Attorneys fees. It is settled that the award of attorneys fees is the exception ra ther than the general rule; counsels fees are not awarded every time a party prev ails in a suit because of the policy that no premium should be placed on the rig ht to litigate. Attorneys fees, as part of damages, are not necessarily equated t o the amount paid by a litigant to a lawyer. In the ordinary sense, attorneys fee s represent the reasonable compensation paid to a lawyer by his client for the l

egal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for damages to be paid by the los ing party to the prevailing party. Attorneys fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it i s necessary for the court to make findings of fact and law that would bring the case within the ambit of these enumerated instances to justify the grant of such award, and in all cases it must be reasonable. Filomena R. Benedicto vs. Antoni o Villaflores; G.R. No. 185020. October 6, 2010. Attorneys fees. We have stressed that the award of attorneys fees is the exception rather than the rule, as they are not always awarded every time a party prevail s in a suit because of the policy that no premium should be placed on the right to litigate. Attorneys fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code. Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al . vs. Financial Building Corporation; G.R. No. 164186/G.R. No. 164347. October 4, 2010. Attorneys fees. An award of attorneys fees is the exception rather than the rule. The right to litigate is so precious that a penalty should not be charged on th ose who may exercise it erroneously. It is not given merely because the defenda nt prevails and the action is later declared to be unfounded unless there was a deliberate intent to cause prejudice to the other party. Spouses Ramy and Zenaid a Pudadera vs. Ireneo Magallanes and the late Daisy Teresa cortel Magallanes, su bstituted by her children, Nelly M. Marquez, et al.;G.R. No. 170073, October 18, 2010. Compensation; partial set-off. Under the circumstances, fairness and reason dict ate that we simply order the set-off of the petitioners contractual liabilities t otaling P575,922.13 against the repair cost for the defective gutter, pegged at P717,524.00, leaving the amount ofP141,601.87 still due from the respondent. Sup port in law for this ruling for partial legal compensation proceeds from Article s 1278, 1279, 1281, and 1283 of the Civil Code. In short, both parties are credi tors and debtors of each other, although in different amounts that are already d ue and demandable. Spouses Victoriano chung and Debbie Chung vs. Ulanday Constru ction, Inc.;G.R. No. 156038, October 11, 2010. Agency; doctrine of apparent authority. The doctrine of apparent authority in re spect 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 sc ope of their authority. Under the law on agency, however, apparent authority is de fined as the power to affect the legal relations of another person by transactio ns with third persons arising from the others manifestations to such third person such that the liability of the principal for the acts and contracts of his agen t extends to those which are within the apparent scope of the authority conferre d 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 real ity of a contractual relationship, but rather because of the actions of a princi pal or an employer in somehow misleading the public into believing that the rela tionship or the authority exists. The existence of apparent authority may be asc ertained through (1) the general manner in which the corporation holds out an of ficer or agent as having the power to act or, in other words, the apparent autho rity to act in general, with which it clothes him; or (2) the acquiescence in hi s acts of a particular nature, with actual or constructive knowledge thereof, wh ether within or beyond the scope of his ordinary powers. It requires presentatio n of evidence of similar act(s) executed either in its favor or in favor of othe r parties. Easily discernible from the foregoing is that apparent authority is determined o nly by the acts of the principal and not by the acts of the agent. The principal is, therefore, not responsible where the agents own conduct and statements have created the apparent authority. In this case, not a single act of respondent, acting through its Board of Direct

ors, was cited as having clothed its general manager with apparent authority to execute the contract with it.Sargasso Construction & Development Corporation / P ick & Shovel, Inc./Atlantic Erectors, Inc./ Joint Venture vs. Philippine Ports A uthority, G.R. No. 170530, July 5, 2010. Agency; principle of apparent authority. There is ample evidence that the hospit al held out to the patient that the doctor was its agent. The two factors that d etermined apparent authority in this case were: first, the hospitals implied mani festation to the patient which led the latter to conclude that the doctor was th e hospitals agent; and second, the patients reliance upon the conduct of the hospi tal and the doctor, consistent with ordinary care and prudence. It is of record that the hospital required a consent for hospital care to be signe d preparatory to the surgery of the patient. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medication s and treatments as may be deemed necessary or advisable by the physicians of th is hospital for and during the confinement of xxx. By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its hospital, rather than one independently practi cing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. Professi onal Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by h er children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Aga na and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuente s Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467 /G.R. No. 127590, February 2, 2010. Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable illness under the applicable standard contract for Filipino seafa rers that binds the seafarer and the vessels foreign owner, it was an error for t he CA to treat such illness as work-related and, therefore, compensable. The sta ndard contract precisely did not consider gallstone as compensable illness becau se the parties agreed, presumably based on medical science, that such affliction is not caused by working on board ocean-going vessels. Nor is there any evidence to prove that the nature of the seafarers work on board a ship aggravated his illness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it is highly probable that he already had it when he boarded his assigned ship although it went undiagnosed because he had yet to experience its symptoms. Bandila Shipping, Inc. et al. vs . Marcos C. Abalos, G.R. No. 177100, February 22, 2010. Several cases decided by the Supreme Court indicate that the agent should be ver y careful in the manner he or she signs a mortgage contract on behalf of the pri ncipal; otherwise, the mortgage may be binding upon the agent only. In Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rola ndo Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 1799 09, January 25, 2010, the principal executed a special power of attorney in favo r of her daughter authorizing her to contract a loan from a bank and to mortgage the principals two lots. The principal also executed an affidavit of non-tenancy for the approval of the loan. The bank granted a loan secured by two promissory notes and a real estate mortgage over the principals two lots. The mortgage docu ment was signed by the agent and her husband as mortgagors in their individual c apacities, without stating that the agent was executing the mortgage contract fo r and in behalf of the principal. The bank foreclosed the mortgage due to non-payment of the loan. A notice of pub lic auction sale was sent to principal. The latters lawyer responded with a lette r to the bank requesting that the public auction be postponed. The letter went u nheeded and the public auction was held as scheduled wherein the mortgaged prope rties were sold to the bank. Subsequently, the bank consolidated its title and o btained new titles in its name after the redemption period lapsed without the pr incipal taking any action. Around five years later, the principal filed a complaint for annulment of mortga ge and extrajudicial foreclosure of the properties with damages with the regiona

l trial court (RTC) of Naga City. The principal sought nullification of the real estate mortgage and extrajudicial foreclosure sale, as well as the cancellation of the banks title over the properties. The RTC rendered judgment in favor of the principal, holding that the principal cannot be bound by the real estate mortgage executed by the agent unless it is s hown that the same was made and signed in the name of the principal; hence, the mortgage will bind the agent only. The Court of Appeals (CA) affirmed the RTCs ruling. It held that it must be shown that the real estate mortgage was executed by the agent on behalf of the princi pal, otherwise the agent may be deemed to have acted on his own and the mortgage is void. However, the CA further declared that the principal loan agreement was not affected, which had become an unsecured credit. Agency; principle of undisclosed principal. It is a general rule in the law of a gency that, in order to bind the principal by a mortgage on real property execut ed by an agent, it must upon its face purport to be made, signed and sealed in t he name of the principal, otherwise, it will bind the agent only. It is not enou gh merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a power of a ttorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and i ntend that it shall be the act of the principal, yet, unless in fact it is execu ted by the agent for and on behalf of his principal and as the act and deed of t he principal, it is not valid as to the principal. Far East Bank and Trust Compa ny (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sp s. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010. Contract; element of consent; causal fraud. In order that fraud may vitiate cons ent to a contract, it must be the causal (dolo causante), not merely the inciden tal (dolo incidente), inducement to the making of the contract. Additionally, th e fraud must be serious. In this case, causal fraud necessary to justify the ann ulment of the contract of sale between the parties was absent. It is clear from the records that petitioners agreed to sell their property to the buyers. The pe titioners belief that the fraud employed by the buyers was already operational at the time of the perfection of the contract of sale is incorrect. The Buyers misrep resentation that the postdated check (covering the purchase price for the proper ty) would not bounce on its maturity hardly equates to dolo causante. The buyers assurance that the check issued was fully funded was not the principal inducemen t for the petitioners to sign the Deed of Absolute Sale. Even before the buyers issued the check, the parties had already consented and agreed to the sale trans action. The petitioners were never tricked into selling their property to the bu yer. On the contrary, they willingly accepted his offer to purchase the property at P3,000,000. In short, there was a meeting of the minds as to the object of t he sale as well as the consideration therefor. Spouses Carmen Tongson and Jose T ongson vs. Emergency Pawnshop Bula, Inc. et al., G.R. No. 167874, January 15, 20 10. Contract; interpretation. There is nothing in the subject Extrajudicial Settleme nt to indicate any express stipulation for petitioner and respondents to continu e with their supposed co-ownership of the contested lot. On the contrary, a plai n reading of the provisions of the Extrajudicial Settlement would not, in any wa y, support petitioners contention that it was his and his siblings intention to bu y the subject property from the Bank and continue what they believed to be co-ow nership thereof. It is a cardinal rule in the interpretation of contracts that t he intention of the parties shall be accorded primordial consideration. It is th e duty of the courts to place a practical and realistic construction upon it, gi ving due consideration to the context in which it is negotiated and the purpose which it is intended to serve. Such intention is determined from the express ter ms of their agreement, as well as their contemporaneous and subsequent acts. Abs urd and illogical interpretations should also be avoided. Petitioners contention that he and his siblings intended to continue their supposed co-ownership of the

subject property contradicts the provisions of the subject Extrajudicial Settle ment where they clearly manifested their intention of having the subject propert y divided or partitioned by assigning to each of the petitioner and respondents a specific 1/3 portion of the same. Partition calls for the segregation and conv eyance of a determinate portion of the property owned in common. It seeks a seve rance of the individual interests of each co-owner, vesting in each of them a so le estate in a specific property and giving each one a right to enjoy his estate without supervision or interference from the other. In other words, the purpose of partition is to put an end to co-ownership, an objective which negates petit ioners claims in the present case. Celestino Balus vs. Saturnino Balus and Leonar da Balus vda. De Calunod, G.R. No. 168970, January 15, 2010.