FORM OF THE CONTRACT OF AGENCY 13. AF REALTY & DEVELOPMENT, INC., vs DIESELMAN FREIGHT SERVICES, CO. (G.R. No.

111448, January 16, 2002)

Facts of the case: 1. Dieselman Freight Service Co., is an owner of a commercial lot located in Pasig City; 2. Manuel Cruz Jr., (Cruz)a member of the board of directors of Dieselman issued a letter authorizing Cristeta N.Polintan (Polintan) to look for a buyer and negotiate the sale. Cruz Jr., has no authority from Dieselman to sell the lot; 3. In turn, Politan authorized Felicisima Noble to sell the same lot and later offered to AF Realty, Inc.; 4. Zenaida Ranullo, the board member and vice-president of AF Realty accepted the offer and issued a check which Cruz Sr., president of Dieselman, acknowledged receipt of the said money as earnest money. 5. AF Realty filed a complaint for specific performance against Dieselman and Cruz Jr, and order the latter to execute and deliver a final deed of sale in favor of AF Realty; 6. In its answer, Dieselman alleged that it did not authorize any person to enter into such transaction on its behalf; 7. Meanwhile, on 1988, Dieselman and Midas Development Corporation (Midas) executed by a Deed of Absolute Sale of the same property.

ISSUE/S: Who between AF Realty and Midas has a right to overtake the subject lot?

RULING: Midas Development Corporation has a better right to overtake the subject lot. Under Article 1874 of the Civil Code provides When a sale of 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; Considering that Cruz Jr., Politan and Noble were not authorized by Dieselman to sell its lot, the supposed contract is void. Being a void contract, it is not susceptible of ratification. On the other hand, the validity of the sale to Midas in unquestionable. As noted , the sale was authorized by a board resolution of respondent Dieselman.

WHO HAS THE OBLIGATION TO DETERMINE THE EXISTENCE AND SCOPE OF AGENCY? 14. KEELER ELECTRIC CO. vs RODRIGUEZ (44 Phil 19)

Facts of the case: 1. Keeler Electric Co., is a domestic corporation engaged in the electrical business, and among other things in the sale of what is known as the Matthews electric plant. 2. Montelibano approached plaintiff that he could find purchaser for the Matthews plant, and was told by the plaintiff that for any plant that he could sell or any customer that he could find he would paid a commission of 10% for his services, if the sale was consummated; 3. Subsequently, Montelibano through his efforts sold Matthews plants to Rodriguez, and later shipped and installed on its premises, after which, without the knowledge of Keeler Electric Co, Rodriguez paid the purchase price to Montelibano; 4. As a result, Electric Co., commenced an action against Rodriguez alleging that that latter did not paid the purchased plant that was already been sold and delivered. ISSUE/S: Who has the obligation to determine the existence and scope of agency? RULING: Respondent Rodriguez has the obligation to determine the existence and scope of agency. In the instant case, it devolved upon him to prove the payment to the Keeler Co., by a preponderance of the evidence.

A third person must act with ordinary prudence and reasonable diligence to ascertain whether the agent is acting and dealing with him within the scope of his powers. Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot claim protection. So, if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the authority which he seeks is of such an unusual or improbable character, as would suffice to put an ordinarily prudent man upon his guard, the party dealing with him may not shut his eyes to the real state of the case but should withal refuse to deal with the agent at all, or should ascertain from the principal the true condition of affairs. The testimony is conclusive that the plaintiff never authorized Montelibano to receive or receipt for money in its behalf, and that Rodriguez had no right to assume by any act or deed of that Montelibano was authorized to receive money, and that the defendant made the payment at his own risk and on the sole representation of Montelibano that he was authorized to receipt for the money.

15. SPS. YU ENG CHO vs PAN AMERICAN WORLD AIRWAYS (G.R No. 123560, March 27, 2000)

Facts of the case: 1. Plaintiff Yu Eng Cho is a businessman who travels from time to time to other foreign countries in connection with his businesses; 2. On July 1976 Yu Eng Cho bought plane tickets from defendant Claudia Tagunicar who represented herself to be an agent of defendant Tourist World Services, Inc., (TWSI); 3. A complaint for damages was filed by petitioners against private respondents Pan American, Julieta Canilao, and Claudia Tagunicar for expense allegedly incurred such as costs of tickets and hotel accommodations when petitioners were compelled to stay in Hongkong and then Tokyo by reason of the nonconfirmation of their booking with Pan-am.

ISSUE/S: Who has the obligation to determine that a person is an agent and that a contract of agency really existed between the parties? RULING: 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. The elements of agency are:

(1) Consent, express or implied, of the parties to establish the relationship; (2) The object is the execution of a juridical act in relation to a third person; (3) The agent acts as a representative and not for himself; (4) The agent acts within the scope of his authority. It is settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it.