1.

Rallos v Felix Go Chan & Sons

P-Concpecion ; A- Simeon

2. Orient Air Services & Hotel Representatives v. CA

P-Am Air ; A-Orient Air

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Concepcion and Gerundia Rallos, sisters, owned a parcel of land in Cebu. They executed a special power of Atty in favor of their brother, Simeon Rallos, w/c authorized him to sell their lot. In 1955, Concepcion died. Simeon sold the undivided shares of his sisters to Felix Corp. for P10k+ Ramon Rallos as administrator of the estate of Concepcion filed a complaint w/ the CFI praying that the sale of Simeon be declared unenforceable, that share be reconveyed to her estate Both Simeon and Gerundia died while case was pending, so they were substituted by the respective estate administrators TC rendered judgment declaring deed of sale null and void

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ISSUE: WON the sale of the undivided lot share of Concepcion is valid/enforceable although executed by the agent AFTER her death HELD: No, it is unenforceable. " In an agency, the principal (mandante) authorizes the agent (mandatorio) to act in his behalf in transactions w/ 3rd persons " Essential elements of an agency: 1. Consent, express or implied, of the parties to establish relationship 2. Object, w/c is the execution of the juridical act in relation to the 3rd person 3. Agent acts as a representative, and not for himself 4. Agent acts w/in the scope of his authority The Civ Code (art 1919) provides that by nature of relationship bet principal and agent, agency is extinguished by the DEATH of the principal and agent This is because the JURIDICAL BASIS OF AGENCY IS REPRESENTATION.. which cannot continue if either is dead. (Manresa) HOWEVER, there are exceptions (1930 and 1931). An act done by an agent is valid even after the principals death if: 1. Agency is coupled w/ an interest 2. Agent acted w/o knowledge of death of principal 3. Third person who contracted w/ the agent also acted in good faith (3p also was not aware of death of principal) In this case, the Simeon was aware of the death of his sister. Civ code does not impose a duty on the heirs to notify the AGENT of the death of the principal. Code only requires that heirs must notify the PRINCIPAL of the death of the agent. Agency is PERSONAL, REPRESENTATIVE, DERIVATIVE in nature: Authority of agent emanates from powers granted by principal. AGENTs ACT is PRINCIPALs act if done w/in scope of authority. "

American Airlines and Orient Air entered into an agreement where American Airlines authorized Orient Air to be its exclusive general sales agent for the sale of air passenger transportation In 1981, American Airlines terminated the said agreement because Orient Air had allegedly breached their obligation by failing to promptly remit the net proceeds of sales from Jan to March. Am Air also instituted a suit against Orient w/ the CFI of Manila stating the basis of the termination. Orient denied the allegations, saying that Am Air in fact still owed them unpaid commissions. TC ruled in favor of Orient Air and ordered that American Airlines pay for the commission to reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement. CA affirmed the lower courts decision with some modifications on the monetary awards.

ISSUE: WON TC and CA erred in ordering American Airlines to reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement HELD: Yes. (but lower courts were correct in ruling that Orient is entitled to commission) " It is believed, however, that respondent appellate court erred in affirming the rest of the decision of the trial court. We refer particularly to the lower court's decision ordering American Air to "reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement." " TC and CA in effect compelled American Air to extend its personality to Orient Air by ordering its reinstatement. This would be violative of the principles and essence of agency. In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. By legal fiction, the agent becomes the principal authorized to perform all acts, which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by any law or court. Article 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. The agreement itself states that either party may terminate the agreement WITHOUT CAUSE by giving 30 days notice by letter, telegram or cable.

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Digests

Agency 2010

Pearl Ganzon

3. LITONJUA, JR V. ETERNIT CORP

P-EC, A-Marquez

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A corporation may act only through its board of directors or when authorized by its by-laws or board resolution. Thus, an unauthorized act of an officer is NOT binding on the corporation unless it is ratified. Written authority is needed. Property of a corporation is NOT the property of the stockholders or members, and may not be sold without express authority from the board of directors. Even if stockholder owns 90% of shares does not justify that it be treated the same. By contract of agency, a person binds himself to render some service or do something in representation of another, WITH THE CONSENT AND AUTHORITY OF THE LATTER. CONSENT of BOTH principal and agent is necessary to create an agency. Agency may be express or implied from the act of the principal; acceptance may be express or implied; agency may be oral unless law requires specific form# TO CONVEY REAL RIGHTS OVER IMMOVABLE PROPERTY, a special power of attorney is necessary. In sale of a piece of land, authorization of agent MUST be in writing. IN THIS CASE, the offer of Delsaux emanated only from the "Belgian/Swiss decision not the entire management or Board of Directors of ESAC. While it is true that petitioners accepted the counter-offer of respondent ESAC, respondent EC was not a party to the transaction between them; so EC was NOT bound by such acceptance. In an agent-principal relationship, PERSONALITY OF THE PRINCIPAL is extended through the FACILITY of the agent, so that agent becomes the principal by legal fiction, and he is authorized to perform ALL ACTS w/c principal would have him do. THIS cannot be compelled by LAW or by ANY court. Persons must exercise caution in dealing w/ agents and ascertaining their authority Litonjuas contention that EC is estopped to deny the existence of principalagency relationship is also w/o merit. For an agency by estoppel to exist, the ff must be established: 1. Principal manifested representation of agents authority/ allowed agent to assume authority 2. 3p in good faith relied on representation 3. Relying on such representation, 3p changed his position to his detriment BUT This needs to be proven, and in this case, Litonjua failed to prove such Agency may be express or implied from the act of the principal, his silence / lack of action OR failure to repudiate the agency); ASF A real estate broker is one who negotiates the sale of real properties. His business is only to FIND a purchaser willing to buy the land and has NO AUTHORITY to sign a contract of sale / to sell.

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Eternit Corporation (EC) is engaged in the manufacture of roofing materials and pipe products. 90% of its shares of stocks of EC were owned by ESAC. Glanville-General Manager and President of EC, while Delsaux- Regional Director for Asia of ESAC. Both had their offices in Belgium. In 1986, the management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country. ESAC instructed Adams (member board of directors) to dispose eight parcels of land. Adams engaged the services of realtor/broker Marquez, who offered the parcels of land to Litonjua, Jr. The Litonjua siblings offered to buy the property for P20M. Delsaux (Director) sent a telex w/ a counter-offer of 1M dollars and P2.5M w/c Litonjua accepted. Meanwhile, with the assumption of Corazon C. Aquino as President, the political situation in the Philippines improved. Glanville (Manager) called Marquez to tell him that at a Board Meeting they decided not to sell anymore. Delsaux himself later sent a letter confirming that the ESAC had decided not to proceed with the sale. Litonjuas then filed a complaint for specific performance and damages against EC (now the Eterton Multi-Resources Corporation). EC and ESAC alleged that the Board and stockholders of EC never approved any resolution to sell subject properties nor authorized Marquez to sell the same; and the offer of Jack Glanville and Delsaux were of his own personal making and did not bind them. TC dismissed the complaint, saying that since the authority of the agents was not in writing, sale is VOID. Also, the supposed sale involves substantially all assets of EC and ESAC Litonjuas elevated decision to CA, insisting that Marquez acted merely as a BROKER and NOT an agent so it was not necessary for him to have written authorization, and that agency by estoppel was created. o They said that Glanville and Delsaux had authority to sell the property CA, however, affirmed TC decision.

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ISSUES: 1) Won Glanville and Delsaux had authority to sell the properties 2) Won Marquez needed written authority from EC before sale could be perfected HELD: 1) No, they did not. (This is a question of fact w/c the SC cannot touch on except if they fall w/in exceptions.) " Petitioners failed to prove that EC had decided to sell its properties or that it had empowered Adams, Glanville and Delsaux or Marquez to offer the properties for sale to prospective buyers and to accept any counter-offer. When specific performance is sought of a contract made with an agent, the agency must be established by clear, certain and specific proof.

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4. Bordador v. Luz (no agency w/o representation)

Pearl Ganzon

Digests

Agency 2010

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The Bordadors were engaged in the business of purchase and sale of jewelry. Luz was their regular customer. On several occasions, her brother, Deganos, received several jewelries from petitioners. Out of the 17 receipts issued by the Bordadors, 6 indicated that they were received for Luz. Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold items to petitioners. But Deganos remitted an incomplete sum and he neither paid the balance of the sales proceeds nor did he return any unsold item to petitioners. Bordadors filed a civil case in the RTC against Deganos and Luz to recover the amount. They claimed that Deganos acted as the agent of Luz when he (Deganos) received the subject items of jewelry and, because he failed to pay for the same, Luz, as principal, is solidarily liable with him. On the other hand, Deganos asserted that it was he alone who was involved in the transaction with the petitioners; that he neither acted as agent for nor was he authorized to act as an agent by Luz, notwithstanding the fact that six of the receipts indicated that the items were received by him for the latter. He further claimed that he never delivered any of the items he received from petitioners to Luz. Luz, on her part, denied that she had anything to do with the transactions between petitioners and Deganos. She claimed that she never authorized Deganos to receive any item of jewelry in her behalf and neither did she actually receive any of the articles in question. The RTC ruled in favor of the respondents stating that only Deganos was liable to petitioners. The CA affirmed it.

The Bordadors, who were negligent in their transactions, cannot seek relief from the effects of their negligence by conjuring a supposed agency w/o evidence What was finally proven as a matter of fact is that there was no such contract between Brigida D. Luz and Narciso Deganos, executed or partially executed, and no delivery of any of the items subject of this case was ever made to the former.

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5. Victorias Milling Co. v. Court of Appeals

P-STM; A-CSC

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ISSUE: WON Luz and her spouse is liable to the Bordadors despite the fact that the evidence does not show that Luz authorized Deganos to receive the items of jewelry on their behalf HELD: No. Evidence does not support the allegation that Deganos was an agent of Luz and that she should be held solidarily liable with Deganos. " The basis for agency is representation. Here, there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular transactions involved. It was also negligent of petitioners to entrust to Deganos on 6 occasions several pieces of jewelry w/o requiring a written authorization from his alleged principal. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. The records show that neither an express nor an implied agency was proven to have existed between Deganos and Luz. Evidently, petitioners, who were negligent in their transactions with Deganos, cannot seek relief from the effects of their negligence by conjuring a supposed agency relation between the two respondents where no evidence supports such claim.

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St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling, Inc. In the course of their dealings, Victorias issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M. which covers 25,000 bags of sugar. The transaction it covered was a "direct sale." In 1989, STM sold its rights in SLDR 1214M to Consolidated Sugar Corporation (CSC) for P 14M+. That same day, CSC wrote Victorias that it had been authorized by STM to withdraw the sugar covered by the SLDR STM issued 16 checks totaling about P31M w/ Victorias as payee. CSC surrendered the SLDR to Victorias warehouse and was allowed to withdraw sugar. However, after 2k bags were released, Victorias refused to allow further withdrawals against the said SLDR because STM had already withdrawn all the sugar covered by the cleared checks. CSC filed a complaint for specific performance, alleging that STM had fully paid petitioner the sugar and should not refuse delivery. Victorias alleged that CSC did not pay for the SLDR and had co-conspired w/ STM to defraud it through misrepresentation. TC and CA ruled against Victorias.

ISSUE: WON CSC is had the capacity to sue on its own on SLDR 1214M HELD: Yes, CSC had the capacity to sue. It is not estopped because it is NOT an agent of STM. " 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. The basis of agency is REPRESENTATION. On the part of the principal, there must be an actual intention to appoint. On the part of the agent, there must be an intention to accept the appointment and act on it. There is no agency w/o such. One factor which most clearly distinguishes agency from other legal concepts is CONTROL: one person - the agent - agrees to act under the control or direction of another - the principal.

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Digests

Agency 2010

Pearl Ganzon

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Agency connotes control by the principal. Indeed, the very word "agency" has come to connote control by the principal. The control factor has caused the courts to put contracts between principal and agent in a separate category. IN THIS CASE, CSC was a buyer of the SLDFR form, and not an agent of STM. It was not subject to to STM's control. The question of whether a contract is one of sale or agency depends on the INTENTION of the parties as gathered from the whole scope and effect of the language employed. Even if the authorization given to CSC contained the phrase "for and in our (STM's) behalf," it was not enough to establish an agency. That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been "sold and endorsed" to it. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an agency.

HELD: No, he did not, and is NOT personally liable. " DEF OF AGENCY: In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latters consent. PURPOSE: 1. to accomplish results by using the services of others, to do a great variety of things (selling, buying, manufacturing, and transporting) 2. to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act BASIS OF AGENCY: Representation # agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence, qui facit per alium facit per se (he who acts through another acts himself). Essential elements of an agency: 1. Consent, express or implied, of the parties to establish relationship 2. Object, w/c is the execution of the juridical act in relation to the 3rd person 3. Agent acts as a representative, and not for himself 4. Agent acts w/in the scope of his authority Furthermore, petitioner posits that EDWIN is personally liable since he exceeded his authority as an agent. Agent is not personally liable to the party w/ whom he contracts EXCEPT in 2 instances (1897-although first 2 only are mentioned): 1. If he expressly binds himself to obligation 2. Exceeds his authority o He can be liable if he does not give 3P sufficient notice of his powers IN THIS CASE, Edwin, as sales manager, was granted broad powers, which presupposes a degree of confidence where he can exercise his judgment / discretion in transactions Edwin's participation was "reasonably necessary" to protect the business of Impact. (he had a fiduciary relation w/ Impact) In case agent exceeds his authority, the law does not say that the 3p can recover from both principal and agent Edwin as agent is NOT a real party in interest. A real party in interest is one who stands to be benefited or injured by the judgment / party entitled to the avails of the suit The facts of the case show that Impact really needed the sludge pump. Had EDWIN not issued the Deed of Assignment, the business of the principal would have been adversely affected.

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6. Eurotech Industrial Technologies Inc. v. Cuizon

P- Impact, A-Edwin " "

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Eurotech is engaged in the business of selling industrial equipments to its customers. One of its customers is Impact, a company solely owned by ERWIN Cuizon, w/ EDWIN Cuizon as its general manager. From January to April 1995, Eurotech sold several equipments to Impact. When Impact wanted to buy a sludge pump from Eurotech, Eurotech refused to deliver the sludge pump from UK until Impact had fully paid its obligation Thus, EDWIN executed a Deed of Assignment of its receivables from Toledo Power Corp. amounting to P365,000. After this, Eurotech delivered the sludge pump to Impact. However, unknown to Eurotech, EDWIN collected from Toledo the amount of P365k+. When Eurotech learned about this collection, Eurotech demanded payment from Impact. As a result, Impact made partial payments to Eurotech. But when Impact failed to pay the balance of their account, Eurotech sued ERWIN and EDWIN for the payment of their account. TC ruled that EDWIN should be dropped from the case saying he is only an agent, and Impact had ratified Edwin's act when Erwin made a dp of 50k while Eurotech had ratified Edwins act by accepting the dp CA affirmed this decision.

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ISSUE: WON EDWIN exceeded his authority and is personally liable to Eurotech

Digests

Agency 2010

Pearl Ganzon

7. Domingo v Domingo
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Vicente Domingo granted Gregorio Domingo, a real estate broker, the exclusive agency to sell his lot of Piedad Estate at P2 / sqm, with commission of 5% if property is sold by Vicente or by anyone else during the 30-day duration of the agency, OR property is sold by Vicente w/in 3 months from the termination of the agency to a purchaser submitted by Gregorio during the continuance of the agency w/ notice to Vicente. The said agency contract was in triplicate, one copy was given to Vicente, while the original and another copy were retained by Gregorio. Gregorio then authorized intervenor Teofila to look for a buyer, promising him one-half of the 5% commission. Teofila, in turn, introduced Oscar to Gregorio as a prospective buyer. Oscar offered a price MUCH LOWER than the P2 / sqm. After negotiation, Oscar raised his offer to P1.20 / sqm to which Vicente agreed. This was confirmed in a letter by Oscar to Vicente. Subsequently, Vicente asked for an additional amount of P1,000 as EARNEST MONEY (money given by buyer to seller to bind contract), w/c Oscar promised to deliver to him. Pursuant to his promise to Gregorio, Oscar gave Gregorio a gift / propina totaling P1k for for succeeding in persuading Vicente to sell his lot at P1.20 / sqm The P1k gift was NOT disclosed by Gregorio to Vicente. Neither did Oscar pay Vicente the additional amount of P1k by way of earnest money. The deed of sale did not push through because Oscar told Gregorio that the money he expected from his brother did not materialize. Eventually, Gregorio discovered that the property was sold by Vicente to AMPARO, Oscars wife, as down payment by Oscar on the purchase of Vicentes lot. Gregorio demanded his 5% commission, but Vicente refused to give it, saying that Gregorio is NOT entitled to the commission because he sold the lot to Amparo and not to Oscar (Gregorios buyer).

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The duty of an agent is likened to that of a trustee. THUS, 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 is GUILTY of breach of loyalty. Consequently, he forfeits his right to collect the commission from his principal, even if the principal DOES NOT suffer any injury by reason of the breach. WHY? The rule is to prevent the possibility of any wrong, NOT to remedy or repair damage. The rule would not apply if the agent/ broker was merely acting as middleman, or if he informed the principal of the gift / bonus. IN THIS CASE, Gregorio did NOT inform Vicente of the bonus and was NOT merely a middleman. He was acting in behalf of the principal. THUS, Gregorio should return the commission to Vicente. Teofilo, the sub-agent of Gregorio, can only recover from Gregorio his one-half share of whatever amounts Gregorio received by virtue of the transaction

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8. Schmid and Oberly Inc v RJL

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RJL MARTINEZ is engaged in the business of deep-sea fishing. He needed electric generators for some of its boats and SCHMIID sold electric generators of different brands, negotiations between them for the acquisition thereof took place. The parties had two separate transactions over "Nagata"-brand generators. First: was the sale of three (3) generators. In this transaction, it is not disputed that SCHMID was the vendor of the generators. The company supplied the generators from its stockroom; it was also SCHMID, which invoiced the sale. Second, which gave rise to the present controversy, involves twelve (12) "Nagata"brand generators. o It was stipulated that payment would be made by confirming an irrevocable letter of credit in favor of NAGATA CO. Furthermore, among the General Conditions of Sale appearing on the dorsal side of the Quotation is the following: o Buyer will, upon request, promptly open irrevocable Letter of Credit in favor of seller, in the amount stated, specifying shipment, and providing that in the event the shippers are unable to ship within the specified period, Buyer agrees to extend the said Letter of Credit for later shipment. For its efforts, SCHMID received from NAGATA CO. a commission for the sale of the twelve generators to RJL MARTINEZ. All fifteen (15) generators subject of the two transactions burned out after continuous use. RJL MARTINEZ informed SCHMID about this development. In turn, SCHMID brought the matter to the attention of NAGATA CO. NAGATA CO. sent two technical representatives who made an ocular inspection and conducted tests on some of the burned out generators, which by then had been delivered to the premises of SCHMID.

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ISSUE: WON failure on the part of Gregorio to disclose to Vicente the payment to him by Oscar of P1k as gift fraud resulting in forfeiture of his commission HELD: YES, Gregorio can no longer collect commission for failure to disclose. " Art. 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 an account shall be void. Art. 1909. The agent is responsible not only for fraud but also for negligence, which shall be judged with more less rigor by the courts, according to whether the agency was or was not for a compensation.

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Digests

Agency 2010

Pearl Ganzon

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The tests revealed that the generators were overrated. As indicated both in the quotation and in the invoice, the capacity of a generator was supposed to be 5 KVA (kilovolt amperes). However, it turned out that the actual capacity was only 4 KVA. SCHMID replaced the three (3) generators subject of the first sale with generators of a different brand. As not all of the generators from the 12 of the second transaction were replaced or repaired, RJL MARTINEZ formally demanded that it be refunded the cost of the generators and paid damages. SCHMID maintained that it was not the seller of the 12 generators and thus refused to refund the purchase price therefore. RJL MARTINEZ brought suit against SCHMID on the theory that the latter was the vendor of the 12 generators and, as such vendor, was liable under its warranty against hidden defects.

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In its complaint, RJL MARTINEZ admitted that the generators were purchased "through indent order" In the same vein, it admitted in its demand letter previously sent to SCHMID that twelve (12) of en (15) Nagata-brand generators "were purchased through your company (SCHMID), by indent order and three (3) by direct purchase."

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The only participation of SCHMID was to act as an intermediary or middleman between NAGATA CO. and RJL MARTINEZ, by procuring an order from RJL MARTINEZ and forwarding the same to NAGATA CO. for which the company received a commission from NAGATA CO. The above transaction is significantly different from the first transaction wherein SCHMID delivered the goods from its own stock (which it had itself imported from NAGATA CO.), issued its own invoice, and collected payment directly from the purchaser. Not being the vendor, SCHMID cannot be held liable for the implied warranty for hidden defects under the Civil Code

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ISSUE: WON the second transaction between the parties was a sale or an indent transaction. HELD: YES. SCHMID was merely acting as an indentor in the purchase and sale of the twelve (12) generators subject of the second transaction. " The Civil Code defines a contract of sale: ART. 458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Essence of the contract of sale is transfer of title or agreement to transfer it for a price paid or promised. "If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is, a sale." Indentor: a middlemen in the same class as commercial brokers and commission merchants. o A broker one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some purpose the agent of both parties. ! As an agent employed to make bargains and contracts between other persons, in matters of trade, commerce or navigation, for compensation commonly called brokerage. A commission merchant - one who is engaged in the purchase or sale for another of personal property which, for this purpose, is placed in his possession and at his disposal. He maintains a relation not only with his principal and the purchasers or vendors, but also with the property which is subject matter of the transaction.

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9. Tan v Gullas (Diff bet. Agent and broker)

P-Gullas; Broker-Tan,etc.

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The spouses Gullas were owners of land in Cebu. They executed a special power of Atty authorizing Tan, a licensed real estate broker and his associates to negotiate a sale for a price of P550/sqm for 3% commission. The power of Atty was non-exclusive and effective for 1 month. Tan, et. al. were able to find prospective buyers (The Sisters of Mary) for the lot. However, the Gullas instead agreed to sell the lot to The Sisters of Mary, through another broker Caete for a lower fee of P200/sqm and a Deed of Sale was executed. When Tan, et. al. demanded for their brokers fees, the Gullas refused to pay, claiming that another broker had completed the deal, and not them. Tan,etc. filed a complaint for recovery of their brokers fee and damages, saying that they were the procuring cause in bringing about the sale of the property to Sisters of Mary The Gullas on the other hand contend that another broker, Pacana, was the one who introduced the property to the Sisters ahead of Tan,etc. When petitioners introduced the buyers to private respondent Eduardo Gullas, the former were already decided in buying the property through Pacana, who had been paid his commission. TC ruled in favor of Tan, etc. but decision was reversed by CA.

ISSUE: WON Tan, et. al. can collect brokers fees from the Gullas RATIO: YES, they can. " A broker is one whose job is to bring together prospective buyers and sellers, never acting in his own name but only as a middleman.

Digests

Agency 2010

Pearl Ganzon

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The authority given to petitioners was non-exclusive, which meant that private respondents were not precluded from granting the same authority to other agents with respect to the sale of the same property. In fact, Gullas authorized another agent in the person of Mr. Bobby Pacana to sell the same property. There was nothing illegal or amiss in this arrangement, per se, considering the non-exclusivity of petitioners authority to sell. The problem arose when it eventually turned out that these agents were entertaining one and the same buyer, the Sisters of Mary Hence, it is inconsistent with sound business practice that the authority to sell is contained in an undated and unnotarized Special Power of Attorney. Tan, on the other hand, were given the written authority to sell by the private respondents. Indeed, it is readily apparent that Gullas are trying to evade payment of the commission, which rightfully belong to Tan as brokers with respect to the sale. There was no dispute as to the role that Tan played in the transaction. At the very least, Tan set the sale in motion. They were not able to participate in its consummation only because they were prevented from doing so by the acts of Gullas. Unlike agents, who receive commission upon completion of the sale, brokers receive payment as soon as they are able to bring the buyer and seller together. They are entitled to commission w/n sale of property is concluded through their efforts. Thus, even if Tan, etc. were not responsible for concluding the sale, they deserved to be paid because they set the sale in motion. They were unable to participate in its consummation only because they were prevented by the Gullas spouses. The Gullas also failed to prove that Pacana began negotiations ahead of Tan,etc.

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Medrano issued the Letter of Authority - For your labor and effort in finding a purchaser thereof, I hereby bind myself to pay you a commission of 5% of the total purchase price to be agreed upon by the buyer and seller. Lee went to the lot himself for ocular. Lee told her that the mango trees "looked sick" so he was bringing an agriculturist to the property. Three weeks thereafter, respondent called Lee again to make a follow-up of the latters visit to Ibaan. Lee informed her that he already purchased the property. A Deed of Sale was eventually executed between the bank, represented by its President/General Manager Teresa M. Ganzon (as Vendor) and KGB Farms, Inc., represented by Dominador Lee (as Vendee. Since the sale of the property was consummated, the respondents asked from the petitioners their commission, or 5% of the purchase price.

ISSUES: 1. Whether or not the letter of authority is binding and enforceable against the defendant Bank only or both defendants; and 2. Whether or not the plaintiffs are entitled to any commission for the sale of the subject property HELD: " Pacita Borbon is a licensed real estate broker and respondents Antonio and Flor are her associates. o A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some purposes the agent of both parties.

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10. Medrano v. CA
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Medrano was the Vice-Chairman of Ibaan Rural Bank, a bank owned by the Medrano family. Medrano asked Mrs. Estela Flor, a cousin-in-law, to look for a buyer of a foreclosed asset of the bank, a 17-hectare mango plantation. Mr. Dominador Lee, a businessman from Makati City, was a client of Mrs. Pacita G. Borbon, a licensed real estate broker. Lee expressed that he preferred a land with mango trees instead. Borbon promised to get back to him as soon as she would be able to find a property according to his specifications. Borbon relayed to her business associates and friends that she had a ready buyer for a mango orchard. Flor then advised her that her cousin-in-law owned a mango plantation, which was up for sale. She told Flor to confer with Medrano and to give them a written authority to negotiate the sale of the property. "

For the respondents participation in finding a buyer for the petitioners property, the petitioners refuse to pay them commission, asserting that they are not the efficient procuring cause of the sale, and that the letter of authority signed by petitioner Medrano is not binding against the petitioners. The term "procuring cause," in describing a brokers activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker producing a purchaser ready, willing and able to buy real estate on the owners terms. A broker will be regarded as the "procuring cause" of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun. The broker must be the efficient agent or the procuring cause of the sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker.

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Digests

Agency 2010

Pearl Ganzon

"

Certainly, it was not the intention of Medrano to expect the respondents to do just that (to negotiate) when he issued the letter of authority. The clear intention is to reward the respondents for procuring a buyer for the property. Before negotiating a sale, a broker must first and foremost bring in a prospective buyer. It has been held that a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made In the absence of an express contract between the broker and his principal, the implication generally is that the broker becomes entitled to the usual commissions whenever he brings to his principal a party who is able and willing to take the property and enter into a valid contract upon the terms then named by the principal, although the particulars may be arranged and the matter negotiated and completed between the principal and the purchaser directly. If not for the respondents, Lee would not have known about the mango plantation being sold by the petitioners. The sale was consummated. The bank had profited from such transaction. It would certainly be iniquitous if the respondents would not be rewarded their commission pursuant to the letter of authority

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buying price and the lower selling price). In addition, it charges a commission for brokering the sale. However, if the customer sells and there is a profit, Abacus deducts the purchase price and delivers only the surplus after charging its commission. Ampil further claims that all his trades with petitioner were not paid in full in cash at anytime after purchase or within the T+4 [4 days subsequent to trading] and none of these trades was cancelled. Neither did [petitioner] apply with either the Philippine Stock Exchange or the SEC for an extension of time for the payment or settlement of his cash purchases. This was not brought to his attention by his broker and so with the requirement of collaterals in margin account. Thus, his trade under an offset transaction with [petitioner] is unlimited subject only to the discretion of the broker. That [petitioner] did not comply with the T+4 mandated in cash transaction. When [respondent] failed to comply with the T+3, [petitioner] did not require him to put up a deposit before it executed its subsequent orders. [Petitioner] did not likewise apply for extension of the T+4 rule

ISSUE: WON both parties are at pari-delicto HELD: " Article 1236 (second paragraph) of the Civil Code: 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. " " Since a brokerage relationship is essentially a contract for the employment of an agent, principles of contract law also govern the broker-principal relationship. In securities trading, the brokers are essentially the counterparties to the stock transactions at the Exchange. Since the principals of the broker are generally undisclosed, the broker is personally liable for the contracts thus made. Hence, petitioner had to advance the payments for respondents trades. Brokers have a right to be reimbursed for sums advanced by them with the express or implied authorization of the principal, in this case, Ampil. In the final analysis, both parties acted in violation of the law and did not come to court with clean hands with regard to transactions subsequent to the initial trades. Thus, the peculiar facts of the present case bar the application of the pari delicto rule to all the transactions entered into by the parties. In this case, the pari delicto rule applies only to transactions entered into after the initial trades. Since the initial trades are valid and subsisting obligations, respondent is liable for them. Justice and good conscience require all persons to satisfy their debts.

11. Abacus v Ampil

! ! ! !
Abacus engaged in business as a broker and dealer of securities of listed companies at the Philippine Stock Exchange Center. Ampil opened a cash or regular account with Abacus for the purpose of buying and selling securities as evidenced by the Account Application Form. The parties business relationship was governed by the terms and conditions: Ampil actively traded his account, and as a result of such trading activities, he accumulated an outstanding obligation in favor of Abacus. Despite the lapse of the period within which to pay his account as well as sufficient time given by Abacus to comply with his proposal to settle his account, the latter failed to do so. Such that Abacus thereafter sold Ampils securities to set off against his unsettled obligations. "After the sale of securities and application of the proceeds thereof against his account, Ampils remaining unsettled obligation to was then referred the matter to its legal counsel for collection purposes. Abacus through counsel demanded that Ampil settle his obligation plus the agreed penalty charges accruing thereon equivalent to the average 90-day Treasury Bill rate plus 2% per annum (200 basis points). Ampil acknowledged receipt of demand and admitted his unpaid obligation and at the same time request[ed] for 60 days to raise funds to pay the same, which was granted by Abacus. Despite said demand and the lapse of said requested extension, Ampil failed and/or refused to pay his accountabilities. Ampils defense: he was induced to trade in a stock security with Abacus because the latter allowed offset settlements wherein he is not obliged to pay the purchase price. Rather, it waits for the customer to sell. And if there is a loss, Abacus only requires the payment of the deficiency (i.e., the difference between the higher

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Digests

Agency 2010

Pearl Ganzon

12. Hahn v. CA
P-BMW , A-Hahn

! ! ! ! ! ! !

Hahn is a Filipino citizen doing business w/ BMW as its dealer of cars in the Philippines Consequently, Hahn executed in favor BMW a Deed of Assignment with a Special Power of Attorney wherein Hahn will be the exclusive dealer of BMW But in a later business deal, Hahn found out that BMW was arranging to grant the exclusive dealership to CMC (Columbia Motors Corporation) because of their dissatisfaction w/ Hahn (decline in sales, deteriorating service, etc.) BMW, however, expressed willingness to continue business relations w/ Hahn on the basis of a standard BMW importer contract instead of exclusive dealership. Because of Hahns insistence on his former business relationship with BMW, BMW withdrew its counteroffer. BMW proposed that Hahn and CMC jointly import and distribute BMW cars but Hahn found such unacceptable. He filed a complaint for specific performance and damages against BMW to compel it to continue exclusive dealership.

ISSUE: WON Hahn is an agent of BMW; because if he is, BMW may be considered as doing business in the Phils through Hahn and the trial court acquired jurisdiction over BMW HELD: Yes, Hahn is an agent and not merely a broker. " " The fact that Hahn invested his own money to put up service centers and showrooms does not necessarily prove that he is not an agent of BMW. Records show that BMW exercised control over Hahns activities as a dealer and made regular inspections of Hahns premises to enforce compliance with standards and specifications, etc. (Also, he was given commission, payment of buyers was made directly to BMW) An agent receives a commission upon the successful conclusion of a sale while a broker gets his commission by just bringing the buyer and seller together, even if no sale is eventually made.

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Digests

Agency 2010

Pearl Ganzon

II. 13. Siasat v IAC

!
Respondent Teresita Nacianceno succeeded in convincing officials of the then DECS hereinafter called Department, to purchase without public bidding, 1M worth of national flags for the use of public schools throughout the country. All the legal reqs had been complied with except the release of purchase orders. When Respondent 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 in accordance with the required specifications was first submitted for approval, she contacted the owners of the United Flag Industry. Document from United Flag Industry: o 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. First delivery were made but the next day, the authority of respondent to represent UFI was revoked by petitioner Siasat. Siasat, after receiving the payment for the first delivery tendered five percent (5%) of the amount received, to the respondent as payment of her commission. The latter allegedly protested. She refused to accept the said amount insisting on the 30% commission agreed upon. The respondent was prevailed upon to accept the same, however, because of the assurance of the petitioners that they would pay the commission in full after they delivered the other half of the order. The respondent states that she later on learned that petitioner Siasat had already received payment for the second delivery. When she confronted them, they vehemently denied receipt of the payment, at the same time claiming that the respondent had no participation whatsoever with regard to the second delivery of flags and that the agency had already been revoked. Respondent filed an action to recover the 25% balance of first delivery and 30% of the second delivery.

HELD: TC, CA & SC dismissed the contentions of petitioner. An agent may be (1) universal: (2) general, or (3) special. " 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. " 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. o 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.

! ! !

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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. The way 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. 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. Section 7 Rule 130 of our Revised Rules of Court states that "when the terms of an agreement have been reduced to writing, it is to be considered as containing all such terms", except in cases specifically mentioned in the same rule. Petitioners have failed to show that their agreement falls under any of these exceptions. The respondent was given ample authority to transact with the Department in behalf of the petitioners. The petitioners' evidence is overcome by other pieces of evidence proving that there was only one transaction. The petitioners' evidence does not necessarily prove that there were two separate transactions. 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. There is no evidence on record from which to conclude that the revocation of the agency was deliberately effected by the petitioners to avoid payment of the respondent's commission. What appears is only the petitioner's use in court of such a factual allegation as a defense against the respondent's claim.

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Petitioners Contention: ! Authorization making the respondent the petitioner's representative merely states that she could deal with any entity in connection with the marketing of their products for a commission of 30%. o There was no specific authorization for the sale of 15,666 Philippine flags to the Department; ! There were two transactions involved evidenced by the separate purchase orders and separate delivery receipts. The revocation of agency effected by the parties with mutual consent, forecloses the respondent's claim of 30% commission on the second transaction ! There was no basis for the granting of attorney's fees and moral damages because there was no showing of bad faith on the part of the petitioner. It was respondent who showed bad faith in denying having received her commission on the first delivery. Digests Agency 2010

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Pearl Ganzon

14. Dominion Insurance Corp v CA

! ! ! ! !
Rodolfo S. Guevarra (plaintiff) instituted Civil Case for sum of money against defendant Dominion Insurance Corporation. Guevara claimed he had advanced the money in his capacity as manager to satisfy certain claims filed by Dominions clients Dominion Insurance denied any liability to plaintiff and asserted a counterclaim representing premiums that plaintiff allegedly failed to remit. Dominion Insurance filed a third-party complaint against Fernando Austria, who at that time was its Regional Manager for Central Luzon area. The case was again called for pre-trial conference. Only plaintiff and counsel were present. Despite due notice, defendant and counsel did not appear, although a messenger, Roy Gamboa, submitted to the trial court a handwritten note sent to him by defendants counsel which instructed him to request for postponement. Plaintiffs counsel objected to the desired postponement and moved to have defendant declared as in default. TC rendered a decision in favor of Guevara, ordering Dominion to pay him the sum he advanced Dominion appealed decision to CA, but CA affirmed TCs decision "

enumerated in or similar to those enumerated in the Special Power of Attorney do not require a special power of attorney. Article 1878. Special powers of attorney are necessary in the following cases: o (1) To make such payments as are not usually considered as acts of administration; o " (15) Any other act of strict dominion.

The payment of insurance claims is NOT an act of administration. It is an act w/c requires a special power of atty, as stated in the Civil Code (special power of atty is necessary to make payments not usually considered acts of administration) IN THIS CASE, Guevara was authorized to pay the claim of the insured, but the payment shall come from the revolving fund / collection in his possession NOT from his own funds. Having deviated from the principal Dominions instructions, Guevara cannot reimburse the expenses he incurred in settling the claims. Guevarra was authorized to pay the claim of the insured, but the payment shall come from the revolving fund or collection in his possession. o Having deviated from the instructions of the principal, the expenses that respondent Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from petitioner Dominion.

"

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ISSUES: 1. WON Guevarra acted w/in his authority as agent for Dominion 2. WON he is entitled to reimbursement of amounts he paid "

HELD: No. " By contract of agency, a person binds himself to render some service or do something in representation OR on behalf of another with consent or authority of the latter. The basis of agency is representation. o On the part of the principal, there must be ACTUAL INTENTION TO APPOINT (or an INTENTION naturally inferable from his words or actions) o o " " On the part of the agent, there must be an INTENTION TO ACCEPT THE APPOINTMENT AND ACT ON IT W/o such intent, there is NO agency

The law (Art 1918) provides that The principal is not liable for the expenses incurred by the agent when the agent ACTED IN CONTRAVENTION OF THE PRINCIPALS INSTRUCTIONS, unless he should wish to avail himself of the benefits derived from the contract.. HOWEVER, the general law on Oblicon (art 1236) also provides that whoever pays for another may demand from the debtor what he has paid except if he paid w/o the knowledge / against the will of the debtor, he may only recover insofar as the debtor has benefited. Thus, to the extent that Dominions obligation has been extinguished, Guevara may demand reimbursement. Otherwise, this would result in unjust enrichment.

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A reading of the Special Power of Atty shows that Dominion and Guevara intended to enter into a principal-agent relationship. Despite the word special the contents of the document reveal that what was constituted was actually GENERAL AGENCY. The agency comprises all business of the principal but couched in gen. terms, it is limited only to ACTS OF ADMINISTRATION The agency comprises all the business of the principal, but, couched in general terms, it 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. Thus, the acts Agency 2010 Pearl Ganzon

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Digests

15. Veloso v CA
! ! !
Francisco Veloso was the owner of a parcel of land located in Tondo, Manila. Later on he discovered that his title over the land was cancelled and a new one was issued in favor of Escario. Veloso claimed that he was the absolute owner of the property and that he never authorized anyone, including his wife Irma, to sell the land. He filed for annulment of docs, reconveyance of property and preliminary injuction. He also found out that his copy of the title was missing and later on discovered that his title was already cancelled in favor of Escario. Escario, on the other hand, said that she was a buyer in good faith and had no knowledge of any irregularity over the land. Escario claimed that Irma, Velosos wife, sold the land to her and was accompanied by a general power of attorney, w/c was even notarized (along w/ title of the land) The lower courts had found that the GPA was sufficient in form and substance and the presumption of regularities over said instrument is presumed. "

contemplated upon the agent or attorney in fact. If the power is couched in general terms, then such power cannot go beyond acts of administration. However, where the power to sell is specific, it not being merely implied, much less couched in general terms, there can not be any doubt that the attorney in fact may execute a valid sale. An instrument may be captioned as special power of attorney but if the powers granted are couched in general terms without mentioning any specific power to sell or mortgage or to do other specific acts of strict dominion, then in that case only acts of administration may be deemed conferred. The SPA can be included in the general power when it the specific act/ transaction for w/c the SPA is required is SPECIFIED in the GPA. What matters is the extent of the powers contemplated upon the agent. IF the power is couched in general terms then such powers cannot go beyond such acts even if written. In a SPA, powers must be specific not merely implied

"

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Petitioners Contention (VELOSO): ! He denied granting any such power and challenged the GPA for being false. ! He also said his signature was forged. ! He denied having met or transacted with the defendant. ! The sale of the property and the subsequent transfer should be null and void Defendants Contentions (ESCARIO): ! She was a buyer in good faith and denied any knowledge of the alleged irregularity. ISSUE: WON the sale was valid HELD: YES, the sale was valid. Escario is a purchaser in good faith. " " Forgery must never be presumed and must be supported and substantiated with evidence. IN THIS CASE, Veloso failed to prove such. 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, to wit: Thus, 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 special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required. Whether the instrument be denominated as general power of attorney or special power of attorney, what matters is the extent of the power or powers

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Digests

Agency 2010

Pearl Ganzon

16. Pineda v CA
A- Capt Nuval (PMSI), P Insular Life

! !

The petitioners were the complainants in IC Case No. RD-058, an administrative complaint against private respondent Insular Life Assurance Company, Ltd., which was filed with the Insurance Commission. They prayed therein that Insular Life "be ordered to pay the claimants their insurance claims" and that "proper sanctions/penalties be imposed on" it "for its deliberate, feckless violation of its contractual obligations to the complainants, and of the Insurance Code." Insular Life's motion to dismiss the complaint on the ground that "the claims of complainants are all respectively beyond the jurisdiction of the Insurance Commission as provided in Section 416 of the Insurance Code.

After Pineda learned that they were entitled, as beneficiaries, to life insurance benefits under a group policy with Insular Life, they sought to recover these benefits from Insular Life but the latter denied their claim on the ground that the liability to them was already extinguished upon delivery to and receipt by PMSI of the six (6) checks issued in their names CA held that the Insurance Commission had jurisdiction over the case on the ground that although some of the claims exceed P100,000.00, the petitioners had asked for administrative sanctions against Insular Life which are within the Commission's jurisdiction to grant. CA ruled that the powers of attorney, Exhibits "1" to "5," relied upon by Insular Life were sufficient to authorize Capt. Nuval to receive the proceeds of the insurance pertaining to the beneficiaries.

MORE FACTS: ! Prime Marine Services, Inc. (PMSI, for brevity), a crewing/manning outfit, procured Group PoIicy No. G-004694 from Insular Life to provide life insurance coverage to its sea-based employees enrolled under the plan. ! During the effectivity of the policy, six covered employees of the PMSI perished at sea when their vessel sunk. They were survived by complainants-appellees (Pineda), the beneficiaries under the policy. ! Pineda sought to claim death benefits due them and, for this purpose, they approached the President and General Manager of PMSI, Capt. Roberto Nuval, who showed willingness to assist them to recover Overseas Workers Welfare Administration (OWWA) benefits from the POEA and to work for the increase of their PANDIMAN and other benefits arising from the deaths of their husbands/sons. ! They were thus made to execute, with the exception of the spouses Alarcon, special powers of attorney authorizing Capt. Nuval to, among others, "follow up, ask, demand, collect and receive" for their benefit indemnities of sums of money due them relative to the sinking of M/V Nemos. ! By virtue of these written powers of attorney, Pineda were able to receive their respective death benefits. o Unknown to them, however, the PMSI, in its capacity as employer and policyholder of the life insurance of its deceased workers, filed with Insular Life formal claims for and in behalf of the beneficiaries, through its President, Capt. Nuval. o Among the documents submitted by the latter for the processing of the claims were five special powers of attorney executed by complainantsappellees. On the basis of these and other documents duly submitted, Insular Life drew against its account with the Bank of the Philippine Islands (6) checks, payable to the order of Pineda (complainants). These checks were released to the treasurer of PMSI. Capt. Nuval, upon receipt of these checks from the treasurer, who happened to be his sonin-law, endorsed and deposited them in his account with the Commercial Bank of Manila, now Boston Bank.

HELD: SC rules for Petitioners Pineda " SC agrees with the Insurance Commission that the special powers of attorney "do not contain in unequivocal and clear terms authority to Capt. Nuval to obtain, receive, receipt from respondent company insurance proceeds arising from the death of the seaman-insured. On the contrary, the said powers of attorney are couched in terms which could easily arouse suspicion of an ordinary man." The holding of CA to the contrary is principally premised on its opinion that: o [t]here is nothing in the law which mandates a specific or special power of attorney to be executed to collect insurance proceeds. Such authority is not included in the enumeration of art. 1878 of the New Civil Code. Neither do we perceive collection of insurance claims as an act of strict dominion as to require a special power of attorney. o " If this be so, then they could not have been meant to be a general power of attorney since Exhibits "1" to "5" are special powers of attorney.

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The execution by the principals of special powers of attorney, which clearly appeared to be in prepared forms and only had to be filled up with their names, residences, dates of execution, dates of acknowledgment and others, excludes any intent to grant a general power of attorney or to constitute a universal agency. Being special powers of attorney, they must be strictly construed. Insular Life knew that a power of attorney in favor of Capt. Nuval for the collection and receipt of such proceeds was a deviation from its practice with respect to group policies. Group insurance is a comparatively new form of insurance. In its original and most common form, group insurance provides life or health insurance coverage for the employees of one employer. The coverage terms for group insurance are usually stated in a master agreement or policy that is issued by the insurer to a representative of the group or to an administrator of the insurance program, such as an employer. Pearl Ganzon

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Digests

Agency 2010

The employer acts as a functionary in the collection and payment of premiums and in performing related duties. Likewise falling within the ambit of administration of a group policy is the disbursement of insurance payments by the employer to the employees. Most policies, such as the one in this case, require an employee to pay a portion of the premium, which the employer deducts from wages while the remainder is paid by the employer.

"

Insular Life however recognized Capt. Nuval as the attorney-in-fact of the petitioners. Even granting for the sake of argument that the special powers of attorney were in due form, Insular Life was grossly negligent in delivering the checks, drawn in favor of the petitioners, to a party who is not the agent mentioned in the special power of attorney.

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Although the employer may be the titular or named insured, the insurance is actually related to the life and health of the employee. Indeed, the employee is in the position of a real party to the master policy, and even in a noncontributory plan, the payment by the employer of the entire premium is a part of the total compensation paid for the services of the employee. Put differently, the labor of the employees is the true source of the benefits, which are a form of additional compensation to them.

In Elfstrom vs. New York Life Insurance Company, the California Supreme Court explicitly ruled that in group insurance policies, the employer is the agent of the insurer. " We are convinced that the employer is the agent of the insurer in performing the duties of administering group insurance policies. It cannot be said that the employer acts entirely for its own benefit or for the benefit of its employees in undertaking administrative functions. While a reduced premium may result if the employer relieves the insurer of these tasks, and this, of course, is advantageous to both the employer and the employees, the insurer also enjoys significant advantages from the arrangement. The reduction in the premium which results from employer-administration permits the insurer to realize a larger volume of sales, and at the same time the insurer's own administrative costs are markedly reduced. " The most persuasive rationale for adopting the view that the employer acts as the agent of the insurer, however, is that the employee has no knowledge of or control over the employer's actions in handling the policy or its administration. An agency relationship is based upon consent by one person that another shall act in his behalf and be subject to his control. It is clear from the evidence regarding procedural techniques here that the insurer-employer relationship meets this agency test with regard to the administration of the policy, whereas that between the employer and its employees fails to reflect true agency. The insurer directs the performance of the employer's administrative acts, and if these duties are not undertaken properly the insurer is in a position to exercise more constricted control over the employer's conduct. In the light of the above disquisitions and after an examination of the facts of this case, we hold that PMSI, through its President and General Manager, Capt. Nuval, acted as the agent of Insular Life. The latter is thus bound by the misconduct of its agent.

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Digests

Agency 2010

Pearl Ganzon

17. Home Insurance Co. v United States Lines Co

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SS "Pioneer Moon" arrived in Manila and discharged unto the custody of the Bureau of Customs (arrastre operator) 200 cartons of carbonized adding machine rolls consigned to Burroughs. However, when the cargo was delivered Burroughs (the consignee), several cartons were damaged. Burroughs claimed the P2k+ worth of damage from the Bureau of Customs, the United Lines Company (owner of the vessel) and the Home Insurance Company (cargo insurer). Home Insurance paid the claim and demanded reimbursement from either the Bureau of Customs or US Lines. When both rejected the claim, Home Insurance filed an action against the RP, Bureau of Customs and United States Lines for recovery of the P2k+ with interest. On the date set for pre-trial, only the counsel for Home Insurance appeared, who upon being asked for written authority to compromise, assured the court that though he had no written authority, he had such authority verbally given by the Home Insurance. The court dismissed the case for failure of the Home Insurance to appear at the pre-trial conference. Home Insurance appealed to SC, claiming that the lower court erred in dismissing the case its failure to appear.

"

If the judge, w/ good reason, is not satisfied that said authority exists, as in this case, dismissal of the suit for non-appearance of plaintiff in pre-trial is sanctioned by the Rules.

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ISSUE: WON failure of Home Insurance to appear at the pre-trial conference merits the dismissal of the case despite the appearance of its counsel (who has a verbal authority from the plaintiff). R: YES. Dismissal was proper. " Section 2, Rule 20 of the new Rules of Court says that "a party who fails to appear at a pre-trial conference may be non-suited or considered as in default."

This shows the purpose of the Rules to compel the parties to appear personally before the court to reach, if possible, a compromise. Accordingly, the court is given the discretion to dismiss the case should plaintiff not appear at the pre-trial.

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Rules of Court (Sec 23, Rule 138) require that for attorneys to compromise the litigation of their clients, a "special authority is necessary. While the same does not state that the special authority be in writing, the court has every reason to expect that such be duly established by evidence other than the counsels assertion that he has been given verbal authority. Authority to compromise cannot lightly be presumed.

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Digests

Agency 2010

Pearl Ganzon

18. Estate of Lino Olaguer v Ongjoco

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Lino Olaguer died, leaving his wife Olivia who was appointed administrator and Eduardo as co-admin. Later, Olivia got married to Jose. In a court order, some properties of Linos estate were authorized to be sold to pay its obligations. Thus, Olivia and Eduardo sold 12 parcels of land to Pastor Bacani. Pastor Bacani then sold back to the lots to Olivia and Eduardo. Relying on the same court order, Olivia and Eduardo sold 10 of the parcels to Estanislao for P7k. Olivia and Estanislao both executed special powers of Atty in favor of JOSE, authorizing him to sell and mortgage properties. Jose then sold one of the properties to his son Virgilio. After this, Jose, claiming to be Atty-in-Fact of his son, sold the properties to Ojongco. The estate of Lino Olaguer, represented by his children, filed an Action for Annulment of the said titles, claiming that these were absolutely simulated / fictitious. Involved in this was Ongjoco, who insisted that he was a buyer in good faith since Jose was duly authorized by a WRITTEN POWER OF ATTY when the properties were sold to Ongjoco.

"

Even if a document is designated as a GPA, the requirement of a SPA is met if there is a CLEAR MANDATE from the PRINCIPAL specifically authorizing the performance of the act. The special power can be included in the gen. power when the act for which the special power is required is SPECIFIED THEREIN. The written power of atty contained the signature of Virgilio and was duly notarized, so it can thus be considered a PUBLIC DOCUMENT. It is thus presumed authentic, and can only be rebutted by clear convincing evidence. In this case, no evidence was presented to overcome such presumption. With regard to the first 2 lots, there was 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.

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ISSUE: WON Ongjoco was a buyer in good faith HELD: Ongjoco was a BUYER IN BAD FAITH when he bought lots 1 and 2 of the properties w/o due authorization. " HOWERVER, he was a buyer in GOOD FAITH when he bought the rest of the lots based on a duly notarized written power of atty. Art 1874: When the sale of a piece of land or any interest therein is made through an agent, the authority of the agent must be made in writing. W/o this, the sale shall be void. Art 1878: A special power of Atty is necessary for an agent to enter into a contract where the ownership of an immovable property is transmitted / acquired, either gratuitously or for valuable consideration. IN THIS CASE, for lots 1 and 2, the power of atty supposedly issued by Virgilio in favor of Jose was NEVER presented in trial. Thus, there was NO written power of atty to speak of. o " " Ongjoco thus cannot claim good faith.

"

As regards the other lots, Ongjoco was able to present a gen power of atty (GPA) executed by Virgilio. While the law requires a SPA, the GPA was sufficient in this case as Jose was expressly empowered to sell ANY of Virgilios properties. Agency 2010 Pearl Ganzon

Digests

19. Pineda v. CA (2002)

! ! !
Respondents Baezes are the real owners of a parcel of land located in White Plains, while petitioner Pineda is the real owner of a house located in LA, California. Baez and Pineda agreed to exchange their respective properties and so they executed an Agreement to Exchange Real Properties. The parties agreed to: o Exchange their respective properties; o Pineda to pay an earnest money in the total amount of $12,000.00 on or before the first week of February 1983; and o To consummate the exchange of properties not later than June 1983. It appears that the parties undertook to clear the mortgages over their respective properties. At the time of the execution of the exchange agreement, the White Plains property was mortgaged with the Government Service Insurance System (GSIS) while the California property had a total mortgage obligation of $84,000.00 In the meantime, the appellees were allowed to occupy or lease to a tenant Pinedas California property and Pineda was authorized to occupy appellees White Plains property. Pursuant to the exchange agreement, Alejandria Pineda paid the appellees the total amount of 12k. Unknown to the respondents, Pineda and Duque executed an Agreement to Sell over the White Plains property whereby Pineda sold the property for P1.6M. The contract provides that: o Upon signing of the agreement, the purchaser shall pay P450,000.00 and the seller shall cause the release of the property from any encumbrance and deliver to the purchaser the title to the property; o Balance shall be paid by the purchaser to the seller; o Upon full payment, the seller shall deliver to the purchaser a deed of absolute sale duly signed by its registered owner, the appellees. On the same date, Pineda, out of the downpayment received from the appellants, paid the appellees mortgage obligation with the GSIS in the sum of P112,690.75 Upon the respondents return, they discovered that the Duques are occupying the WP property. The exchange agreement was rescinded for failure of Pineda to clear her mortgage obligation to the California property. Negotiations for the purchase of the WP property were held between respondents and petitioners Duque but the same failed which resulted to the respondents demanding the Duques to vacate the property. " "

On January 11, 1983, the Baez spouses and petitioner Pineda executed an agreement to exchange real properties. However, the exchange did not materialize.

Pinedas "sale" of the property to petitioners Duque was not authorized by the real owners of the land, respondent Baez. The Civil Code provides that in a sale of a parcel of land or any interest therein made through an agent, a special power of attorney is essential. This authority must be in writing, otherwise the sale shall be void. o In his testimony, Duque confirmed that at the time he "purchased" respondents property from Pineda, the latter had no Special Power of Authority to sell the property.

! !

"

A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired for a valuable consideration. Without an authority in writing, petitioner Pineda could not validly sell the subject property to petitioners Duque. Hence, any "sale" in favor of petitioners Duque is void. Art. 1318 of the Civil Code - requisites of a valid and perfected contract: consent, object, and cause. As the consent of the real owner of the property was not obtained, no contract was perfected Pineda was not authorized to enter into a contract to sell the property. As the consent of the real owner of the property was not obtained, no contract was perfected. Consequently, petitioner Duque failed to validly acquire the subject property.

"

"

! ! ! !

ISSUE: WON the petitioners validly acquired the subject property. HELD: NO. " It appears that the Baez spouses were the original owners of the parcel of land and improvements located at White Plains, Quezon City.

Digests

Agency 2010

Pearl Ganzon

20. Cosmic Lumber v CA

!
Cosmic Lumber Corp. executed a Special Power of Attorney appointing VillamilEstrada as atty-in-fact to: o to initiate, institute and file any court action for the ejectment of third persons and/or squatters of the entire lot 9127 and 443 and covered by TCT Nos. 37648 and 37649, o for the said squatters to remove their houses and vacate the premises in order that the corporation may take material possession of the entire lot, o and for this purpose, to appear at the pre-trial conference and enter into any stipulation of facts and/or compromise agreement so far as it shall protect the rights and interest of the corporation in the aforementioned lots. Thus, Villamil-Estrada, by this power, instituted an action for the ejectment of Perez in the RTC of Dagupan. Eventually, Villamil-Estrada and Perez entered into a Compromise Agreement, recognizing that Perez occupied a portion of Cosmics lot and that Perez should pay for such. TC approved the Compromise agreement. Upon learning about this, Cosmic sought the annulment of said decision.

"

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. It is therefore clear that by selling to respondent Perez a portion of petitioner's land through a compromise agreement, Villamil-Estrada acted without or in obvious authority. o The sale ipso jure is consequently void. So is the compromise agreement.

"

"

"

! ! ! !

"

ISSUE: WON sale of Cosmics land in the compromise agreement is valid HELD: No. No perfected contract, sale was void. " The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary to institute ejectment actions and enter into compromise agreements to PROTECT the corporations rights. o " Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject property. "

This being the case, the judgment based thereon is necessarily void. Antipodal to the opinion expressed by respondent court in resolving petitioner's motion for reconsideration, the nullity of the settlement between Villamil-Estrada and Perez impaired the jurisdiction of the trial court to render its decision based on the compromise agreement. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document.

Power to sell CANNOT be inferred from the specific authority to enter into a compromise agreement because of the explicit limitation fixed by the grantor that the compromise entered into shall only be so far as it shall protect the rights and interest of the corporation In this case, alienation by sale of an immovable CANNOT be deemed protective of the right of Cosmic to physically possess such. 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. 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 includes a sale as a necessary ingredient of the act mentioned. The power of atty must express the powers of the agent in clear and unmistakable language.

" " "

"

Digests

Agency 2010

Pearl Ganzon

III. 3. Gozun v Mercado

! ! ! ! ! ! ! ! ! ! !
In the l995 elections, Mercado vied for the gubernatorial post in Pampanga. Mercado asked Gozun, the owner of JMG Publishing, to print his materials in exchange for a price. Mercado's wife told Gozun that Mercado already approved the price quotation and that Gozun could start printing, so he did. Given the urgency and limited time to do the job order, Gozun availed of the services and facilities of Metro Angeles AND St. Joseph Printing, owned by his daughter and mother, respectively. Gozun delivered the campaign materials to respondents headquarters. Meanwhile, Mercado's sister-in-law, Lilian obtained from Gozun "cash advance" of P253k allegedly for the allowances of poll watchers, who were attending a seminar and for other related expenses The amount received was acknowledged in Gozun's diary. Gozun later sent Mercado a Statement of Account itemizing the cost of printing in JMG, Metro, St. Joseph and the "cash advance." Mercado's wife partially paid P1M to Gozun. HOWEVER, Mercado failed to settle the balance despite repeated demands and respondents promise to pay. Thus, Gozun filed w/ RTC complaint for collection. Mercado denied having transacted w/ Gozun for the printing of campaign materials, saying that these were DONATIONS from his family, friends and political supporters. He also denied having given Lilian authority to obtain a cash advance from Gozun.

" "

In this case, Gozuns testimony failed to categorically state whether the loan was made on behalf of Mercado or of his wife. The receipt presented by Gozun to support his claim only indicates that the amount was received by Lilian, but it DID NOT specify for what reason the amount was delivered / what capacity Lilian received it. Art 1317 (NCC): A person cannot be bound by contracts he did not authorize to be entered into his behalf. Lilian signed the receipt in her name alone, without indicating that she was acting for and in behalf of respondent. She thus bound herself in her PERSONAL CAPACITY and not as an agent of respondent or anyone for that matter. THUS, Mercado should only pay for the printing of mats to Gozun.

o "

"

4. Borja v Sulyap
! ! ! ! ! ! ! !
Borja as lessor, and Sulyap Inc., as lessee, entered into a contract of lease involving a one-storey office building owned by Borja in QC. Sulyap paid advance rentals and dues accordingly. Upon the expiration of their lease contract, Sulyap demanded the return of the said advance rentals, but Borja refused to do so. Thus, Sulyap filed w/ RTC a complaint for sum of money against Borja. Following this, the parties entered into and submitted to the trial court a Compromise Agreement w/c TC approved. HOWEVER, Borja failed to pay the amounts (P30k and P50k w/ 2% interest AND 25% atty's fees) in the judicial compromise. Hence, Sulyap filed a motion for the issuance of a writ of execution for such amounts. Borja prayed for the quashal of the writ, saying that there was fraud and execution in the compromise agreement. o He said that 3 sets of compromise agreement were submitted for his approval. Among them, he allegedly chose and signed the compromise agreement which contained NO stipulation as to the payment of 2% monthly interest and 25% attorneys fees in case of default in payment. He said that his former counsel, Atty. Cruz, removed the page of the genuine compromise agreement and made it appear that he agreed to the penalty clause. Sulyap denied this and presented Atty Cruz, who said that the compromise agreement was signed by the petitioner inside the courtroom before the same was submitted for approval. TC and CA ruled in favor of respondent (Sulyap).

ISSUE: WON Lilian had authority to obtain cash advance HELD: No; Lilian had NO authority " 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. A special power of attorney is necessary for an agent to BORROW MONEY, unless it be urgent and indispensable for the preservation of the things which are under administration. Since nothing in this case involves the preservation of things under administration, a determination of whether Soriano had the special authority to borrow money on behalf of respondent is in order. Lim Pin v. Liao Tian: the requirement of a special power of attorney refers to the NATURE of the authorization and not to its form.

"

! ! !

"

"

ISSUE: W/ON Borja is bound by the penalty clause in the compromise agreement HELD: YES, he is bound by such.

Digests

Agency 2010

Pearl Ganzon

"

While a judicial compromise may be annulled or modified on the ground of vitiated consent or forgery, the testimony of Borja failed to establish the attendance of fraud. Atty. Cruz is worth of belief and credence. After receiving the judgment based on the compromise agreement, Borja never raised the issue of the fraudulent inclusion of the penalty clause in their agreement. Evidently, Borja cannot feign ignorance of the existence of the penalty clause in the compromise agreement approved by the court. Even assuming that Atty. Cruz exceeded his authority in inserting the penalty clause, the status of the said clause is not void but merely voidable, i.e., capable of being ratified. Borja's failure to question the inclusion of the 2% monthly interest and 25% attorneys fees in the judicial compromise despite several opportunities to do so was tantamount to ratification. Hence, he is estopped from assailing its validity.

"

If the third person is aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principals ratification. The plane ticket itself provides that it is NOT VALID AFTER March 27. The ticket constitutes the contract between the parties. When the terms are clear and leave no doubt as to the intention of the parties, contracts are to be interpreted according to their literal meaning. Moreover, Cervantes was aware that there was a need to send a letter to the legal counsel of PAL for the extension of the period of validity of the ticket. He thus knew that the agents were acting beyond their authority when they confirmed the flight, and therefore, PAL cannot be held liable.

"

" "

" "

" "

"

6. Rural Bank of Bombon, Inc., v. Court of Appeals

P Gallardo; A - Aquino

"

! ! ! ! ! ! !

5. Cervantes v CA
A PAL; 3P - Cervantes

! ! ! ! ! ! !

PAL issued to Cervantes a round trip ticket for Manila-Honolulu-LA-HonoluluManila, w/ an expiry date of March 27, 1990. This ticket was issued in compliance with a compromise agreement between the Cervantes and PAL in previous suits. 4 days before the expiry of the ticket (March 23), Cervantes used it. Upon his arrival in LA on the same day, he immediately booked his return ticket to Manila and it was confirmed for the April 2 flight. Upon learning that the plane would make a stopover in San Francisco, Cervantes made arrangements w/ PAL so he can board in San Francisco, instead of LA. On April 2 Cervantes was not allowed to board. PAL personnel marked that it was because his ticket was NOT ACCEPTED due to EXPIRATION OF VALIDITY. Hence he filed a complaint for breach of contract of carriage, saying that the act of PALs agents of confirming his ticket changed the compromise agreement between the parties.

Gallardo executed a special power of attorney in favor of Aquino, authorizing him to secure a loan and mortgage her property in Las Pias. Aquino executed a Deed of Real Estate Mortgage in favor of the Rural Bank. Gallardo eventually discovered that the mortgage was used to pay for Aquinos personal loans. Rural Bank was then on the verge of foreclosing the property. Gallardo moved to annul the Deed of Real Estate Mortgage with the Makati RTC on the basis of the unauthorized actions of Aquino. RTC restrained the bank from enforcing the foreclosure proceedings. Meanwhile, the Rural Bank filed a complaint against Gallardo and Aquino for foreclosure

ISSUE: WON Deed of Real Estate Mortgage is binding on Gallardo HELD: NO. Only Aquino, NOT Gallardo is liable. " In order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed, and sealed in the name of the principal. Otherwise, it will bind the agent only. In executing the mortage deed in favor of the bank, Aquino named HIMSELF as the mortgagor WITHOUT stating that his signature was FOR AND IN BEHALF of Gallardo in his capacity as her attorney-in-fact. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Under the facts, it appears that the Bank dealt w/ Aquino and his wife ON A PERSONAL basis. The Bank also did not conduct inquiries on whether the loans would benefit the interest of the principal rather than the agent.

"

ISSUE: WON PAL the acts of the agents changed the compromise agreement bet the parties HELD: NO. " " CC (1898) the acts of an agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. When the THIRD PARTY knows that the agent was acting beyond power, principal cannot be held liable. " "

Digests

Agency 2010

Pearl Ganzon

"

Because the loans were to be used exclusively for Aquinos business in the bangus and sugpo production, Gallardo in effect became SURETY who is primarily answerable for loans taken by Aquino in his persona capacity.

addition of words describing him as agent or as filing a representative character, without disclosing his principal, does not exempt him form personal liability. An inspection of the drafts shows that nowhere did Aruego disclose that he was signing as a representative of Philippine Education Foundation Company. An accommodation party is one who has signed as maker, drawer or indorser, without receiving value, for the purpose of lending his name. Aruego signed as a drawee/acceptor, and not as an accommodation party only. Under the NIL a drawee is primarily liable. Yes, the drafts are bills of exchange. As long as a commercial paper conforms with the definition of a bill of exchange, that paper is considered a bill of exchange. The nature of acceptance is important only in determining the kind of liabilities of the parties involved, but not in determining whether or not the commercial paper is a bill of exchange or not.

7. Philippine Bank of Commerce v Aruego

! ! ! ! !
Philippine Bank wanted to recover a sum of money with interest and commission from Aruego. The sum is based on 22 transactions between the Philippine Bank and Aruego regarding the printing of World Current Events periodical, published by Aruego. To facilitate payment of the printing, Aruego obtained a credit accommodation from Philippine Bank. To pay for every printing of World Current Events, Encal Press (the printer) draws a draft against Philippine Bank to be sent to Aruego for acceptance. An added security required by Philippine Bank, was for Aruego to hold in trust for Philippine Bank the periodicals and to sell the periodicals with the promise to turn over the proceeds to Philippine Bank to answer for payment of all obligations arising from the draft. Aruego contends that: o When the various bills of exchange were presented to Aruego for acceptance, Philippine Bank had already paid the amounts without Aruegos knowledge or acceptance. o Aruego signed the bills of exchange in a representative capacity, as the President of the Philippine Education Foundation Company, publisher of World Current Events. o Aruego signed the bills of exchange as an accommodation or additional party obligor, and not as principal obligor, to add to the security of Philippine Bank. He can only be made liable after showing that the drawer Philippine Bank is incapable of paying. o In real bills of exchange, payment of face value is advanced to the drawer only upon acceptance of the drawee. In this case, payment for the bills of exchange was made before acceptance. Therefore, although these documents are labeled bills of exchange, they are only instruments evidencing indebtedness of the drawee.

ISSUES: 1. WON Aruego is principally/primarily liable 2. WON the drafts are bills of exchange

HELD & RATIO: Yes, Aruego is principally/primarily liable. Sec. 20 of the NIL: Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere

Digests

Agency 2010

Pearl Ganzon

V. Extinguishment of Agency 1. Garcia v de Manzano

P- Narciso, A-Angel (son), Josefa (mother)

" " "

Thus, it must be considered that he was acting under a valid POA when he sold the half interest in the steamer. POA given to Angel is general and complete, terms of w/c authorize sale, buying and mortgaging of real property + borrowing of money. ALTHOUGH it does not state that the agent may sell the boat, since it is SO FULL AND COMPLETE as to authorize sale of real property, it must necessarily carry w/ it the right to sell a half interest in a small boat. The record further shows the sale was necessary in order to get money or a credit without which it would be impossible to continue the business which was being conducted in the name of Narciso and for his benefit.

! ! ! ! ! !

! ! ! !

Narciso Manzano was a merchant in Tayabas who gave a general power-ofattorney to his son, Angel and subsequently, a second general power-of-attorney to his wife, Josefa. Narciso was the owner of a half interest in a small steamer, the San Nicolas. The other half was owned by Ocejo, Perez & Co. (Ocejo), with whom there was a partnership agreement to run the steamer for a few years. When the period expired, Ocejo refused to continue the contact and demanded that Narciso buy or sell. Since Narciso did not want buy or sell, Juan Garcia bought the half interest of Ocejo. Angel, by virtue of the power-of-attorney from his father: o Sold the other half of the boat to the Juan (registered in his sons name, since he was a Spaniard who could not register) o Executed a contract of loan where Juan agreed to lend Narciso P12,000. This was secured by a mortgage over 3 parcels of land in Atimonan. (registration though was refused by registrar) After Narciso died, the CFI named Josefa the administratrix of the property of Narciso. Juan then filed an action to foreclose the so-called mortgage. Josefa and defendants countered this, saying that the estate had already been divided among her and her children, and mortgage had no legal effect. Josefa and defendants also alleged that: o The power-of-attorney given to Josefa revoked the one to the son, Angel o The power-of-attorney, even if valid, did not authorize the sale by Angel of the half interest in the boat to Juan

"

ISSUES: 1) 2) WON the power-of-attorney to the wife Josefa revoked the one to the son Angel NO! WON power-of-attorney authorized the sale by Angel of the half interest in the boat to Juan-YES!

HELD: NO. YES. " " NO. POA granted to Josefa DID NOT revoke POA to Angel. Art 1753: The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article. Defendants failed to prove that notice of the subsequent POA was given to Angel. He did not know of the POA to his mother.

"

Digests

Agency 2010

Pearl Ganzon

2. CMS LOGGING vs. CA

! ! ! ! ! ! ! ! !
CMS Logging and DRACOR entered into a contract of agency where CMS appointed DRACOR as its exclusive export and sales agent for all logs that the CMS may produce, for a period of 5 years. DRACOR was entitled to 5% commission of the gross sales of logs sold. CMS was then able to sell through DRACOR a total of about 77M+ board feet of logs in Japan. About 6 months prior to the expiration of the agreement, while on a trip to Japan, CMS's president, gen manager and legal counsel, discovered that DRACOR had used Shinko Trading as agent in selling CMS's logs in Japan. From this, Shinko earned a commission of about $1 per 1k board feet of logs sold. Shinko was thus able to collect about $77k. CMS claimed that this commission paid to Shinko was in violation of the agreement and that CMS is entitled to this amount as part of the proceeds of the sale of the logs. CMS contended that since DRACOR had been paid the 5% commission under the agreement, it is no longer entitled to the additional commission paid to Shinko as this tantamount to DRACOR receiving double compensation for services rendered. After the discovery, CMS sold and shipped logs DIRECTLY to firms in Japan w/o the aid of DRACOR. CMS also sued DRACOR for recovery of the commission that Shinko received + damages

" "

DRACOR cannot collect damages from CMS, since damages are generally not awarded to the agent for the revocation of the agency. Only time damages can be collected is if principal acts directly in order to to evade the payment of the agent's commission. This was not the case.

3. DY BUNCIO & CO. V ONG GUAN CAN\

! ! ! ! !
Ong Guan Can Jr., as agent of Ong Guan Can, sold a rice-mill and camarin in Capiz for P13k. He gave as his authority a power of attorney, a copy of w/c was attached to the deed and recorded in the Register of Deeds of Capiz. The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the agent in his own name, without any words indicating that he was signing it for the principal. It was seen that what was granted was not a gen power of atty but a LIMITED ONE, and does not grant the power to sell the said properties (Article 1713 of the Civil Code) Appellants Tong and Giok Eng claim that this defect was cured by a GPA given to the same agent in 1920. (?)

ISSUE: WON the deed of sale executed by Ong Guan Can Jr. was valid HELD: NO, sale was not valid. " The making and accepting of a new power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture.

ISSUE: WON DRACOR is entitled to its commission from the sales made by CMS to Japanese firms HELD: NO, DRACOR is no longer entitled to commission. " The principal may revoke a contract of agency at will, and such revocation may be express, or implied, and may be availed of even if the period fixed in the contract of agency as not yet expired. As the principal has this absolute right to revoke the agency, the agent can not object thereto; neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the payment of agent's commission. IN THIS CASE, CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract of agency, w/c accdg to the law exists when(art1924) the principal directly manages the business entrusted to the agent / deals directly w/ 3Ps. Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, DRACOR is no longer entitled to commission from the proceeds of such sale.

"

"

"

"

"

Digests

Agency 2010

Pearl Ganzon

4. Republic v Evangelista
! ! ! !
Legaspi is the owner of a land in Bulacan. Calimlim, representing the Republic and as head of the AFP Intelligence service, entered into a MOA w/ Reyes which granted Reyes a permit to hunt for treasure in Bulacan. Reyes and others started, digging, tunneling and blasting works on the said land of Legaspi. Legaspi executed a special power of attorney (SPA) appointing his nephew, Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the treasure hunting activities on Legaspis land and to file charges against those who may enter it without the Legaspis authority. Legaspi agreed to give Gutierrez 40% of the treasure that may be found. Gutierrez filed a case for damages and injunction against Calimlim, etc. for illegally entering Legaspis land. He hired the legal services of Atty. Adaza. Their contract provided that Atty. Adaza shall be entitled to 30% of Legaspis share in whatever treasure may be found. The RTC of Quezon City issued a 72-hr TRO. Calimlim, etc. filed a Motion to Dismiss contending: o There is no real party-in-interest as the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as evidenced by a Deed of Revocation o Gutierrez failed to establish that the alleged armed men guarding the area were acting on orders of Legaspi

"

Pursuant to this, Gutierrez hired the services of Atty. Adaza to prosecute the case for damages and injunction against petitioners, and even assigned to Adaza 30% of Legaaspis share of whatever treasure may be recovered. It is clear that the treasure that may be found in the land is the subject matter of the agency, and that Gutierrez and Atty. Adaza BOTH have an interest in the subject matter of the agency, i.e., in the treasures that may be found in the land. Thus, as a bilateral contract coupled w/ interest, it cannot be revoked at the pleasure of the principal.

"

" " "

! ! ! ! !

ISSUE: WON the contract of agency between Legaspi and Gutirerez was effectively revoked by Legaspi HELD: NO, it cannot be revoked by will. Deed of revocation executed by Legaspi has NO EFFECT. " " " Generally, an agency may be revoked by the principal at will. An exception to the revocability of a contract of agency is when it is coupled with interest, SUCH AS if a bilateral contract depends upon the agency. This is because the agency becomes part of another obligation or agreement. It is not solely the rights of the principal but also that of the agent and third persons which are affected. In this case, the agency granted by Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It is clear from the records that Gutierrez was given by Legaspi among other things the power to manage the treasure hunting activities in the subject land, file any case against anyone who enters the land without authority from Legaspi, engage the services of lawyers to carry out the agency, dig for any treasure within the land and enter into agreements relative to it

" "

Digests

Agency 2010

Pearl Ganzon