Partnership Digests PDF

AGENCY 2009 (PASCUAL)
vitaminC2012+B1 gen.mai.rog.toff.reg.abby.earla.jances.ivy.jill+alain
Afriends mark.eva.jessa.anj.bambi.rex.toe.
I. Nature, Form and Kind
A. A!"ICLE #$%$
Art. 1!"!. By t#e contract of agency a erson binds
#imself to render some service or to do somet#ing
in reresentation or on be#alf of anot#er$ %it# t#e
consent or a&t#ority of t#e latter.
1. &e'inition
2. Nature
(rient Air Ser)i*e + ,ote- !e.. ) CA (GEN)
'ay 2($ 1((1
)adilla$ *.
+AC,-. American Airlines /nc. 0AA/1 and 2rient Air
-ervices and 3otel 4eresentatives 02rient Air1
entered into a 5eneral -ales Agency Agreement
a&t#ori6ing t#e latter to act as its excl&sive general
sales agent %it#in t#e )#iliines for t#e sale of air
assenger transortation.
7&e to t#e alleged fail&re of 2rient Air to romtly
remit t#e net roceeds of sales for " mont#s$ AA/
&ndertook t#e collection of t#e roceeds of tickets
sold originally by 2rient Air and terminated t#e
agency agreement. AA/ t#en instit&ted s&it against
2rient Air %it# C+/ of 'anila for Acco&nting %it#
)reliminary Attac#ment or 5arnis#ment$
'andatory /nj&nction and 4estraining 2rder.
,#e C+/ of 'anila r&led in favor of 2rient Air and
dismissed t#e comlaint. /t t#en ordered AA/ to
reinstated 2rient Air as its general sales agent for
assenger transortation in t#e )#iliines. ,#e
/AC affirmed %it# modifications t#e findings of C+/
of 'anila.
/--89. :2; t#e lo%er co&rt may comel AA/ to
extend its ersonality to 2rient Air<
39=7. ;2. /t %o&ld be violative of t#e rinciles
and essence of agency$ defined by la% as a
contract %#ereby a erson binds #imself to
anot#er to render some service or to do somet#ing
in reresentation or on be#alf of anot#er :/,3 ,39
C2;-9;, 24 A8,324/,> 2+ ,39 =A,,94. /n an
agent?rincial relations#i$ t#e ersonality of t#e
rincial is extended t#ro&g# t#e facility of t#e
agent. /n so doing$ t#e agent$ by legal fiction$
becomes t#e rincial$ a&t#ori6ed to erform all
acts %#ic# t#e latter %o&ld #ave #im do. -&c# a
relations#i can only be effected %it# t#e consent
of t#e rincial$ %#ic# m&st not$ in any %ay$ be
comelled by la% or by any co&rt.
3. /ai
!a--o ). Fe-i0 Go C1an (2AI)
*an&ary @1$ 1(A!
'&Bo6 )alma$ *.
+AC,-. Concecion and 5er&ndia 4allos %ere
sisters and registered co?o%ners of a arcel of land
kno%n as =ot ;o. C(!@. /n 1(CD$ t#ey exec&ted a
secial o%er of attorney in favor of t#eir brot#er$
-imeon 4allos$ a&t#ori6ing #im to sell for and in
t#eir be#alf t#e aforementioned arcel of land. 2n
'arc# 1(CC$ Concecion 4allos died. 2n
-etember 1(CC$ -imeon 4allos sold t#e &ndivided
s#ares of #is sisters in lot C(!@ to +elix 5o C#an
and -ons 4ealty Cororation. ,#e deed of sale %as
registered and t#e revio&s ,C, %as cancelled.
2n 'ay 1(C"$ 4amos 4allos$ as administrator of
t#e /ntestate 9state of Concecion 4allos$ filed a
comlaint %it# t#e C+/ of Ceb&$ raying 011 t#at t#e
sale of t#e &ndivided s#are of t#e deceased
Concecion 4allos be declared &nenforceable$ and
said s#are be reconveyed to #er estateE 021 t#at
t#e ,C, iss&ed in t#e name of +elix 5o C#an and
-ons 4ealty Cororation be cancelledE and 0@1 t#at
t#e laintiff be indemnified by %ay of attorneyFs
fees and ayment of costs of s&it.
,#e trial co&rt rendered j&dgment declaring t#e
deed of sale n&ll and void$ insofar as t#e one?#alf
ro?indiviso s#are of Concecion 4allos in t#e
roerty in G&estion$ and sentencing *&an
Borromeo$ t#e administrator of t#e estate of
-imeon 4allos$ to ay +elix 5o C#an and -ons
4ealty Cororation t#e s&m reresenting t#e rice
of one?#alf of t#e lot. ,#e aellate co&rt reversed
t#e decision and s&stained t#e sale.
/--89. :#et#er or not t#e sale of t#e agent of t#e
rincialFs roerty after t#e latterFs deat# is valid
39=7. ;2. ,#e general r&le in Article 1(1( of t#e
;CC is t#at deat# is one of t#e ca&ses for t#e
exting&is#ment of agency. ,#ere being an
integration of t#e ersonality of t#e rincial into
t#at of t#e agent$ it is not ossible for t#e
reresentation to contin&e once t#e deat# of eit#er
is establis#ed. ,#ere are certain excetions$
#o%ever$ Article 1(@1 being one of t#em. 8nder
t#is rovision$ an act done by t#e agent after t#e
deat# of t#e rincial is valid and effective if t%o
conditions conc&r. 011 t#e agent acted %it#o&t
kno%ledge of t#e deat# of t#e rincialE and 021
t#at t#e t#ird erson %#o contracted %it# t#e
agent acted in good fait#. B&t beca&se it %as
establis#ed t#at -imeon 4allos #ad kno%ledge of
t#e deat# of #is rincial %#en #e made t#e sale$
Article 1(@1 %ill not aly. ,#e general r&le s#all
aly t#en t#at any act of an agent after t#e deat#
of #is rincial is void ab initio. -imeon 4allosF act
1
of selling t#e s#are of Concecion after #er deat#
is t#erefore n&ll and void.
AGENCY:
,#e relations#i of agency is %#ereby one arty$
called t#e rincial 0mandante1$ a&t#ori6es
anot#er$ called t#e agent 0mandatario1$ to act for
and in #is be#alf in transactions %it# t#ird ersons.
,#e essential elements of agency are. 011 t#ere is
consent$ exress or imlied of t#e arties to
establis# t#e relations#iE 021 t#e object is t#e
exec&tion of a j&ridical act in relation to a t#ird
ersonE 0@1 t#e agents acts as a reresentative and
not for #imself$ and 0D1 t#e agent acts %it#in t#e
scoe of #is a&t#ority.
Agency is basically ersonal reresentative$ and
derivative in nat&re. ,#e a&t#ority of t#e agent to
act emanates from t#e o%ers granted to #im by
#is rincialE #is act is t#e act of t#e rincial if
done %it#in t#e scoe of t#e a&t#ority. H&i facit er
ali&m facit se. I3e %#o acts t#ro&g# anot#er acts
#imselfI.
3i*toria 2i--in4 ). CA (!(G)
/ordador ). Lu5 ("(FF)
Caram ). Laureta (!EG)
#9$#
+AC,-. /n 1(DC$ 'ata conveyed a arcel of land in
favor of =a&reta 0first vendee1. ,#e deed of
absol&te sale %as &nregistered beca&se it %as not
ackno%ledged before a notary &blic or any
a&t#ori6ed officer. 3o%ever$ 'ata delivered
ossession to =a&ereta$ as %ell as an 2%nerFs
7&licate 2riginal 0%t#J1 certificate of title.
/n 1(DA$ t#e same land %as sold by 'ata to Caram
t#ro&g# #is reresentatives /rese and Aortadera.
,#e deed of sale %as ackno%ledged by Attorney.
Aortadera. Aortadera and Arcilla filed %it# t#e
C+/ of 7avao a etition for t#e iss&ance of a ne%
2%nerFs 7&licate of 2riginal Certificate alleging as
gro&nd t#e loss of said title. /t %as granted. ,#e
second sale %as later registered in t#e 4egistry of
7eeds.
)etitioner contends t#at /rese %as merely a
broker or intermediary %it# t#e task to make t#e
ayment to 'ataE and t#at Aortadera merely
acted as a notary &blic.
/--89-.
11 :2; /rese and Aortadera served as agents
of Caram. 0>9-1
21 :2; t#e t%o %ere in bad fait#. 0>9-1
@1 :2; Caram$ as rincial$ is deemed also in
bad fait#. 0>9-1
39=7.
1. ,#e facts of record s#o% t#at 'ata$ t#e vendor$
and Caram$ t#e second vendee #ad never met.
7&ring t#e trial$ 'ata testified t#at #e kno%s
Attorney. Aortadera b&t did not kno% Caram.
,#&s$ t#e sale of t#e roerty co&ld #ave only
been t#ro&g# CaramKs reresentatives$ /rese
and Aortadera.
2. :#en =eaning 'ansaca narrated to Attorney.
Aortadera t#e circ&mstances &nder %#ic# #is
roerty #ad been sold to =a&reta$ #e m&st
#ave incl&ded in t#e narration t#e sale of t#e
land of 'ata$ for t#e t%o roerties #ad been
sold on t#e same occassion and &nder t#e
same circ&mstances. /rese$ %#o %as t#e
%itness in most of t#e cases filed by Attorney.
Aortadera in #is caacity as )rovincial +iscal
of 7avao against =a&reta$ m&st #ave kno%n of
t#e &rc#ases of lands made by =a&reta.
9ven if /rese and Aortadera did not #ave
act&al kno%ledge of t#e first sale$ still t#eir
actions #ave not satisfied t#e reG&irement of
good fait#. Bad fait# is not based solely on t#e
fact t#at a vendee #ad kno%ledge of t#e defect
or lack of title of #is vendor. /rese and
Aortadera #ad kno%ledge of circ&mstances
%#ic# o&g#t to #ave &t t#em an inG&iry. Bot#
of t#em kne% t#at 'ataKs certificate of title
toget#er %it# ot#er aers ertaining to t#e
land %as taken by soldiers &nder t#e command
of Col. =a&reta. Also$ at t#e time of t#e second
sale$ =a&reta %as already in ossession of t#e
land. /rese and Aortadera s#o&ld #ave
investigated t#e nat&re of =a&retaKs
ossession. Caveat emptor.
@. Alying t#e rincile of agency$ Caram as
rincial$ s#o&ld also be deemed to #ave acted
in bad fait#.
9ffect. as if no t#ere %as no registration at all
Air Fran*e ) CA, 6oe Gana (A//Y)
7ec. 2($ 1(!@
'elencio 3errera
+AC,-. ,#e 5anas &rc#ased from Air +rance
t#ro&g# /merial ,ravels$ a d&ly a&t#ori6ed agent$
( oen dated tickets for a
'anilaL2sakaL,okyoL'anila. ,#e exiry date %as
'ay !$ 1(A0. *ose 5ana so&g#t t#e assistance of
,eresita 'an&cdoc$ a secretary of t#e comany
%#ere *ose 5ana %orked$ to roc&re t#e extension
of t#e validity of t#eir tickets. 'an&cdoc talked
%it# =ee 9lla$ 'anager of t#e )#iliine ,ravel
B&rea&. -#e %as told t#at t#ey %o&ld #ave to ay
fare differentials and t#at t#e extension is
imossible. ,#e 5A;A- sc#ed&led t#eir deart&re
for 'ay A and on 'ay "$ ,eresita again asked for
=ee 9llaFs #el in t#e revalidation. -#e %as told
t#at it %o&ld only be valid &ntil 'ay ! and no
longer valid for t#e rest of t#e tri after t#at.
3o%ever$ 9lla attac#ed revalidation stickers on t#e
2
tickets 0revalidated by t#e )#iliine ,ravel
B&rea&1$ %it#o&t informing Air +rance. ,#e 5anas
dearted and b&t t#e airlines ref&sed to #onor
t#eir tickets at t#e start of t#e 2sakaL,okyo leg.
,#e 5A;A- #ad to &rc#ase ne% tickets at
readj&sted rates and arrived at 'anila on different
dates. ,C?Air +rance. CA? 5anas. -C?Air +rance
/--89-.
1. :2; 9lla acted beyond #is o%ers as travel
agent< >9-
2. :2; notice to 'an&cdoc is notice to t#e
5anas< >9-
39=7. ,#e 5A;A- cannot defend by contending
lack of kno%ledge of t#ose r&les since t#e evidence
bears o&t t#at ,eresita$ %#o #andled travel
arrangements for t#e 5A;A-$ %as d&ly informed by
travel agent 9lla of t#e advice of 4eno$ t#e 2ffice
'anager of Air +rance$ t#at t#e tickets in G&estion
co&ld not be extended beyond t#e eriod of t#eir
validity %it#o&t aying t#e fare differentials and
additional travel taxes bro&g#t abo&t by t#e
increased fare rate and travel taxes.
,o all legal intents and &roses$ ,eresita %as t#e
agent of t#e 5anas and notice to #er of t#e
rejection of t#e reG&est for extension of t#e validity
of t#e tickets %as notice to 5ana as #er rincial.
,#e circ&mstances t#at A/4 +4A;C9 ersonnel at
t#e ticket co&nter in t#e airort allo%ed t#e 5A;A-
to leave is not tantamo&nt to an imlied ratification
of travel agent 9llaKs irreg&lar act&ations. ,#e
validating stickers t#at 9lla affixed on #is o%n
merely reflect t#e stat&s of reservations on t#e
secified flig#t and co&ld not legally serve to
extend t#e validity of a ticket or revive an exired
one.
,#e concl&sion is inevitable t#at t#e 5A;A-
bro&g#t &on t#emselves t#e redicament t#ey
%ere in for #aving insisted on &sing tickets t#at
%ere d&e to exire in an effort$ er#as$ to beat
t#e deadline and in t#e t#o&g#t t#at by
commencing t#e tri t#e day before t#e exiry
date$ t#ey co&ld comlete t#e tri even t#ereafter.
/t s#o&ld be recalled t#at A/4 +4A;C9 %as even
&na%are of t#e validating -A- and *A=. stickers
t#at 9lla #ad affixed s&rio&sly. ConseG&ently$
*aan Air =ines and A/4 +4A;C9 merely acted
%it#in t#eir contract&al rig#ts %#en t#ey
dis#onored t#e tickets on t#e remaining segments
of t#e tri and %#en A/4 +4A;C9 demanded
ayment of t#e adj&sted fare rates and travel taxes
for t#e ,okyoL'anila flig#t.
4. Pur.oe
(rient Air Ser)i*e ) CA, u.ra
5. Eentia- E-ement o' Contra*t o' A4en*7
!a--o ). Fe-i0 C1an, u.ra
6. C1ara*teriti* o' an A4en*7 Contra*t
Smit1 ). Lo.e5 (EA!LA)
-etember @0$ 1(0C
,orres$ *.
+AC,-. ;icasio =oe6$ as administrator of t#e
#o&se o%ned by #is t%o da&g#ters$ contracted t#e
services of )#iliine 5as =ig#t Comany for t#e
installation of a %ater system$ &rinals$ closets$
s#o%er bat#s$ and drain ies in t#e #o&se at 1D2
Calle 7&l&mbayan$ -anta Cr&6 'anila. ,#is %as
done &rs&ant to t#e order of t#e Board of 3ealt#.
,#e Comany$ %it# -mit# and 4eyes as
rorietors$ inc&rred a total of )D020 'exican
c&rrencyE )AC0 of %#ic# %as already aid$ leaving
a balance of )@2A0.
+ailing to ay$ -mit# and 4eyes instit&ted an action
to recover t#e )@2A0 l&s interest$ from t#e sisters$
*acinta and /gnacia =oe6 de )ineda. As a defense$
t#e sisters claimed$ among ot#ers$ t#at t#ey are
not liable for t#e s&m demanded since t#e %orks
done by -mit# %ere done %it#o&t t#e a&t#ority or
consent of t#e sisters. ,#e C+/ r&led in favor of
-mit# and ordered t#e =oe6 sisters to ay
)2A1A.D0 local c&rrency.
/--89. :2; ;icasio =oe6 is t#e agent of #is t%o
da&g#ters< >es.
39=7. ;icasio is t#e administrator of t#e roerty
of t#e defendant. )&rs&ant to t#e order of t#e
Board of 3ealt#$ #e contracted t#e services of t#e
)#il. 5as =ig#t Comany for t#e installation of
certain fixt&res. Accordingly$ #e did all t#ese
vol&ntarily. ,#&s$ alt#o&g# t#ere %as no exress
consent given by t#e sisters$ t#ro&g# a valid o%er
of attorney$ t#ere %as an /')=/97 o%er$ beca&se
t#e sisters did not object to t#e %ork being done on
t#e #o&se$ %#ic# benefited t#em in t#e end. ,#ere
%as a G&asi?contract %#ic# created certain
recirocal obligations bet%een t#em and t#e
laintiffs.
'oreover$ it is res&med from t#eir fail&re to
object to t#e %ork being done t#at t#ey %ere
aroving it$ t#ereby ratifying t#e act of t#eir
fat#er$ as t#o&g# #e acted &nder an exress o%er
from t#em.
/t cannot also be denied t#at t#ey #ave benefited
from t#e %ork done by -mit#$ et al. ,#e #o&se %as
not imroved by said %ork. =ike%ise$ /f it %ere not
&ndertaken by t#e laintiffs$ t#e Board of 3ealt#
%o&ld #ave &ndertaken t#e same %ork at t#e
@
exense of t#e sisters. ,#&s$ it is only j&st t#at t#ey
be ordered to ay t#e cost of t#e %ork and t#e
val&e of t#e materials &sed.
"1oma ). Pineda (6ANCES)
Se)erino ). Se)erino (6ILL)
*an&ary 1"$ 1(2@
2strand$ *.
+AC,-E 'elecio -everino o%ned a land$ by %#ic#
brot#er 5&illermo served as administrator. 8on
t#e deat# of 'elecio$ 5&illermo contin&ed
occ&ation of t#e land$ and in a cadastral
roceeding s&ccessf&lly #ad t#e land ,itled in #is
favor$ considering t#at #e #as ossessed it for @0
years. ,#is action no% is bro&g#t by t#e nat&ral
da&g#ter and sole #eir of 'elecio$ +abiola
-everino$ to comel defendant 5&illermo to convey
t#e lands in #er favor. 'ean%#ile$ administratrix of
'elecioFs estate$ +elicitas Millan&eva$ also
intervened so t#e land %ill be conveyed in t#e
estateFs name.
7efendant arg&es t#at t#e land %as o%ned in
common by t#eir fat#er and did not solely belong
to 'elecio and t#at #is ,itle is indefeasible &nder
t#e =and 4egistration Act.
/--89. :2; defendant 5&illermo #as rig#ts over
t#e roerty< ;2.
39=7. ,#e relation of an agent to a rincial is
fid&ciary$ and t#e agent is estoed from acG&iring
or asserting ,itle adverse to t#e rincial. 3is
osition is analogo&s to a tr&stee$ and t#at
%#atever #e does in&res to t#e benefit of t#e
cest&i G&e vie.
/n 5ilbert v. 3e%etson$ a tr&stee or agent is &tterly
disabled from acG&iring for #is o%n any roerty
committed in #is c&stody. ,#is is entirely
indeendent of t#e fact %#et#er any fra&d #as
intervened. ;o fra&d in fact need be s#o%. ,#e r&le
stands on moral obligation to refrain from lacing
oneFs self in conflicts of self?interest and integrity.
/t seeks to remove t#e temtation t#at mig#t arise
o&t of oneFs relation to serve anot#erFs interest for
#is o%n benefit.
3ere$ %#ile t#e legal title of 5&illermo is not
G&estioned$ it m&st be deemed as to in&re to t#e
benefit of t#e estate of 'elecio -everino$ as t#e
cest&i G&e vie %it# s&erior eG&itable rig#t.
/t m&st be noted t#at t#e roerty s#all in&re to
t#e 9-,A,9F- benefit and not to t#e da&g#ter %#o
bro&g#t t#e action since it is t#e estate %#o %ill
aortion all t#e claims. 'oreover$ t#e legitimacy
of +abiola as a nat&ral c#ild is also being
G&estioned.
&uma4uin ). !e7no-d (ALAIN)
Pa-ma ) Crito8a- (GEN)
7ec. 11$ 1(D"
)erfecto$ *.
+AC,-. /n 1(0($ after registration roceedings$ 2C,
%as iss&ed in t#e names of etitioner and #is %ife
=&isa. After t#e latterFs deat#$ a ne% certificate of
title %as iss&ed only in t#e name of etitioner.
,#e arcel of land is a comm&nity roerty #eld by
etitioner in tr&st for t#e real o%ners 0resondent1.
,#e registration %as made in accordance %it# an
&nderstanding bet%een t#e co?o%ners of t#e
confidence t#ey reosed &on t#e etitioner and
#is %ife. /t %as only after t#e deat# of =&isa and
after etitionerFs s&bseG&ent marriage t#at tro&ble
on religio&s matters arose bet%een etitioner and
resondent.
)etitioner t#en so&g#t to eject resondent from t#e
land. ,#is %as dismissed and anot#er comlaint
%as filed$ %#erein t#e etitioner rays t#at #e be
declared t#e o%ner of t#e land.
/--89. :2; etitioner may be declared t#e o%ner
of t#e land<
39=7. ;2. ,#e registration of t#e roerty in t#e
name of t#e tr&stees in ossession t#ereof$ m&st
be deemed to #ave been effected for t#e benefit of
t#e cest&i G&e tr&st. :#et#er or not t#ere is bad
fait# or fra&d in obtaining a decree %it# resect to
a registered roerty$ t#e same does not belong to
t#e erson in %#ose favor it %as iss&ed$ and t#e
real o%ners %o&ld be entitled to recover t#e
o%ners#i of t#e roerty so long as t#e same #as
not been transferred to a t#ird erson %#o #as
acG&ired it in good fait# and for val&able
consideration. ,#&s$ t#e etitioner$ being a tr&stee$
does not acG&ire t#e land registered in #is name.
Araneta ). de- Paterno (2AI)
A&g&st 22$ 1(C2
,&ason$ *.
+AC,-. )a6 ,&ason de )aterno is t#e registered
o%ner of a arcel of land$ %#ic# %as s&bdivided
into lots. 'ost of t#ese lots %ere occ&ied by
lessees %#o #ad contracts of lease t#at %o&ld
exire at a certain time$ and carried a sti&lation
giving t#e lessees a rig#t of first ref&sal in case t#e
lots %ere to be sold.
/n 1(D0 and 1(D1$ )a6 ,&ason obtained from *ose
Midal several loans$ and constit&ted a mortgage on
t#e roerty to sec&re t#e debt. /n 1(D@$ s#e
obtained additional loans &on t#e same sec&rity.
-#e decided to sell t#e %#ole roerty to 5regorio
Araneta$ /nc. ,#e day after t#e agreement %as
signed$ )a6 ,&ason offered to Midal a c#eck in f&ll
D
settlement of #er mortgage obligation b&t Midal
ref&sed to accet it or cancel t#e mortgage.
5regorio Araneta instit&ted t#e case to comel )a6
,&ason to deliver to t#e former a clear title of t#e
lots.
2ne of t#e objections made against t#e sale is t#at
*ose Araneta$ resident of 5regorio Araneta /nc.$
%as also t#e agent of )a6 ,&ason.
/--89. :#et#er or not 5regorio Araneta %as t#e
agent of )a6 ,&ason
39=7. ;2. Article 1DC( of t#e -anis# Civil Code
rovides. ,#e follo%ing ersons cannot take by
&rc#ase$ even at a &blic or j&dicial a&ction$
eit#er in erson or t#ro&g# mediation of anot#er.
2. An agent$ any roerty of %#ic# t#e
management or sale may #ave been entr&sted to
#imE
3o%ever$ in t#e oinion of 'anresa$ an agent 0in
t#e sense of Article 1DC(1 is one %#o accets
anot#erFs reresentation to erform in #is name
certain acts of more or less transcendency. ,#e
ban of aragra# 2 of Article 1DC( connotes t#e
idea of tr&st and confidence. ,o come &nder t#is
ro#ibition$ t#e agent m&st be in a fid&ciary
relation %it# #is rincial.
,ested by t#is standard$ *ose Araneta %as not an
agent %it#in t#e meaning of Article 1DC(. 3e %as
not#ing more t#an a go?bet%een or middleman
bet%een )a6 ,&ason and 5regorio Araneta$ /nc. to
bring t#em toget#er to make t#e contract
t#emselves. *ose Araneta %as not a&t#ori6ed to
make a binding contract for )a6 ,&ason. 3e #ad
no o%er or discretion$ %#ic# #e co&ld ab&se to #is
advantage and to t#e o%nerFs rej&dice.
A--ied Free 9or:er ). Com.ania 2aritima
(!(G)
Far Eatern E0.ort ). Lim "e*1 Suan ("(FF)
1(CC
'ontemayor$ *.
+AC,-. +99/C agent 7eli6alde %ent to t#e store of
-&an to sell textile %#ic# offer %as t#ereafter
agreed &on. 7eli6alde later on ret&rned %it#
b&yers order and a doc&ment signifying ayment
be done by Confirmed /rrevocable =etter of
Credit among ot#ers. /n accordance %it# t#is$
-&an establis#ed a letter of credit in favor of
+renkel /nternational Cororation. :#en t#e textile
arrived at 'anila$ -&an comlained to +99/C of t#e
inferior G&ality of t#e textile and #ad t#em
examined$ %#ere a reort %as s&bmitted by t#e
examining body. 8on instr&ctions by +99/C$ -&an
deosited goods %it# t#e 8nited :are#o&se Cor.
b&t s&bseG&ently %it#dre% 1C cases of textile to
offer t#em for sale. ,#e net direct loss %as
)11$DA"."". A comlaint for damages reresenting
difference in rice bet%een textile ordered and
received$ &nreali6ed rofits and cost of s&it %as
instit&ted against +99/C. +99/C set & t#at it only
acted as broker in t#e transaction and took no
f&rt#er action after lacement of order as defense.
/t averred t#at t#e cargo %as directly taken by
-&an from +renkel. ,#e trial co&rt acG&itted +99/C
b&t t#e Co&rt of Aeals reversed decision based
on its r&ling on Melasco v. 8niversal ,rading Co.
/--89. :2; +99/C co&ld act as agent of bot# -&an
and +renkel.
39=7. ;2. An agent co&ld not serve t%o masters at
t#e same time. ,#e same agent co&ld not very %ell
act as agent for local b&yers beca&se t#e interest
of its foreign rincial and t#ose of t#e b&yer %o&ld
be a direct conflict.
+99/C %as clearly an agent of +renkel. As er t#e
facts. -&an %as merely to be commissioning +99/C
to roc&re for #im t#e merc#andise in G&estion.
+&rt#ermore$ t#e rice of t#e merc#andise bo&g#t
%as aid for by -&an by means of an irrevocable
letter of credit in favor of +renkel.
*&dgment of Co&rt of Aeals affirmed.
7. Partie;Ca.a*it7
2endo5a ). &e Gu5man<
8. &itin4ui1ed 'rom ot1er =uridi*a-
re-ation
Se)i--a ). CA (!EG)
#99$
FAC"S> ,o&rist :orld -ervice$ /nc. 0,:-1 leased
t#e remises belonging to ;og&era for t#e formerFs
&se as a branc# office. )etitioner -evilla #eld
#erself solidarily liable %it# t#e arty of t#e art for
t#e romt ayment of t#e mont#ly rental. :#en
t#e branc# office %as oened$ it %as r&n by -evilla
ayable to ,:- by any airline. +or any fare bro&g#t
in on t#e efforts of -evilla$ DN %as to go to =ina
-evilla and @N %as to be %it##eld by t#e ,:-.
-evilla %as aid no salaries. -#e even s#ared in t#e
exenses of maintaining t#e office$ aid for t#e
salary of an office secretary and ot#er s&ndry
exenses.
=ater ,o&rist :orld considered closing do%n its
office beca&se of b&siness losses and ne%s t#at
-evilla %as t#en connected %it# a rival firm. ,#&s$
an emloyee of ,:- %ent to t#e branc# and
adlocked its remises. -evilla filed a comlaint
claiming damages bro&g#t abo&t by ,:-Fs
revocation of t#eir relations#i.
C
/--89.
11 :2; -evilla %as j&st an emloyee of ,:-$ and
as s&c# %as bo&nd by t#e acts of #er
emloyer. 0;21
21 :2; -evilla %as an agent of ,:- and t#&s
entitled to damages beca&se ,:- revoked
s&c# relations#i. 0>9-1
39=7.
1. -evilla %as not s&bject to control by
t#e rivate resondent ,:- eit#er as to t#e
res&lt of t#e enterrise or as to t#e means
&sed in connection t#ere%it#.
? 8nder t#e contract of lease covering t#e
,o&rist :orlds 9rmita office$ s#e #ad bo&nd
#erself in solidum as and for rental ayments.
A tr&e emloyee cannot be made to art %it#
#is o%n money in &rs&ance of #is emloyerKs
b&siness$ or ot#er%ise$ ass&me any liability
t#ereof.
? -evilla %as not &nder t#e control of ,:-
Ias to t#e means &sed.I -evilla in &rs&ing t#e
b&siness$ obvio&sly relied on #er o%n gifts and
caabilities.
? -#e %as not in t#e comanyKs ayroll. +or #er
efforts$ s#e retained DN in commissions from
airline bookings$ t#e remaining @N going to
,o&rist :orld. 8nlike an emloyee t#en$ %#o
earns a fixed salary &s&ally$ s#e earned
comensation in fl&ct&ating amo&nts
deending on #er booking s&ccesses.
2. -evilla solicited airline fares$ b&t s#e
did so for and on be#alf of #er rincial$ ,o&rist
:orld -ervice$ /nc. As comensation$ s#e
received DN of t#e roceeds in t#e concet of
commissions.
? An agency t#at #as been created for m&t&al
interest$ of t#e agent and t#e rincial cannot
be revoked at %ill. -evilla is a bona fide travel
agent #erself$ and as s&c#$ s#e #ad acG&ired
an interest in t#e b&siness entr&sted to #er.
'oreover$ s#e #ad ass&med a ersonal
obligation for t#e oeration t#ereof$ #olding
#erself solidarily liable for t#e ayment of
rentals. -#e contin&ed t#e b&siness$ &sing #er
o%n name$ after ,o&rist :orld #ad stoed
f&rt#er oerations. 3er interest$ obvio&sly$ is
not to t#e commissions s#e earned as a res&lt
of #er b&siness transactions$ b&t one t#at
extends to t#e very s&bject matter of t#e
o%er of management delegated to #er.
Free- ) 2ariano U7 C1a*o Son + Co.
(A//Y)
'arc# @$ 1(1"
,rent$ *.
+AC,-. 'erritt &ndertook and agreed %it# t#e
defendant to b&ild for t#e defendant a costly
edifice in t#e city of 'anila at t#e corner of Calle
4osario and )la6a del )adre 'oraga. /n t#e contract
it %as agreed bet%een t#e arties t#ereto$ t#at 8y
C#aco at any time$ &on certain contingencies$
before t#e comletion of said edifice co&ld take
ossession of said edifice in t#e co&rse of
constr&ction and of all t#e materials in and abo&t
said remises acG&ired by 'erritt for t#e
constr&ction of said edifice.+ressel delivered to
'erritt at t#e said edifice in t#e co&rse of
constr&ction certain materials of t#e val&e of
)1$@!1.218y C#aco took ossession of t#e
incomlete edifice in co&rse of constr&ction
toget#er %it# all t#e materials on said remises
incl&ding t#e materials delivered. ;eit#er 'eritt
nor 8y C#aco aid for t#e materials even after
extraj&dicial demand. ,#e aellants insist t#at t#e
above G&oted allegations s#o% t#at 'erritt acted
as t#e agent of t#e defendant in &rc#asing t#e
materials in G&estion and t#at t#e defendant$ by
taking over and &sing s&c# materials$ acceted
and ratified t#e &rc#ase$ t#ereby obligating itself
to ay for t#e same.
/--89. +resselFs allegation ,#at in &rs&ance of
t#e contract bet%een 'erritt and t#e defendant$
'erritt acted as t#e agent for defendant in t#e
acG&isition of t#e materials from laintiffs. O:L;
'eritt acted as an agent for 8y C#aco and -ons
3eld. ;2. 'eritt is an indeendent contractor.
:#ere one arty to a contract %as a&t#ori6ed to do
%ork according to #is o%n met#od and %it#o&t
being s&bject to t#e ot#er artyFs control$ excet
as to t#e res&lt of t#e %ork$ #e is an indeendent
contractor and not an agent.
,#e fact t#at It#e defendant entered into a
contract %it# one 9. 'erritt$ %#ere by t#e said
'erritt &ndertook and agreed %it# t#e defendant
to b&ild for t#e defendant a costly edificeI s#o%s
t#at 'erritt %as a&t#ori6ed to do t#e %ork
according to #is o%n met#od and %it#o&t being
s&bject to t#e defendantKs control$ excet as to t#e
res&lt of t#e %ork. 3e co&ld &rc#ase #is materials
and s&lies from %#om #e leased and at s&c#
rices as #e desired to ay. Again$ t#e allegations
t#at t#e Ilaintiffs delivered t#e 'erritt . . . .
certain materials 0t#e materials in G&estion1 of t#e
val&e of )1$@!1.21$ . . . . %#ic# rice 'erritt agreed
to ay$I s#o% t#at t#ere %ere no contract&al
relations %#atever bet%een t#e sellers and t#e
defendant. ,#e mere fact t#at 'erritt and t#e
defendant #ad sti&lated in t#eir b&ilding contract
t#at t#e latter co&ld$ I&on certain contingencies$I
take ossession of t#e incomleted b&ilding and all
materials on t#e gro&nd$ did not c#ange 'erritt
from an indeendent contractor to an agent. /n t#e
"
absence of a stat&te creating %#at is kno%n as
mec#anicsK liens$ t#e o%ner of a b&ilding is not
liable for t#e val&e of materials &rc#ased by an
indeendent contractor eit#er as s&c# o%ner or as
t#e assignee of t#e contractor.
3i*toria 2i--in4 ) CA, u.ra
9. Kno?-ed4e o' a4ent im.uted to .rin*i.a-
Art. 1!21. ;otice to any artner of any matter
relating to artners#i affairs$ and t#e kno%ledge
of t#e artner acting in t#e artic&lar matter$
acG&ired %#ile a artner or t#en resent to #is
mind$ and t#e kno%ledge of any ot#er artner %#o
reasonably co&ld and s#o&ld #ave comm&nicated it
to t#e acting artner$ oerate as notice to or
kno%ledge of t#e artners#i$ excet in t#e case of
fra&d on t#e artners#i$ committed by or %it# t#e
consent of t#at artner.
B. Arti*-e #$%9
Art. 1!"(. Agency may be exress$ or imlied from
t#e acts of t#e rincial$ from #is silence or lack of
action$ or #is fail&re to re&diate t#e agency$
kno%ing t#at anot#er erson is acting on #is be#alf
%it#o&t a&t#ority.
#. (ra-, e0.re
2. Im.-ied
a. a*t or *ondu*t o' .rin*i.a-
Gutierre5 ,ermano ). (rene (EA!LA)
7ecember D$ 1(1D
,orres$ *.
+AC,-. 9ngracio 2rense is t#e original o%ner of a
arcel of land in 5&inobatan$ Albay. 2n +ebr&ary
1D$ 1(0A$ *ose 7&ran$ t#e ne#e% of 2rense$ sold
t#e land for )1C00 to 5&tierre6 3ermanos$ %it#
2renseFs kno%ledge and consent. ,#e sale %as
embodied in a &blic instr&ment$ and contained a
rovision giving 7&ran a rig#t to re&rc#ase %it#in
a eriod of D years. ,#ereafter$ by a contract of
lease exec&ted bet%een 5&tierre6 and 7&ran$
2rense contin&ed occ&ying t#e land.
After t#e lase of D years sti&lated for t#e
redemtion of t#e roerty$ 5&tierre6 asked t#at
2rense deliver t#e roerty to t#e comany and
ay rentals for t#e &se of t#e roerty. 2rense
#o%ever$ ref&sed to do so.
2rense claimed t#at t#e sale %as void for #aving
been done %it#o&t #is a&t#ority$ eit#er %ritten or
verbal. 3e f&rt#er alleged t#at #e did not
intentionally and deliberately erformed acts as
%o&ld lead 5&tierre6 3ermanos t#at #e a&t#ori6ed
#is ne#e% to enter into t#e contract of sale.
As a res&lt$ t#e comany instit&ted an estafa case
against 7&ran for allegedly misreresenting
#imself as t#e o%ner of t#e roerty %#en #e sold
t#e same to 5&tierre6. 7&ring trial$ t#e defense
resented 2rense as %itness$ %#ere #e stated t#at
t#e sale %as done %it# #is kno%ledge and consent.
By virt&e of #is testimony$ confirming t#at #e gave
#is ne#e% a&t#ority to convey t#e s&bject land$
7&ran %as acG&itted of t#e criminal c#arges
against #im.
,#e Comany t#en demanded t#at 2rense exec&te
t#e roer deed of conveyance of t#e roerty
sold. ,#e C+/ t#ereafter r&led in its favor and
ordered t#at a delivery of t#e roerty be done$
t#ro&g# a &blic instr&ment.
/--89. :2; 7&ran is t#e agent of 2rense< >es.
39=7. ,#e s%orn statement of 2rense d&ring t#e
trial of t#e estafa case confirmed and ratified t#e
sale of #is roerty effected by #is ne#e%. ,#e
initial sale made by 7&ran %as indeed n&ll and
void$ b&t it became erfectly valid and c&red of t#e
defect of n&llity by t#e confirmation solemnly made
by 2rense$ &on #is stating &nder oat# to t#e
j&dge t#at #e #imself consented to t#e making of
t#e said sale. ,#&s$ 2renseFs ratification rod&ced
t#e effect of an exress a&t#ori6ation to make t#e
said sale.
Lo.e5 ). !oario (6ANCES)
2a*1e ). Cam.o (6ILL)
+ebr&ary 2A. 1(0A
Carson$ *.
+AC,-. )laintiffs B3 'acke P :3 C#andler sold to
4icardo +lores$ on t#e alleged order of #is rincial
0defendant Cams1$ several bills of goods at t#e
:as#ington CafQ. +lores ackno%ledged receit of
goods and made aymentsE #o%ever$ #e reserved
ayment of t#e balance &on t#e ret&rn of t#e
rincial Cams. )laintiffs t#en investigated t#e
tr&e stat&s of +lores and fo&nd o&t t#at #e is t#e
b&siness manager of defendantFs CafQ. ,#at in t#e
contract of lease of t#e b&ilding %#ere :as#ington
CafQ is laced$ #e signed as t#e managing agent.
7efendant Cams mean%#ile alleges t#at #e did
not receive t#e goods and so %ill not ay t#e
balance.
/--89. :2; Cams is liable for t#e balance<
39=7. >9-. /n t#e absence of roof$ -C fo&nd t#at
+lores in t#e agent of CamsE #e even signed as
managing agent. 2ne %#o clot#es anot#er %it#
aarent a&t#ority as #is agent$ and #olds #im o&t
to t#e &blic as s&c#$ cannot be ermitted to deny
t#e a&t#ority of s&c# erson to act as #is agent$ to
A
t#e rej&dice of innocent t#ird ersons. ,#e
a&t#ority of t#e agent m&st be res&med to
incl&de all t#e necessary and &s&al means of
carrying #is agency into effect. 'oreover$ t#ere is
s&fficient roof t#at +lores did receive t#e goods$
t#ereby making Cams liable.
Linan ). Puno (ALAIN)
&ominion Inuran*e Cor.. ) CA (GEN)
+eb. "$ 2002
)ardo$ *.
+AC,-. 4odolfo 5&evarra claimed to #ave
advanced )1C"$ DA@.(0 in #is caacity as a
manager of 7ominion /ns&rance Cor. to satisfy
certain claims filed by t#e etitionerFs clients. 3e
t#en instit&ted a comlaint for s&m of money
against t#e etitioner. ,#e etitioner denied any
liability to laintiff and asserted a co&nterclaim of
)2D($"A2.C@$ reresenting remi&m t#at 5&evarra
failed to ay.
,#e 4,C r&led in favor of 5&evarra and ordered t#e
etitioner to ay #im t#e s&m #e claims. ,#e CA
affirmed t#e decision of t#e 4,C.
/--89. :2; 5&evarra acted %it#in #is a&t#ority as
agent for etitioner<
39=7. ;2. ,#e -ecial )o%er of Attorney entered
into by etitioner and 5&evarra %o&ld s#o% t#at
t#ey intended to enter into a rincial?agent
relations#i. 7esite t#e %ord secial in t#e
doc&ment$ t#e contents reveal t#at %#at %as
constit&ted %as act&ally a general agency. ,#e
agency comrises all t#e b&siness of t#e rincial
b&t co&c#ed in general termsE #ence it is limited
only to acts of administration.
,#&s$ t#e general agency constit&ted does not
%arrant t#e ayment or settlement of claims as
t#ey secifically reG&ire a -ecial )o%er of
Attorney as rovided by Art. 1!A! of t#e Civil Code.
B&t as rovided by t#e 'emorand&m of
'anagement Agreement$ 5&evarra %as a&t#ori6ed
to ay t#e claim b&t t#e ayment s#all come from
t#e revolving f&nd or collection in #is ossession.
3aving deviated from t#e instr&ctions of t#e
rincial$ t#e exenses t#at 5&evarra inc&rred in
t#e settlement of t#e claims of t#e ins&red may not
be reimb&rsed from 7ominion in accordance %it#
Art. 1(1! of t#e Civil Code.
;evert#eless$ &nder Art. 12@"$ to t#e extent t#at
t#e obligation of t#e etitioner #as been
exting&is#ed$ 5&evarra may demand for
reimb&rsement from #is rincial.
8. i-en*e or -a*: o' a*tion
Conde ). CA (2AI)
7ecember C$ 1(!2
'elencio O 3errera$ *.
+AC,-. A Aril 1(@!. 'argarita Conde$ Bernardo
Conde and t#e etitioner 7ominga Conde$ as #eirs
of -antiago Conde$ sold %it# rig#t of re&rc#ase$
%it#in ten 0101 years from said date$ a arcel of
agric&lt&ral land to Casimira )asag&i$ married to
)io for )1"C.00. I)acto de 4etro -aleI rovided
t#at after 10 yrs. /f land is not re&rc#ased a ne%
agreement s#all be made bet%een t#e arties and
in no case title and o%ners#i s#all be vested in
t#e #and of t#e arty of t#e -9C2;7 )A4, 0t#e
Alteras1.
,#ree years after Cadastral Co&rt adj&dicated land
to t#e Alteras Is&bject to t#e rig#t of redemtion
by 7ominga Conde$ %it#in ten 0101 years co&nting
from Aril A$ 1(!@$ after ret&rning t#e amo&nt of
)1"C.00 and t#e amo&nts aid by t#e so&ses in
concet of land tax R
;eit#er of t#e vendees?a?retro$ )io Altera nor
Casimira )asag&i$ %as a signatory to t#e deed.
Conde maintains t#at beca&se )io Altera %as very
ill at t#e time$ )aciente Cordero exec&ted t#e deed
of resale for and on be#alf of #is fat#er?in?la%.
Conde f&rt#er states t#at s#e redeemed t#e
roerty %it# #er o%n money as #er co?#eirs %ere
bereft of f&nds for t#e &rose.
@0 *&ne 1("C )io Altera sold lot to t#e -s 4amon
Conde and Catalina ,. Conde 0rivate
resondents1.
7ominga contends t#at land %as re&rc#ased in
1(DC and filed a case against )aciente Cordero and
#is %ife ;icetas Altera$ 4amon Conde and #is %ife
Catalina ,. Conde$ and Casimira )asag&i )io Altera
#aving died in 1(""1$ for G&ieting of title to real
roerty and declaration of o%ners#i.
7omingaFs 9vidence. )aciente Cordero signed t#e
'emorand&m of 4e&rc#ase in reresentation of
#is fat#er?in?la% )io Altera$ %#o %as serio&sly sick
on t#at occasion$ and of #is mot#er?in?la% %#o %as
in 'anila at t#e time$ and t#at Cordero received
t#e re&rc#ase rice of )"C.00.
,C. 7ominga %as ordered to vacate roerty
CA. 8#eld ,C?etitioner
;eit#er of t#e vendees?a?retro signed t#e
I'emorand&m of 4e&rc#aseI$ and t#at t#ere %as
no formal a&t#ori6ation from t#e vendees for
)aciente Cordero to act for and on t#eir be#alf.
/--89. :2; t#ere %as an imlied agency
39=7> >es. +rom t#e exec&tion of t#e re&rc#ase
doc&ment in 1(DC$ ossession$ %#ic# #eretofore
#ad been %it# t#e Alteras$ #as been in t#e #ands of
7ominga. =and taxes #ave also been aid for by
7ominga$ yearly from 1(DA to 1("( incl&sive. /f$ as
!
oined by bot# t#e ,C and t#e Aellate Co&rt$
etitioner #ad done not#ing to formali6e #er
re&rc#ase$ by t#e same token$ neit#er #ave t#e
vendees?a?retro done anyt#ing to clear t#eir title of
t#e enc&mbrance t#erein regarding etitionerKs
rig#t to re&rc#ase. ;o ne% agreement %as
entered into by t#e arties as sti&lated in t#e
deed of pacto de retro$ if t#e vendors a retro failed
to exercise t#eir rig#t of redemtion after ten
years. /f$ as alleged$ etitioner exerted no effort to
roc&re t#e signat&re of )io Altera after #e #ad
recovered from #is illness$ neit#er did t#e Alteras
re&diate t#e deed t#at t#eir son?in?la% #ad
signed. ,#&s$ an imlied agency m&st be #eld to
#ave been created from t#eir silence or lack of
action$ or t#eir fail&re to re&diate t#e agency.
)ossession of t#e lot in dis&te #aving been
adversely and &ninterr&tedly %it# etitioner from
1(DC %#en t#e doc&ment of re&rc#ase %as
exec&ted$ to 1("($ %#en s#e instit&ted t#is action$
or for 2D years$ t#e Alteras m&st be deemed to
#ave inc&rred in lac#es. ,#at etitioner merely
took advantage of t#e abandonment of t#e land by
t#e Alteras d&e to t#e searation of said so&ses$
and t#at etitionerKs ossession %as in t#e concet
of a tenant$ remain bare assertions %it#o&t roof.
Catalina is not b&yer in good fait# since t#e ten?
year eriod #ad lased in 1("C and t#ere %as no
annotation of any re&rc#ase by 7omingo$ neit#er
#ad t#e title been cleared of t#at enc&mbrance.
,#e &rc#asers %ere &t on notice t#at some ot#er
erson co&ld #ave a rig#t to or interest in t#e
roerty. /t be#ooved 4amon Conde and Catalina
Conde to #ave looked into t#e rig#t of redemtion
inscribed on t#e title$ and artic&larly t#e matter of
ossession$ %#ic#$ as also admitted by t#em at t#e
re?trial$ #ad been %it# etitioner since 1(DC.
Altera and CatalinaFs m&st be #eld bo&nd by t#e
clear terms of t#e 'emorand&m of 4e&rc#ase
t#at #e #ad signed %#erein #e ackno%ledged t#e
receit of )1"C.00 and ass&med t#e obligation to
maintain t#e re&rc#asers in eacef&l ossession
s#o&ld t#ey be Idist&rbed by ot#er ersonsI.
,#e imeratives of s&bstantial j&stice$ and t#e
eG&itable rincile of lac#es bro&g#t abo&t by
rivate resondentsK inaction and neglect for 2D
years$ loom in etitionerKs favor.
*. 'ai-ure to re.udiate
&e-a !oa ). ,ida-4o (!(G)
Na4uiat ). CA ("(FF)
200@
,inga$ *.
+AC,-. H&eano alied %it# ;ag&iat a loan of
)200$000 %#ic# %as event&ally granted. ;ag&iat
indorsed t%o c#ecks to H&eano amo&nting to
)(C$000 eac#. ,o sec&re t#e loan$ H&eano
exec&ted a 7eed of 4eal 9state 'ortgage and
s&rrendered to ;ag&iat #er d&licates of titles
covering t#e mortgage. ,#e mortgage %as
notari6ed and a romissory note for )200$000 %it#
interest of 12N er ann&m %as given by H&eano.
-#e also iss&ed a -ec&rity Bank c#eck ayable to
;ag&iat. 8on resentment of t#e c#eck$ t#e
-ec&rity Bank c#eck %as dis#onored for
ins&fficiency of f&nds. A mont# after$ H&eano
received a letter from ;ag&iat demanding
settlement of t#e loan. H&eano and a certain
4e&benfeldt 0%#o %as alleged to be ;ag&iatFs
agent1 met %it# ;ag&iat to manifest t#at H&eano
did not receive t#e roceeds of t#e loan as t#e
c#ecks %ere retained by 4e&benfeldt. ;ag&iat
alied for extraj&dicial foreclos&re of t#e
mortgage b&t t#e same %as declared n&ll and void.
2n aeal$ t#e CA affirmed t#e decision of t#e trial
co&rt. Among t#e iss&es raised by ;ag&iat is t#e
admissibility of t#e reresentations of
4e&bendfeldt insisting t#at s#e %as not #er agent.

/--89. :2; 4e&benfeldt %as ;ag&iatFs agent.
39=7. >9-. 9vidence s#o%ed t#at ;ag&iat
instr&cted 4e&benfeldt to %it##old t#e c#ecks
ending t#e delivery of additional collateral by
H&eano. 3e served as agent of ;ag&iat on t#e loan
alication of H&eanoFs friend as to %#om H&eano
came to kno% of ;ag&iat. +&rt#ermore$ s#e also
dre% a c#eck for t#e s&m of )220$000 ayable to
;ag&iat to cover for H&eanoFs liability.
As a conseG&ence of t#e interaction bet%een
;ag&iat and 4e&benfeldt$ H&eano %as imressed
t#at s#e %as ;agiatFs agent and ;ag&iat did not do
anyt#ing to correct t#at. ,#e r&le states t#at one
%#o clot#es anot#er %it# aarent a&t#ority as #is
agent and #olds #im o&t in t#e &blic as s&c#
cannot be ermitted to deny t#e a&t#ority of s&c#
erson to act as #is agent$ to t#e rej&dice of t#ird
arties dealing in good fait#. ,#e CA correctly &sed
t#e r&le on agency by estoel.
*&dgment affirmed.
Pro'eiona- Ser)i*e ). A4ana (!EG)
@. (t1er :ind
a. A to nature
? Con)entiona-
? Le4a-
Art. 1!0@. :#en t#e manner of management #as
not been agreed &on$ t#e follo%ing r&les s#all be
observed.
(
011 All t#e artners s#all be considered agents and
%#atever any one of t#em may do alone s#all bind
t#e artners#i$ %it#o&t rej&dice to t#e rovisions
of Article 1!01.
021 ;one of t#e artners may$ %it#o&t t#e consent
of t#e ot#ers$ make any imortant alteration in t#e
immovable roerty of t#e artners#i$ even if it
may be &sef&l to t#e artners#i. B&t if t#e ref&sal
of consent by t#e ot#er artners is manifestly
rej&dicial to t#e interest of t#e artners#i$ t#e
co&rtKs intervention may be so&g#t.
Art. 1!!D. ,#e agent is bo&nd by #is accetance to
carry o&t t#e agency$ and is liable for t#e damages
%#ic#$ t#ro&g# #is non?erformance$ t#e rincial
may s&ffer.
Art. 1!!C. /n case a erson declines an agency$ #e
is bo&nd to observe t#e diligence of a good fat#er
of a family in t#e c&stody and reservation of t#e
goods for%arded to #im by t#e o%ner &ntil t#e
latter s#o&ld aoint an agent or take c#arge of
t#e goods.
Art. 1(2(. ,#e agent$ even if #e s#o&ld %it#dra%
from t#e agency for a valid reason$ m&st contin&e
to act &ntil t#e rincial #as #ad reasonable
oort&nity to take t#e necessary stes to meet
t#e sit&ation.
Art. 1(@1. Anyt#ing done by t#e agent$ %it#o&t
kno%ledge of t#e deat# of t#e rincial or of any
ot#er ca&se %#ic# exting&is#es t#e agency$ is valid
and s#all be f&lly effective %it# resect to t#ird
ersons %#o may #ave contracted %it# #im in
good fait#.
Art. 1(@2. /f t#e agent dies$ #is #eirs m&st notify
t#e rincial t#ereof$ and in t#e meantime adot
s&c# meas&res as t#e circ&mstances may demand
in t#e interest of t#e latter.
8. A to *onideration
? Gratuitou
Art. 1!AC. Agency is res&med to be for a
comensation$ &nless t#ere is roof to t#e
contrary.
? (nerou
*. A to e0tent o' trana*tion
? Genera-
Art. 1!A". An agency is eit#er general or secial.
? S.e*ia-
d. A to mana4ement
? Cou*1ed in 4enera- term
Art. 1!AA. An agency co&c#ed in general terms
comrises only acts of administration$ even if t#e
rincial s#o&ld state t#at #e %it##olds no o%er
or t#at t#e agent may exec&te s&c# acts as #e may
consider aroriate$ or even t#o&g# t#e agency
s#o&ld a&t#ori6e a general and &nlimited
management.
? S.e*i'i* term
Art. 1!A!. -ecial o%ers of attorney are
necessary in t#e follo%ing cases.
011 ,o make s&c# ayments as are not &s&ally
considered as acts of administrationE
021 ,o effect novations %#ic# &t an end to
obligations already in existence at t#e time t#e
agency %as constit&tedE
0@1 ,o comromise$ to s&bmit G&estions to
arbitration$ to reno&nce t#e rig#t to aeal from a
j&dgment$ to %aive objections to t#e ven&e of an
action or to abandon a rescrition already
acG&iredE
0D1 ,o %aive any obligation grat&ito&slyE
0C1 ,o enter into any contract by %#ic# t#e
o%ners#i of an immovable is transmitted or
acG&ired eit#er grat&ito&sly or for a val&able
considerationE
0"1 ,o make gifts$ excet c&stomary ones for
c#arity or t#ose made to emloyees in t#e
b&siness managed by t#e agentE
0A1 ,o loan or borro% money$ &nless t#e latter act
be &rgent and indisensable for t#e reservation of
t#e t#ings %#ic# are &nder administrationE
0!1 ,o lease any real roerty to anot#er erson for
more t#an one yearE
0(1 ,o bind t#e rincial to render some service
%it#o&t comensationE
0101 ,o bind t#e rincial in a contract of
artners#iE
0111 ,o obligate t#e rincial as a g&arantor or
s&retyE
0121 ,o create or convey real rig#ts over
immovable roertyE
01@1 ,o accet or re&diate an in#eritanceE
01D1 ,o ratify or recogni6e obligations contracted
before t#e agencyE
01C1 Any ot#er act of strict dominion.
e. A to manner o' a..ointment
? &ire*t
? Indire*t, a..ointment t1rou41
anot1er
'. A to nature and e''e*t
10
? (teni8-e or re.reentati)e
? Sim.-e or *ommiion
A. Form o' A4en*7
a. Contra*t
Art. @!1. :#en a erson disaears from #is
domicile$ #is %#ereabo&ts being &nkno%n$ and
%it#o&t leaving an agent to administer #is
roerty$ t#e j&dge$ at t#e instance of an
interested arty$ a relative$ or a friend$ may
aoint a erson to reresent #im in all t#at may
be necessary.
8. Arti*-e (ee 8e-o?)
Art. 1!AD. :#en a sale of a iece of land or any
interest t#erein is t#ro&g# an agent$ t#e a&t#ority
of t#e latter s#all be in %ritingE ot#er%ise$ t#e sale
s#all be void.
Art. 1@CA. /f t#e la% reG&ires a doc&ment or ot#er
secial form$ as in t#e acts and contracts
en&merated in t#e follo%ing article$ t#e contracting
arties may comel eac# ot#er to observe t#at
form$ once t#e contract #as been erfected. ,#is
rig#t may be exercised sim&ltaneo&sly %it# t#e
action &on t#e contract.
Art. 1@C!. ,#e follo%ing m&st aear in a &blic
doc&ment.
011 Acts and contracts %#ic# #ave for t#eir object
t#e creation$ transmission$ modification or
exting&is#ment of real rig#ts over immovable
roertyE sales of real roerty or of an interest
t#erein a governed by Articles 1D0@$ ;o. 2$ and
1D0CE
021 ,#e cession$ re&diation or ren&nciation of
#ereditary rig#ts or of t#ose of t#e conj&gal
artners#i of gainsE
0@1 ,#e o%er to administer roerty$ or any ot#er
o%er %#ic# #as for its object an act aearing or
%#ic# s#o&ld aear in a &blic doc&ment$ or
s#o&ld rej&dice a t#ird ersonE
0D1 ,#e cession of actions or rig#ts roceeding from
an act aearing in a &blic doc&ment.
All ot#er contracts %#ere t#e amo&nt involved
exceeds five #&ndred esos m&st aear in
%riting$ even a rivate one. B&t sales of goods$
c#attels or t#ings in action are governed by
Articles$ 1D0@$ ;o. 2 and 1D0C
Art. 1D0@. ,#e follo%ing contracts are
&nenforceable$ &nless t#ey are ratified.
011 ,#ose entered into in t#e name of anot#er
erson by one %#o #as been given no a&t#ority or
legal reresentation$ or %#o #as acted beyond #is
o%ersE
021 ,#ose t#at do not comly %it# t#e -tat&te of
+ra&ds as set fort# in t#is n&mber. /n t#e follo%ing
cases an agreement #ereafter made s#all be
&nenforceable by action$ &nless t#e same$ or some
note or memorand&m$ t#ereof$ be in %riting$ and
s&bscribed by t#e arty c#arged$ or by #is agentE
evidence$ t#erefore$ of t#e agreement cannot be
received %it#o&t t#e %riting$ or a secondary
evidence of its contents.
0a1 An agreement t#at by its terms is not to be
erformed %it#in a year from t#e making t#ereofE
0b1 A secial romise to ans%er for t#e debt$
defa&lt$ or miscarriage of anot#erE
0c1 An agreement made in consideration of
marriage$ ot#er t#an a m&t&al romise to marryE
0d1 An agreement for t#e sale of goods$ c#attels or
t#ings in action$ at a rice not less t#an five
#&ndred esos$ &nless t#e b&yer accet and
receive art of s&c# goods and c#attels$ or t#e
evidences$ or some of t#em$ of s&c# t#ings in
action or ay at t#e time some art of t#e
&rc#ase moneyE b&t %#en a sale is made by
a&ction and entry is made by t#e a&ctioneer in #is
sales book$ at t#e time of t#e sale$ of t#e amo&nt
and kind of roerty sold$ terms of sale$ rice$
names of t#e &rc#asers and erson on %#ose
acco&nt t#e sale is made$ it is a s&fficient
memorand&mE
0e1 An agreement of t#e leasing for a longer eriod
t#an one year$ or for t#e sale of real roerty or of
an interest t#ereinE
0f1 A reresentation as to t#e credit of a t#ird
erson.
0@1 ,#ose %#ere bot# arties are incaable of
giving consent to a contract.
B. Preum.tion o' A4en*7
a. Genera- ru-e
,arr7 Kee-er E-e*tri* Co. ). !odri4ue5
(EA!LA)
;ovember 11$ 1(22
*o#ns$ *.
+AC,-. 3arry Seeler is engaged in t#e electrical
b&siness and is selling t#e 'att#e%s lant in t#e
)#iliine /slands. 2ne day$ A.C 'ontelibano %ent
to t#e office of 3arry Seeler and told #im t#at #e
co&ld find &rc#asers of t#e 'att#e%s lant.
Seeler agreed %it# t#e &nderstanding t#at for
every c&stomer t#at #e co&ld find or any lant t#at
#e co&ld sell$ #e %o&ld be given a 10N commission
if t#e sale %as cons&mmated. )&rs&ant to t#is
agreement$ 'ontelibano %as able to negotiate t#e
sale of t#e t#e 'att#e%s lant bet%een Seeler and
11
4odrig&e6. After t#e mac#ine #ad been installed$
4odrig&e6 aid t#e &rc#ase rice of )2C1@.CC to
'ontelibano$ %it#o&t t#e kno%ledge of Seeler.
Seeler alleged t#at it %as #is emloyee Cenar %#o
installed t#e eG&iment in defendantFs remises.
'oreover$ Seeler also claimed t#at it %as Cenar
%#o gave #im t#e statement of acco&nt totaling
)2C"@.(C. Cenar did not make any effort to collect
t#e money since #e %as ass&red by 4odrig&e6 t#at
#e %ill ay it in 'anila.
2n t#e ot#er #and$ 4odrig&e6 alleged t#at #e aid
t#e &rc#ase rice to 'ontelibano$ since #e %as
t#e one %#o sold$ delivered and installed t#e
electrical lantE t#at #e %as t#e one %#o resented
t#e acco&ntE t#at #e %as ass&red by 'ontelibano
t#at #e %as a&t#ori6ed to collect t#e val&e of t#e
lant.
,#e lo%er co&rt decided in favor of 4odrig&e6$
#olding t#at 'ontelibano %as an agent a&t#ori6ed
to collect t#e &rc#ase rice.
/--89. :2; 'ontelibano %as t#e agent of 3arry
Seeler.
39=7. ;o. According to t#e Co&rt$ t#ere is not#ing
in t#e receit iss&ed by 'ontelibano t#at %o&ld
indicate t#at #e %as a&t#ori6ed by Seeler to collect
t#e money. Accordingly$ %#at %as contained
t#erein %ere #is ersonal receit and ersonal
signat&re. ,#ere %ere no more indications of #is
a&t#ority.
'oreover$ t#e Co&rt also r&led t#at t#e receit
resented in evidence by 4odrig&e6 act&ally s#o%s
t#at it %as Cenar %#o gave t#e statement of
acco&nts to #imE ot#er%ise$ t#ere %o&ld #ave been
no need to inc&r s#iing costs of )!1."0 if it %as
'ontelibano %#o installed t#e lant in #is
remises.
/n s&m$ t#ere %as no evidence t#at Seeler ever
delivered any statement to 'ontelibano or t#at #e
%as ever a&t#ori6ed to receive t#e money.
/t is a settled rincile in agency t#at a erson
dealing %it# an agent m&st be caref&l in
ascertaining t#e fact of t#e agency and t#e nat&re
and extent of a&t#ority of t#e agent. Accordingly$
/n aroac#ing t#e consideration of t#e inG&iry
%#et#er an ass&med a&t#ority exists in a given
case$ t#ere are certain f&ndamental rinciles
%#ic# m&st not be overlooked. Among t#ese are$
as #as been seen$
011 t#at t#e la% ind&lges in no bare res&mtions
t#at an agency exists. it m&st be roved or
res&med from factsE
021 t#at t#e agent cannot establis# #is o%n
a&t#ority$ eit#er by t#e reresentations or by
ass&ming to exercise itE
0@1 t#at an a&t#ority cannot be establis#ed by
mere r&mor or general re&tationE
0D1 t#at even a general a&t#ority is not an
&nlimited oneE and
0C1 t#at every a&t#ority m&st find its &ltimate
so&rce in some act or omission of t#e rincial.
,#&s$ %#en 4odrig&e6 aid to 'ontelibano$ #e did
so at #is o%n eril. 3e is t#erefore$ still liable to
ay Seeler t#e amo&nt of t#e electric lant.
8. E0*e.tion to t1e ru-e
Art. 1!0@. :#en t#e manner of management #as
not been agreed &on$ t#e follo%ing r&les s#all be
observed.
011 All t#e artners s#all be considered agents and
%#atever any one of t#em may do alone s#all bind
t#e artners#i$ %it#o&t rej&dice to t#e rovisions
of Article 1!01.
021 ;one of t#e artners may$ %it#o&t t#e consent
of t#e ot#ers$ make any imortant alteration in t#e
immovable roerty of t#e artners#i$ even if it
may be &sef&l to t#e artners#i. B&t if t#e ref&sal
of consent by t#e ot#er artners is manifestly
rej&dicial to t#e interest of t#e artners#i$ t#e
co&rtKs intervention may be so&g#t
Com.ana 2aritima ). Limon (6ANCES)
%. Aut1orit7 o' attorne7 to a..ear i
.reumed
-ec. 21. Authority of attorney to appear. - An
attorney is res&med to be roerly a&t#ori6ed to
reresent any ca&se in %#ic# #e aears$ and no
%ritten o%er of attorney is reG&ired to a&t#ori6e
#im to aear in co&rt for #is client$ b&t t#e
residing j&dge may$ on motion of eit#er arty and
on reasonable gro&nds t#erefor being s#o%n$
reG&ire any attorney %#o ass&mes t#e rig#t to
aear in a case to rod&ce or rove t#e a&t#ority
&nder %#ic# #e aears$ and to disclose$ %#enever
ertinent to any iss&e$ t#e name of t#e erson %#o
emloyed #im$ and may t#ere&on make s&c#
order as j&stice reG&ires. An attorney %ilf&lly
aearing in co&rt for a erson %it#o&t being
emloyed$ &nless by leave of t#e co&rt$ may be
&nis#ed for contemt as an officer of t#e co&rt
%#o #as misbe#aved in #is official
transactions.c#an robles virt&al la% library
-ec. 22. Attorney who appears in lower court
presumed to represent client on appeal. - An
attorney %#o aears de arte in a case before a
lo%er co&rt s#all be res&med to contin&e
reresenting #is client on aeal$ &nless #e files a
formal etition %it#dra%ing #is aearance in t#e
aellate co&rt.
12
-ec. 2@. Authority of attorneys to bind clients. -
Attorneys #ave a&t#ority to bind t#eir clients in any
case by any agreement in relation t#ereto made in
%riting$ and in taking aeals$ and in all matters of
ordinary j&dicial roced&re. B&t t#ey cannot$
%it#o&t secial a&t#ority$ comromise t#eir clientKs
litigation$ or receive anyt#ing in disc#arge of a
clientKs claim b&t t#e f&ll amo&nt in cas#.
Air P1i- Cor.. ). Internationa- /uine
(ALAIN)
)anganiban *.
+acts.
A)C %as in need of t#e services of a
b&siness establis#ment to ferry its B?A@A
airlane. /t engaged t#e services of /BA)-/
as its agent to look for and engage$ for
A)C$ a b&siness enterrise to ferry t#e
airlane. /BA-)/ did engage t#e services of
8niversal :eat#er P Aviation$ /nc. 08:A/1.
8:A/ sent its TBillingsF to A)C$ t#ro&g#
/BA-)/$ in t#e total amo&nt of
8-U"C$1@1.CC for its services for t#e ferry
of t#e airlane. B&t A)C reeatedly failed
to ay its acco&nt. 9xaserated$ 8:A/
blamed /BA-)/. /BA-)/ %as imelled to ay
8:A/. /BA-)/ demanded ref&nd of t#e
amo&nt advanced to 8:A/. B&t still$ no
ayment %as effected by A)/. /BA-)/
demanded t#e ayment of said amo&nt
l&s 10N commission.
A)C finally made its first artial ayment of
)200$000.00 to /BA-)/ %it# a sim&ltaneo&s
4eceitLAgreement exec&ted by /BA-)/
and A)C$ t#e latter$ t#ro&g# Attorney.
'anolito A. 'analo$ 2fficer?in?C#arge of t#e
=egal 7eartment of A)C. After t#is artial
ayment$ no ot#er ayments %ere
exec&ted by A)C. A)C ref&sed to ay its
balance %it# /BA-)/.
/BA-)/ s&ed A)C in co&rt. 3o%ever$ t#e
co&nsel of A)C filed at least t#ree motions
to extend filing of etitionerFs Ans%erE did
not aear d&ring t#e sc#ed&led retrialsE
and failed to file etitionerFs retrial Brief.
Co&rt ordered /BA-)/ to ay t#e balance$
t#e 10N commission and attorneyFs fees.
A)C s&bmits t#at CA erred in &#olding t#e
r&ling of t#e 4,C desite t#e fact t#at t#e
gross negligence$ incometence and
dis#onesty of A)CFs former co&nsel$
Attorney. 'anolito A. 'anolo$ #ave
effectively denied A)C of its day in co&rt.
A)C f&rt#er contended t#at Attorney.
'analo %as not a&t#ori6ed to exec&te t#e
4eceitLAgreement in be#alf of etitioner
A)C.
,#&s A)C asked for 'otion for ;e% ,rial.
/ss&e. :L; t#e 'otion for ;e% ,rial s#o&ld be
granted since Attorney. 'analo %#o %as s&osed
to defend A)C effectively denied said etitioner of
its day in co&rt. ;2J
3eld.
Axiomatic is t#e r&le t#at Inegligence of
co&nsel binds t#e client.I ,#e basis is t#e
tenet t#at an act erformed by co&nsel
%it#in t#e scoe of a Igeneral or imlied
a&t#orityI is regarded as an act of t#e
client.
:#ile t#e alication of t#is general r&le
certainly deends &on t#e s&rro&nding
circ&mstances of a given case$

t#ere are
excetions recogni6ed by t#is Co&rt. I011
%#ere reckless or gross negligence of
co&nsel derives t#e client of d&e rocess
of la%E 021 %#en its alication %ill res&lt in
o&trig#t derivation of t#e clientFs liberty
or roertyE or 0@1 %#ere t#e interests of
j&stice so reG&ire.I :oef&lly none of t#ese
excetions aly #erein. ,#&s$ t#e Co&rt
cannot Iste in and accord reliefI to
etitioner$ even if it may #ave s&ffered by
reason of its o%n arrant fat&ity.
,#e negligence of etitioner and t#at of its
co&nsel are conc&rrent. Attorney. 'analo is
an emloyee$ not an o&tsider #ired by
etitioner on a retainer basis. /n fact$ #e is
t#e officer?in?c#arge of its =egal
7eartment. ,#ere is no s#o%ing t#at #e
%as not a&t#ori6ed to exercise t#e o%ers
of t#e cororation or to transact its
b&siness$ artic&larly t#e #andling of its
legal affairs. Besides$ it is res&med t#at
t#e ordinary co&rse of b&siness #as been
follo%ed. ,#erefore$ co&nselFs cororate
acts are s&osed to be kno%n and
assented to by etitioner.
+irst$ t#e 4eceitLAgreement %as entered
into by resondent and etitioner$ %#ic#
%as reresented by its agent Attorney.
'analo. As an agent$ #e rendered service
to$ and did somet#ing in reresentation or
on be#alf of$ #is rincial and %it# its
consent and a&t#ority. /t cannot be denied
t#at$ on its art$ t#ere %as an act&al intent
to aoint its co&nselE and$ on t#e latterFs
art$ to accet t#e aointment and Iact
on it.I ,#&s$ t#e general rinciles of
agency govern its relations#i %it# its
officers or agents$ s&bject to t#e articles of
incororation$ byla%s and ot#er relevant
rovisions of la%.
'oreover$ t#e 4eceitLAgreement is not a
romise to ay t#at Iamo&nts to an offer to
comromise and reG&ires a secial o%er
of attorney or t#e exress consent of
1@
etitioner.I A comromise agreement is Ia
contract %#ereby t#e arties$ by making
recirocal concessions$ avoid a litigation or
&t an end to one already commenced.I ;o
s&c# recirocal concessions %ere made in
t#is case. ,#&s$ t#e 4eceitLAgreement is
b&t an o&trig#t admission of etitioner of
its obligation$ after making artial
ayment$ to ay t#e balance of its acco&nt.
And even if %e %ere to consider t#e same
as a comromise$ from its nat&re as a
contract$ t#e absence of an -)A does not
render it void$ b&t merely &nenforceable.
)9,/,/2; 79;/97.
Pitt8ur41 P-ate ). &ire*tor o' Patent (GEN)
'arc# 2($ 1(AD
Castro$ *.
+AC,-. 2n ;ov. C$ 1("2$ t#e la% firm of =ic#a&co$
)ica6o and Agcaoili filed %it# t#e )#iliine )atent
2ffice a etition for extension of @0 days %it#in
%#ic# to file in be#alf of t#e etitioner a notice of
oosition to t#e resondentKs alication for
registration of I-olex Bl&eaneI as trademark for
its glass rod&cts. ,#e lea %as made &rs&ant to
a cablegram from =angner$ )arry$ Card and
=angner /nternational )atent and ,rademark
Agents$ 8-A$ asking t#at t#e resondentKs
alication be oosed. ,#e extension %as
granted.
An &nverified notice of oosition to t#e trademark
alication %as filed by =ic#a&co$ )ica6o and
Agcaoili before t#e )atent 2ffice %#ic# a&t#ori6es
t#e filing of s&c# a notice rovided it is verified by
t#e ooser %it#in "0 days t#ereafter. 2n t#e
same day$ t#e same co&nsel filed a d&ly
a&t#enticated o%er of attorney exec&ted by t#e
etitioner on ;ov. 12$ 1("2 in favor of t#e former
for t#e rosec&tion of its oosition. ,#ereafter
etitionerKs verified oosition to t#e resondentKs
alication %as filed.
,#e 7irector of )atents iss&ed a resol&tion
dismissing t#e etitionerKs oosition on t#e
gro&nd t#at on ;ov. C$ 1("2 %#en etitionerKs
co&nsel asked for an extension of time to file a
notice of oosition$ t#e said co&nsel %as not yet
a&t#ori6ed by t#e etitioner to file t#e said
leading as t#e o%er of attorney %as exec&ted
only on ;ov. 12$ 1("2.
/--89. :2; t#e la% firm %as a&t#ori6ed to
reresent t#e etitioner before t#e )#iliine
)atent 2ffice on ;ov. C$ 1("2 %#en t#e former
leaded for an extension of time to register t#e
etitionerFs oosition to t#e resondentFs
alication<
39=7. >9-. )etitioner does not deny$ as in fact it
asserted in %riting$ t#at t#e said la% firm %as
a&t#ori6ed to reresent it by virt&e of t#e o%ers it
#ad vested &on =angner$ et al., a corresondent
of =ic#a&co$ )ica6o and Agcaoili$ to #andle all
foreign trademark matters affecting t#e etitioner.
/t bears em#asis t#at t#e relations#i bet%een
co&nsel and client is strictly a ersonal one. /t is a
relations#i t#e creation of %#ic# co&rts and
administrative trib&nals cannot b&t recogni6e on
t#e fait# of t#e clientKs %ord$ esecially %#en no
s&bstantial rej&dice is t#ereby ca&sed to any t#ird
arty.
)etitioner$ %#o claims to be adversely affected by
t#e resondentKs trademark alication$
seasonably informed t#e 7irector of )atents t#at
its co&nsel #ad t#e a&t#ority to reresent it before
t#e latterKs office. ,#ere is no valid reason to
interose chevau-de frise
!
&on t#at claim and
deny t#e etitioner its basic rig#t to be #eard.
C. Arti*-e #$C0 to #$C2
Art. 1!A0. Accetance by t#e agent may also be
exress$ or imlied from #is acts %#ic# carry o&t
t#e agency$ or from #is silence or inaction
according to t#e circ&mstances.
Art. 1!A1. Bet%een ersons %#o are resent$ t#e
accetance of t#e agency may also be imlied if
t#e rincial delivers #is o%er of attorney to t#e
agent and t#e latter receives it %it#o&t any
objection.
Art. 1!A2. Bet%een ersons %#o are absent$ t#e
accetance of t#e agency cannot be imlied from
t#e silence of t#e agent$ excet.
011 :#en t#e rincial transmits #is o%er of
attorney to t#e agent$ %#o receives it %it#o&t any
objectionE
021 :#en t#e rincial entr&sts to #im by letter or
telegram a o%er of attorney %it# resect to t#e
b&siness in %#ic# #e is #abit&ally engaged as an
agent$ and #e did not rely to t#e letter or
telegram.
#. A**e.tan*e, not
*om.u-or7
a. E0.re
8. Im.-ied
i. 'rom t1e a*t o' t1e a4ent
?1i*1 *arr7 out t1e a4en*7D
1
9tymology. +renc#$ literally$ #orse from +riesland
# > a defense consisting tyically of a timber or an iron
barrel covered %it# rojecting sikes and often str&ng
%it# barbed %ire
2 > a rotecting line 0as of sikes1 on to of a %all V
&s&ally &sed in l&ral
1D
ii. 'rom 1i i-en*e or ina*tion
? ?1ere t1e .eron are
.reent
objection.
? ?1ere t1e .eron are
a8ent
objectionE
telegram.
2. Po?er o' attorne7D
de'inition, .ur.oe
? Notari5ation needed
Stron4 ). Gutierre5 !e.ide (2AI)
+ebr&ary 21$ 1(12
'oreland$ *.
+AC,-. )rior to 2ctober 10$ 1(0@$ t#e laintiff$
9leanor 9rica -trong$ %as t#e o%ner of !00 s#ares
of t#e caital stock of t#e )#iliine -&gar 9states
7eveloment Comany$ =imited$ of t#e ar val&e
of )100 eac#. 2n 2ctober 10$ 1(0@$ t#e defendant$
+rancisco 5&tierre6 4eide$ by means
s&bseG&ently fo&nd and adj&dged to #ave been
fra&d&lent$ obtained ossession of said s#ares and
t#ereafter alleged to be t#e o%ner t#ereof. ,#e C+/
of 'anila s&bseG&ently #eld t#at t#e sale of t#ese
s#ares %as made %it#o&t t#e a&t#ority of 'rs.
-trong$ t#at s#e never ratified t#e sale b&t
re&diated it as soon as s#e learned of it$ t#at t#is
sale %as ind&ced by fra&d on t#e art of t#e
defendant$ and t#erefore %as a fra&d&lent sale.
,#is j&dgment %as$ on aeal to t#e -&reme
Co&rt of t#e )#iliine /slands$ reversed$ and
laintiffKs comlaint dismissed on t#e merits.
,#ere&on$ laintiff rosec&ted an aeal to t#e
-&reme Co&rt of t#e 8nited -tates$ %#ic# co&rt$
on t#e @rd of 'ay$ 1(0($ rendered its j&dgment$
reversing t#e decision of t#e -&reme Co&rt of t#e
)#iliine /slands and affirming t#e j&dgment of
t#e trial co&rt.
+rom t#e 10t# day of 2ctober$ 1(0@$ t#e date of
t#e said fra&d&lent &rc#ase by t#e defendant$
&ntil t#e 2At# day of *&ly$ 1(0($ t#e defendant
retained said s#ares in #is ossession or &nder #is
control and after t#e rendition of said j&dgment of
Aril 2($ 1(0D$ collected t#e dividends earned by
said s#ares for t#e years 1(0C$ 1(0"$ 1(0A$ and
1(0! at t#e rate of " er cent er ann&m$
amo&nting to a total of )1($200$ %#ic# s&m t#e
defendant retained and ref&sed to ay over to t#e
laintiff.
/--89. :#et#er or not t#e agreement entered into
bet%een #im and t#e laintiff t#ro&g# #er co&nsel
released #im from all resonsibility in connection
%it# t#e transaction relating to t#e stock
39=7. ;2. ,#ere is not#ing in t#e %ritten disc#arge
%#ic# co&ld roerly be given t#e legal effects
%#ic# t#e aellant in t#is case assigns to it. /t is a
disc#arge of a j&dgment and not#ing more. Being
s&c#$ it reac#es no f&rt#er t#an t#e terms of t#e
j&dgment itself. It i to 8e .reumed t1at an
intrument ati'7in4 a de8t or o8-i4ation
mani'eted in anot1er intrument e0tend no
'urt1er t1an t1e term o' t1e intrument
?1i*1 mani'et t1e o8-i4ation to 8e
di*1ar4ed, un-e, 'rom t1e term o' t1e
intrument, it i *-ear t1at t1e .artie
intended omet1in4 more. -o far as t#e record
discloses$ at t#e time t#is satisfaction %as
exec&ted not#ing %#atever occ&rred bet%een t#e
arties relative to t#e dividends on t#e stock %#ic#
formed t#e s&bject?matter of t#at j&dgment$ nor
did anyt#ing transire as to any ot#er relations
bet%een t#e arties t#an t#ose embraced %it#in
t#e j&dgment itself. "1ere ?a not1in4 in t1e
*ondu*t o' t1e .artie, or in t1eir re-ation or
attitude, 'rom ?1i*1 it *ou-d 8e im.-ied or
in'erred t1at t1e7 ?ere dea-in4 ?it1 au41t
e-e t1an t1e =ud4ment ite-'. ,#ere is no basis$
t#en$ for t#e contention of t#e aellant &nless it
be fo&nd in t#e %ording of t#at instr&ment itself.
A o%er of attorney is an instr&ment in %riting by
%#ic# one erson$ as rincial$ aoints anot#er as
#is agent and confers &on #im t#e a&t#ority to
erform certain secified acts on be#alf of t#e
rincial. 9xcet as may be reG&ired by stat&te$ a
o%er of attorney is valid alt#o&g# no notary &blic
intervened in its exec&tion.
Lim Pin ). Liao "an (!(G)
+AC,-> A comromise agreement bet%een =im )in
reresented by son 5eorge 3&ng and =iao ,an %as
made incident to an &nla%f&l detainer comlaint
filed by ,an against )in. 2n #earing$ =im )in %as
absent. 3er son 5eorge 3&ng %#o attended %it#
#is mot#er all revio&s #earings %as resent
toget#er %it# co&nsel. =iao and co&nsel %ere also
1C
resent. ,#ro&g# co&rtKs initiative t#e comromise
agreement %as form&lated and exec&ted.

A motion for reconsideration %as filed by =im )in
assailing t#e comromise agreement. 11 t#at s#e
never a&t#ori6ed #er son nor #er co&nsel on record
0Attorney. )astor 'amaril1 to enter into s&c#
comromise agreement and 21 t#at #ad s#e been
resent %#en said agreement %as rearedE s#e
%o&ld not #ave acceded t#ereto.

,an filed oosition to '4 and rayed t#at son
5eorge 3&ng and Attorney. )astor ). 'amaril be
cited for contemtI in t#e event t#ey s#o&ld
belatedly deny t#at 5eorge 3&ng %as d&ly
a&t#ori6ed by #is mot#er to enter into t#e
comromise agreement.

,C. '4 denied 5eorge 3&ng cited for contemt of
co&rt. :rit to exec&te iss&ed.

=im )in. *&dge s#o&ld not #ave allo%ed #er son
5eorge 3&ng and #er t#en co&nsel$ Attorney.
)astor 'amaril in #er absence to enter into
comromise agreement %it# ,an. Considering t#at
s&c# comromise agreement %o&ld imose
onero&s obligations &on #er$ s&c# as a
tremendo&s increase of rentals in t#e remises
being leased from ,an from )1$C00.00 a mont# to
)C$000.00 a mont# and t#at said agreement
contained admissions by #er$ t#e resondent *&dge
s#o&ld #ave reG&ired a %ritten a&t#ority and o%er
of attorney from #er son and co&nsel.

/--89> :2; *&dge s#o&ldFve reG&ired %ritten
a&t#ority and )o%er of attorney before allo%ing
=imKs son and co&nsel to act on #er be#alf on
comromise agreement< ;2

39=7.
11 )o%er of attorney need not be %ritten b&t
a&t#ority m&st be d&ly establis#ed by evidence.
Art. 1!A! ;CC. a secial o%er of attorney is
necessary to comromise$ to s&bmit G&estions to
acG&ired.

-ection 2@ of 4&le 1@! on Attorneys and Admission
to t#e Bar governs t#e a&t#ority of attorneys to
bind t#eir clients and rovides t#at IAttorneys #ave
a&t#ority to bind t#eir clients in any case by any
agreement in relation t#ereto made in %riting$ and
in taking aeal$ and in an matters of ordinary
*&dicial )roced&re$ b&t t#ey cannot$ %it#o&t secial
a&t#ority$ comromise t#eir clientsK litigation or
receive anyt#ing in disc#arge of t#eir clientsK
claims b&t t#e f&ll amo&nt in cas#.I

,#e reG&irements of a secial o%er of attorney in
Article 1!A! of t#e Civil Code and of a secial
a&t#ority in 4&le 1@! of t#e 4&les of Co&rt refer to
t#e nat&re of t#e a&t#ori6ation and not its form.
,#e reG&irements are met if t#ere is a clear
mandate from t#e rincial secifically a&t#ori6ing
t#e erformance of t#e act.

'andate may be oral or %ritten B8, vital t#at it
m&st be exress. /f t#e secial a&t#ority is not
%ritten it m&st be d&ly establis#ed by evidence
ot#er t#an mere assertion of co&nsel.

21 *&dge considered evidence before allo%ing son
to exec&te agreement on momKs be#alf.
3ere$ it %as s#o%n t#at *&dge took necessary
reca&tionary meas&res and acted on t#e basis of
satisfactory evidence %#en #e allo%ed t#e
comromise agreement to be exec&ted by 5eorge
3&ng t#e etitionerKs son.

)rior to #earing$ =im )in #ad reeatedly asked
co&rt to arove #er roosal for mont#ly increase
of C00# + t#at increases be egged at t#at rate
till mont#ly rental reac#es Ck. on 7ec 1(AA. B&t at
t#e time$ ,an not amenable to it$ b&t ,an later
c#anged #er mind so co&rt later asked 5eorge to
exec&te agreement.

,#ere %ere ot#er reasons %#ic# led t#e lo%er co&rt
to a finding t#at 5eorge 3&ng #ad t#e f&ll a&t#ority
to enter into t#e comromise. ,#e co&rt itself
observed d&ring t#e earlier #earings and it is not
dis&ted t#at ... defendant =im )in co&ld not decide
on anyt#ing %it#o&t first cons&lting #er son.I
5eorge 3&ngKs later denial t#at #e never
manifested #is a&t#ority to reresent #is mot#er
%as rejected by t#e co&rt. As a matter of fact$ t#is
s&dden t&rnabo&t of 5eorge 3&ng led t#e co&rt to
cite #im for contemt. 3e %as fined ,%o 3&ndred
)esos. ,#e citation for contemt %as never
aealed.

@1 9ven ass&ming 5eorge acted %it#o&t a&t#ority$
agreement %o&ld not be void$ merely
&nenforceable$ and caable of being ratified.
,#e comromise agreement %as ratified by t#e
etitioner %#en a fe% days after t#e rom&lgation
of t#e G&estioned j&dgment and before t#e filing of
a motion for reconsideration$ s#e filed a 'otion ,o
:it#dra% 7eosits$ a consignation case ending
before t#e same co&rt bet%een t#e same arties.
-&c# motionKs exressly stated &rose %as to
%it#dra% deosit made in order imlement
Lim Pin ). Liao "an (ALAIN)
1C *&ly 1(!2
+acts.
1"
-o&ses Conc#ita =iao ,an and ,an C#o
3&a alleged in t#eir comlaint for &nla%f&l
detainer t#at t#e laintiff Conc#ita =iao
,an$ as o%ner of a arcel of registered land
%it# imrovements located at +rancisco
-treet$ Caloocan City$ #ad leased a ortion
of it$ more artic&larly kno%n as (1
+rancisco -treet$ Caloocan City to
defendant =im )in on a mont# to mont#
basis b&t t#at t#e latter starting Aril$ 1(AA
#ad not aid t#e agreed rental sti&lated
for s&c# mont# and t#e s&cceeding mont#s
t#ereafter. And t#at desite demand$ t#e
defendant ref&sed to vacate t#e leased
remises.
7efendant =im )in$ filed #er Ans%er
denying t#e material allegations of t#e
comlaint and rotesting t#e alleged #ig#ly
I&nconscionable and &nreasonableI
increase of rental demanded by laintiffs.
2n t#e sc#ed&led 2ctober 1($ 1(AA
#earing$ defendant =im )in %as absent. 3er
son 5eorge 3&ng %#o attended %it# #is
mot#er all t#e revio&s #earings %as
resent toget#er %it# t#e defendantKs
co&nsel. )laintiff Conc#ita =iao ,an
toget#er %it# #er co&nsel %as also resent.
,#ro&g# t#e initiative of t#e co&rt a G&o$
t#e s&bject comromise agreement %as
form&lated and exec&ted and it finally
became t#e basis of t#e 2ctober 1($ 1(AA
j&dgment.
,#e aforesaid j&dgment %as t#e s&bject of
a motion for reconsideration filed on
2ctober 2!$ 1(AA by defendant =im )in on
t#e follo%ing gro&nds. 11 t#at s#e never
a&t#ori6ed #er son nor #er co&nsel on
record 0Attorney. )astor 'amaril1 to enter
into s&c# comromise agreement and 21
t#at #ad s#e been resent %#en said
agreement %as reared$ s#e %o&ld not
#ave acceded t#ereto.
)etitioner arg&es t#at t#e resondent
*&dge s#o&ld not #ave allo%ed #er son
5eorge 3&ng and #er t#en co&nsel$
Attorney. )astor 'amaril in #er absence to
enter into t#e 2ctober 1($ 1(AA
comromise agreement %it# t#e rivate
resondent Conc#ita =iao ,an assisted by
#er co&nsel. -aid agreement contained
admissions by etitioner$ t#e resondent
*&dge s#o&ld #ave reG&ired a %ritten
a&t#ority and o%er of attorney from #er
son and co&nsel. 3er objections to t#e
validity of t#e comromise agreement are
remised on Article 1!A! of t#e Civil Code
and 4&le 1@!$ -ection 2@ of t#e 4&les of
Co&rt.
/ss&e. :#et#er t#e resondent *&dge committed
grave ab&se of discretion in allo%ing t#e 2ctober
1($ 1(AA comromise agreement in t#e absence of
t#e etitioner. ;2.
39=7.
Article 1!A! is fo&nd in ,itle W of t#e Civil Code
on Agency. /t states t#at a secial o%er of
attorney is necessary to comromise$ to s&bmit
G&estions to arbitration$ to reno&nce t#e rig#t
to aeal from a j&dgment$ to %aive objections
to t#e ven&e of an action or to abandon a
rescrition already acG&ired.
-ection 2@ of 4&le 1@! on Attorneys and
Admission to t#e Bar governs t#e a&t#ority of
attorneys to bind t#eir clients and rovides
t#at IAttorneys #ave a&t#ority to bind t#eir
clients in any case by any agreement in
relation t#ereto made in %riting$ and in taking
aeal$ and in an matters of ordinary *&dicial
)roced&re$ b&t t#ey cannot$ %it#o&t secial
receive anyt#ing in disc#arge of t#eir clientsK
claims b&t t#e f&ll amo&nt in cas#.I
,#e reG&irements of a secial o%er of
attorney in Article 1!A! of t#e Civil Code and of
a secial a&t#ority in 4&le 1@! of t#e 4&les of
Co&rt refer to t#e nat&re of t#e a&t#ori6ation
and not its form. ,#e reG&irements are met if
t#ere is a clear mandate from t#e rincial
secifically a&t#ori6ing t#e erformance of t#e
act. As early as 1(0"$ t#is Court in "tron# v.
Gutierre$-%epide 0" )#il. "!01 stated t#at s&c#
a mandate may be eit#er oral or %ritten$ t#e
one vital t#ing being t#at it s#all be exress.
And more recently$ :e stated t#at$ if t#e
secial a&t#ority is not %ritten$ t#en it m&st be
d&ly establis#ed by evidence.
... t#e 4&les reG&ire$ for attorneys
to comromise t#e litigation of
t#eir clients$ a secial a&t#ority.
And %#ile t#e same does not state
t#at t#e secial a&t#ority be in
%riting t#e Co&rt #as every reason
to exect t#at$ if not in %riting$ t#e
same be d&ly establis#ed by
evidence ot#er t#an t#e self?
serving assertion of co&nsel
#imself t#at s&c# a&t#ority %as
verbally given #im.
:#ere&on t#e follo%ing took lace. 011
,#e co&rt asked 5eorge 3&ng %#et#er #e
%as %illing to enter into t#e comromise
agreement and %#et#er #e #ad t#e
a&t#ority of #is mot#er to enter into s&c# a
comromise agreementE 021 ,#e
defendantKs co&nsel confirmed in oen
co&rt t#e ass&rance of 5eorge 3&ng t#at
#e #ad t#e f&ll a&t#ority of #is mot#er to
enter into a comromise agreement. 0@1
1A
After t#e form&lation of t#e comromise
agreement t#e *&dge exlained in ,agalog
to bot# arties$ incl&ding 5eorge 3&ng its
terms and conditions after %#ic# t#e same
%as red&ced into %ritingE 0D1 5eorge 3&ng
%illingly signed t#e comromise
agreement$ t#e terms and conditions of
%#ic# %ere t#ose originally roosed by
t#e etitioner #erself. 3&ng %as all t#e
%#ile assisted by t#eir co&nsel.
)9,/,/2; 7/-'/--97.

@. Genera- ru-e in Art.
#$C2D E0*e.tion
objectionE
telegram.
A. &i''erentiate Art. #$C#
to Art. #$C2
objection.
objectionE
telegram.
B. Cae
Ca-i8o ). CA ("(FF)
*. H&is&mbing
+AC,-. 'ike Ab&ella$ rivate resondentFs son
leased t#e #o&se of Calibo for residential &roses.
)ablo Ab&ella left t#e tractor %it# #is son for
safekeeing. 4ent and ot#er exenses %ere
initially aid b&t s&bseG&ently defa&lted in
ayment t#ereof. :#en confronted by Calibo$ 'ike
Ab&ella manifested t#at #eFll only stay in t#e #o&se
&ntil end of t#e year 1(!" and offered t#e tractor
as sec&rity. /n order for #im to ay #is obligations
sooner$ #e asked Calibo to #el #im look for
b&yers. /n *an&ary 1(!A$ a ne% tenant occ&ied t#e
#o&se and Calibo moved t#e tractor to #is fat#erFs
garage also in t#e same city. 9ven after demands$
'ike failed to ay #is arrearsE #e only ass&red
Calibo t#at t#e tractor %o&ld stand as g&arantee to
#is ayment. :#en )ablo Ab&ella tried to get t#e
tractor from Calibo$ #e tried to negotiate %it# #im
and offered to %rite a c#eck in ayment of t#e
rentals and ostdated c#ecks to cover t#e ot#er
exenses b&t still #ad to verify %it# 'ike. Calibo
%o&ld only accet t#e latter if )ablo %o&ld exec&te
a romissory note in #is favor to cover t#e
remaining exenses. ,#e t%o did not agree. )ablo
Ab&ella instit&ted an action for relevin$ claiming
o%ners#i of t#e tractor and seeking to recover
ossession t#ereof from etitioner Bot# t#e trial
co&rt and t#e CA r&led in favor of Ab&ella. 'ike
Ab&ella co&ld not #ave validly ledged t#e s&bject
tractor to etitioner since #e %as not t#e o%ner
t#ereof$ nor %as #e a&t#ori6ed by its o%ner to
ledge t#e tractor.
/--89. :2; t#ere %as an imlied rincial?agent
relations#i bet%een )ablo and 'ike
39=7. ;o. )ablo Ab&ella categorically stated t#at
t#e tractor %as only left to 'ike for safekeeingE
not to be ledged or alienated. 'ike acted %it#o&t
a&t#ority or consent from )ablo. Article 1!"( states
t#at t#ere %o&ld only be imlied agency is t#e
erson is acting %it#in t#e a&t#ority granted to #im
by t#e rincial.
Article 1(11 mandates t#at t#e rincial is
solidarily liable %it# t#e agent if t#e former allo%ed
t#e latter to act as t#o&g# #e #ad f&ll
o%ers. Again$ in vie% of )abloFs lack of
kno%ledge of 'ikeFs ledging t#e tractor %it#o&t
any a&t#ority from #im$ it s#o%s t#at )ablo co&ld
not #ave allo%ed t#e 'ike to ledge t#e tractor as
if #e #ad f&ll o%ers to do so.
)etition denied. CA decision affirmed.
Linan ). Puno (!EG)
*o#nson$ *.
1(1C
FAC"S> =inan %as t#e o%ner of a certain arcel of
land. /n 1(0!$ #e exec&ted a doc&ment %#ic#
conferred &on )&no t#e o%er$ d&ties and
obligations to &rc#ase$ sell$ collect and ay$ as
%ell as s&e and be s&ed before any a&t#ority$
aear before t#e co&rts of j&stice and
administrative officers in any roceeding or
b&siness concerning t#e good administration and
advancement of #is interests. /n 1(11$ )&no$ for
t#e s&m of )!00$ sold and delivered said arcel of
land to t#e ot#er defendants. )etitioner alleges
1!
t#at t#e said doc&ment #e exec&ted did not confer
&on t#e )&no t#e o%er to sell t#e land and
rayed t#at t#e sale be set asideE t#at t#e land be
ret&rned to #im$ toget#er %it# damages. =o%er
co&rt fo&nd for )&no.
ISSUE> :2; t#e doc&ment did not give )&no
a&t#ority to sell t#e land.
,EL&> YES. ,#ere seems to be no good reason for
saying t#at )&no #ad a&t#ority to administer and
not to sell %#en Ito sellI %as as advantageo&s to
t#e laintiff in t#e administration of #is affairs as
Ito administer.I ,o #old t#at t#e o%er %as Ito
administerI only %#en t#e o%er Ito sellI %as
eG&ally conferred %o&ld be to give to secial %ords
of t#e contract a secial and limited meaning to
t#e excl&sion of ot#er general %ords of eG&al
imort.
:#enever it is ossible$ effect is to be given to
every %ord and cla&se &sed by t#e arties. /t is to
be res&med t#at t#e arties said %#at t#ey
intended to say and t#at t#ey &sed eac# %ord or
cla&se %it# some &rose and t#at &rose is$ if
ossible$ to be ascertained and enforced.
=ike%ise$ t#ere %as no allegation on roof t#at
)&no acted in bad fait# or fra&d&lently in selling
t#e land. /t %ill be res&med t#at #e acted in good
fait# and in accordance %it# #is o%er as #e
&nderstood it
&. Arti*-e #$C@
Art. 1!A@. /f a erson secially informs anot#er or
states by &blic advertisement t#at #e #as given a
o%er of attorney to a t#ird erson$ t#e latter
t#ereby becomes a d&ly a&t#ori6ed agent$ in t#e
former case %it# resect to t#e erson %#o
received t#e secial information$ and in t#e latter
case %it# regard to any erson.
,#e o%er s#all contin&e to be in f&ll force &ntil t#e
notice is rescinded in t#e same manner in %#ic# it
%as given.
#. E''e*t o' .e*ia- in'ormation
2a*:e ). Cam. (A//Y)
+eb 12$ 1(0A
Carson$ *.
+AC,-. B.3. 'acke and :.3. C#andler are artners
and sold to *ose Cams of t#e :as#ington CafQ
vario&s bills of goods amo&nting to )@C1.C0 b&t #e
only received )1AD. 'acke made a demand b&t
Cams failed to ay. 'acke said t#at 4icardo
+lores t#e b&siness manager of t#e #otel bar
resta&rant signed t#e receit and t#at +lores %as
also t#e one %#o made t#e revio&s ayments. A
%itness$ one 5almes$ t#e lessor of t#e b&ilding said
t#at +lores also signed as a %itness on t#e
s&blease contract as managing agent$ %#ic# *ose
Cams also signed. Cams no% says t#at t#e
foregoing facts are not s&fficient to establis# t#e
fact t#at #e received t#e goods for %#ic# ayment
is demanded.
/--89. :o; Cams is estoed from roclaiming
t#at 4icardo +lores %as not #is agent
39=7. >es. +lores %as aarently in c#arge of t#e
b&siness$ erforming t#e d&ties &s&ally entr&sted
to managing agent$ leave little room for do&bt t#at
#e %as t#ere as a&t#ori6ed agent of t#e defendant.
2ne %#o clot#es anot#er aarent a&t#ority as #is
agent$ and #olds #im o&t to t#e &blic as s&c#$
cannot be ermitted to deny t#e a&t#ority of s&c#
erson to act as #is agent$ to t#e rej&dice of
innocent t#ird arties dealing %it# s&c# erson in
good fait# and in t#e follo%ing res&mtions or
ded&ctions$ %#ic# t#e la% exressly directs to be
made from artic&lar facts$ are deemed concl&sive.
I:#enever a arty #as$ by #is o%n declaration$ act$
or omission$ intentionally and deliberately led
anot#er to believe a artic&lar t#ing tr&e$ and to
act &on s&c# belief$ #e cannot$ in any litigation
arising o&t s&c# declaration$ act$ or omission$ be
ermitted to falsify itI and &nless t#e contrary
aears$ t#e a&t#ority of an agent m&st be
res&med to incl&de all t#e necessary and &s&al
means of carrying #is agency into effect.
!a--o ). Yan4*o (EA!LA)
-et 2A$ 1(11
'oreland$ *.
+AC,-. 2n ;ovember 2A$ 1(0A$ ,eodoro >angco
sent a letter to +lorentino 4allos$ offering >angco
#is services. Accordingly$ #e #as j&st oened a
s#iing and commission deartment for b&ying
and selling tobacco leaf and ot#er native rod&cts
in #is steams#i office in 'anila. 3e exressly
indicated in #is letter t#at +lorentino Collantes %ill
act for and in #is be#alf in transacting %it# 4allos.
3e f&rt#er stated t#at #e #as given Collantes a
o%er of attorney$ notari6ed by 'r. 4odrig&e6.
2n +ebr&ary 1(0($ 4allos sent to Collantes 21!
b&ndles of tobacco in t#e leaf to be sold on
commission. After ded&cting t#e commission
0)20".("1 from t#e total amo&nt of )1ADD$ 4allos is
entitled to )1C@A.0!.
/t aears t#at at t#e time 4allos gave t#e tobacco
to Collantes$ #e %as not t#e agent of >angco
anymore$ >angco #aving severed #is relations#i
%it# Collantes. ,#is fact #o%ever %as not kno%n to
nor comm&nicated %it# 4allos. As a res&lt$ %#en
1(
4allos tried to collect from >angco t#e )1C@A.0!$
>angco ref&sed to ay #im t#e amo&nt$ on t#e
basis t#at Collantes %as already acting on #is
be#alf at t#e time #e collected t#e 21! b&ndles of
tobacco.
/--89. :2; >angco is still liable to ay 4allos t#e
amo&nt of )1C@A.
39=7. >es. 3aving advertised t#e fact t#at
Collantes %as #is agent and #aving given t#em a
secial invitation to deal %it# s&c# agent$ it %as
t#e d&ty of t#e defendant on t#e termination of t#e
relations#i of rincial and agent to give d&e and
timely notice t#ereof to t#e laintiffs. +ailing to do
so$ #e is resonsible to t#em for %#atever goods
may #ave been in good fait# and %it#o&t
negligence sent to t#e agent %it#o&t kno%ledge$
act&al or constr&ctive$ of t#e termination of s&c#
relations#i.
+or #is fail&re to inform 4allos of t#e termination of
t#e agency relations#i %it# Collantes$ >angco is
liable.
2. E''e*t o' Pu8-i* Ad)ertiement
@. A4en*7 87 eto..e- ). im.-ied
a4en*7
2a*:e ). Cam., u.ra
Na4uiat ). CA (6ANCES)
A. 2anner o' termination
E. Arti*-e #$CA>
E0*e.tion to t1e 4enera- ru-e t1at a4entE
aut1orit7 ma7 8e ora- or ?ritten
s#all be void.
#. A..-i*a8i-it7D re-ate to Art. #A0@ (2e)
Art. 1D0@. ,#e follo%ing contracts are
&nenforceable$ &nless t#ey are ratified.
20e1. An agreement of t#e leasing for a longer
eriod t#an one year$ or for t#e sale of real
roerty or of an interest t#ereinE
2. !e.ur*1ae
@. Cae>
Lim ). CA (ALAIN)
Comi* Lum8er ). CA (GEN)
;ov. 2($ 1(("
Bellosillo$ *.
+AC,-. Cosmic$ t#ro&g# its 5eneral 'anager$
exec&ted a -ecial )o%er of Attorney aointing
)a6 5. Millamil?9strada as attorney?in?fact.
x x x to initiate$ instit&te and file any co&rt action
for t#e ejectment of t#ird ersons andLor sG&atters
of t#e entire lot (12A and DD@ and covered by ,C,
;os. @A"D! and @A"D($ for t#e said sG&atters to
remove t#eir #o&ses and vacate t#e remises in
order t#at t#e cororation may take material
ossession of t#e entire lot$ and for t#is &rose$ to
aear at t#e re?trial conference and enter into
any sti&lation of facts andLor comromise
agreement so far as it s#all rotect t#e rig#ts and
interest of t#e cororation in t#e aforementioned
lots.
9strada$ by virt&e of #er o%er of attorney$
instit&ted an action for t#e ejectment of rivate
resondent /sidro )ere6 and recover t#e ossession
of a ortion of =ot ;o. DD@ before t#e 4,C of
7ag&an.
=ater$ 9strada entered into a Comromise
Agreement %it# )ere6$ %#erein t#e latter agreed to
ay t#e ortion being occ&ied by #im and to
deliver t#e s&m of )2"$"D0. ,#e 4,C aroved t#e
Comromise Agreement. 3o%ever$ it %as not
exec&ted %it#in t#e C?year eriod from date of t#e
finality of t#e j&dgment allegedly d&e to t#e fail&re
of etitioner to rod&ce t#e o%nerFs d&licate coy
of t#e title needed to segregate from =ot ;o. DD@
t#e ortion sold by 9strada to )ere6 &nder t#e
Cosmic asserts t#at it %as only &on t#e revival of
t#e j&dgment t#at it came to kno% of t#e
comromise agreement bet%een 9strada and
)ere6. 3ence$ it so&g#t to ann&l t#e decision of t#e
trial co&rt alleging t#at it %as void beca&se 9strada
#ad no a&t#ority to disose of t#e roerty b&t
merely confined to file an ejectment case in order
t#at the corporation may ta&e material possession
of the entire lot. 'oreover$ a board resol&tion %as
needed for t#e disosition of t#e roerty.
,#e CA dismissed t#e comlaint.
/--89. :2; 9strada %as a&t#ori6ed to sell t#e
roerty<
39=7. ;2. ,#e a&t#ority granted 9strada &nder t#e
secial o%er of attorney %as exlicit and
excl&sionary. ;o%#ere in t#is a&t#ori6ation %as
9strada granted exressly or imliedly any o%er
to sell t#e s&bject roerty nor a ortion t#ereof.
;eit#er can a conferment of t#e o%er to sell be
validly inferred from t#e secific a&t#ority 'to
enter into a compromise a#reement( beca&se of
t#e exlicit limitation fixed by t#e grantor t#at t#e
comromise entered into s#all only be 'so far as it
20
shall protect the ri#hts and interest of the
corporation in the aforementioned lots.(
Alienation by sale of an immovable certainly
cannot be deemed rotective of t#e rig#t of
etitioner to #ysically ossess t#e same$ more so
%#en t#e land %as being sold for a rice of )!0.00
er sG&are meter$ very m&c# less t#an its assessed
val&e of )2C0.00 er sG&are meter$ and
considering f&rt#er t#at etitioner never received
t#e roceeds of t#e sale.
By selling to )ere6 a ortion of etitionerFs land
t#ro&g# a comromise agreement$ 9strada acted
%it#o&t or in obvio&s a&t#ority. ,#e sale ipso )ure
is conseG&ently void. -o is t#e comromise
agreement.
X2t#er iss&e on agency.
/t may be arg&ed t#at etitioner kne% of t#e
comromise agreement since t#e rincial is
c#argeable %it# and bo&nd by t#e kno%ledge of or
notice to #is agent received %#ile t#e agent %as
acting as s&c#. B&t t#e general r&le is intended to
rotect t#ose %#o exercise good fait# and not as a
s#ield for &nfair dealing. 3ence t#ere is a %ell?
establis#ed excetion to t#e general r&le as %#ere
t#e cond&ct and dealings of t#e agent are s&c# as
to raise a clear res&mtion t#at #e %ill not
comm&nicate to t#e rincial t#e facts in
controversy. ,#e logical reason for t#is excetion is
t#at %#ere t#e agent is committing a fra&d$ it
%o&ld be contrary to common sense to res&me or
to exect t#at #e %o&ld comm&nicate t#e facts to
t#e rincial.
!odri4ue5 ). Court o' A..ea- (2AI)
A&g&st 2($ 1("(
Castro$ *.
+AC,-. 2n 7ecember @1$ 1(C!$ by virt&e of a
doc&ment denominated ISas&nd&anI %ritten in t#e
vernac&lar and ratified before ;otary )&blic =a6aro
C. /son of t#at locality$ ;ieves Cr&6$ a&t#ori6ed t#e
so&ses Atanacio Malen6&ela$ and 'aximina
Mictorio and =iberate -antos to sell a certain arcel
of land of abo&t DD$"@D sG&are meters belonging to
#er.
;ieves Cr&6 and #er c#ildren$ #o%ever$ collected
from t#e agents$ eit#er t#r& 'aximina Mictorio or
t#r& -al&d 5. de =eon$ da&g#ter of =iberate -antos$
vario&s s&ms of money d&ring t#e eriod from *&ly
@$ 1(C( & to -etember @$ 1("1$ all of %#ic# %ere
d&ly receited for by ;ieves Cr&6 andLor #er
c#ildren and in %#ic# receits it is exressly stated
t#at said amo&nts %ere Ibilan# &ara#da#an sa
ipina#bili namin# lupa sa &anila 0additional
ayments for t#e land %e sold to t#em1.
;ieves Cr&6 t#en sold t#e roerty in G&estion to
Barbara =ombos 4odrig&e6$ #er IbalaeI beca&se
t#e latterKs son %as married to #er da&g#ter$ for
t#e s&m of )AA$21".00.
;ieves Cr&6 s&bseG&ently so&g#t to rescind t#e
contract of sale %it# t#e rivate resondents.
/--89. :#et#er or not t#e agreement is
enforceable or can be roved &nder t#e la%
39=7. >9-. ,#e fact t#at Atanacio Malen6&ela$ et al.
%ere agents of ;ieves Cr&6 &nder t#e agency
agreement of 7ecember @1$ 1(C! is not material$
for if it is tr&e t#at ;ieves Cr&6 did agree to sell to
#er agents t#e real estate s&bject of t#e agency$
#er consent to t#e agreement took t#e transaction
o&t of t#e ro#ibition contained in article 1D(1021
of t#e Civil Code. Neit1er are arti*-e #$CA and
#$C$(B) and (#2) o' t1e Ci)i- Code re-e)ant,
'or t1e7 re'er to a-e made 87 an a4ent 'or a
.rin*i.a- and not to a-e made 87 t1e o?ner
.erona--7 to anot1er, ?1et1er t1at ot1er 8e
a*tin4 .erona--7 or t1rou41 a
re.reentati)e. "1u, t1e a4reement i )a-id.
,#e arties to t#e agency agreement s&bseG&ently
entered into a ne% and different contract by %#ic#
t#e lando%ner$ ;ieves Cr&6$ verbally agreed to sell
#er interest in t#e litigated real estate to Atanacio
Malen6&ela$ et al. and t1i ?a eta8-i1ed 87
*ertain 'a*t, s&c# as. Y1Z -al&d de =eon testified
t#at it %as s#e %#o #ad t#e oral agreement %it#
;ieves Cr&6 for t#e &rc#ase by Atanacio
Malen6&ela$ et al. of t#e litigated roerty and$ as
fo&nd by t#e resondent Co&rt$ -al&d de =eon %as
t#e reresentative of Atanacio Malen6&ela$ et al.$
not of ;ieves Cr&6E Y2Z Cr&6Fs accetance of t#e
s&ms of money given by t#e rivate resondents
and #er s&bseG&ent iss&ance of receits for t#ese
s&msE Y@Z t#e sale %as establis#ed and recogni6ed
in t#e land registration roceedings %#ere t#e
certificates of title bear t#e annotation of t#e
aforesaid rig#t of Atanacio Malen6&ela$ et al.
)ertinent rovisions.
Art. 1D(1. ,#e follo%ing ersons cannot acG&ire by
&rc#ase$ even at a &blic or j&dicial a&ction$
eit#er in erson or t#ro&g# t#e mediation of
anot#er.
x x x
021 Agents$ t#e roerty %#ose administration or
sale may #ave been entr&sted to t#em$ &nless t#e
consent of t#e rincial #as been givenE
s#all be void.
Kati48a: ). "ai ,in4 (!(G)
1(2!

21
+AC,-. 9ja %as o%ner of land %it# ,orrens ,itle
t#at %as s&bject to a mortgage lien in favor of )#il
;ational Bank. )o ,ecsi exec&ted a general o%er
of attorney in favor of brot#er 9ja emo%ering
latter to erform on #is be#alf as #is la%f&l agent$
t#e follo%ing. Ito b&y$ sell$ or barter$ assign$ or
admit in acG&ittance$ or in any ot#er manner to
acG&ire or convey all sorts of roerty$ real and
ersonal$ b&sinesses and ind&stries$ credits rig#ts
and actions... for %#atever rices and conditions
#e may sti&late$ aying and receiving ayment in
cas# or in instalments and exec&te t#e roer
instr&ments...I

)o ,ecsi exec&ted instr&ment of indebtedness to
#is brot#er 9ja for rice of roerty %#ic# latter
sold to #im. 9ja exec&ted a 2nd mortgage on s&c#
land to =imjenco. =ater #e sold land to bot#er )o
,ecsi s&bject to same enc&mbrances.

9ja$ &sing o%er given by #is brot#er$ sold
absolutely and forever to Satigbak t#e land$
mentioning only t#e mortgage to );B %it#o&t
recording eit#er #is o%er of attorney or sale in
roer certificate of title. )o ,ecsi remained in
ossession of land and leased land to 8y C#ia for C
years. =ease %as recorded in title.

)o ,ecsi comlained to #is brot#er t#at #e #ad
been after #im so m&c# for t#e for%arding of #e
rents of t#e roerty and exlaining #is recario&s
financial condition$ t#at #e did not collect t#e rents
for #imself$ and romised to remit t#e balance
after #aving aid all exenses of reairs and
cleaning & toget#er %it# vo&c#ers so #e co&ld not
blame #im for anyt#ing.

)o ,ecsi ans%ered t#at #e #ad sent a draft of )2k
and %as s&rrised t#at 9ja claimed s&c# rent and
t#at if 9ja %anted to lease roerty to -mit# Bell
#e s#o&ld not do so %it#o&t first cons&lting #im$
bec if someone offered a #ig#er rent #e %anted to
exercise #is rig#t to lease it.

'ortgage on land %as cancelled. )o ,ecsi died. 3is
son$ -&n -&y$ s&bmitted to 9ja a liG&idation of
acco&nts s#o%ing rents collected on roerty. -&n
%as delayed in rental ayments and begged 9ja
to let #im ay later. 9ja assigned credit against
,ecsi to #is son -&n Boo.

Satigbak sold roerty to -&n Boo. =atter notified
-&n -&y. -&n Boo no% seeks recovery of rent
against ,ai 3ing Co. And members of s&c#
comany -&n -&y.

-&n -&y. 9ja not a&t#ori6ed &nder o%er
exec&ted by ,ecsi to sell land co6 it %as exec&ted
before 9ja sold land to #is brot#er ,ecsi.
/--89. :2; 9ja #ad a&t#ority to sell land to
Satigbak &nder )2A exec&ted by ,ecsi even
t#o&g# s&c# )2A %as exec&ted even before ,ecsi
#ad bo&g#t land from 9ja< >9-

39=7.
11 9ja #ad a&t#ority. )o%er #ere %as general and
a&t#ori6es 9ja to sell any kind of realty
IbelongingI 0ertene6can1 to t#e rincial. ,#e &se
of s&bj&nctive Iertene6canI 0mig#t belong1 and
not t#e indicative IertenecenI 0belong1 means
t#at )o ,ecsi meant not only t#e roerty #e #ad
at t#e time of exec&tion b&t also %#at #e mig#t
after%ards #ave.

21 )o%er of attorney not recorded in registry still
binds rincial to ackno%ledge acts erformed by
9ja.
:#ile itFs tr&e t#at o%er of attorney not recorded
in registry of deeds is ineffective in order t#at an
agent or attorney in fact may validly erform acts
in t#e name of #is rincial$ and any act erformed
by agent by virt&e of o%er is ineffective against
@rd erson %#o$ in good fait#$ may #ave acG&ired a
rig#t$ it does #o%ever$ bind rincial to
ackno%ledge acts erformed by #is attorney in fact
regarding said roerty.

3ere$ %#ile itFs tr&e t#at non?registration of )2A by
)o ,ecsi revents sale made by 9ja to Satigbak
from being recorded in registry of deeds$ itFs not
ineffective to comel ,ecsi to ackno%ledge said
sale.

-ale %as not fra&d&lent even if o%er and sale not
recorded in registry. 4ecord s#o%s t#at )o ,ecsi
%as a%are of sale as s#o%n by several letter
comlaining of ressing demands of #is bro 9ja to
send #im rents of land$ #is romises to send t#em
and remittance %ere tacit ackno%ledgment t#at #e
occ&ied land no longer as o%ner b&t only as
lessee.

Linan, u.ra ("(FF)
Stron4, u.ra (!EG)
*. ,racey
1(0"
FAC"S> 'rs. -trong %as t#e o%ner of !00 s#ares
of caital stock of t#e )#il. -&gar 9states
7eveloment Comany. ,#e s#ares %ere
&rc#ased by t#e resondent t#ro&g# a broker %#o
dealt %it# -trongFs agent$ *ones$ %#o #ad t#e scrit
on t#is ossession and %#o made t#e sale %it#o&t
t#e kno%ledge of -trong. )revio&s to t#e sale %as
a conversation bet%een etitioner and resondent
%#ere t#e former told t#e latter$ seaking of #er
s#ares$ not to art %it# t#em &ntil / got t#eir face
val&e. *ones #ad been acting grat&ito&sly as agent
of -trong$ not only &nder a %ritten o%er secial in
terms to collect money$ b&t also as general agent
managing all #er b&siness. 9ven before t#e sale
22
mentioned$ t#ere #ad been an occasion %#ere
*ones %it#o&t secial instr&ction sold ot#er stocks
o%ned by -trong$ &nderstanding t#at t#e act %as
%it#in t#e scoe of #is general agency.
-trong alleges t#at *ones$ as #er agent$ did not
#ave t#e o%er to sell or deliver #er stocks.
/--89. :2; selling t#e s#ares %as %it#in t#e
a&t#ority of t#e agent *ones.
39=7. ;2. ,#e only evidence of t#e agency %as
t#e conversation bet%een -trong and *ones.
5at#ering from it$ t#e o%er may #ave been
general or secial$ exress or merely ass&med.
,#is %o&ld lead$ #o%ever$ to t#e ass&mtion
ro#ibited by Art. 1A1@. ,#e general management
of t#e roerty did not necessitate incidentally t#e
sale of stock. ,#erefore$ t#ere is no roof of an
effective o%er given *ones to disose of t#e stock.
Acts of agents beyond t#eir a&t#ority are n&ll.
,#ird ersons %#o deal %it# t#em at t#eir o%n eril
and are bo&nd to inG&ire as to t#e extent of t#e
o%er of t#e agent %it# %#om t#ey contract. /n
t#is case$ defendant is not s#o%n to #ave made
any inG&iry$ b&t aarently relied &nG&estioningly
&on *onesFs ass&mtion of a&t#ority and took risk
in so doing.
Pa*ua- ) !ea-t7 In)etment In*. (A//Y)
'ay 12$ 1(C2
*. Ba&tista
+AC,-. 4amon )asc&al filed an action to comel
4ealty /nvestment to sell to #im t#e land t#at #e is
occ&ying. 3e alleges t#at #e #as been occ&ying
t#e DC0 sG.m. of land since 1(12 %#ile it %as still
&nder Angela ,&asonFs administration. :#en it %as
sold to 4ealty in 1(D1$ #e said t#at #e offered to
b&y it at )1CLsGm. 3e failed to erfect t#e sale
beca&se 4ealty increased t#e rice to )2C #ence
t#is action. 4ealty filed a motion to dismiss and
%as granted.
C+/ basis. An agreement to sell real roerty
s#o&ld be made in %riting$ or at least it s#o&ld
aear in a note or a memorand&m$ in order t#at a
s&it based t#ereon may be enforceable$ t#e
resent action cannot be maintained and s#o&ld be
dismissed. O+or o&r &roses aly 1D0@ also. ,#e
oint is :L; t#e sale to be enforceable$ m&st be in
%ritingV>9-J
,#e &rose of t#is action is to enforce an alleged
verbal agreement to sell to t#e laintiff a arcel of
land %#ic# is claimed to #ave been occ&ied by
t#e laintiff as at tenant since 1(12$ it aearing
t#at &nder t#e stat&te of fra&ds said verbal
agreement cannot be enforced$ nor evidence
t#ereon resented$ beca&se it #as not been made
in %riting$ nor does it aear in a note or
memorand&m$ as reG&ired by said stat&te 04&le
12@$ section 21 0e1$ 4&les of Co&rt1.
/--89. :L; )asc&alFs allegation takes #is case o&t
of t#e oeration of t#e stat&te of fra&ds. 0/f yes
t#en 4ealty is comelled to exec&te t#e deed of
sale1
39=7. ;o$ t#is is not one of t#e excetions. :#ile it
is alleged t#at laintiff #as occ&ied t#e land since
1(12$ t#ere is not#ing alleged t#erein to t#e effect
t#at #e #as taken ossession t#ereof in vie% of a
s&osed verbal contract #e #ad %it# t#e
defendant to &rc#ase it$ nor is t#ere any
allegation t#at #e #as made imrovements t#ereon
beca&se and as a conseG&ence of said s&osed
contract to sell. ,#is case #aving been dismissed
on a mere motion to dismiss$ the merits of the
order of the court can only be #au#ed upon a
consideration of the alle#ations appearin# in the
complaint, and upon no other.
91ere a .aro- *ontra*t o' a-e i addu*ed not
'or t1e .ur.oe o' en'or*in4 it, 8ut a a 8ai
o' t1e .oeion o' t1e .eron *-aimin4 to
8e t1e o?ner o' t1e -and, t1e tatute o'
'raud i not a..-i*a8-e 0Almirol et al.$ vs.
'onserrat$ D! )#il.$ "A1$ in t#e same %ay t#at it
does not aly to contracts %#ic# are eit#er totally
or artially erformed &on t#e t#eory t#at t#ere is
a %ide field for t#e commission of fra&ds in
exec&tory contracts %#ic# only revented by
reG&iring t#em to be in %riting$ a fact %#ic# is
red&ced to a minim&m in exec&ted contracts
beca&se t#e intention of t#e arties become
aarent by t#eir exec&tion1. )asc&alFs sit&ation
does not #ere obtain for t#e reason t#at t#e
comlaint does not contain t#e reG&isite
allegations. 2n t#e contrary$ it alleges t#at laintiff
occ&ied t#e land as a tenant since 1(12.
!aet ). CA (EA!LA)
-etember 1A$ 1((!
'endo6a$ *.
2@
+AC,-. /n 1(!D$ t#e -s. 4aet and -s. 'itra aid
Amaro 5at&s )D0k and )@Ck$ resectively$ after
negotiations regarding t#e sale of 5at&sF rig#ts in
certain &nits in =as Millas de -to ;ino in
'eyaca&ayan$ B&lacan. ,#is s&bdivision %as
develoed by t#e )#il?Mille 7eveloment and
3o&sing Cororation 0)M73C1$ rimarily for arties
G&alified to obtain loans from 5-/-.
/n 1(!C$ t#e t%o so&ses alied directly to )M73C
for t#e &rc#ase of &nits in t#e s&bdivision. ,#ey
t#en looked for 5-/- members %#o can act as
accommodation arties by allo%ing t#em to &se
t#eir olicies$ for t#e &rose of enabling t#e t%o
so&ses to b&y &nits in t#e s&bdivision. ,#e )M73C
%o&ld t#en allo% t#em to b&y &nits after t#e 5-/-
aroved t#e loan alications of t#eir roxies.
,#e t%o so&ses t#en resented t#e 5-/- olicies
of 9rnesto Casidsid 0for 4aets1 and 9dna =im 0for
'itras1 and aid )7M3C )@2$"C@ and )2Ak$
resectively. 3o%ever$ t#e loan alications of
Casidsid and =im %ere disaroved by 5-/-$ t#&s
romting )M73C to inform etitioners to look for
ot#er so&rces of financing. B&t in t#e meantime$
t#ey %ere allo%ed to occ&y t#e &nits initially
granted to t#em.
2n ;ovember 10$ 1(!!$ for fail&re of t#e
etitioners to look for alternative so&rces of
financing$ )M73C ordered t#em to vacate t#e
remises. ,#e so&ses #o%ever ref&sed to #eed
t#e order. An e=e*tment *ae %as t#en filed
against t#em before t#e ',C 'eyca&ayan$ %#ic#$
in its decision dated 'ay 2D$ 1((1$ ordered t#em
to vacate t#e remises.
2n t#e ot#er #and$ a comlaint for eta'a %as
filed against 5at&s. ,#e comlaint %as #o%ever
dismissed on t#e gro&nd t#at 5at&s never
reresented #erself to be t#e agent of )M73C.
,#e so&ses filed anot#er comlaint before t#e
4,C 'alolos for t#e re*o)er7 o' t1e
u..-ementa- *ot t#ey #ad aid )M73C. ,#is
%as #o%ever dismissed by t#e 4,C on t#e gro&nd
of lack of j&risdiction. Anot#er case %as t#en filed
to t#e 3=84B in 1((1 O a *om.-aint 'or .e*i'i*
.er'orman*e and dama4e against 5at&s and
)M73C.
,#e Arbiter t#en r&led in favor of t#e so&ses and
ordered t#em to reimb&rse t#e amo&nts aid by
t#e so&ses to t#em. ,#e Arbiter also fo&nd t#at
5at&s %as an agent of )M73C. 2n aeal$ t#e
Board Commissioner r&led t#at t#e case #as
already been decided by t#e ejectment case in t#e
',C. 8on elevation to t#e Office of the
President$ it s&stained t#e decision of t#e Arbiter.
B&t on aeal to t#e CA$ t#e case %as dismissed
%it#o&t rej&dice to t#eir rig#t to roceed against
5at&s.
/--89. :2; 5at&s %as an agent of )M73C.
39=7. ;o. 5at&s %as not t#e agent of rivate
resondent )M73C. ,#e dismissal of t#e criminal
case for estafa against 5at&s roves t#at s#e is not
an agent of )M73C$ esecially since it %as fo&nd
t#erein t#at s#e never reresented #erself to be an
agent of )M73C.
'oreover$ Art. 1!AD of t#e Civil Code reG&ires for
t#e validity of a sale involving land t#at t#e agent
s#o&ld #ave an a&t#ori6ation in %riting$ %#ic#
5at&s did not ossess. )etitioners kne% from t#e
beginning t#at 5at&s %as negotiating %it# t#em in
#er o%n be#alf$ and not as an agent of rivate
resondent )M73C. ,#ere is$ t#erefore$ no basis in
fact for t#e finding of t#e 3o&sing and =and 8se
Arbiter t#at 5at&s %as t#e agent of rivate
resondent )M73C %it# resect to t#e transactions
in G&estion.
X/n t#is case$ t#e -C also said t#at t#ere %ere no
erfected contracts of sale$ since t#e &rc#ase
rice and t#e ayment sc#emes #ave not been
agreed &on. At most$ t#ere %as only a roosed
contract to sell.
6imene5 ). !a8ot (6ANCES)
Cit7FLite !ea-t7 Cor.. ). CA (6ILL)
+ebr&ary 10$ 2000
*. Bellosillo
+AC,-. 4esondent +) 3oldings %as selling its
land$ also kno%n as t#e Miolago )roerty 0itFs a
s&bdivision in HC no%1$ to t#e general &blic via
sales broc#&res. /ts agent$ 'eldin 4oyL'etro 7r&g
transacted %it# City?=ite for t#e sale of t#e front
ortion of t#e land$ rovided t#at City?=ite %o&ld
&t into %riting its accetance %it# t#e terms and
conditions. After City?=ite conveyed t#eir
agreement into %riting$ +) 3oldings ref&sed to
exec&te t#e corresonding 7eed of -ale$
romting City?=ite to register an adverse claim in
t#e ,itle. +) 3oldings t#en filed a )etition for t#e
cancellation of t#e adverse claim %it# t#e 4,C HC
b&t t#is %as dismissed by a finding t#at t#ere is
s&fficient gro&nd for t#e adverse claim.
City?=ite no% s&ed +) 3oldings for secific
erformance 0exec&tion of 7eed of -ale1. )ending
t#is case$ +) 3oldings transferred t#e roerty to
Mie% 'aster$ forcing City?=ite to again annotate a
notice of lis pendens over t#e ne% ,itle of Mie%
'aster.
,#e trial co&rt rendered a decision favorable to
City?=ite$ b&t t#is %as reversed by t#e Co&rt of
Aeals on t#e gro&nd t#at t#ere %as no erfected
contract of sale since t#ere %as no definite
agreement as to t#e manner of ayment.
2D
/--89. :2; a contract of sale %as erfected< ;2.
4A,/2. 8nder Art. 1!AD$ %#en a sale of a iece of
land or any interest t#erein is made by an agent$
t#e a&t#ority of t#e latter m&st be made in %ritingE
ot#er%ise$ t#e sale s#all be void. 3ere$ t#e
a&t#ority of 'eldin 4oyL'etro 7r&g %as j&st
establis#ed by testimonies and evidences. 011
admissions of 4oyL'etro 7r&gE 021 sales broc#&re
secifying 4oy to be a contact ersonE 0c1 t#e
g&ard at t#e roerty saying 4oyL'etro 7r&g are
a&t#ori6ed agentsE and 0d1 common kno%ledge
among brokers. 4oyL'etro 7r&g t#erefore %as
merely a contact erson.
'oreover$ t#e )resident of +) 3oldings$ in a
memorand&m$ merely reG&ested 'etro 7r&gFs
'assistance in referrin# to us buyers for the
property. *lease proceed to hold preliminary
ne#otiations with interested buyers and endorse
formal offers to us for final evaluation and
appraisal.( ,#is only meant t#at t#e task of
4oyL'etro 7r&g %as to look for b&yers$ b&t t#e
final eval&ation of t#e offers s#all be made only by
+) 3oldings. /n t#is case$ t#e transaction %as
finali6ed only by 4oy. 2t#er testimonies even said
t#at 4oyL'etro 7r&g %as a mere broker %#ose task
is to bring arties toget#er for a ossible
transaction. 5iven t#ese circ&mstances$ t#e sale is
declared n&ll and void$ %it# no legal effects.
F. Arti*-e #$CB> "1e
Genera- !u-e
Art. 1!AC. Agency is res&med to be for a
comensation$ &nless t#ere is roof to t#e
contrary.
#. E0*e.tion
2. 91en i an a4ent entit-ed to
*om.enation> Genera- ru-e
@. 2eaure o' *om.enation> Genera-
!u-e
A. &ou8-e A4en*7> Genera- !u-e
B. Cae
2edrano ) Court o' A..ea- 059;1
+eb. 1!$ 200C
Callejo$ -r.$ *.
FAC"S> Bienvenido 'edrano$ t#e Mice?C#airman of
/baan of 4&ral Bank o%ned by t#e 'edrano family$
asked 9stela +lor$ a co&sin?in?la%$ to look for a
b&yer of a foreclosed asset of t#e bank.
,#e roerty %as a 1A?#a mango lantation
0)2.2'1 located in /baan$ Batangas.
+lor advised )acita Borbon$ a licensed real estate
broker$ t#at 'edrano o%ned a mango lantation
%#ic# %as & for sale. Borbon told +lor to confer
%it# 'edrano and to give t#em a %ritten a&t#ority
to negotiate t#e sale of roerty to 7ominador =ee$
a client of Borbon.
/n t#e a&t#ority given by 'edrano to Borbon it
stated t#at.
'+or your labor and effort in findin# a purchaser
thereof, , hereby bind myself to pay you a
commission of -. of the total purchase price to be
a#reed upon by the buyer and seller.(
4esondents +lor$ Borbon and *osefina Antonio
arranged for an oc&lar insection of t#e roerty
toget#er %it# =ee %#ic# never materiali6ed.
/nstead$ =ee %as instr&cted to get in to&c# %it#
'edranoFs da&g#ter$ ,eresa 5an6on$ regarding t#e
roerty.
Antonio called =ee to make a follo%?& of t#e
latterFs visit to t#e roerty. =ee informed #er t#at
#e already &rc#ased t#e roerty and #ad made a
do%n ayment of )1'. ,#e remaining balance %as
to be aid &on aroval of t#e incororation
aers. =ee f&rt#er %as s&rrised t#at t#e
resondents #ad not yet received t#eir
commission.
A deed of sale %as exec&ted. -ince its
cons&mmation$ resondents asked from t#e
etitioners for t#eir commission or CN of t#e
&rc#ase rice. ,#e etitioners ref&sed to ay and
offered a measly s&m of )C$000 eac#. 3ence$ t#e
resondents filed an action against etitioners.
,#e trial co&rt r&led in favor of t#e resondents.
,#e etitioners %ere ordered to ay jointly and
severally t#e CN brokerFs commission to t#e
resondents. /t r&led t#at t#e sale of t#e roerty
co&ld not #ave been ossible %it#o&t t#e
reresentation and intervention of t#e
resondents.
,#e Co&rt of Aeals affirmed t#e decision of t#e
trial co&rt.
ISSUE> :2; t#e resondents are entitled to t#eir
commission
,EL&. >9-. 4esondents %ere instr&mental in t#e
sale of t#e roerty to =ee. :it#o&t t#eir
intervention$ no sale co&ld #ave been
cons&mmated.
,#e resondents %ere t#e only ones %#o kne%
abo&t t#e roerty for sale and %ere resonsible in
leading a b&yer to its cons&mmation. All t#ese
circ&mstances lead to t#e inescaable concl&sion
t#at t#e resondents %ere t#e roc&ring ca&se of
t#e sale.
:#en t#ere is a close$ roximate and ca&sal
connection bet%een t#e brokerFs efforts and t#e
2C
rincialFs sale of #is roerty$ t#e broker is
entitled to a commission.
'oreover$ desite t#e lack of articiation in t#e
negotiations as reG&ired in t#e letter of a&t#ority$
resondents are still entitled to t#eir commission.
,#e clear intention is to re%ard t#e resondents for
roc&ring a b&yer for t#e roerty. Before
negotiating a sale$ a broker m&st first bring in a
rosective b&yer. A bro&er earns his pay by
merely brin#in# the buyer and the seller to#ether
even if no sale is eventually made. ,#e essential
feat&re of a brokerFs conventional emloyment is
merely to roc&re a &rc#aser for a roerty
ready$ able$ and %illing to b&y at t#e rice and on
t#e terms m&t&ally agreed &on by t#e o%ner and
t#e &rc#aser. And it is not a rereG&isite to t#e
rig#t to comensation t#at t#e broker cond&ct t#e
negotiations bet%een t#e arties after t#ey #ave
been bro&g#t into contact %it# eac# ot#er t#ro&g#
#is efforts.
Note>
Broker O one %#o is engaged$ for ot#ers$ on a
commission negotiating contracts relative to
roerty %it# t#e c&stody of %#ic# #e #as no
concernE t#e negotiatior bet%een ot#er arties$
never acting in #is o%n name b&t in t#e name of
t#ose %#o emloyed #imE #e is strictly a
middleman and for some &roses t#e agent of
bot# arties.
Nationa- /re?er7 + A--ied Indutrie La8or
Union ). San 2i4ue- /re?er7 In*. (2AI)
7ecember 2A$ 1("@
Ba&tista Angelo$ *.
+acts. ,#e ;ational Bre%ery and Allied /nd&stries
=abor 8nion of t#e )#iliines 0)A+=81filed before
t#e Co&rt of +irst /nstance of 'anila against t#e
-an 'ig&el Bre%ery$ /nc. a comlaint alleging t#at.
as er t#eir CBA$ -an 'ig&el agreed to ay t#e
basic daily rates of t#ose %orkers %it#in t#e
bargaining &nit %#o may articiate in t#e =abor
7ay arade #eld on 'ay 1st of every year.
3o%ever$ said comany ref&sed to ay t#e basic
%ages for t#e day of t#e &nion members %#o
articiated in t#e arade. ,#e comlaint rayed
for t#e ayment of t#e %ages of t#ose &nion
members$ and damages.
,#e comany in its ans%er set & secial and
affirmative defenses. Among t#e latter$ t#e
comany alleged t#at 0a1 t#e &nion #as no ca&se of
action against t#e comany$ and 0b1 t#e co&rt #as
no j&risdiction over t#e s&bject matter of t#e
action. :it# resect to t#e first gro&nd$ t#e
comany contends t#at t#e &nion is not t#e real
arty in interest b&t t#e individ&al members %#ose
rig#t to recover t#e one dayKs %age is ersonal to
t#em.
/ss&e. :#et#er or not t#e &nion can file t#e action
in be#alf of its members
3eld. >9-.
,#e comlaint filed by t#e &nion comes &nder t#e
j&risdiction of t#e co&rt a G&o for t#e same is based
&on t#e collective bargaining agreement
concl&ded bet%een t#e &nion and t#e comany
and t#e basis of t#e rig#t %#ic# is so&g#t to be
enforced is t#e agreement itself and not t#e %ages
to be collected.
,#e %ages accr&ed mainly on t#e strengt# of an
agreement entered into bet%een t#e &nion and t#e
comany. ,#e action t#en may be bro&g#t in t#e
name of t#e &nion t#at #as obliged itself to sec&re
t#ose %ages for t#ese members. ,#e &nion is t#e
arty %it# %#om or in %#ose name t#e collective
bargaining agreement in G&estion #as been
entered into for t#e benefit of its members and$ in
line %it# t#e above r&le$ t#e &nion may s&e
t#ereon %it#o&t joining t#e members for %#ose
benefit t#e action #as been resented.
7isosition. Case remanded for f&rt#er
roceedings.
2a*ondra7 ). Se--ner (!(G)
+eb. 2$ 1(1"
*. Carson

Fa*t> -ellner$ a real estate broker$ sold land to
'acondray. +ormal deed of sale not exec&ted &ntil
delivery of a ,orrens title. /n t#e meantime$ land
%as flooded by #ig# tides and 'acondray became
#ig#ly dissatisfied %it# its &rc#ase. :#en final
transfer %as made comany informed -ellner t#at
land as %#olly &ns&ited for &se as a coal?yard$ for
%#ic# it #ad been bo&g#t and reG&ested #im to
find anot#er &rc#aser. Bot# arties #ad an
&nderstanding t#at -ellner %as to #ave as
commission for getting a &rc#aser anyt#ing over
amo&nt %#ic# #e co&ld get.

-ellner fo&nd anot#er b&yer Barretto. A formal
deed of sale %as exec&ted toget#er %it# ,orrens
%#ic# %as delivered to -ellner by Comany.
Barretto agreed to accet land if &on
examination$ title and deed be satisfactory. -ellner
retained t#e ,orrents title b&t left deed of sale %it#
Barretto %it# &nderstanding t#at if bot# %ere
satisfactory$ latter %o&ld j&st iss&ed c#eck to
former. A fe% days later Barretto %as detained by
ty#oon on #is %ay to ,ayabas so #is ret&rn %as
delayed. 7&ring #is absence$ comany advised
-ellner t#at latter m&st cons&mmate sale and
collect money %it#o&t delay &on BarrettoKs ret&rn.
All t#e %#ile comany ket asking -ellner to seed
& in closing t#e deal b&t Barretto co&ld not
immediately do so co6 #e %as indisosed from #is
tri. Barretto arrived -at&rday and romised #eKd
2"
get to c#ecking t#e docs in a day or t%o. By
'onday$ Comany gave an &ltimat&m.

?>o&ng$ ComanyKs general manager t#en formally
notified -ellner t#at &nless &rc#ase rice %as aid
before Cm of t#at afternoon deal %as off. Barretto
t#en asked -ellner to t&rn over t#e ,orrens title
%#ic# latter did b&t latter %o&ld only receive t#e
c#eck @"#rs later$ :ednesday morning. 8on
receit of c#eck$ -ellner immediately tendered to
Co b&t CoKs manager ref&sed to accet and filed
t#is action claiming t#at sale #ad been IcancelledI
&on fail&re of -elner to t&rn over rice.

Iue> :2; sale be cancelled on gro&nd of late
delivery of &rc#ase rice< ;2
:2; 'acondray entitled to damages from real
estate broker -ellner< ;2
,e-d>
CourtG .re-iminarie>
?;o reason given by Comany for delivery of rice
at certain #o&r ot#er t#an t#at manager #ad been
annoyed by delays or c#anged mind abo&t selling
beca&se #e fo&nd a better deal or land %ort# more
t#an #e offered.

?As to val&e of land??no real diff act&al and tr&e
market val&e of land. :itness Comany rovided
%as of a rival real estate broker$ %#o #ad never
been on t#e land b&t claimed familiarity %it#
general location. -&c# %itness ins&fficient to
establis# s&c# fact. /t may be t#at land #as
sec&lative val&e #ig#er t#an act&al market val&e
at time of sale b&t t#e G&estion of fact r&led &on
is t#e act&al market val&e at time of sale and ;2,
sec&lative val&e.
?'arket val&e [ rice %#ic# roerty %ill bring in
a fair?market after fair and reasonable efforts #ave
been made to find a &rc#aser %#o %ill give t#e
#ig#est rice for it.

2. 2a*ondra7 no *aue o' a*tion to 'i-e 'or
dama4e ) Se--ner it rea- etate a4ent.
?'eas&re of damages recoverable from real estate
agent [ act&al market val&e of roerty$ title to
%#ic# #ad been lost as a res&lt of t#e sale. ,#is is
damages %#ic# comany #as a rig#t to s#o&ld #e
c#oose to ratify sale and reco& from agent any
loss res&lting from latterKs alleged &na&t#ori6ed
cons&mmation of t#e sale.

?Comany still liable to real estate agent in event
t#at former terminate negotiations$ for t#e amo&nt
of commission$ %#ic# former agreed to ay latter
&on #is agency contract. 'arket val&e of land [
1!k of t#is comany received 1Ak leaving a bal of
1$A1A &naid. ,#e commission agreed &on %as all
over 1Ak %#ic# -ellner %o&ld sec&re from
roerty???allo%ing -ellner t#is commission$ and
offsetting it against t#e &naid balance$ 'acondray
not entitled to money j&dgment against -ellner.

?At t#e time fixed by manager of Co for t#e
termination of t#e negotiations$ -ellner #ad already
earned t#e commissions agreed &on$ and co&ld
not be derived t#ereof by arbitrary action of Co in
declining to exec&te t#e contract of sale for some
reason ersonal to itself.
@. !ea- etate a4ent a-read7 entit-ed to
*ommiion at moment 1e 'ind a 8u7er
?i--in4 to ta:e t1e .ro.ert7.
F,#e b&siness of a real estate broker or agent is
generally only to find a &rc#aser$ and 48=9 /- in
absence of an exress contract bet%een broker
and #is rincial$ t#e imlication generally is t#at
t#e broker becomes entitled to t#e &s&al
commissions %#enever #e brings to #is rincial a
arty %#o is able and %illing to take t#e roerty
and enter into a valid contract &on t#e terms t#en
named by t#e rincial alt#o&g# t#e artic&lars
may be arranged and matter negotiated and
comleted bet%een t#e rincial and t#e
&rc#aser directly.
A. !i41t o' rea- etate 8ro:er 1ou-d 8e
.rote*ted 'rom ar8itrar7 re)o*ation o'
a4en*7 ?it1out remuneration 'or 1i er)i*e
rendered in 'indin4 a 8u7er prior to
revocation.
?/t %o&ld be inj&stice to ermit rincial to
%it#dra% a&t#ority after efforts made by agent in
finding a b&yer after rincial reas t#e benefit of
t#e agentKs labors. ,#is %o&ld make t#e contract
an &nconscionable one %o&ld offer a remi&m for
fra&d by enabling one of t#e arties to take
advantage of #is o%n %rong.
B. 2a*ondra7 *annot *an*e- or re*ind
a4reement 'or a-e on o-e 4round t1at .ri*e
not .aid at 1our dei4nated in -etter.
Comany co&ld not validly terminate negotiations
at t#e time and t#en decline to sell land to
Barretto$ %#o #ad acceted offer of sale$ s&bject
only to examination of docs of title and stood ready
to ay rice &on delivery of deed of sale and
ot#er necessary docs of title.

F,ime does not aear to be t#e essence of t#e
contract. ,#e agreement to sell %as made %it#o&t
any exress sti&lation as to time %it#in %#ic#
&rc#ase rice %as to be aid$ excet t#at
&rc#aser reserved rig#t to examine docs of title
before aying$ t#o&g# it %as &nderstood t#at sale
%as for cas# &on delivery of docs of title exec&ted
in d&e form.

?:#ile seller #as rig#t to co&le agreement %it#
sti&lation to ay at certain day #o&r min&te 3949
t#ere %as no s&c# sti&lation. ,ime may be and
often t#e essence of contract b&t absence of
sti&lation #ere s#o%s t#at intention of arties %as
to allo% reasonable time for examination of docs so
2A
vendor canFt no% arbitrarily demand ayment at
secified time.

?/; absence of sti&lation$ it %ill be imlied t#at
time to ay [ reasonable time deendent on
circ&mstances of case. ?t#is r&le also alies to
time %it#in %#ic# any condition recedent is to be
erformed$ or %it#in %#ic# contingency &on
%#ic# transaction deends is to #aen and to
erformance of vario&s acts by arties to recede
conveyance or ayment.
Lim ). Sa8an ("(FF)
Pere5 de "a4-e ). Lu5on Suret7 (!EG)
Hui=ano ). E4uerra (A//Y)
62 "uaon ). Co--e*tor o' Interna- !e)enue
(EA!LA)
*&ne @0$ 1("0
=abrador$ *.
+acts. *' ,&ason and Marsity 3ills$ /nc.$ as o%ner of
C arcels of land entered into a contract %#ereby it
ceded t#e said lands to *' ,&ason for t#e &rose
of #aving it s&rveyed$ latted$ mon&mented$ and
ot#er%ise develoed into a s&bdivision. Aside from
t#e c&stomary brokerFs d&ties 0recommending
sales rices of lots 0-ec. @1$ signing contracts of
sale or lease$ or contracts to sell$ releases of
mortgage 0-ec. D1$ collecting sales rices or ot#er
acco&nts d&e t#e 2%ner 0-ec. A1$ organi6ing offices
and ersonnel to attend to t#e %ork relating to all
t#e above 0-ec. !11$ it %as also tasked to &ndertake
t#e laying o&t of arks$ laygro&nds$ t#e
constr&ction of streets$ c&lverts$ avements$
se%age system$ drainage$ t#e installation of
&tilities. As ayment for its service$ it %as
sti&lated t#at it s#all be given !N administration
fee$ in addition to t#e 10N commission it is entitled
to. As a res&lt of t#is transaction$ t#e Collector of
/nternal 4even&e assessed against t#e etitioner
t#e brokerKs tax on t#e ! er cent received by t#e
latter as Iadministration feeI in t#e amo&nt of
)!$A2D.!D$ reresenting t#e brokerKs ercentage
tax and s&rc#arge t#ereon. /t aid t#e amo&nt
&nder rotest$ and immediately so&g#t ref&nd of
t#e said amo&nt. ,#e C/4 #o%ever$ denied its
reG&est$ %#ic# %as affirmed by t#e C,A. ,#e C,A
ratiocinated t#at t#e restation is indivisible$
#ence$ t#e administration fee given to *' ,&ason is
only art of t#e %#ole transaction ? t#at t#e
activities of t#e etitioner of s&bdividing t#e
roerty or collecting acco&nts$ %#ic# etitioner
denominated \acts of administrationK are not in
fact detac#ed$ distinct$ nor transcendental to t#e
brokerage relations#i created by aforesaid
contract$ b&t rat#er acts %#ic# are merely
incidental to t#e rimary &rose for %#ic# t#e
agreement %as entered into.
/--89. :2; it is entitled to a tax ref&nd.
39=7. ;2.
,#e so?called administration fee corresonds to t#e
incidental d&ties of a broker in t#e sale of real
roerty. ,#e only d&ty t#at is searate and
distinct from t#at of a broker is t#e obligation to
b&ild roads$ arks$ se%age system$ etc. B&t all t#e
ot#ers are necessary arts of t#e %ork of a broker.
A broker engaged in t#e sale of real estate is not
limited to bringing vendor and vendee toget#er
and arranging t#e terms and conditions of a sale of
real estate. As sales of real estate m&st be in
%riting t#e rearation of t#e doc&ments is art of
t#e f&nctions of t#e broker. -o t#e only f&nction
entr&sted to etitioner &nder t#e contract %#ic#
may not be embraced in t#ose of a broker$ is t#at
of constr&cting t#e s&bdivision$ as above exlained
and detailed o&t. /t follo%s$ t#erefore$ t#at t#e
arties #ave agreed on giving comensation
denominated administration fees for services %#ic#
may %ell be incl&ded in t#e d&ties of a broker. B&t
t#e d&ty of develoing t#e s&bdivision$ %it# its lots$
streets$ laygro&nds$ se%age$ etc. is also a
necessary incident to t#e d&ty of selling t#e lands
s&bject of t#e contract. ,#e lands m&st be
s&bdivided into residential lots$ %it# streets laid
o&t$ before said lots can be sold. And %#ile t#is
%ork may be entr&sted to anot#er$ t#e arties
#ave seen fit to #ave t#e same entr&sted to t#e
etitioner.
'oreover$ alt#o&g# *' ,&ason may be regarded as
a contractor$ insofar as t#e b&ildings of
infrastr&ct&res is concerned$ it failed #o%ever to
s#o% %#ic# ortion of t#e administration fee is
secifically designated for s&c# service.
Peo.-e ) Cati--o (6ANCES)
*&ne 1"$ 2000
*. )ardo
+acts. ,#e victim engaged in real estate b&siness.
,#e so&ses Castillo %ere bot# #er sales agents on
commission basis. )rior to #er kidnaing$ a
certain Albert 5&tierre6 called and reresented
t#at #e %as interested in b&ying a roerty sold by
t#e victim. ,#e so&ses Castillo %ere t#e ones %#o
referred t#e roerty to 'r. 5&tierre6. :#en t#e
victim met %it# Albert 5&tierre6$ s#e fo&nd o&t
t#at it %as really 'alaayon. -#e %as bro&g#t to a
safe #o&se$ %ere 5on6ales %as t#e one %#o
%atc#ed over #er and #eld #er cative at g&noint.
,#e so&ses Castillo also %ent to t#e safe #o&se
and %ere able to %alk t#e remises freely.
,C. 'alaayon and 5on6ales g&ilty of illegal
ossession of fire arms. A== g&ilty of kidnaing
%it# ransom.
2nly t#e so&ses Castillo$ Abello and 5on6ales
aealed.
2!
/ss&e. :2; acc&sed?aellants articiated as
consirators
39=7. ,#e so&ses Castillo %ere consirators.
'ercedita %as t#e one %#o referred 'alaayon to
t#e victim. 3o%ever$ 'alaayon never mentioned
t#at #e %as referred by t#e Castillos$ %#ic# is
s&sicio&s as it is common ractice for a b&yer to
inform t#e seller %#o referred #im. Also$ t#e
Castillos being agents %orking on commission$
s#o&ld #ave also informed t#eir rincial of t#e
referral$ t#em #aving to gain &on s&c# referral
s#o&ld t#e b&yer roceed %it# t#e acG&isition.
=astly$ bot# Castillos %ere able to freely enter and
exit t#e safe #o&se.
:it# regard to Abello$ #is exlanation t#at #e %as
t#ere to do a ainting job is tenable. 'alaayon
confirmed t#is by stating t#at at t#at time #e #ired
#elers to aint t#e aartment. ,#is defense %as
also not reb&tted by t#e rosec&tion.
Concerning 5on6ales$ #is defense t#at #e too %as
#ired to do a ainting job cannot give %ay to #is
acG&ittal. 3e %as t#e one %#o g&arded t#e victim.
By doing so$ #e conc&rred %it# t#e criminal design
of t#e rincials and erformed an act
indisensable to t#e crimeFs commission.
7isosition. aeals of so&ses Castillo and
5on6ales denied. Abello acG&itted.
In-and !ea-t7 In)etment ). CA (ALAIN)
*&ne ($ 1((A
3ermosisisima$ *r.$ *..
FAC"S> 2n -etember 1"$ 1(AC$ defendant
cororation 0Araneta$ /nc.1 t#r& its co?defendant
Asst. 5en. 'gr. 9d&G&e$ granted to /nland 4ealty
/nvestment -ervice$ /nc. 0/nland1 reresented by
one 4oman de los 4eyes 0entitled to ] of t#e claim
asserted %#ic# is CN brokerFs commission1 a @0?
day a&t#ority to sell its s#ares stock in anot#er
cororation.
/nland %as able to find a rosective b&yer$ t#e
-tanford 'icrosystems$ /nc.$ b&t t#e offer of said
b&yer %as rejected by Araneta$ /nc. ,#&s$ /nland
looked for ot#er b&yers and fo&nd t%o more
rosective ones.
,#e a&t#ority %as extended several times. first on
2ct. 2$ 1(AC$ for @0 days from t#e said date$ t#e
second on 2ct. 2!$ 1(AC for @0 days from said
date$ and on 7ec. 2$ 1(AC for @0 days from t#e said
date.
2n *&ly !$ 1(AA or 1 year and C mont#s after t#e
last extension granted to /nland$ t#e s#ares of
stock %ere finally sold to -tandford 'icrosystems$
/nc.
,#&s$ /nland and de los 4eyes formally demanded
t#eir CN brokerFs commission$ %#ic# %as denied
by Araneta$ /nc. on t#e gro&nd t#at t#e claim #as
no fact&al or legal basis.
/nland and de los 4eyes claimed t#at a letter dated
2ctober 2!$ 1(A" %as signed by Araneta //$
rene%ing t#eir a&t#ority to act as sales agent for a
eriod of @0 days from said date. ,#ey also
asserted t#at a broker is a&tomatically entitled to
t#e sti&lated commission merely &on sec&ring
for$ and introd&cing to$ t#e seller t#e artic&lar
b&yer %#o &ltimately &rc#ases from t#e former
t#e object of t#e sales$ regardless of t#e exiration
of t#e brokerFs contact of agency and a&t#ority to
sell.
,rial co&rt and CA r&led in favor of Araneta$ /nc.
ISSUE> :L; /nland and de los 4eyes are entitled to
t#e brokerFs commission. N(.
!A"I(>
1. ,#e alleged letter extending t#e a&t#ority @0
more days from 2ctober 2!$ 1(A" is a blatant lie.
/nland and de los 4eyes failed to attac# a certified
coy of t#is letter. ,#&s$ t#eir contract already
exired t#irty days from its last rene%al on
7ecember 2$ 1(AC.
2. 2n t#e claim of a&tomatic brokerFs
commission$ t#is is devoid of merit. +rom
-etember 1"$ 1(AC to *an&ary 1$ 1(A"$ %#en
/nlandFs a&t#ority to sell %as s&bsisting$ if at all$
etitioners #ad not#ing to s#o% t#at t#ey actively
served t#eir rincialFs interests$ &rs&ed to sell
t#e s#ares in accordance %it# t#eir rincialFs
terms and conditions$ and erformed s&bstantial
acts t#at roximately and ca&satively led to t#e
cons&mmation of t#e sale to -tanford of Araneta$
/nc.Fs s#ares.
&anon ). /rimo (2A!K)
-et. 12$ 1(21
*. *o#nson
FAC"S>
7efendant Antonio A. Brimo$ in a conversation
%it# t#e laintiff *&lio 7anon$ informed t#e
latter t#at #e 0Brimo1 desired to sell #is factory$
t#e 3olland American 2il Co.$ for t#e s&m of
)1$200$000. 3e agreed and romised to ay to
t#e laintiff a commission of C er cent
rovided t#e latter finds a b&yer t#at %ill b&y
said factory for t#e said amo&nt.
;o definite eriod of time %as fixed %it#in
%#ic# t#e laintiff s#o&ld effect t#e sale. ,#ere
%as like%ise anot#er broker 0-ellner1 %#o %as
negotiating t#e sale of said roerty.
-ellner$ t#e ot#er broker referred to$ #ad fo&nd
a &rc#aser %#o &ltimately bo&g#t t#e factory
for )1$@00$000. +or t#at reason 'r. )rieto$ t#e
2(
%o&ld be &rc#aser fo&nd by t#e laintiff$
never came to see 'r. Brimo to erfect t#e
roosed negotiation.
7anon filed an action to recover t#e s&m of
)"0$000$ alleged to be t#e val&e of services
rendered by #im$ as broker$ to t#e defendant.
ISSUES :2; 7anon is entitled to t#e commission
agreed &on. ;2.
!A"I(NALE
)laintiff is not entitled to t#e commission.,#e
most t#at can be said as to %#at t#e laintiff
#ad accomlis#ed is$ t#at #e #ad fo&nd a
erson who mi#ht have bou#ht t#e defendantKs
factory if t#e defendant #ad not sold it to
someone else. ,#e evidence does not s#o%
t#at t#e -anta Ana 2il 'ill #ad definitely
decided to b&y t#e roerty in G&estion at t#e
fixed rice of )1$200$000. ,#e board of
directors of said cororation #ad not resolved
to &rc#ase said roertyE and even if its
resident co&ld legally make t#e &rc#ase
%it#o&t revio&s formal a&t#ori6ation of t#e
board of directors$ yet said resident does not
retend t#at #e #ad definitely and formally
agreed to b&y t#e factory in G&estion on be#alf
of #is cororation at t#e rice stated.
/t is &ndis&ted t#at laintiffs services did not
any %ay contrib&te to%ards bringing abo&t t#e
sale of t#e factory in G&estion. 3e %as not It#e
efficient agent or t#e roc&ring ca&se of t#e
sale.I
Si88a-d ) /et-e1em Iron Co O
o ,#e d&ty ass&med by t#e broker is to
bring t#e minds of t#e b&yer and seller
to an agreement for a sale$ and t#e
rice and terms on %#ic# it is to be
made$ and &ntil t#at is done #is rig#t to
commissions does not accr&e.
o /t follo%s$ as a necessary ded&ction
from t#e establis#ed r&le$ t#at a broker
is never entitled to commissions for
&ns&ccessf&l efforts. ,#e risk of a
fail&re is %#olly #is. ,#e re%ard comes
only %it# #is s&ccess. ,#e broker may
devote #is time and labor$ and exend
#is money %it# ever so m&c# of
devotion to t#e interest of #is
emloyer$ and yet if #e fails$ if %it#o&t
effecting an agreement or
accomlis#ing a bargain$ #e abandons
t#e effort$ or #is a&t#ority is fairly and
in good fait# terminated$ #e gains no
rig#t to commissions. 3e loses t#e
labor and effort %#ic# %as staked &on
s&ccess. And in s&c# event it matters
not t#at after #is fail&re$ and t#e
termination of #is agency$ %#at #e #as
done roves of &se and benefit to t#e
rincial.
o ,#e r&le #o%ever m&st be taken %it#
one imortant and necessary
limitation. /f t#e efforts of t#e broker
are rendered a fail&re by t#e fa&lt of
t#e emloyerE if caricio&sly #e
c#anges #is mind after t#e &rc#aser$
ready and %illing$ and consenting to
t#e rescribed terms$ is rod&cedE or if
t#e latter declines to comlete t#e
contract beca&se of some defect of
title in t#e o%ners#i of t#e seller$
some &nremoved inc&mbrance$ some
defect %#ic# is t#e fa&lt of t#e latter$
t#en t#e broker does not lose #is
commissions. And t#at &on t#e
familiar rincile t#at no one can avail
#imself of t#e nonerformance of a
condition recedent$ %#o #as #imself
occasioned its nonerformance. ,#is
limitation is not an eception to t#e
general r&le affecting t#e brokerKs rig#t
for it goes on t#e gro&nd t#at t#e
broker #as done #is d&ty$ t#at #e #as
bro&g#t b&yer and seller to an
agreement$ b&t t#at t#e contract is not
cons&mmated and fails t#o&g# t#e
after?fa&lt of t#e seller.
o ;2 -,/)8=A,97 )94/27. :#ere no
time for t#e contin&ance of t#e
contract is fixed by its terms eit#er
arty is at liberty to terminate it at %ill$
s&bject only to t#e ordinary
reG&irements of good fait#. 8s&ally t#e
broker is entitled to a fair and
reasonable oort&nity to erform #is
obligation$ s&bject of co&rse to t#e
rig#t of t#e seller to sell indeendently.
B&t #aving been granted #im$ t#e rig#t
of t#e rincial to terminate #is
a&t#ority is absol&te and &nrestricted$
excet only t#at #e may not do it in
bad fait#$ and as a mere device to
escae t#e ayment of t#e brokerKs
commissions.
Alt#o&g# 7anon co&ld robably #ave effected
t#e sale of t#e defendantKs factory #ad not t#e
defendant sold it to someone else$ #e is not
entitled to t#e commissions agreed &on
beca&se #e #ad no intervention %#atever t#e
sale in G&estion. /t m&st be borne in mind t#at
no definite eriod %as fixed by t#e defendant
%it#in %#ic# t#e laintiff mig#t effect t#e sale
of its factory. ;or %as t#e laintiff given by t#e
defendant t#e excl&sive agency of s&c# sale.
,#erefore$ t#e laintiff cannot comlain of t#e
defendantKs cond&ct in selling t#e roerty
t#ro&g# anot#er agent before t#e laintiffKs
efforts %ere cro%ned %it# s&ccess. I2ne %#o
#as emloyed a broker can #imself sell t#e
@0
roerty to a &rc#aser %#om #e #as
roc&red$ %it#o&t any aid from t#e broker.I
Fie4e and /ro?n ) Smit1, /e-- + Co and
Co?.er (GEN)
'arc# A$ 1((2
*o#ns$ *.
FAC"S> Co%er %as an emloyee of -mit#$ Bell P
Co. %#ic# %as engaged in t#e sale of mac#inery
and eG&iment for t#e &se of man&fact&rers of
cocon&t oil.
8nder t#e terms of t#e 3arden Contract$ Co%er
and laintiff +iege %ere entitled to receive #alf of
t#e rofits received from t#e sale of mac#inery to
'r. -c#midt.
=ater$ t#e laintiffs %ere associated %it# Co%er$
and t#ey entered into a contract %it# t#e
Comany. ,#ey %ere to seek to b&yers for t#e
mac#inery %#ic# %ere accetable to t#e Comany
and t#at t#e rices %ere to be fixed by t#e
laintiffs$ as brokers.
/n t#e contract$ it %as sti&lated t#at t#e laintiffs
as brokers %ere to receive one?#alf of t#e
difference bet%een t#e cost of t#e mac#inery and
eG&iment laid do%n in 'anila and t#e rices at
%#ic# t#ey %ere sold to b&yers sec&red by t#e
brokers.
,#e laintiffs %ere able to sec&re orders for
mac#inery and eG&iment$ %#ic# %ere delivered to
and acceted by t#e Comany. ,#e defendant
imorted all of t#e secified mac#inery b&t t#at it
#as failed and ref&sed to make any settlement %it#
t#e laintiffs or to render any acco&nting of t#e
cost of t#e mac#inery$ or to make any ayment$
eit#er in f&ll or on acco&nt$ of t#e services
rendered.
,#e laintiffs allege t#at %#en t#e contracts %ere
signed by t#e Comany %it# t#e b&yers$ t#eir
services %ere comleted and are entitled to
recover )@C$000.
,#e defendants on t#e ot#er #and allege t#at aside
from t#e )2$000 aid by one of t#e b&yers$ no
ot#er ayments #ave been made on t#e resective
contracts by any of t#e ot#er &rc#asers %#ic#
%ere sec&red by t#e laintiffs. 8ntil s&c# ayments
#ave been made$ t#e Comany cannot ascertain
net rofits.
,#e trial co&rt rendered a j&dgment for t#e
laintiffs for )"$C11.1A$ t#e only amo&nt admitted
by t#e defendant as commission for t#e sale of t#e
mac#inery.
ISSUES> :2; t#e laintiffs are entitled to t#eir
comensation
,EL&> ;2. ,#e laintiffs and Co%er and t#e
Comany %ere to divide eG&ally t#e rofits of eac#
contract$ and t#e laintiffs are entitled to one?#alf
of t#e rofits o&t of eac# contract$ and &ntil s&c#
time as t#e comany made a rofit on a given
contract$ laintiffFs commission %as not earned as
to t#at contract.
,#ere %as no rofit t#ro&g# t#e mere signing of
t#e contract by t#e &rc#aser and its accetance
by t#e comany. ,#ere %o&ld not be any rofit
&ntil t#e &rc#aser aid all t#e money and
comlied %it# #is contract. 8ntil s&c# time as t#e
comany reali6ed a rofit on t#e contracts$ t#ere
%as not#ing to s#are or divide.
;o ayment %as tendered before 2ctober 1C$
1(1($ t#e date of t#e filing of t#e comlaint.
!amo ). CA and Ca-ano* (2AI)
Aril 0D$ 1(AC
'akalintal$ C.*.
+acts. +/'C2 entered into several contracts %it#
local merc#ants for t#e resale to t#em of certain
imorted goods. 2ne s&c# contract %as concl&ded
%it# 'rs. -al&stiana 7ee$ or :ellington P Co.$ in
t#e amo&nt of U1$@@@.000.00 or )2$"""$000.00.
Cesario ). Calanoc instit&ted t#is action$ claiming
t#at 9merito '. 4amos of +/'C2 #ad engaged #is
services to roc&re &rc#asers for t#e imorted
goods and t#at #e %as directly instr&mental in
bringing abo&t t#e contracts in G&estion$ and t#&s$
#e %as entitled to t#e agreed commissions of 2N
on t#e contract %it# :ellington P Co. and 1N on
t#ose %it# t#e /nternational 'ercantile Co.
*ose Ang 8co testified t#at #e introd&ced 'rs.
-al&stiana 7ee to Calanoc as a rosective b&yer
of imorted merc#andise. ,oget#er$ t#e t#ree of
t#em %ent to 'r. 4ecto of t#e 9G&itable Bank %#o
exlained to 'rs. 7ee abo&t t#e banking roced&re
involved in t#e transaction. ,#ereafter$ #e and t#e
laintiff Calanoc %ere in freG&ent comm&nication
%it# 'rs. 7ee &ntil t#e latter %ent directly to
4amos and closed t#e contract in G&estion %it#o&t
t#eir resence. 'rs. 7ee #ad agreed to ay #im a
2N commission on t#e transaction.
/ss&e. :#et#er or not Calanoc %as entitled to a
fixed commission
3eld. ;2.
,#e contract bet%een 4amos and Calanoc is G&ite
exlicit. t#e arrangement %as for Calanoc to sell
t#e merc#andise to any b&yer at a mark?& rice of
2@N over t#e invoice val&e of t#e imortation and
any overrice s&ccessf&lly collected above t#e
stated 2@N %o&ld accr&e to Calanoc as #is
commission. ,#e amo&nt of s&c# commission %as
t#erefore fl&id$ deending &on t#e overrice
@1
obtained above t#e 2@N mark?& rice of t#e
invoice val&e set by 4amos.
;ot#ing in t#e agreement g&aranteed Calanoc a
fixed commission$ %#ic# deended &on t#e
overrice t#e b&yer %o&ld ay. And it is a fact$
&ndis&ted by Calanoc t#at %#at 4amos received
in t#e :ellington P Co. transaction in excess of #is
original 2@N mark?& rice %as only )1@$@@0.00
and not )C@$@20.00$ t#e amo&nt claimed and
a%arded by t#e trial co&rt and t#e Co&rt of
Aeals.
:#ile it is tr&e$ as Calanoc claims$ t#at #e informed
etitioner t#at 'rs. 7ee #ad already agreed to ay
t#e 2CN remi&m$ t#ere is absent in t#e records of
t#e case any evidence to s#o% t#at 'rs. 7ee
confirmed s&c# agreement %it# etitioner and t#at
t#e latter co&ld #ave bo&nd #er to it. )etitioner #ad
fixed for #imself a 2@N mark?&$ allo%ing anyt#ing
over t#at amo&nt as commission. /f 'rs. 7ee
c#anged #er mind and ref&sed to ay t#e 2CN
remi&m$ and aid only 2@?1L2N$ t#at %as #er
rerogativeE etitioner #ad neit#er t#e d&ty nor t#e
rig#t to comel #er to contract for more t#an %#at
s#e %as %illing to ay$ %#en s#e %as ready to
meet #is rice.
Pratt ). CA (!(G)
1(A!
Fa*t> ,#is comlaint for s&m of money filed by
)rats$ doing b&siness &nder name of )#iliine
4eal 9state 9xc#ange$ against 7oronila and );B.

7oronila %as registered o%ner of @00#ectares of
land. 3e %rote to --- C#air offering #is roerty to
--- at )D er sG&are meter 0er sGm1. ,#ere %ere
several co&nter offers made as to t#e rice.
7oronilla reG&ested certification from Board of
4ealtor regarding t#e act&al rices of #is real
estate ra%?land roerties. ,#e Board relied t#at
t#e fair market val&e of ra% land is )@?)@.C0 er
sGm. C&rrent rices before reac#ing 7oronillaKs
roerty range from "?A er sGm.

7oronilla granted an excl&sive otion and a&t#ority
to )rats to sell formerKs roerty. Commission %ill
be 10N based on )2.10 er sGm or at any rice
finally agreed &on. 7oronilla asked --- to ret&rn
all aers related to #is roerty in vie% of t#e
excl&sive otion granted to )rats.

--- asked for a meeting %it# 7oronilla b&t latter
asked t#at --- meet %it# )#iliine 4eal 9state
9xc#ange instead beca&se 7oronilla #ad given
excl&sive otion to it. )rats gave notice to 7oronilla
t#at --- #ad agreed to &rc#ase t#e land. ,#e
latter relied t#at #e #ad not received any %ritten
offer from --- d&ring t#e "0day eriod of t#e
excl&sive a&t#ority nor d&ring its extension.

7oronilla %rote to --- rene%ing #is offer to sell
revising #is original offer of )D er sGm to )@.2C.
--- assed a resol&tion ;2. "@" making a co&nter
offer of )#@.2C er sG m s&bject to an araisal of
t#e roerty and to s&bmit a reort t#ereon. After
a favorable araisal reort of t#e ,oles P
3arding --- assed 4es no. A@! aroving
&rc#ase of t#e land for )#@.2C or for total of
)(.Am. 7eed of -ale %as exec&ted. 7oronilla
received t#e f&ll &rc#ase rice. )rats t#en
demanded ayment of #is rofessional fee.

,C. ordered 7oronilla to ay
CA. reversed.

Iue> :2; )rats %as not t#e efficient roc&ring
ca&se in bringing abo&t t#e sale of 7oronilaKs land
to ---< >9-

,e-d>
#. &oroni--aG o''er to e-- -and to SSS ?a
'orma--7 a**e.ted on-7 on 6une #9%$ after
the exclusive authority in favor of Prats had
expired.
,#e CAKs fact&al finding t#at )rats not t#e efficient
roc&ring ca&se in bringing abo&t t#e sale are final.
)rats %as not categorical t#at it %as t#ro&g# #is
efforts t#at t#e meeting bet%een ---
Administrator ,eodoro and 7oronilla took lace. 3e
refers to a #one call #e made a fe% days before
'ay 2($ 1("! b&t in t#e conversation #e #ad %it#
'r. ,eodoro$ t#e latter reG&ested #im ;2, to be
resent in t#e meeting. /t is manifest t#at ---
officials never %anted to be in any %ay g&ided by$
or mediated by )rats relative to t#e negotiation for
&rc#ase of roerty. ,#e meeting %as done
indeendently and not by virt&e of )ratKs efforts.

2. In eIuit7, *ourt note t1at Prat 1ad
di-i4ent-7 ta:en te. to 8rin4 8a*: to4et1er
&oroni--a and SSS and t1ere'ore 4rant 1im
#00: 87 ?a7 o' *om.enation 'or 1i e''ort
and aitan*e in t1e trana*tion. .
Among ot#ers. 3e %rote to t#e 2ffice of
)residential 3o&sing Commission offering t#e land
and %rote a follo% & letter %#ic# %as ans%ered
by Commission s&ggesting t#at roerty be offered
directly to ---.

-ale %as erfected only at t#e rice offered by
7oronila %#en #e alone %as dealing excl&sively
%it# b&yer long before )rats came along b&t )rats
efforts %ere instr&mental in bringing t#em toget#er
again and finally cons&mmating t#e sale alt#o&g#
sale finali6ed after exiration of )ratsK extended
excl&sive a&t#ority.
@2
2anoto: /rot1er ). CA (2A!K)
Aril A$ 1((@
*. Camos$ *r.
**Um Mark ! don"t recall assi#nin# this to
you. $orry%
FAC"S>
)etitoner 'anotok Brot#ers /nc %as t#e o%ner
of a certain arcel of land and b&ilding %#ic#
%ere formerly leased by t#e city of 'anila and
&sed by Claro '. 4ecto 3ig# -c#ool. By means
of lettter dated *&ly C$ 1(""$ etitioner
a&t#ori6ed resondent -alvador -alig&mba to
negotiate %it# t#e city of 'anila t#e sale of
aforementioned roerty. /n t#e same %riting
etitoner agreed to ay resondent CN
commisssion in t#e event t#e sale is
cons&mmated.
)etitoner exended resondentFs a&t#ority to
sell several times. :it#in t#e extended eriod$
t#e city of 'anila assed 2rdinace ;o. ""0@
aroriating t#e s&m of )D10$!1" for t#e
r&rc#ase of 'anotok Brot#ersF roerty. -aid
ordinance #o%ever %as signed by t#e mayor
only on 'ay 1A$ 1("!$ t#ree days after t#e
lase of resondentFs extended a&t#ority.
-ale %as cons&mmated. ;ot%it#standing t#e
reali6ation of t#e sale$ -alig&mba never
received any commission. ConseG&ently$ #e
filed a comlaint against etioner.
ISSUES :2; -alig&mba is entitled to t#e CN
agentFs commission. >9-.
!A"I(NALE
/n Prat ) CA, t#e -C a%arded a s&m of
money to agent?claimant in vie% of #is
assistance and efforts in t#e transaction$
alt#o&g# #e %as not t#e efficient roc&ring
ca&se in bringing abo&t t#e sale and
not%it#satnding t#e exiration of #is a&t#ority.
/n t#e case at bar$ resondent -alig&mba is t#e
efficient roc&ring ca&se for %it#o&t #is efforts
t#e m&niciality %o&ld not #ave anyt#ing to
ass and t#e 'ayor %o&ld not #ave anyt#ing to
arove. /t is clear t#erefore from t#e
foregoing a&t#ority t#at resondent is entitled
to t#e commission.
7isting&is#ed from 7anon vs Brimo. ,#e case
of 7anon is not in oint. /n t#at case$ claimant?
agent f&lly comre#ended t#e ossibility t#at
#e may not reali6e t#e agentFs commission as
#e %as informed t#at anot#er agent %as also
negotiating t#e sale and t#&s$ comensation
%ill ertain to t#e one %#o finds a &rc#aser
and event&ally effects t#e sale.
LG 2arIue5 ). 3a-era (!EG)
*. =abrador
1(C2
FAC"S> =ora %as a&t#ori6ed by defendants Marela
to negotiate t#e sale of t#eir s#are or interest in a
arcel of land on )la6a 5oiti$ 'anila. 3e and real
estate broker 'arG&e6 agreed to %ork toget#er for
t#e sale of t#e roerty. ,#ey fo&nd a ready$
%illing$ and able b&yer$ %#ic# acceted
defendantsK rice and terms$ b&t t#at t#ereafter
defendants$ %it#o&t any j&stifiable reason$ ref&sed
to carry o&t t#e sale and exec&te t#e necessary
deed. As a conseG&ence$ etitioners failed to
receive t#e commission %#ic# t#ey %ere entitled to
receive.
7efendants arg&ed t#at etitioner 'arG&e6 #ad no
ca&se of action beca&se t#ey never dealt %it#
'arG&e6$ directly or indirectly.
ISSUE> :2; 'arG&e6 is entitled to be aid #is
commission. >9-.
!ULING> =ora and 'arG&e6 acted jointly in
rendering services to defendants &nder =oraKs
contract 0of agency1$ and t#e same G&estions of
la% and fact govern t#eir claims. ,#e 4&les of
Co&rt do not reG&ire t#e existence of rivity of
contract bet%een 'arG&e6 and t#e defendants as
reG&ired &nder t#e common la%.
All t#at etitioners demand is t#at 'arG&e6 #as a
material interest in t#e s&bject of t#e action$ t#e
rig#t to s#are in t#e brokerKs commission to be aid
=ora &nder t#e latterKs contract$ %#ic# rig#t =ora
does not deny. ,#is is s&fficient to j&stify t#e
joinder of 'arG&e6 as a arty laintiff$ even in t#e
absence of rivity of contract bet%een #im and t#e
defendants.
In'ante ). Cunanan, 2i=are, CA (A//Y)
A&g. @1$ 1(C@
*. Ba&tista Angelo
+acts.
Consejo /nfante o%ned 2 arcels of land %it# a
#o&se in ,aft 'anila. /nfante contracted t#e
services of C&nanan and 'ijares to look for a
b&yer. ,#e selling rice %as for )@0$000$ b&yer
m&st ass&me mortgage on t#e roertyE CN
commission on selling rice.
C&nanan and 'ijares fo&nd a b&yer$ )io -.
;oc#e and introd&ced #im to /nfante. -#e
informed t#em t#at s#e %as no longer
interested in selling t#e roerty and
s&cceeded in making t#em sign a doc&ment
stating t#erein t#at t#e %ritten a&t#ority s#e
#ad given t#em %as already can?celled.
/t t&rns o&t t#at /nfante dealt %it# ;oc#e
directly and sold t#e roerty for )@1$000. ,#e
resondents fo&nd o&t and instit&ted an action
for recovery of t#e commission %#en s#e
ref&sed to give t#e resondents anyt#ing.
@@
/nfante said s#e roc&red t#eir services b&t
only for )1$200$ only on condition t#at t#ey b&y
#er a roerty some%#ere in ,aft Aven&e to
%#ere s#e mig#t transfer after selling #er
roerty. 7efendant avers t#at %#ile laintiffs
took stes to sell #er roerty as agreed &on$
t#ey sold t#e roerty at ,aft Aven&e to
anot#er arty and beca&se of t#is fail&re it %as
agreed t#at t#e a&t#ority s#e #ad given t#em
be cancelled
4esondents claim t#at %#ile t#ey agreed to
cancel t#e %ritten a&t#ority given to t#em$
t#ey did so merely &on t#e verbal ass&rance
given by etitioner t#at$ s#o&ld t#e roerty be
sold to t#eir own buyer$ )io -. ;oc#e$ t#ey
%o&ld be given t#e commission agreed &on.
,r&e$ t#is verbal ass&rance does not aear in
t#e %ritten cancellation$ 9x#ibit 1$ and$ on t#e
ot#er #and$ it is dis&ted by etitioner$ b&t
resondents %ere allo%ed to resent oral
evidence to rove it$ and t#is is no% assigned
as error in t#is etition for revie%.
=C fo&nd for t#e C&nanan and 'ijares ordering
/nfante to ay t#em )2$C00 %L legal interest.
CA affirmed =C
/ss&e. :o; /nfante %as liable to ay C&nanan and
'ijares commission desite t#e %ritten
cancellation of a&t#ority signed by t#e
resondents.
3eld. >es. )etition denied
,#ere is eno&g# j&stification for t#e concl&sion
reac#ed by t#e lo%er co&rt as %ell as by t#e
Co&rt of Aeals to t#e effect t#at resondents
are entitled to t#e commission originally
agreed &on. /t is a fact fo&nd by t#e Co&rt of
Aeals t#at after etitioner #ad given t#e
%ritten a&t#ority to resondents to sell #er
land for t#e s&m of )@0$000$ resondents
fo&nd a b&yer in t#e erson of one )io -. ;oc#e
%#o %as %illing to b&y t#e roerty &nder t#e
terms agreed &on$ and t#is matter %as
immediately bro&g#t to t#e kno%ledge of
etitioner. B&t t#e latter$ er#as by %ay of
strategem$ advised resondents t#at s#e %as
no longer interested in t#e deal and %as able
to revail &on t#em to sign a doc&ment
agreeing to t#e cancellation of t#e %ritten
a&t#ority.
,#at etitioner #ad c#anged #er mind even if
resondents #ad fo&nd a b&yer %#o %as %illing
to close t#e deal$ is a matter t#at %o&ld not
give rise to a legal conseG&ence if resondents
agree to call off t#e transaction in deference to
t#e reG&est of t#e etitioner. B&t t#e sit&ation
varies if one of t#e arties takes advantage of
t#e benevolence of t#e ot#er and acts in a
manner t#at %o&ld romote #is o%n selfis#
interest. ,#is act is &nfair as %o&ld amo&nt to
bad fait#. ,#is act cannot be sanctioned
%it#o&t ac?cording to t#e arty rej&diced t#e
re%ard %#ic# is d&e #im. ,#is is t#e sit&ation in
%#ic# resondents %ere laced by etitioner.
)etitioner took advantage of t#e services
rendered by resondents$ b&t believing t#at
s#e co&ld evade ayment of t#eir commission$
s#e made &se of a r&se by ind&cing t#em to
sign t#e deed of cancellation 9x#ibit 1. ,#is act
of s&bversion cannot be sanctioned and cannot
serve as basis for etitioner to escae ayment
of t#e commission agreed &on.
Godu*o ). CA and 2aria Catro (EA!LA)
+eb 2!$ 1("D
)aredes$ *.
+acts. 3erminia 5od&co instit&ted a comlaint
against 'aria Castro for recovery of s&ms of
money as commission d&e #er for t#e sale of a
land in )aranaG&e. -#e alleged t#at t#e b&yer
indicated in t#e deed of sale$ -ostenes Camillo$
%as a mere d&mmy$ and t#at Castro %as t#e real
b&yer of t#e roerty. -#e f&rt#er claimed t#at
%#en t#e &rc#ase rice of )1C0k %as aid to t#e
seller$ t#e amo&nt of )AC00 as #er commission %as
ded&cted from it. ,#is artic&lar information %as
allegedly given to #er by t#e son of t#e o%ner of
t#e roerty$ 7r. +rancisco.
2n t#e ot#er #and$ Castro alleged t#at s#e %as not
t#e real b&yer in t#e transaction. -#e also alleged
t#at 5od&co reeatedly offered #er certain ieces
of roerty to &rc#ase$ b&t s#e ref&sed since #er
roerties %ere already levied at t#at time.
After trial$ t#e trial co&rt dismissed t#e comlaint.
,#e CA t#ereafter affirmed t#is decision$ saying
t#at t#e claims of 5od&co are merely based on
conject&res and s&rmises.
/--89. :2; 5od&co is entitled to t#e commission.
39=7. ;o.
,#e -C agreed %it# t#e CA t#at t#ere is not one
iota of evidence resented to s&ort 5od&coFs
claim. 3er reference to t#e case of 'arvel Bldg
Cor vs. -at&rnino 7avid is mislaced. Alt#o&g#
t#at case r&led t#at t#e stock#olders in t#e
cororation %ere mere d&mmies of 'aria Castro$
t#e same concl&sion co&ld not be alied in t#e
case at bar. ,#is is esecially so$ since t#e deed of
sale categorically states t#at t#e b&yer is Camillo$
and not Castro. ,#e fact t#at t#e #eirs of Castro
registered an adverse claim in t#e said roerty
co&ld not s&ort laintiffFs claim$ since t#is %as
not &t in iss&e in t#is case and s#o&ld t#erefore
be ventilated in t#e roer for&m.
Ass&ming ar#uendo t#at 5od&co %as a&t#ori6ed to
sell t#e land$ it does not a&tomatically entitle #er
to a commission from t#e b&yer. At most$ t#e
o%ner of t#e roerty and t#e one %#o romised to
give #er a commission s#o&ld be t#e one liable to
@D
ay t#e same and to %#om t#e claim s#o&ld #ave
been directed. And even ass&ming t#at Castro %as
t#e real b&yer$ t#e claim did not accr&e
a&tomatically against #er$ b&t against t#e erson
%#o romised #er a commission.
&omin4o ) &omin4o (6ANCES)
2ct. 2($ 1(A1
*. 'akasiar
+acts. Micente 7omingo exec&ted an excl&sive
contract of agency %it# 5regorio 7omingo. ,#e
contract %as to last for @0 days. /t %as stated t#at
Micente a&t#ori6ed 5regorio to sell #is lot %it# a
commission of CN on t#e total rice. 5regorio
%o&ld still be entitled to t#e commission if Micente
or anyone else sold t#e roerty %it#in t#e @0 day
eriod or if t#e roerty is sold by Micente %it#in @
mont#s from t#e termination of t#e agency to a
&rc#aser revio&sly s&bmitted by 5regorio d&ring
t#e contin&ance of t#e agency.
5regorio a&t#ori6ed )&risima to look for a b&yer$
romising ] of t#e CN commission.
5regorio t#en s&bmitted t#at 2scar de =eon
%anted to b&y t#e roerty. ,#e latter aid )1000
earnest money to Micente and gave )1000 as gift
to 5regorio. 5regorio did not inform Micente of t#is
)1000 roinaLgift. 3o%ever$ Micente ers&aded
2scar to b&y t#e roerty from #im directly at
)10D$000 0as oosed to t#e )10($000 revio&sly
agreed &on1. 5regorio fo&nd o&t t#at t#e roerty
%as sold t#e Amaro 7ia6$ %ife of 2scar de =eon.
3e t#en demanded t#e CN commission from
Micente.
,C. Micente s#o&ld ay 5regorio and )&risima.
CA affirmed. Amaro 7ia6 being t#e %ife of 2scar
de =eon$ t#e sale by Micente of #is roerty is
ractically a sale to 2scar since #&sband and %ife
#ave common interests.
Micente #aving died$ #is #eirs aealed.
/ss&e. :2; t#e fail&re on t#e art of 5regorio to
disclose to Micente t#e ayment to #im by 2scar of
t#e )1000 gift constit&tes fra&d as to ca&se
forfeit&re of #is commission. Y>9-Z
39=7. ,#e d&ties and liabilities of a broker to #is
emloyer are t#ose %#ic# an agent o%es to #is
rincial. Art 1!(1 rovides t#at an agent is bo&nd
to render an acct of #is transactions and to deliver
to t#e rincial %#atever #e may #ave received by
virt&e of t#e agency$ even t#o&g# it may not be
o%ing to t#e rincial. Art 1(0( rovides t#at an
agent is resonsible not only for fra&d b&t also for
negligence.
3ence$ an agent %#o takes a secret rofit in t#e
nat&re of a bon&s$ grat&ity or ersonal benefit from
t#e vendee$ %it#o&t revealing t#e same to #is
rincial$ t#e vendor$ is g&ilty of a breac# of #is
loyalty to t#e rincial and forfeits #is rig#t to
collect t#e commission from #is rincial$ even if
t#e rincial does not s&ffer any inj&ry by reason of
s&c# breac# of fidelity$ or t#at #e obtained better
res&lts or t#at t#e agency is a grat&ito&s one$ or
t#at &sage or c&stom allo%s itE beca&se t#e r&le is
to revent t#e ossibility of any %rong$ not to
remedy or reair an act&al damage. By taking s&c#
rofit or bon&s or gift or roina from t#e vendee$
t#e agent t#ereby ass&mes a osition %#olly
inconsistent %it# t#at of being an agent for #is
rincial$ %#o #as a rig#t to treat #im$ insofar as
#is commission is concerned$ as if no agency #ad
existed. ,#e fact t#at t#e rincial may #ave been
benefited by t#e val&able services of t#e said
agent does not exc&late t#e agent %#o #as only
#imself to blame for s&c# a res&lt by reason of #is
treac#ery or erfidy.
Art 1!(1 %ill not aly if t#e agent acted only as a
middleman %it# t#e task of merely bringing
toget#er t#e vendor and t#e vendee$ %#o
t#emselves %ill negotiate on t#e terms and
conditions of t#e transaction. /n t#is case #o%ever$
5regorio %as not merely a middleman of Micente
and 2scar. 3e %as t#e broker of Micente 2;=>.
G. Arti*-e #$C%, #$CC
Art. 1!A". An agency is eit#er general or secial.
,#e former comrises all t#e b&siness of t#e
rincial. ,#e latter$ one or more secific
transactions.
Art. 1!AA. An agency co&c#ed in general terms
comrises only acts of administration$ even if t#e
rincial s#o&ld state t#at #e %it##olds no o%er
or t#at t#e agent may exec&te s&c# acts as #e may
consider aroriate$ or even t#o&g# t#e agency
s#o&ld a&t#ori6e a general and &nlimited
management.
#. C-ae o' A4en*7> Genera-, S.e*ia-,
Uni)era-
Siaat ). IAC (2A!K)
2ct. 10$ 1(!C
*. 5&tierre6$ *r.
FAC"S
-ometime in 1(AD$ resondent ,eresita
;acianceno s&cceeded in convincing officials of
t#e t#en 7eartment of 9d&cation and C&lt&re
to &rc#ase %it#o&t &blic bidding$ one million
esos %ort# of national flags for t#e &se of
&blic sc#ools t#ro&g#o&t t#e co&ntry. ,#e
resondent %as able to exedite t#e aroval
of t#e &rc#ase by #and?carrying t#e different
indorsements from one office to anot#er$ so
@C
t#at by t#e first %eek of -etember$ 1(AD$ all
t#e legal reG&irements #ad been comlied
%it#$ excet t#e release of t#e &rc#ase
orders.
:#en ;acianceno %as informed by t#e C#ief of
t#e B&dget 7ivision t#at t#e &rc#ase orders
co&ld not be released &nless a formal offer to
deliver t#e flags in accordance %it# t#e
reG&ired secifications %as first s&bmitted for
aroval$ s#e contacted t#e o%ners of t#e
8nited +lag /nd&stry. ,#e next day$ after t#e
transaction %as disc&ssed$ a do*ument %as
dra%n & a&t#ori6ing ;acianceno to represent
/nited +la# ,ndustry to deal with any entity or
or#ani$ation, private or #overnment, in
connection with the mar&etin# of /nited0s
products-fla#s and its accessories, sub)ect to
12. commission.
2n 2ctober 1"$ 1(AD$ t#e first delivery of A$(@@
flags %as made by t#e 8nited +lag /nd&stry.
,#e follo%ing day t#e resondentKs a&t#ority to
reresent t#e 8nited +lag /nd&stry %as revoked
by etitioner )rimitivo -iasat.
After receiving t#e ayment for t#e first
delivery$ tendered t#e amo&nt of )2@$(00.00 or
five ercent 0CN1 of t#e amo&nt received to
t#e resondent as ayment of #er commission.
,#e latter ref&sed to accet t#e said amo&nt
insisting on t#e @0N commission agreed &on.
,#e resondent$ #o%ever$ %as revailed &on
to accet t#e same beca&se of t#e ass&rance
of t#e etitioners t#at t#ey %o&ld ay t#e
commission in f&ll after t#ey delivered t#e
ot#er #alf of t#e order.
4esondent ;acianceno later on learned t#at
etitioner -iasat #ad already received ayment
for t#e second delivery of A$!@@ flags. :#en
s#e confronted t#e etitioners$ t#ey
ve#emently denied receit of t#e ayment$ at
t#e same time claiming t#at t#e resondent
#ad no articiation %#atsoever %it# regard to
t#e second delivery of flags and t#at t#e
agency #ad already been revoked.
,#e resondent originally filed a comlaint %it#
t#e Comlaints and /nvestigation 2ffice in
'alacaBang b&t %#en not#ing came of t#e
comlaint$ s#e filed an action in t#e Co&rt of
+irst /nstance of 'anila to recover t#e follo%ing
commissions. 2CN$ as balance on t#e first
delivery and @0N$ on t#e second delivery. C+/
r&led in favor of resondent. CA affirmed.
ISSUES :2; ;acianceno is entitled to t#e
commission desite t#e absence of secific
a&t#ori6ation for t#e sale of 1C$""" )#iliine flags
to 79C-.
,EL& >es. ;acianceno is a general agent.
!A"I(NALE
,#ere are several kinds of agents. ,o G&ote a
commentator on t#e matter.
An a#ent may be 3!4 universal: 354 #eneral,
or 314 special. A universal6 a#ent is one
authori$ed to do all acts for his principal
which can lawfully be dele#ated to an
a#ent. "o far as such a condition is
possible, such an a#ent may be said to
have universal authority. 37ec. "ec. -84.
A #eneral a#ent is one authori$ed to do all
acts pertainin# to a business of a certain
&ind or at a particular place, or all acts
pertainin# to a business of a particular
class or series. 9e has usually authority
either epressly conferred in #eneral terms
or in effect made #eneral by the usa#es,
customs or nature of the business which he
is authori$ed to transact.
An a#ent, therefore, who is empowered to
transact all the business of his principal of
a particular &ind or in a particular place,
would, for this reason, be ordinarily
deemed a #eneral a#ent. 37ec "ec. ,124.
A special a#ent is one authori$ed to do
some particular act or to act upon some
particular occasion. lie acts usually in
accordance with specific instructions or
under limitations necessarily implied from
the nature of the act to be done. 37ec. "ec.
:!4 3*adilla, Civil ;aw <he Civil Code
Annotated, =ol. =,, !>:> Edition, p. 52?4.
2ne does not #ave to &ndertake a close
scr&tiny of t#e doc&ment embodying t#e
agreement bet%een t#e etitioners and t#e
resondent to ded&ce t#at t#e Klatter %as
instit&ted as a general agent. /ndeed$ it can
easily be seen by t#e %ay general %ords %ere
emloyed in t#e agreement t#at no restrictions
%ere intended as to t#e manner t#e agency
%as to be carried o&t or in t#e lace %#ere it
%as to be exec&ted. "1e .o?er 4ranted to
t1e re.ondent ?a o 8road t1at it
.ra*ti*a--7 *o)er t1e ne4otiation
-eadin4 to, and t1e e0e*ution o', a
*ontra*t o' a-e o' .etitionerG
mer*1andie ?it1 an7 entit7 or
or4ani5ation.
2. Cou*1ed in 4enera- termD a*t o'
adminitration
3e-oo ) CA (GEN)
@"
A&g. 21$ 1(("
,orres$ *r.$ *.
FAC"S> +rancisco Meloso o%ned a arcel of land in
,ondo$ 'anila. A ,C, %as iss&ed in #is name b&t
later on it %as cancelled and anot#er one %as
iss&ed in t#e name of t#e rivate resondents.
)etitioner alleged t#at #e %as t#e absol&te o%ner
of t#e roerty and t#at #e never a&t#ori6ed
anybody$ not even #is %ife$ to sell it. 3e alleged
t#at #e %as in ossession of t#e title b&t %#en #is
%ife$ /rma$ left for abroad$ #e fo&nd o&t t#at #is
coy %as missing. After verifying %it# t#e 4egister
of 7eeds$ #e fo&nd t#at t#e transfer of roerty
%as s&orted by a 5eneral )o%er of Attorney.
)etitioner denied exec&ting t#e o%er of attorney
and alleged t#at #is signat&re %as falsified. 3e
contends t#at t#e sale and transfer of t#e roerty
%as n&ll and void.
)rivate resondent$ Aglaloma 9scario$ on t#e ot#er
#and alleged t#at s#e %as a b&yer in good fait#
and denied any kno%ledge of irreg&larity. -#e
relied on t#e general o%er of attorney of /rma
%#ic# %as s&fficient in form and s&bstance and
%as d&ly notari6ed.
,#e general o%er of attorney stated t#at.
<o buy or sell, hire or lease, mort#a#e or otherwise
hypothecate lands, tenements and hereditaments
or other forms of real property, more specifically
<C< No. ?>!18, upon such terms and conditions
and under such covenants as my said attorney
shall deem fit and proper.
,#e trial co&rt r&led t#at 9scario %as t#e la%f&l
o%ner of t#e roerty as s#e %as deemed an
innocent &rc#aser for val&e. ,#e general o%er of
attorney %as #eld to be valid and s&fficient for t#e
&rose. /t r&led t#at t#ere %as no need for a
secial o%er of attorney %#en t#e secial o%er
%as mentioned in t#e general one.
,#e Co&rt of Aeals affirmed in toto t#e r&ling of
t#e trial co&rt.
ISSUE> :2; t#e general o%er of attorney %as
valid and reg&lar
,EL&> >9-. :#ile t#e o%er of attorney %as
denominated as general$ a er&sal revealed t#at
it stated an a&t#ority to sell.
,#ere %as no need to exec&te a searate and
secial o%er of attorney since t#e general o%er
of attorney #ad exressly a&t#ori6ed t#e agent or
attorney?in?fact t#e o%er to sell t#e s&bject
roerty. ,#e secial o%er of attorney can be
incl&ded in t#e general o%er %#en it is secified
t#erein t#e act or transaction for %#ic# t#e secial
o%er is reG&ired.
/t is not t#e denomination t#at matters b&t t#e
extent of t#e o%erLs contemlated &on t#e
agent or attorney?in?fact.
9scario %as an innocent &rc#aser for val&e. -#e
relied on t#e o%er of attorney resented by /rma$
etitionerFs %ife. Being t#e %ife of t#e o%ner$ and
#aving %it# #er t#e title of t#e roerty$ t#ere %as
no reason for 9scario not to believe in #er
a&t#ority. 'oreover$ t#e o%er of attorney %as
notari6ed and carried %it# t#e res&mtion of d&e
exec&tion.
A &rc#aser in good fait# is one %#o b&ys roerty
of anot#er$ %it#o&t notice t#at some ot#er erson
#as a rig#t to$ or interest in s&c# roerty and ays
a f&ll and fair rice for t#e same$ at t#e time of
s&c# &rc#ase$ or before #e #as notice of t#e claim
or interest of some ot#er erson in t#e roerty.
2a*:e ). Cam., u.ra
Germann + Co. ). &ona-don, Sim + Co.
(2ai)
;ovember 11$ 1(01
=add$ *.
+acts. 'ax =eonard ,orno% is t#e sole o%ner of t#e
b&siness carried on in Berlin and 'anila &nder t#e
name of 5emann P Co. 2n +ebr&ary C$ 1(00$ #e
exec&ted in Berlin an instr&ment$ constit&ting
+ernando Sammer6ell as #is tr&e and la%f&l
attorney %it# f&ll o%er to enter t#e firm name of
5ermann P Co. in t#e Commercial 4egistry of t#e
city of 'anila as a branc# of t#e #o&se of 5ermann
P Co. in Berlin$ it being t#e &rose of t#is o%er
to invest said attorney %ill f&ll legal o%ers and
a&t#ori6ation to direct and administer in t#e city of
'anila for &s and in o&r name a branc# of o&r
general commercial b&siness of imortant and
exortation$ for %#ic# &rose #e may make
contracts of lease and emloy s&itable assistants$
as %ell as sign every kind of doc&ments$ acco&nts$
and obligations connected %it# t#e b&siness %#ic#
may be necessary$ take c#arge in general of t#e
receit and delivery of merc#andise connected
%it# t#e b&siness$ i4n a-- re*ei.t 'or um o'
mone7 and *o--e*t t1em and e0a*t t1eir
.a7ment 87 -e4a- mean$ and in general exec&te
all t#e acts and t#ings necessary for t#e erfect
carrying on of t#e b&siness committed to #is
c#arge in t#e same manner as %e co&ld do
o&rselves if %e %ere resent in t#e same lace.
2n 2ctober 2A$ 1(00$ +ernando Sammer6ell
exec&ted a general o%er for s&its$ &rortedly as
a s&bstit&tion to t#e instr&ment exec&ted by
,orno%. ,#is instr&ment %as a&t#enticated by a
notary %it# t#e formalities reG&ired by t#e
domestic la%s. ,#e ot#er %as not so a&t#enticated.
@A
/ss&e. :#et#er or not t#e original o%er can be
constr&ed as conferring &on Sammer6ell a&t#ority
to instit&te or defend s&its for t#e recovery of
money
3eld. >9-.
/t aears to be exressly and secially a&t#ori6ed
by t#e cla&se conferring t#e o%er to exact t#e
ayment of s&ms of money by legal means. ,#is
m&st mean t#e o%er to exact t#e ayment of
debts d&e t#e concern by means of t#e instit&tion
of s&its for t#eir recovery.
,#e main object of t#e instr&ment is clearly to
make Sammer6ell t#e manager of t#e 'anila
branc# of t#e laintiffFs b&siness$ %it# t#e same
general a&t#ority %it# reference to its cond&ct
%#ic# #is rincial %o&ld #imself ossess if #e
%ere ersonally directing it. /t can not be
reasonably s&osed$ in t#e absence of very clear
lang&age to t#at effect$ t#at it %as t#e intention of
t#e rincial to %it##old from #is agent a o%er so
essential to t#e efficient management of t#e
b&siness entr&sted to #is control as t#at to s&e for
t#e collection of debts.
Yu C1u*: ). Kon4 Li Po (!(G)
Cited Cor&s *&ris. /n t#e absence of exress
limitations$ a manager #as a&t#ority to #ire an
emloyee for s&c# eriod as is c&stomary or
roer. B&t &nless #e is exressly a&t#ori6ed #e
canFt make a contract of emloyment for a long
f&t&re eriod$ s&c# as for @ years alt#o&g# contract
not rendered invalid by mere fact t#at emloyment
extends beyond term of managerKs o%n
emloyment.

:#ile C#en as general manager of Song =i )o$ #ad
imlied a&t#ority to bind cor by a reasonable and
&s&al contract of emloyment %it# >& C#&ck s&c#
contract #ere cannot be so considered. ,#e term of
emloyment is &n&s&ally long and conditions are
so onero&s t#at ossibility of cor being t#ro%n
into insolvency is exressly contemlated in
contract. ,#is fact s#o&ld #ave &t >& C#&ck &on
inG&iry as to extent of b&siness managerKs
a&t#ority.

2. E)iden*e doe not u..ort *ontention t1at
*ontra*t ?a im.-ied-7 rati'ied 87 *or..
/t is merely based on fact t#at Sim 3&a$ resident
of cor for 1(20$ admitted on stand t#at #e sa% >&
C#&ck %ork as rinters in t#e office b&t #e denied
any kno%ledge of existence of contract and said it
%as never resented to #im nor t#e Board.

Before a contract may be ratified$ kno%ledge of its
existence m&st be bro&g#t to arties %#o #ave
a&t#ority to ratify it. ;o s&c# kno%ledge s#o%n
#ere.

A ratification by )res %o&ld #ave been no avail
eit#er beca&se in order to validate a contract$
ratification by t#e board of directors %as
necessary. +act t#at res %as reG&ired by by?la%s
to sign docs evidencing contracts of t#e cor$ does
not mean #e #ad o%er to make t#e contracts.

@. Noti*e 4i)en 87 a C1en Yu 2an .oted in
t1e ne?.a.er ma:in4 nu-- and )oid a--
*ontra*t not i4ned 87 "C C1en did not -ead
Yu C1u*: to t1in: C1en 1ad aut1orit7 to
ma:e *ontra*t.
;otice %as &blis#ed a mont# after contract %as
entered into. 9vidence also s#o%s t#at C#en >&
'an and C#en is one and t#e same erson.

,#e notice confers no secial o%ers$ b&t is only an
assertion by C#en t#at #e %o&ld recogni6e no
contracts not d&ly signed by #im.

;2 evidence to s#o% t#at notice ever bro&g#t to
attention of officers of cor.
"ro.i*a- ,ome ). 3i--a-u5 ("(FF)
Inu-ar &ru4 ). PN/ (!EG)
*. 'alcolm
1(@@
FAC"S> 8.9. +oerster$ a salesman and collector of
/ns&lar 7r&g for t#e /slands of )anay and ;egros.
%as instr&cted to take t#e c#ecks for t#e dr&g
comany to t#e /loilo branc# of t#e C#artered Bank
of /ndia$ A&stralia and C#ina and deosit t#e
amo&nts to t#e credit of t#e dr&g comany.
/nstead$ +oerster deosited t#e c#ecks$ incl&ding
t#ose of fo&r eole$ %it# t#e /loilo branc# of t#e
);B$ in #is ersonal acco&nt. ,#e amo&nt of t#e
c#ecks %ere s&bseG&ently %it#dra%n by 8. 9.$
+oerster and Carmen 9. de +oerster 0t#e formerFs
%ife1.
,#e dr&g comany investigated t#e transactions of
+oerster. 8on t#e discovery of anomalies$
+oerster committed s&icide.
,#e bank arg&ed t#at t#e fra&d %as not roved$
and t#at +oerster #ad imlied a&t#ority to indorse
all c#ecks made o&t in t#e name of t#e /ns&lar
7r&g Co.
ISSUE> :2; );B is liable. >9-.
!ULING> As to t#e first arg&ment$ no s&c# secial
defense %as relied &on by t#e bank in t#e trial
co&rt.
As to t#e second$ a salesman %it# a&t#ority to
collect money belonging to #is rincial does not
#ave t#e imlied a&t#ority to indorse c#ecks
received in ayment. Any erson taking c#ecks
made ayable to a cororation$ %#ic# can act only
@!
by agent does so at #is eril$ and m&st same by
t#e conseG&ences if t#e agent %#o indorses t#e
same is %it#o&t a&t#ority. ,#at t#e bank acted in
good fait# does not relieve it from resonsibility.
9ven so$ t#e Bank %as not even in good fait#. ,#e
bank co&ld tell by t#e c#ecks t#emselves t#at t#e
money belonged to t#e /ns&lar 7r&g Co.$ /nc.$ and
not to +oerster or #is %ife or #is clerk. :#en t#e
bank credited t#ose c#ecks to t#e ersonal acco&nt
of +oerster and ermitted +oerster and #is %ife to
make %it#dra%als %it#o&t t#ere being made
a&t#ority from t#e dr&g comany to do so$ t#e
bank made itself resonsible to t#e dr&g comany
for t#e amo&nts reresented by t#e c#ecks.
Soriano ). Peo.-e (A//Y)
'arc# 1($ 1(C1
*. *&go
+acts.
+ederico -oriano %as c#arged and convicted
%it# t#e crime of t#eft of 1 Cyclix electric
motor$ 1 lantern slide rojector incl&ding
accessories.
Beca&se of t#e dist&rbance ca&sed by t#e %ar$
t#e 9agle Cinema Co.$0o%ner of t#e materials1
%as indebted to t#e -aen6 for rents d&e on
acco&nt of t#e leaseE and t#at aellant in t#e
exercise of t#e o%ers conferred &on #im
co&ld #ave s&ed said debtor to foreclose t#e
mortgage exec&ted by t#e 9agle Cinema Co.$
/nc.$ in favor of #is rincials. ,#e items %ere
sei6ed by -oriano and later fo&nd at #is #o&se
after #aving reeatedly denied any kno%ledge
of t#e eG&iment and accessories of t#e Cine
and declined any resonsibility for t#eir loss.
7efense of -oriano ? :it# regard to t#e
Itaking$I aellant contends t#at #e did not
exec&te t#is element of t#eft beca&se being an
attorney?in?fact of t#e #eirs of -aen6$ #e acted
for #is rincials$ and for all intents and
&roses of t#e o%er conferred &on #im$ #e
%as t#e rincial #imself and$ nat&rally$ #e
co&ld not steal somet#ing belonging to #im
&nder t#e rincile t#at I%ei nostrae furtum
facera non pos sumusI. ,#e o%er of attorney
clearly emo%ered t#e aellant Ito ask$
demand$ s&e for$ recover$ collect and receit
for any and all s&ms of money . . . and ot#er
t#ings of val&e of %#atever nat&re or kind$I
and gave #im If&ll o%er to do anyt#ing
reG&isite and necessary to be done in t#e
remises as f&lly as / 09milia -aen61 co&ld if
ersonally resent$ #ereby ratifying and
confirming all t#at my said attorney and
s&bstit&te attorney s#all la%f&lly do or ca&se to
be done by virt&e #ereof.I
B&t t#e CA affirmed t#e conviction for t#eft
citing firstly$ t#at %#en #e too&$ as #e finally
admitted to #ave taken$ t#e lantern slide
rojector and t#e ICyclixI motor generator
from t#e 9agle?,#eater$ #e did not really act in
be#alf and reresentation of t#is rincials$ for
ot#er%ise #e %o&ld not #ave reeatedly denied
#aving taken said roerties and insin&ated
t#at t#ey #ad been taken by t#e *aaneseE and
secondly$ t#at even #is rincials co&ld not
#ave taken and aroriated said roerties
for t#emselves %it#o&t revio&s and roer
action in co&rt$ beca&se no mortgage creditor
can foreclose t#e roerty mortgage to #im
%it#o&t j&dicial roceedings.
/ss&e. :o; t#e taking %as an act of administration
3eld. ;o$ it %as t#eft. Conviction affirmed.
/t is clear t#at said o%er of attorney did not
a&t#ori6e t#e etitioner to take a%ay t#e
rojector and t#e generator$ #iding t#em in #is
#o&se and denying to t#e o%ner and t#e olice
a&t#orities t#at #e #ad t#em in #is
ossessions$ %#ic# %as an illegal act$ not
covered by #is o%er?of?attorney. 3e %as
a&t#ori6ed only to ask$ take$ s&e for$ recover$
collect$ etc.$ s&ms of money$ debts$ d&es$
acco&nts and ot#er t#ings %#ic# %ere or mig#t
t#ereafter be d&e$ etc.$ to #is rincial 9milia
-aen6. ,#is a&t#ority referred mainly to t#e
collection of t#e rents of t#e b&ilding rented by
t#e 9agle Cinema Co.$ /nc. ,#e rojector and
t#e generator %ere not d&e or o%ing to 9milia
-aen6. /t is not to be s&osed t#at -aen6
#erself %o&ld #ave denied t#e ossession of
t#ose articles. /t is %as t#e &rose of t#e
etitioner only to rotect t#ose instr&ments
from looting$ t#ere is o reason %#y #e s#o&ld
#ave concealed t#em from t#e o%ner and
denied #aving t#em.
9ven t#o&g# t#e eG&iment$ incl&ding t#ose
articles$ %ere mortgaged to -ane6 to
g&arantee t#e ayment of t#e rents d&e on t#e
b&ilding$ yet t#ere #ad been no foreclos&re and
neit#er s#e nor t#e etitioner #ad t#e a&t#ority
to take a%ay and conceal t#ose articles from
t#e o%ner or t#e olice a&t#orities. ,#e 9agle
Cinema Co.$ /nc.$ #ad t#e rig#t to ossess said
articles.
As to t#e element of intent$ it is clear t#at
%#en t#e etitioner carried a%ay and
concealed from t#e o%ner and t#e olice
a&t#orities t#e above?mentioned articles$ #e
acted %it# intent of gain. /ntent is a mental
state$ t#e existence of %#ic# is s#o%n by t#e
overt acts of a erson$ %#ic# in t#e resent
case &nmistakably oint to t#at intent.
Antonio GoIui-a7 ). 9a1in4ton S7*i.
(Ear-a)
*&ly 2"$ 1("0
@(
4eyes$ *B=
+acts. Antonio 5oG&ilay and ,an -in An entered
into a general commercial artners#i &nder t#e
artners#i name ,an -in An and Antonio C.
5oG&ilay for t#e &rose of dealing in real estate.
9mbodied in t#eir agreement is t#e sti&lation t#at
,an #as t#e excl&sive management of t#e
artners#i$ %#ile 5oG&ilayFs role is limited to
examining t#e book of acco&nts of t#e artners#i.
/t %as f&rt#er sti&lated t#at t#e artners#i s#all
#ave a life of 10 years$ and t#e deat# of eit#er one
of t#e artners %ill not res&lt to t#e dissol&tion of
t#e artners#i$ b&t bot# arties$ by m&t&al
agreement$ can decide to terminate t#e
artners#i before t#e exiration of t#e eriod.
,#ereafter$ 5oG&ilay exec&ted in favor of ,an a
general o%er of attorney sti&lating t#at ,an s#all
act as #is 'anager in t#e artners#i for t#e %#ole
eriod of t#e artners#i. ,#e artners#i
event&ally bo&g#t @ arcels of lands$ %#ile ,an
bo&g#t D" arcels. ,#ese D( lots %ere later
mortgaged to Banco 3iotecario de +iliinas for t#e
ayment of ^C@k obligation$ ayable %it#in !
years.
7&ring t#e lifetime of t#e artners#i$ ,an died$
and #e %as t#ereafter s&cceeded by #is %ife$ Song
C#ai )in and #is D minor c#ildren. 9vent&ally$ a
certain -ing >ee and C&an Co.$ &on reG&est of
>&tivo -ons 3ard%are Co. 0%#ic# advanced t#e
do%nayment and t#e amorti6ation for t#e
&rc#ase of t#e D( lots1$ aid t#e remaining
balance of t#e mortgage debt. ,#ese t%o entities
event&ally filed t#eir resective claims in t#e
robate co&rt$ as a res&lt of %#ic#$ Song C#ai )in
so&g#t ermission from t#e Co&rt to sell t#ese
lands for settling t#e debts of ,an and t#e
artners#i. ,#ese lands %ere t#en sold to
:as#ington -yci and Betty =ee$ %#o t#en
exec&ted a 7eed of ,ransfer in favor of /ns&lar
7eveloment Co..
After learning abo&t t#e sale$ 5oG&ilay$ as t#e
s&rviving artner of t#e artners#i filed an action
to ann&l t#e sale made to -yci and =ee. ,#e -C in
a searate decision ordered t#e case to be
remanded for ne% trial d&e to non?incl&sion of
indisensable arties. 2n remand$ t#e lo%er co&rt
dismissed t#e amended comlaint. 3ence$ t#is
etition.
/--89. :2; t#e sale exec&ted in favor of -yci and
=ee is valid.
39=7. >es.
,#e Co&rt reliminarily #eld t#at Song C#ai )in$ as
t#e %ido% of t#e ,an$ did not s&cceed #er #&sband
in t#e administration of t#e artners#i. Antonio
5oG&iolay conferred &on ,an -in An t#e excl&sive
management of t#e b&siness$ s&c# o%er$
remised as it is &on tr&st and confidence$ %as a
mere ersonal rig#t t#at terminated &on ,anKs
demise. ,#e rovision in t#e articles stating t#at
Iin t#e event of deat# of any one of t#e artners
%it#in t#e 10?year term of t#e artners#i$ t#e
deceased artner s#all be reresented by #is
#eirsI$ co&ld not #ave referred to t#e managerial
rig#t given to ,an -in AnE more aroriately$ it
related to t#e s&ccession in t#e rorietary interest
of eac# artner. ,#e covenant t#at Antonio
5oG&iolay s#all #ave no voice or articiation in
t#e management of t#e artners#i$ being a
limitation &on #is rig#t as a general artner$ m&st
be #eld coextensive only %it# ,anKs rig#t to
manage t#e affairs$ t#e contrary not being clearly
aarent. -ince t#e Articles of co?artners#i
rovided for t#e contin&atin of t#e firm
not%it#standing t#e deat# of one of t#e artners$
t#e #eirs of t#e deceased$ by never re&diating or
ref&sing to be bo&nd &nder t#e said rovision in
t#e articles$ became individ&al artners %it#
Antonio 5oG&iolay &on ,anKs demise.
Song C#ai )in$ by #er affirmative actions
manifested #er intent to be bo&nd by t#e
artners#i agreement not only as a limited
artner$ b&t also as a limited artner as %ell. /n
fact$ by selling t#e land$ s#e %as act&ally acting as
a managing artner.
,#e Co&rt f&rt#er #eld t#at t#e sale %as valid$
inasm&c# as it %as made by a artner.
Accordingly$ strangers dealing %it# a artners#i
#ave t#e rig#t to ass&me$ in t#e absence of
restrictive cla&ses in t#e co?artners#i
agreement$ t#at every general artner #as o%er
to bind t#e artners#i$ secially t#ose artners
acting %it# ostensible a&t#ority. ,#e latter may
rig#tf&lly ass&me t#at t#e contracting artner %as
d&ly a&t#ori6ed to contract for and in be#alf of t#e
firm and t#at$ f&rt#ermore$ #e %o&ld not ordinarily
act to t#e rej&dice of #is co? artners.
/n t#is case$ t#e records s#o% t#at 5oG&ilay did not
contest t#e sale made to -yci and =eeE it %as only
after t#e deed of conveyance %as exec&ted did #e
make #is rotest kno%n. 3is oosition t#en came
too late.
,. Arti*-e #$C$> a*t o'
tri*t dominion or o?ner1i.
Art. 1!A!. -ecial o%ers of attorney are
necessary in t#e follo%ing cases.
011 ,o make s&c# ayments as are not &s&ally
considered as acts of administrationE
021 ,o effect novations %#ic# &t an end to
obligations already in existence at t#e time t#e
agency %as constit&tedE
0@1 ,o comromise$ to s&bmit G&estions to
D0
acG&iredE
0D1 ,o %aive any obligation grat&ito&slyE
0C1 ,o enter into any contract by %#ic# t#e
o%ners#i of an immovable is transmitted or
acG&ired eit#er grat&ito&sly or for a val&able
considerationE
0"1 ,o make gifts$ excet c&stomary ones for
c#arity or t#ose made to emloyees in t#e
b&siness managed by t#e agentE
0A1 ,o loan or borro% money$ &nless t#e latter act
be &rgent and indisensable for t#e reservation of
t#e t#ings %#ic# are &nder administrationE
0!1 ,o lease any real roerty to anot#er erson for
more t#an one yearE
0(1 ,o bind t#e rincial to render some service
%it#o&t comensationE
0101 ,o bind t#e rincial in a contract of
artners#iE
0111 ,o obligate t#e rincial as a g&arantor or
s&retyE
0121 ,o create or convey real rig#ts over
immovable roertyE
01@1 ,o accet or re&diate an in#eritanceE
01D1 ,o ratify or recogni6e obligations contracted
before t#e agencyE
01C1 Any ot#er act of strict dominion
#. 'orm
2. *ae
,ome Inuran*e ). US Line (6ANCES)
3e-oo ). CA, u.ra
Comi* Lum8er ). CA (2A!K)
;ov. 2($ 1(("
Bellosillo$ *.
FAC"S
C2-'/C =8'B94 C24)24A,/2; t#ro&g# its
5eneral 'anager exec&ted on 2! *an&ary 1(!C
a -ecial )o%er of Attorney aointing )a6 5.
Millamil?9strada as attorney?in?fact ?
x x x to initiate$ instit&te and file any co&rt
action for t#e ejectment of t#ird ersons andLor
sG&atters of t#e entire lot (12A and DD@ and
covered by ,C, ;os. @A"D! and @A"D($ for t#e
said sG&atters to remove t#eir #o&ses and
vacate t#e remises in order t#at t#e
cororation may take material ossession of
t#e entire lot$ and for t#is &rose$ to aear
at t#e re?trial conference and enter into any
sti&lation of facts andLor comromise
agreement so far as it s#all rotect t#e rig#ts
and interest of t#e cororation in t#e
aforementioned lots.
Millamil?9strada$ by virt&e of #er o%er of
attorney$ instit&ted an action for t#e ejectment
of rivate resondent /sidro )ere6 and recover
t#e ossession of a ortion of =ot ;o. DD@
before t#e 4egional ,rial Co&rt of 7ag&an. 2n
2C ;ovember 1(!C$ s#e entered into a
Comromise Agreement %it# resondent
)ere6$ t#e one of t#e terms of %#ic# follo%s.
5. <hat to buy peace said defendant pays unto
the plaintiff throu#h herein attorney-in-fact the
sum of *5:,:?2.22 computed at *82.22@sAuare
meter6
2n 2A ;ovember 1(!C t#e Comromise
Agreement %as aroved by t#e trial co&rt
and j&dgment %as rendered in accordance
t#ere%it#.
Alt#o&g# t#e decision became final and
exec&tory it %as not exec&ted %it#in t#e C?
year eriod from date of its finality allegedly
d&e to t#e fail&re of etitioner to rod&ce t#e
o%nerFs d&licate coy of ,itle ;o. @A"D(
needed to segregate from =ot ;o. DD@ t#e
ortion sold by t#e attorney?in?fact$ )a6 5.
Millamil?9strada$ to rivate resondent &nder
t#e comromise agreement. ,#&s on 2C
*an&ary 1((@ resondent filed a comlaint to
revive t#e j&dgment.
)etitioner asserts t#at it %as only %#en t#e
s&mmons for t#e revival of j&dgment %as
served &on it t#at it came to kno% of t#e
comromise agreement entered into bet%een
)a6 5. Millamil?9strada and resondent /sidro
)ere6. +ort#%it#$ &on learning of t#e
fra&d&lent transaction$ etitioner so&g#t
ann&lment of t#e decision of t#e trial co&rt
before resondent Co&rt of Aeals.
ISSUE :2; Millamil?9strada #as t#e a&t#ority to
sell t#e roerty of Cosmic. ;2.
!A"I(NALE
,#e a&t#ority granted Millamil?9strada &nder
t#e secial o%er of attorney %as exlicit and
excl&sionary. for her to institute any action in
court to e)ect all persons found on ;ots Nos.
>!5B and ??1 so that petitioner could ta&e
material possession thereof, and for this
purpose, to appear at the pre-trial and enter
into any stipulation of facts and@or compromise
a#reement but only insofar as this was
protective of the ri#hts and interests of
petitioner in the property. ;o%#ere in t#is
a&t#ori6ation %as Millamil?9strada granted
exressly or imliedly any o%er to sell t#e
s&bject roerty nor a ortion t#ereof.
D1
;eit#er can a conferment of t#e o%er to sell
be validly inferred from t#e secific a&t#ority
to enter into a comromise agreement
beca&se of t#e exlicit limitation fixed by t#e
grantor t#at t#e comromise entered into s#all
only be so far as it s#all rotect t#e rig#ts and
interest of t#e cororation in t#e
aforementioned lots. /n t#e context of t#e
secific investit&re of o%ers to Millamil?
9strada$ alienation by sale of an immovable
certainly cannot be deemed rotective of t#e
rig#t of etitioner to #ysically ossess t#e
same$ more so %#en t#e land %as being sold
for a rice of )!0.00 er sG&are meter$ very
m&c# less t#an its assessed val&e of )2C0.00
er sG&are meter$ and considering f&rt#er t#at
etitioner never received t#e roceeds of t#e
sale.
:#en t#e sale of a iece of land or any interest
t#ereon is t#ro&g# an agent$ t#e a&t#ority of
t#e latter s#all be in %ritingE ot#er%ise$ t#e
sale s#all be void. ,#&s t#e a&t#ority of an
agent to exec&te a contract for t#e sale of real
estate m&st be conferred in %riting and m&st
give #im secific a&t#ority$ eit#er to cond&ct
t#e general b&siness of t#e rincial or to
exec&te a binding contract containing terms
and conditions %#ic# are in t#e contract #e did
exec&te.
,#e exress mandate reG&ired by la% to
enable an aointee of an agency 0co&c#ed1 in
general terms to sell m&st be one t#at
exressly mentions a sale or t#at incl&des a
sale as a necessary ingredient of t#e act
mentioned. +or t#e rincial to confer t#e rig#t
&on an agent to sell real estate$ a o%er of
attorney m&st so exress t#e o%ers of t#e
agent in clear and &nmistakable lang&age.
:#en t#ere is any reasonable do&bt t#at t#e
lang&age so &sed conveys s&c# o%er$ no s&c#
constr&ction s#all be given t#e doc&ment.
3i*ente ) Gera-de5 (GEN)
*&ly @1$ 1(A@
Antonio$ *.
FAC"S> 3i Cement Cororation acG&ired a )lacer
=ease Contract from Bana#a% -#ale 'ining
Association. ,#e lease contract covered t%o mining
claims over C1 #a of land. /ncl&ded in t#e mining
claims %ere t#e t#ree arcels of land o%ned by t#e
etitioners.
2n several occasions$ t#e Cororation informed t#e
etitioners$ t#r& its reresentatives$ of t#e its
acG&isition of t#e lacer mining claims. ,#e
Cororation reG&ested t#e etitioners to allo% its
%orkers to enter t#eir lands to exlore and develo
t#e claims$ %it# t#e romise to ay t#e etitioners
reasonable amo&nts. 3o%ever$ t#e etitioners
ref&sed and t#reatened t#e %orkers %it# bodily
#arm.
3ence$ t#e Cororation filed %it# t#e C+/ of
B&lacan a comlaint for inj&nction and damages
against t#e etitioners.
,#e trial co&rt directed t#e iss&ance of a %rit of
inj&nction and s&ggested t#e relocation of t#e
bo&ndaries of t#e CororationFs claims in relation
to t#e roerties of t#e etitioners. /t named a
Commissioner to cond&ct a s&rvey lan on
relocation and to s&bmit a reort to t#e co&rt. ,#e
trial co&rt also directed t#e arties to send t#eir
reresentatives to t#e lace of t#e s&rvey. ,#e
CommissionerFs reort %as aroved by t#e trial
co&rt.
/n a s&bseG&ent amendment of t#e comlaint of
t#e Cororation$ it alleged t#at t#e etitioners %ere
%illing to sell t#eir roerties for )10LsG.m. b&t
%#en it offered to ay only )0.(0LsG.m.$ t#e
etitioners stated t#at t#ey %ere %iling to go to
trial on t#e iss&e of %#at %o&ld be t#e reasonable
rice.
,#e co&nsels of t#e arties conferred among
t#emselves on t#e ossibility of terminating t#e
case by comromise$ as t#e defendants %ere
%illing to sell t#e roerties at reasonable rices.
3ence$ t#e co&nsels exec&ted a Comromise
Agreement to determine t#e rices.
,#e trial co&rt aroved t#e Agreement and
enjoined t#e arties to comly %it# t#e terms and
conditions. )&rs&ant to t#e terms$ t#e co&nsels of
bot# arties s&bmitted t#e names of t#e ersons
designated by t#em as t#eir commissioners. ,#e
trial co&rt later aointed t#e commissioners.
,#e Commissioners s&bmitted to t#e co&rt a
Consolidated 4eort regarding t#e alicable &nit
rices.
3o%ever$ t#e CororationFs co&nsel$ Attorney.
Ment&ra$ filed a manifestation in Co&rt stating t#at
t#e Board of 7irectors did not arove t#e
Comromise Agreement entered into by t#e
co&nsels.
)etitioners filed an ans%er to Attorney. Ment&raFs
manifestation raying t#at t#e co&rt ignore and
disregard t#e manifestation. /t alleged t#at %#en
t#e Co&rt inG&ired if t#e la%yers of t#e Cororation
%ere d&ly a&t#ori6ed to enter into a comromise
agreement$ t#e la%yers ans%ered in t#e
affirmative.
,#e trial co&rt rendered a decision &#olding t#e
Agreement. ,#e etitioners t#en filed a motion for
exec&tion %#ic# t#e trial co&rt granted. 3o%ever$
&on an oosition of t#e Cororation$ t#e trial
D2
co&rt reversed its decision and set aside t#e
motion for exec&tion. /t #eld t#at t#e Agreement
%as contrary to la% beca&se t#e la%yers #ad no
secial o%er of attorney as reG&ired by Art. 1!A!
of t#e Civil Code.
ISSUE> :2; t#e Comromise Agreement is valid
,EL&. ;2. Art. 1!A! of t#e Civil Code and 4&le
1@!$ -ec. 2@ of t#e 4&les of Co&rt secifically
reG&ire t#at a secial o%er of attorney be #ad
%#en entering into a comromise agreement.
,#e Comromise Agreement bet%een t#e arties
%as signed only by t#e artiesF resective la%yers
b&t it %as not dis&ted t#at t#e la%yers of t#e
Cororation #ad not s&bmitted to t#e Co&rt any
%ritten a&t#ority from t#eir client to enter into a
comromise.
Also$ it #as been #eld t#at an officer or an agent of
t#e cororation #as no o%er to comromise or
settle a claim by or against t#e cororation$ excet
to t#e extent t#at s&c# o%er is given to #im eit#er
exressly or by reasonable imlication from
circ&mstance. /t is t#&s necessary to ascertain
%#et#er t#e Board of 7irectors of t#e Cororation
#ad a&t#ori6ed its la%yers to enter into t#e
Comromise Agreement.
B&t as resented by evidence$ t#e co&nsels
categorically deny t#at t#ey ever reresented to
t#e co&rt t#at t#ey %ere a&t#ori6ed to enter into a
comromise. ;o%#ere does it aear t#at t#e
CororationFs la%yers ever made s&c# a
reresentation.
Also$ contrary to etitionerFs claims$ Attorney.
Cardenas$ as administrative manager of t#e
cororation$ did not tacitly ratify t#e agreement
entered into by t#e arties. 3e #ad no a&t#ority to
ratify. /t #as been #eld t#at ratification m&st be by
t#e officer or governing body #aving a&t#ority to
make s&c# contract$ and m&st be %it# f&ll
kno%ledge.
=astly$ t#e co&nsels of t#e Cororation #ave not
demonstrated any act or declaration of t#e
cororation amo&nting to false reresentation or
concealment of material facts calc&lated to
mislead t#e etitioners. 3ence$ t#e doctrine of
estoel cannot be &sed against t#em.
*etition dismissed.
PN/ ). 2a0imo Sta. 2aria (2AI)
A&g&st 2($ 1("(
,ee#ankee$ *.
+acts. ,%o s&gar cro loans %ere obtained by
defendant 'aximo -ta. 'aria from laintiff bank
&nder a secial o%er of attorney$ exec&ted in #is
favor by #is six brot#ers and sisters to mortgage a
1"?odd #ectare arcel of land$ jointly o%ned by all
of t#em. -aid -)A indicated t#at t#e sibling
constit&te and aoint 7r. 'AW/'2 -,A. 'A4/A as
t#eir tr&e and la%f&l attorney of and in t#eir lace$
name and stead to mortgage$ or convey as sec&rity
to any bank$ comany or to any nat&ral or j&ridical
erson$ t#eir &ndivided s#ares over a certain arcel
of land toget#er %it# t#e imrovements t#ereon.
/n addition$ Maleriana -ta. 'aria alone also
exec&ted in favor of #er brot#er$ 'aximo$ a secial
o%er of attorney to borro% money and mortgage
any real estate o%ned by #er. By virt&e of t#e t%o
above o%ers$ 'aximo -ta. 'aria alied for t%o
searate cro loans %it# t#e laintiff bank. As
sec&rity for t#e t%o loans$ 'aximo -ta. 'aria
exec&ted in #is o%n name in favor of laintiff bank
t%o c#attel mortgages on t#e standing cros$
g&aranteed by s&rety bonds for t#e f&ll a&t#ori6ed
amo&nts of t#e loans exec&ted by t#e Associated
/ns&rance P -&rety Co.$ /nc. as s&rety %it# 'aximo
-ta. 'aria as rincial.
,#e trial co&rt r&led in favor of );B.
/ss&e. :#et#er or not t#e secial o%er of attorney
iss&ed by t#e siblings a&t#ori6ed -ta. 'aria to
borro% money
3eld. ;2.
)laintiff bank #as not made o&t a ca&se of action
against defendants?aellants 0excet Maleriana1$
so as to #old t#em liable for t#e &naid balances of
t#e loans obtained by 'aximo &nder t#e c#attel
mortgages exec&ted by #im in #is o%n name
alone. /n t#e early case of Bank of )./. vs. 7e
Coster$ t#e Co&rt$ in #olding t#at t#e broad o%er
of attorney given by t#e %ife to t#e #&sband to
look after and rotect t#e %ifeKs interests and to
transact #er b&siness did not a&t#ori6e #im to
make #er liable as a s&rety for t#e ayment of t#e
re?existing debt of a t#ird erson$ cited t#e
f&ndamental constr&ction r&le t#at ?1ere in an
intrument .o?er and dutie are .e*i'ied
and de'ined, t1at a-- o' u*1 .o?er and
dutie are -imited and *on'ined to t1oe
?1i*1 are .e*i'ied and de'ined, and a-- ot1er
.o?er and dutie are e0*-uded.J ,#is is b&t in
accord %it# t#e disinclination of co&rts to enlarge
an a&t#ority granted beyond t#e o%ers exressly
given and t#ose %#ic# incidentally flo% or derive
t#erefrom as being &s&al or reasonably necessary
and roer for t#e erformance of s&c# exress
o%ers.
,#e fact t#at 'aximo resented to t#e laintiff
bank MalerianaKs additional secial o%er of
attorney exressly a&t#ori6ing #im to borro%
money$ aside from t#e a&t#ority to mortgage
exec&ted by Maleriana toget#er %it# t#e ot#er
defendants?aellants also in 'aximoKs favor$
lends s&ort to o&r vie% t#at t#e bank %as not
satisfied %it# t#e a&t#ority to mortgage alone. +or
D@
ot#er%ise$ s&c# a&t#ority to borro% %o&ld #ave
been deemed &nnecessary and a s&rl&sage. And
#aving failed to reG&ire t#at 'aximo s&bmit a
similar a&t#ority to borro%$ from t#e ot#er
defendants?aellants$ laintiff bank$ %#ic#
aarently %as satisfied %it# t#e s&rety bond for
reayment &t & by 'aximo$ cannot no% seek to
#old said defendants?aellants similarly liable for
t#e &naid loans.
&ire*tor o' Pu8-i* 9or: ). Sin4 6u*o (!(G)
01(2(1

Fa*t> ,itle to land %as o%ned by de =a 4ama$
,anbootien$ -ing *&co and -ing Bengco. 4amaKs
interest %as s&bseG&ently transferred to 9c#a&s.
2%ners mortgaged t#e land to );B to sec&re credit
of )1A0k. /ndebtedness #as not been satisfied.

=and is located on )oint =lorente at mo&t# of /loilo
4iver and of so lo% level t#at it is s&bject to
freG&ent flooding. /n 1(21 )#il 5ovt %as lanning
#arbor imrovements in t#is vicinity$ reG&iring
extensive dredging by B&rea& of )&blic :orks in
mo&t# of said river. -&c# dredging made necessary
for 7irector of )&blic :orks to find a lace of
deosit for dirt and m&d taken from lace dredged.
As land %as lo% and accessible t#e material
deosited on s&c# roerty. A contract %as made
bet%een 7ir. )&blic :orks 0reresenting t#e )#il
5ovt1 and D o%ners 4ama$ -ing *&co$ ,anboontien
and -ing Bengco %#ere o%ners %o&ld ay to #ave
material to be deosited on t#eir land.

7ir )&blic :orks reG&ired a bond in enal amo&nt
of )1C0k to be s&lied by o%ners$ conditioned for
ayment of amo&nt d&e from o%ners. Bond %as
exec&tedE one of names aearing on it %as Casa
Mi&da de ,an ,oco &rorting to be signed by de la
4ama.

After 7ir made s&bstantial comliance it demanded
ayment b&t none %as made so no% it seeks t#e
amo&nt d&e t#e 5overnment from t#e original
o%ners and from s&reties. );B %as made a arty
defendant as #aving interest &nder its rior
mortgage &on roerty$ %#ile 9c#a&s %as made
defendant as s&ccessor in interest of 7e =a 4ama
and tan 2ng %ido% of ,an ,oco. Comlaint so&g#t
to enforce t#e 5overnmentKs lien and t#at roerty
s#o&ld be sold Is&bject to t#e first mortgage in
favor of t#e );BI.

2%ner. 5ovt #ad not comlied %it# contract in t#at
dredged material deosited #ad not been s&fficient
in G&antity to raise level of land above #ig# %ater
t#erefore o%ners not obligated to ay for t#e filling
oeration.

Iue> :2; 5ovt #ad comlied %it# oblig
t#erefore it is entitled to ayment for t#e filling<
>9-
:2; :ido% of ,an ,oco is bo&nd by s&retys#i<
;2

,e-d>
#. Contra*t did not o8-i4ate 4o)ernment to
raie t1e -and on ?1i*1 t1e dred4ed materia-
?a de.oited to an7 .e*i'ied -e)e-.
/t only obligated itself to lace &on land t#e
material %#ic# s#o&ld be dredged from mo&t# of
/loilo 4iver in co&rse of imrovement done by 5ovt
near t#at lace.

/n indorsement of 7irector$ acceted by o%ners$ it
%as made clear t#at B&rea& did not &ndertake to
f&rnis# material to comlete t#e filling of land to
any secified level.

Allegation t#at beca&se arts filled %ere still
s&bject to flooding d&ring rains and t#at o%ners
%ere &nable to sell land and t#erefore entitled to
damages &ntenable beca&se no breac# done by
5ovt.

2. "an (n4 S5e not 8ound 87 *ontra*t o'
uret71i..
Contract &rorts to be signed by de la 4ama$
acting for defendants &nder a o%er of attorney.
B&t t#e 5ovt #as not s#o%n a o%er of attorney
t#at %o&ld a&t#ori6e creation$ by attorney?in?fact$
of an obligation in nat&re of s&retys#i binding
&on rincial.

2 )o%ers of Attorney conferred by ,an 2ng -6e
&on 7e =a 4ama resented by 5ovt does not
confer &on de la 4ama t#e o%er to bind rincial
by a contract of s&retys#i. ,#e cla&ses relate
more to t#e exec&tion of contracts relating to
roerty. ,#e more general %ords$ &nder r&le of
ej&sdem generis$ refer to contracts of like
c#aracter. )o%er to exec&te a contract of so
excetional a nat&re as a contract of s&retys#i or
g&aranty canFt be inferred from general %ords
contained in t#ese o%ers.

/n Art. 1!2A. g&aranty not res&med b&t m&st be
exress and canFt be extended beyond its secified
limits. By analogy a o%er of attorney to exec&te a
contract of g&aranty -328=7 ;2, B9 inferred from
vag&e or general %ords$ esecially %#en s&c#
%ords #ave t#eir origin and exlanation in
artic&lar o%er of a %#olly different nat&re. ,C
erred in j&dgment against ,an 2ng -6e &on bond.

/A Finan*e ). CA ("(FF)
2e-endre5 ). CA (!EG)
)er C&riam
1(!(
FAC"S> ,#e comlainants 0etitioners1 acc&sed a
certain )ineda of estafa. ,#e resondent Attorney.
7ecena %as t#e rivate rosec&tor of t#e said
DD
case. :it#o&t t#e kno%ledge and consent of
comlainants$ t#e resondent IsettledI t#e estafa
case amicably for )2$000.00. 3e informed
comlainants of t#e amicable IsettlementI and of
t#e )C00.00 advance ayment #e received only
after etitioner ;arciso 'elendre6 #ad confronted
#im abo&t t#ese matters. And resondent never
t&rned over to comlainants t#e )C00.00.
ISSUE> :2; a la%yer can enter into an amicable
settlement %it# t#e ot#er arty %it#o&t t#e
kno%ledge and consent of #is client.
!ULING> ;2.
4esondent$ as a la%yer$ is res&med to be a%are
of t#e r&le t#at la%yers cannot I%it#o&t secial
receive anyt#ing in disc#arge of a clientKs claim$
b&t t#e f&ll amo&nt in cas#.. 4esondentKs fail&re
to t&rn over to comlainants t#e amo&nt given by
acc&sed )ineda as artial IsettlementI of t#e
estafa case &nderscores #is lack of #onesty and
candor in dealing %it# #is clients.
P1i-. A-uminum ). FASGI (A//Y)
+acts.
+A-5/ 9nterrises /ncororated 0I+A-5/I1$ an
American Cororation entered into an
agreement %#erein )A:/ +ratelli )edrini
-are66o -.).A. 0I+)-I1$ an /talian cororation
and %o&d man&fact&re and deliver !$C(D
%#eels to t#em for &rc#ase$ imortation and
distrib&tors#i. +A-5/ fo&nd t#e s#iment to
be defective and %as not in comliance %it#
reG&irements.
+A-5/ so&g#t for a rescission of t#e
distrib&tors#i agreement and for ref&nd of
ayments in t#e 8- Co&rts. ,#ey %on b&t )A:/
failed to oen =etters of Credit in favor of
+A-5/ allegedly d&e to Central Bank IinG&iries
and restrictions$I romting +A-5/ to &rs&e its
comlaint for damages against )A:/ before t#e
California district co&rt. /n t#e interim$ t#e
arties$ reali6ing t#e rotracted rocess of
litigation$ resolved to enter into anot#er
arrangement$ t#is time entitled I-&lemental
-ettlement Agreement$I on 2" ;ovember
1(!0. ,#is %as entered into by t#e American
la%yer for )A:/.
Basically$ )A:/ %o&ld ref&nd and +A-5/ %o&ld
ret&rn t#e s#iments. +A-5/ ret&rned 2
s#iments all t#e %#ile %aiting for =Cs from
)A:/ b&t to no avail. +A-5/ so&g#t to enforce
t#e j&dgement in t#e )#iliine Co&rts in 4,C
'akati.
)A:/ contends t#at t#e -&lemental
-ettlement Agreement %as entered into by
Attorney. 4eady %it#o&t a&t#ority and
t#erefore is not enforceable. Merily$ in t#is
j&risdiction$ it is clear t#at an attorney cannot$
%it#o&t a clientKs a&t#ori6ation$ settle t#e
action or s&bject matter of t#e litigation even
%#en #e #onestly believes t#at s&c# a
settlement %ill best serve #is clientKs interest.
/ss&e. :o; t#e --Agreement %as validly entered
into by Attorney. 4eady.
3eld. >es. CA affirmed against )A:/
/n t#e instant case$ t#e s&lemental
settlement agreement %as signed by t#e
arties$ incl&ding 'r. ,#omas 4eady$ on 0"
2ctober 1(!0. ,#e agreement %as lodged in
t#e California case on 2" ;ovember 1(!0 or
t%o 021 days after t#e re?trial conference #eld
on 2D ;ovember 1(!0. /f 'r. 4eady %as indeed
not a&t#ori6ed by )A:/ to enter into t#e
s&lemental settlement agreement$ )A:/
co&ld #ave fort#%it# signified to +A-5/ a
disclaimer of t#e settlement. /nstead$ more
t#an a year after t#e exec&tion of t#e
s&lemental settlement agreement$
artic&larly on 0( 2ctober 1(!1$ )A:/
)resident 4omeo -. 4ojas sent a
comm&nication to 9lena B&#ol6er of +A-5/ t#at
failed to mention 'r. 4eadyKs s&osed lack of
a&t#ority. 2n t#e contrary$ t#e letter confirmed
t#e terms of t#e agreement %#en 'r. 4ojas
so&g#t forbearance for t#e imending delay in
t#e oening of t#e first letter of credit &nder
t#e sc#ed&le sti&lated in t#e agreement.
It i an a**e.ted ru-e t1at ?1en a *-ient,
u.on 8e*omin4 a?are o' t1e *om.romie
and t1e =ud4ment t1ereon, 'ai- to
.rom.t-7 re.udiate t1e a*tion o' 1i
attorne7, 1e ?i-- not a'ter?ard 8e 1eard
to *om.-ain a8out it.
;or co&ld )A:/ claim any rej&dice by t#e
settlement. )A:/ %as sared from ossibly
aying +A-5/ s&bstantial amo&nts of damages
and inc&rring #eavy litigation exenses
normally generated in a f&ll?blo%n trial. )A:/$
&nder t#e agreement %as afforded time to
reimb&rse +A-5/ t#e rice it #ad aid for t#e
defective %#eels. )A:/$ s#o&ld not$ after its
oort&nity to enjoy t#e benefits of t#e
agreement$ be allo%ed to later diso%n t#e
arrangement %#en t#e terms t#ereof
&ltimately %o&ld rove to oerate against its
#oef&l exectations.
Additional iss&e. )A:/ assailed not only 'r.
4eadyKs a&t#ority to sign on its be#alf t#e
-&lemental -ettlement Agreement b&t
deno&nced like%ise #is a&t#ority to enter into a
sti&lation for j&dgment before t#e California
co&rt on 0" A&g&st 1(!2 on t#e gro&nd t#at it
#ad by t#en already terminated t#e formerKs
services. +or #is art$ 'r. 4eady admitted t#at
%#ile #e did receive a reG&est from 'an&el
-ingson of )A:/ to %it#dra% from t#e motion
DC
of j&dgment$ t#e reG&est &nfort&nately came
too late. /n an exlanatory telex$ 'r. 4eady
told 'r. -ingson t#at &nder American *&dicial
)roced&res %#en a motion for j&dgment #ad
already been filed a co&nsel %o&ld not be
ermitted to %it#dra% &nilaterally %it#o&t a
co&rt order. +rom t#e time t#e sti&lation for
j&dgment %as entered into on 2" Aril 1(!2
&ntil t#e certificate of finality of j&dgment %as
iss&ed by t#e California co&rt on 0A -etember
1(!2$ no notification %as iss&ed by )A:/ to
+A-5/ regarding its termination of 'r. 4eadyKs
services. /f )A:/ %ere indeed #ood%inked by
'r. 4eady %#o &rortedly acted in coll&sion
%it# +A-5/$ it s#o&ld #ave atly raised t#e
iss&e before t#e for&m %#ic# iss&ed t#e
j&dgment in line %it# t#e rincile of
international comity t#at a co&rt of anot#er
j&risdiction s#o&ld refrain$ as a matter of
roriety and fairness$ from so ass&ming t#e
o%er of assing j&dgment on t#e correctness
of t#e alication of la% and t#e eval&ation of
t#e facts of t#e j&dgment iss&ed by anot#er
trib&nal.
Lim Pin ). Liao "an (EA!LA)
*&ly 20$ 1(!2
5&tierre6$ *r.$ *.
+acts. -s =iao ,an and ,an C#o 3&a o%ned a
certain real roerty in Caloocan$ %#ic# it leased to
=im )in for )#1C00 er mont#. 7&e to =im )inFs
ref&sal to ay Ck mont#ly rental$ t#e -s filed an
&nla%f&l detainer case against =im )in. After
several ostonements 0-et 1$ -et 1D$ -et 2A1$
t#e arties$ in t#eir 2ct 1( #earing$ &on t#e
initiative of t#e Co&rt a G&o$ aroved t#e
Comromise Agreement entered into by t#e
arties. =im )in %as not resent t#at time$ b&t s#e
%as reresented by #er son$ 5eorge 3&ng$ %#o
al%ays accomanied #er in revio&s #earings. 2n
t#e ot#er #and$ =iao ,an and #er co&nsel %ere
resent d&ring t#e said #earing and agreed %it#
t#e terms of t#e Comromise Agreement$ %#ic#
rovided t#at t#e mont#ly rental s#all increase by
)C00 a mont#$ &ntil it reac#es )Ck.
3o%ever$ =im )in %as not agreeable to t#e
Agreement. 3ence$ s#e instit&ted anot#er action$
asking t#at t#e Agreement be declared n&ll and
void$ contending t#at #er son does not #ave t#e
o%er to reresent #er$ considering t#e lack of
%ritten o%er?of?attorney.
/--89. :2; 5eorge 3&ng is t#e agent of =im )in.
39=7. >9-. ,#e reG&irement of secial o%er of
attorney in Art 1!A! 0%it# regard to entering into
comromise agreements$ etc for agents1 and -ec
2@$ 4&le 1@! 0%it# regard to comromising t#e
clientFs litigation1 does not refer to t#e form$ b&t
merely refer to t#e nat&re of a&t#ori6ation. ,#e
reG&irements are met if t#ere is a clear mandate
from t#e rincial secifically a&t#ori6ing t#e
erformance of t#e actE s&c# a mandate may be
eit#er oral or %ritten$ t#e one vital t#ing being t#at
it s#all be exress and d&ly establis#ed by
evidence.
,#e records s#o% t#at *&dge Cancio took t#e
necessary reca&tions in allo%ing 3&ng to enter
into t#e Agreement %it# =iao ,an. 'oreover$ t#e
fact t#at$ on revio&s #earings$ =iao co&ld not
decide anyt#ing %it#o&t first cons&lting #er son
clearly s#o%s t#at #e #ad f&ll a&t#ority to do so.
9ven ass&ming t#at t#e 3&ng %as not an
a&t#ori6ed agent$ t#e contract$ being merely
&nenforceable$ %as ratified by t#e act of filign t#e
9x?)arte 'otion to :it#dra% 7eosits$ alleging in
#er etition t#at t#ere is anot#er case ending
bet%een t#e same arties to %#ic# t#e arties
#ave agreed to enter into a comromise
agreement.
San 6uan Stru*tura- and Stee- ) CA (6ANCES)
+acts. -an *&an -tr&ct&ral and -teel +abricators
/nc. entered into an agreement %it# 'otoric# -ales
Cororation for t#e transfer of t#e latterFs arcel of
land to t#e former. ;enita 5r&enberg$ 'otoric#Fs
treas&rer$ %as t#e one %#o entered t#e agreement
for 'otoric#. -#e %as$ #o%ever$ not a&t#ori6ed by
t#e board of directors. ,#ere is also no evidence
t#at s#e reresented t#at s#e %as a&t#ori6ed. -an
*&an -tr&ct&ral and -teel made a do%nayment of
)100$000. 3o%ever$ t#e transfer did not &s#
t#ro&g# desite reeated demands made by -an
*&an -tr&ct&ral and -teel.
4&ling.
4,C O dismissed.
CA O dismissed. ;enita to ref&nd t#e do%n
ayment of 100$000 given by -an *&an -tr&ct&ral
and -teel.
/ss&e. :2; sale is valid Y;2Z
39=7. 'otoric# cannot be bo&nd by t#e contract
beca&se it never a&t#ori6ed t#e sale. ,#e general
rinciles of agency govern t#e relation bet%een
t#e cororation and its officers or agents$ s&bject
to t#e article of incororation$ byla%s$ or relevant
rovisions of la%. ConseG&ently$ -elling is foreign
to a cororate treas&rerFs f&nction. ;eit#er is real
estate sale s#o%n to be a normal b&siness activity
of 'otoric# since itFs rimary &rose is marketing$
distrib&tion$ exort and imort in relation to a
general merc#andising b&siness. 'oreover$ Art
1!AD states t#at a sale of a iece of land t#ro&g#
an agent m&st be in %riting. ;enita %as not
a&t#ori6ed. ;eit#er is t#ere any roof t#at 'otoric#
ratified$ exressly or imliedly$ t#e contract.
D"
!ura- /an: o' Ca-oo*an ). CA (ALAIN)
Aril 21$ 1(!1
7e Catro$ *..
FAC"S> 'axima Castro$ a A0 year?old lady %#o
can not read and %rite t#e 9nglis# lang&age since
s#e only finis#ed 2
nd
grade$ needed money in t#e
amo&nt of )@$000.00 to invest in t#e b&siness of
so&ses Malencia.
Castro$ accomanied by so&ses Malencia$ %ent to
t#e 4&ral Bank of Caloocan to aly for an
ind&strial loan. -everino Malencia arranged
everyt#ing abo&t t#e loan and also s&lied t#e
ersonal data reG&ired for CastroFs alication.
+e% days later$ %#en t#e loan %as aroved$
Castro$ again accomanied by so&ses Malencia$
signed a romissory note corresonding to #er loan
in favor of t#e bank. 2n t#e same day$ Malencia
so&ses also obtained from t#e bank an eG&al
amo&nt of )@$000.00. ,#ey signed a romissory
note corresonding to t#eir loan in favor of t#e
bank and #ad Castro affixed t#ereon #er signat&re
as co?maker. ,#e t%o loans %ere also sec&red by a
real?estate mortgage on CastroFs #o&se and lot.
8nable to satisfy t#e obligation covering t#e t%o
romissory notes$ a notice of s#eriffFs sale on #er
roerty %as addressed to Castro. )roblems and
iss&es started to come?o&t. Castro learned for t#e
first time t#at t#e mortgage contract %as for
)"$000.00 and not only )@$000.00 O t#e amo&nt
s#e loaned. /t %as also #er first time to reali6e t#at
s#e %as made to sign as co?maker of t#e
romissory note and claimed t#at t#is %as done
%it#o&t #er being consent. 9vent&ally$ #er roerty
%as s&ccessf&lly sold by t#e s#eriff.
Castro filed a s&it. ,rial co&rt$ affirmed by CA$
declared t#e romissory note making Castro as co?
maked invalid beca&se t#is %as obtained by fra&d
eretrated on #er by t#e Malencias %#o #as
ab&sed #er confidence$ taking advantage of #er old
age and ignorance of #er financial need. ,#e
decision relieved Castro of any liability to t#e
romissory note 0artially1 and t#e mortgage
contract %as deemed valid & to t#e amo&nt of
)@$000.00 only 0#er ersonal loan to t#e bank1. /t
%as also declared t#at t#e 4&ral Bank ret&rn to t#e
#ig#est bidder t#e &rc#ase rice it aid for t#e
mortgaged roerty at t#e &blic a&ction.
ISSUE> 0for o&r &roses1 :#o bet%een Castro
and t#e bank s#o&ld s&ffer t#e conseG&ences of
t#e fra&d eretrated by t#e Malencias.
,EL&> ,#e bank %as as m&c# g&ilty$ as Castro
%as$ of negligence in giving consent to t#e
contracts.
!A"I(>
,#e Bank arg&e t#at CastroFs act of #olding t#e
Malencias as #er agent led t#e bank to believe t#at
t#ey %ere a&t#ori6ed to seak and bind #er. -#e
cannot no% be ermitted to deny t#e a&t#ority of
t#e Malencias to act as #er agent.
,#e a&t#ority of t#e Malencias %as only to follo%?
& CastroFs loan alication %it# t#e bank. ,#ey
%ere not a&t#ori6ed to borro% for #er. ,#is is
aarent from t#e fact t#at Castro %ent to t#e
bank to sign t#e romissory note for #er loan of
)@$000.00. if #er act #ad been &nderstood by t#e
Bank to be a grant of an a&t#ority to t#e Malencias
to borro% in #er be#alf$ it s#o&ld #ave reG&ired a
secial o%er of attorney exec&ted by Castro in
t#eir favor. -ince t#e bank did not$ :e can rig#tly
ass&me t#at it did not entertain t#e notion$ t#at t#e
Malencia so&ses %ere in any manner acting as an
agent of Castro.
,#e bank s#o&ld #ave exercised d&e care and
r&dence by making roer inG&iry if CastroFs
consent to t#e mortgage %as %it#o&t taint or
defect.
I. Arti*-e #$C9, #$$0
Art. 1!A(. A secial o%er to sell excl&des t#e
o%er to mortgageE and a secial o%er to
mortgage does not incl&de t#e o%er to sell.
Art. 1!!0. A secial o%er to comromise does not
a&t#ori6e s&bmission to arbitration.
#. *ae
Nationa- /an: ) "an (n4 S5e (GEN)
-et. 2$ 1(2(
*o#ns$ *.
FAC"S> ,an 2ng -6e vested ,an B&co$ #er
attorney?in?fact$ t#e o%er for me and in my
name to sign$ seal and exec&te$ and as my act and
deed$ deliver any lease$ any ot#er deed for
conveying 0of1 any real or ersonal roerty.
,an B&co loaned )@00$000 from t#e ;ational Bank.
3e t#en exec&ted a romissory note and a real
estate mortgage over a roerty in /loilo o%ned by
t#e defendant to sec&re t#e loan.
:#en no art of t#e defendant #as been aid$ t#e
Bank filed a comlaint and rayed t#at t#e
roerty be foreclosed and t#at t#e roceeds be
alied to t#e satisfaction of t#e debt.
,#e lo%er co&rt rendered j&dgment in favor of t#e
Bank. 8on aeal$ t#e defendant alleged t#at ,an
DA
B&co #ad no a&t#ority to borro% money and
mortgage #er roerties.
ISSUE> :2; ,an B&co #ad t#e a&t#ority to borro%
money and exec&te t#e romissory note and
mortgage defendantFs real roerty
,EL&> ;2. 8nder t#e American *&risr&dence.
1. Cycloedia of =a% and )roced&re.
? t#at t#e a&t#ority to borro% money$ conferred on
an agent$ m&st be created by exress terms or
necessarily imlied from t#e nat&re of t#e agency$
for a&t#ority to borro% money is one of t#e most
dangero&s o%ers a rincial can confer &on an
agent
2. 3a%x#&rst v 4at#geb.
? ,#e %ords Tsell and transferF are of no broader
signification t#at t#e %ords Tsell and conveyF &sed
%it# reference to a conveyance of real estateE and
t#e latter$ emloyed as t#e oerative %ords in a
o%er to convey land$ do not carry a&t#ority to
mortgage or ot#er%ise disose of t#e roerty.
@. Cambell v +oster 3ome Association.
? A o%er to mortgage land is not incl&ded in a
o%er of attorney to sell and convey$ &nco&led
%it# any interest in t#e land or t#e f&nd.
D. 5olinsky v Allison
? A o%er of attoney$ like any ot#er instr&ment$ is
to be constr&ed according to t#e nat&ral imort of
its lang&ageE and t#e a&t#ority %#ic# t#e rincial
#as conferred &on #is agent is not to be extended
by imlication beyond t#e nat&ral and ordinary
significance of t#e terms in %#ic# t#at a&t#ority
#as been given.
;o a&t#ority of any co&rt #as been cited and none
%ill ever be fo&nd #olding t#at a o%er to sign$
seal and exec&te$ and as my act and deed$ deliver$
any lease$ any ot#er deed for conveying 0of1 any
real or ersonal roerty or any similar lang&age$
standing alone and %it#in itself$ carries %it# it or
imlies t#e o%er to borro% money or to exec&te a
real mortgage to sec&re t#e ayment of a debt.
Appeal #ranted. Cecision of the lower court
reversed and set aside.
PN/ ). Pa5 A4ude-o 7 Gon5a4a, et a-. (2AI)
Millareal$ *.
+acts. 2n ;ovember ($ 1(20$ )a6 Ag&delo y
5on6aga exec&ted in favor of #er ne#e%$ 'a&ro
A. 5arr&c#o$ a doc&ment conferring &on #im a
secial o%er of attorney s&fficiently broad in
scoe to enable #im to sell$ alienate and mortgage
in t#e manner and form #e mig#t deem
convenient$ all #er real estate sit&ated in t#e
m&nicialities of '&rcia and Bacolod$ 2ccidental
;egros$ consisting in lots ;os. "1 and 20A of t#e
cadastral s&rvey of Bacolod$ 2ccidental ;egros$
toget#er %it# t#e imrovement t#ereon.
2n 7ecember 22$ 1(20$ Amaro A. 5arr&c#o
exec&ted a doc&ment %#ereby s#e conferred &on
#er brot#er 'a&ro A 5arr&c#o a secial o%er of
attorney s&fficiently broad in scoe to enable #im
to sell$ alienate$ mortgage or ot#er%ise enc&mber$
in t#e manner and form #e mig#t deem
convenient$ all #er real estate sit&ated in t#e
m&nicialities of '&rcia and Bago$ 2ccidental
;egros.
;ot#ing in t#e aforesaid o%ers of attorney
exressly a&t#ori6ed 'a&ro A. 5arr&c#o to contract
any loan nor to constit&te a mortgage on t#e
roerties belonging to t#e resective rincials$
to sec&re #is obligations.
-&bseG&ently$ 'a&ro A. 5arr&c#o exec&ted in t#e
favor of t#e )#iliine ;ational bank several
mortgages on Ag&deloFs roerties to sec&re t#e
ayment of credits$ loans$ commercial overdrafts$
etc.$ toget#er %it# interest t#ereon$ %#ic# #e
mig#t obtain from t#e bank$ iss&ing t#e
corresonding romissory notes to t#at effect.
,#e mortgage deeds$ as %ell as t#e corresonding
romissory notes$ %ere exec&ted in 'a&ro A.
5arr&c#oKs o%n name and signed by #im in #is
ersonal caacity$ a&t#ori6ing t#e mortgage
creditor$ t#e )#iliine ;ational Bank$ to take
ossession of t#e mortgaged roerties$ by means
of force if necessary$ in case #e failed to comly
%it# any of t#e conditions sti&lated t#erein
/ss&e. :#et#er or not 5arr&c#o acted %it#in t#e
a&t#ority given to #im in obtaining t#e mortgages
3eld. ;2.
A romissory note and t%o mortgages exec&ted by
t#e agent for and on be#alf of #is rincial$ in
accordance %it# a o%er of attorney exec&ted by
t#e rincial in favor of t#e agent$ are valid$ and as
rovided by article 1A2A of contracted by t#e
agentE b&t a mortgage on real roerty of t#e
rincial not made and signed in t#e name of t#e
rincial is not valid as to t#e rincial.
,#e records do not s#o% t#at t#e loan obtained by
'a&ro A. 5arr&c#o$ evidenced by t#e romissory
note$ %as for #is rincial )a6 Ag&delo y 5on6aga.
,#e secial o%er of attorney$ does not a&t#ori6e
'a&ro A. 5arr&c#o to constit&te a mortgage on t#e
real estate of #is rincial to sec&re #is ersonal
obligations. ,#erefore$ in doing so by virt&e of t#e
doc&ment$ #e exceeded t#e scoe if #is a&t#ority
and #is rincial is not liable for #is acts
PN/ ). Sta. 2aria, u.ra
D!
!odri4ue5 ). Pamintuan + &e 6eu (!(G)
/i*o- Sa)in4 ). CA ("(FF)
6. Arti*-e #$$#, #$$2
Art. 1!!1. ,#e agent m&st act %it#in t#e scoe of
#is a&t#ority. 3e may do s&c# acts as may be
cond&cive to t#e accomlis#ment of t#e &rose of
t#e agency.
Art. 1!!2. ,#e limits of t#e agentKs a&t#ority s#all
not be considered exceeded s#o&ld it #ave been
erformed in a manner more advantageo&s to t#e
rincial t#an t#at secified by #im.
#. ditin4ui1 8et?een aut1orit7 and
.o?er
2. :ind o' aut1orit7
@. *ae
"an "ion4 "e*: ). SEC (!EG)
AvanceBa
1(@(
FAC"S> ,an ,iong 5ong &rc#ased and sold
s#ares of stock t#ro&g# resondent C&a 2# P Co.
as #is broker. /t %as alleged t#at t#e resondent
&rc#ased s#ares of stock for )@$"D(.!" and sold
ot#ers for )2$@!C$ %it#o&t t#e consent or a&t#ority
of t#e etitioner
ISSUE> :2; transactions effected by t#e
resondent are n&ll and void %it# resect to t#e
etitioner beca&se t#ey %ere not consented or
a&t#ori6ed by t#e latter.
!ULING> ;2.
,#e -ec&rities and 9xc#ange Commission$ after
going into evidence$ reac#ed t#e concl&sion t#at
t#e etitioner failed to establis# #is contention. ,#e
aeal from t#e resol&tion of t#e Commission is
based &on a &re G&estion of fact$ and t#e fact&al
findings of t#e commission is final &nder section @C
of Common%ealt# Act ;o. !@.
/a7 3ie? ,ote- ). Ker + Co., and P1onei0
Auran*e Co. Ltd. (A//Y)
+acts.
Bay Mie% 3otel sec&red a fidelity g&arantee
bond from Ser P Co.$ =td.$ for its acco&ntable
emloyees against acts of fra&d and
dis#onesty %#ose rincial is )#oenix
Ass&rance.
2ne of t#e 99-$ ,omas 9. Abla6a$ %#ile acting
in #is caacity as cas#ier$ %as discovered by
laintiff?aellant to #ave #ad a cas# s#ortage
and &nremitted collections in t#e total amo&nt
of )D2$D(0.(C$ it filed claims for ayments on
t#e said fidelity g&arantee bond b&t Ser P Co.
denied and ref&sed indemnification and
ayment. ,o enforce its claims$ Bay Mie%
instit&ted its comlaint at t#e ,C
Ser P Co. j&stified its denial of t#e claims of
laintiff?aellant on vario&s reasons$ s&c# as
non?comliance %it# t#e conditions sti&lated
in t#e ins&rance olicyE non?resentation of
evidence regarding t#e vario&s c#arges of
dis#onesty and misreresentation against
,omas 9. Abla6a and non?rod&ction of t#e
doc&ments to rove t#e alleged loss. Ser P Co.
like%ise averred t#at it %as merely an agent
and? as s&c# it %as not liable &nder t#e olicy.
05&ys t#is is roced&re so itFs sort of
comlicated if %e are not t#ere yet1
Ser filed a reG&est for admission t#at it %as
)#oenix Ass&rance t#at act&ally iss&ed and
rene%ed t#e olicy$ and later denied t#e claim.
:#en Bay Mie% 'ai-ed to ma:e an7 an?er
to t1e reIuet 'or admiion %it#in t#e
eriod rescribed by t#e r&les$ Ser P Co. filed a
2otion to &imi on A''irmati)e &e'ene$
dated *&ly "$ 1(""$ insisting t#at since &nder
-ec. 2$ 4&le 2" of t#e 4&les of Co&rt$ .-ainti''F
a..e--ant ?a deemed to 1a)e im.-ied-7
admitted ea*1 o' t1e matter enumerated
in t1e reIuet 'or admiion, it 'o--o?ed
t1at t1e .ro.er .art7 in interet a4aint
?1om .-ainti''Fa..e--ant mi41t 1a)e a
*-aim ?a t1e .rin*i.a- P1oeni0
Auran*e Co. (P1oeni0) and not t1e
a4ent Ker + Co.
Bay Mie% filed an oosition arg&ing t#at t#e
roer remedy$ &nder t#e circ&mstances %as
not to dismiss t#e comlaint b&t to amend it in
order to bring t#e necessary or indisensable
arties to t#e s&it. Ser P Co. filed a rely to t#e
oosition reiterating its stand t#at since it
merely acted as an agent$ t#e case s#o&ld be
dismissed and laintiff?aellant s#o&ld file t#e
necessary action against t#e rincial )#oenix.
)laintiff. Bay Mie% filed a 'otion for =eave to
Admit Amended Comlaint$ attac#ing coy of
t#e comlaint$ as amended$ t#is time
imleading )#oenix as arty defendant. 2n
A&g&st 1"$ 1(""$ Ser filed t#eir joint ans%er to
t#e amended comlaint. Again$ Ser P Co.$ =td.$
arg&ed t#at it %as merely an agent and
t#erefore not liable &nder t#e olicy. 2n t#e
ot#er #and$ )#oenix$ averred t#at &nder
Condition ! of t#e ins&rance olicy$ laintiff?
aellant %as deemed to #ave abandoned its
claim in vie% of t#e fact t#at it did not ask for
an arbitration of its claim %it#in t%elve 0121
mont#s from *&ne 22$ 1("C t#e date of receit
of t#e denial of t#e claim.
/ss&e. :o; t#e ,C %as rig#t to dismiss t#e case
against bot# Ser P Co.$ and )#oenix Ass&rance
D(
3eld. 7ismissed against Ser P Co. 4emanded as to
)#oenix Ass&rance
Admission is in t#e nat&re of evidence and its
legal effects %ere already art of t#e records of
t#e case and t#erefore co&ld be availed of by
any arty even by one s&bseG&ently
imleaded. ,#e amendment of t#e comlaint
er se cannot set aside t#e legal effects of t#e
reG&est for admission since its materiality #as
not been affected by t#e amendment. /f a fact
is admitted to be tr&e at any stage of t#e
roceedings$ it is not stricken o&t t#ro&g# t#e
amendment of t#e comlaint. ,o allo% a arty
to alter t#e legal effects of t#e reG&est for
admission by t#e mere amendment of a
leading %o&ld constit&te a dangero&s and
&ndesirable recedent. ,#e legal effects of
laintiff? aellantKs fail&re to ans%er t#e
reG&est for admission co&ld and s#o&ld #ave
been corrected belo% by its filing a motion to
be relieved of t#e conseG&ences of t#e imlied
admission %it# resect to resondent )#oenix.
-ince an agent may do s&c# acts as may be
cond&cive to t#e accomlis#ment of t#e
&rose of t#e agency$ admissions sec&red by
t#e agent %it#in t#e scoe of t#e agency o&g#t
to favor t#e rincial. ,#is #as to be t#e r&le$
for t#e act or declarations of an agent of t#e
arty %it#in t#e scoe of t#e agency and
d&ring its existence are considered and treated
in t&rn as t#e declarations$ acts and
reresentations of #is rincial and may be
given in evidence against s&c# arty.
B&t t#e motion for s&mmary j&dgment %as
filed after t#e comlaint #ad been amended
and ans%er t#ereto #ad been filed. ,#e iss&es$
t#erefore$ %it# resect to )#oenix #ad already
been like%ise joined. 'oreover$ a reading of
t#e said motion for s&mmary j&dgment$ more
artic&larly t#e rayer t#ereof$ s#o%s t#at
)#oenix did join Ser P Co. in moving for t#e
dismissal of t#e case and rayed It#at t#e
resent action be dismissed as against Ser P
Co.$ =td.$ beca&se being &rely and simly t#e
agent of t#e ins&rer$ it is not liable &nder t#e
olicy and as against t#e )#oenix Ass&rance
Co.$ =td. beca&se by failing to seek an
arbitration %it#in t%elve mont#s from t#e date
of its receit of t#e denial of its claim on *&ne
22$ 1("C$ laintiff Bay Mie% 3otel$ /nc.$ is
deemed &nder condition ! of $$ t#e olicy$ to
#ave abandoned its claim against said
defendant #oenix Ass&rance Co.$ =td.I
B&t &nder Condition !$ arbitration is only as to
amo&nt of t#e claim so t#e Co&rt #eld t#at t#e
action may roceed against )#oenix.
As to aellee Ser P Co.$ =td.$ #o%ever$ t#ere
aears to be no serio&s contradiction as to
t#e fact t#at it merely acted as t#e agent of its
rincial$ )#oenix. Considering t#at t#ere %as
f&ll disclos&re of s&c# agency since t#e
ins&rance olicy %as act&ally iss&ed by
)#oenix$ :e find no error in t#e dismissal of
t#e case against said defendant Ser P Co.$ =td.
E.eran5a ). Catindin4 (EA!LA)
'arc# @0$ 1(1DCarson$ *.
+acts. ,#e land s&bject of t#is litigation %as
originally t#e o%ner and ossessor of t#e land.
:#en #e died$ t#is land %as given to #is da&g#ter$
Menancia Catmon$ %#o toget#er %it# #er #&sband$
4amon Catinding and D c#ildren 0Andrea$ et al1
lived in t#e roerty for many years. :#en
Menancia died$ 4amon married -abina B&tron and
came to live in t#e roerty for several years. /n
1!(!$ t#ey sold t#e land to Balta6ar B&llo %#o %as
b&ying t#e land in favor of #is grandson$ +lorentino
9seran6a. ,o rectify t#e mistakes made in t#e
original deed$ t#ey %ent before t#e *&stice of t#e
)eace in 1(0D and exec&ted anot#er deed of sale.
Beca&se t#ey co&ld not take ossession of t#e said
roerty$ =&is 9seran6a and Balta6ar B&llo as
aoderados 0attorneys?in?fact1 of +lorentino
9seran6a filed an action to recover a certain iece
of land in -&rigao. ,#ey alleged t#at Andrea
Catinding %as &nla%f&lly deriving t#em of
+lorentinoFs roerty. ,#ey f&rt#er assert t#at t#e
land %as entered &on by 4amon Catinding and
-abina B&tron %#ile it %as yet &nclaimed and
&nc&ltivated landE t#at it %as first c&ltivated by
t#em and t#at t#eir title in t#e land %as by reason
of t#is original occ&ancy.
,#e trial co&rt dismissed t#eir comlaint on t#e
gro&nd t#at t#e evidence resented failed to rove
t#e claim of t#e laintiffs. 9ven t#e %itnesses t#ey
resented contradicted t#eir claim t#at Catinding
and B&tron %ere t#e original occ&ant of t#e
roerty. As a matter of fact$ t#eir %itnesses
categorically stated t#at t#e land in G&estion
formerly belonged to *&lian Catmon.
/--89. :2; t#ey can recover t#e land.
39=7. ;o. ,#e -C agreed %it# t#e concl&sions of
fact reac#ed by t#e trial co&rt$ saying t#at t#e
laintiffs %ere not even able to rove by a
reonderance of evidence t#e claims ventilated in
t#e action. ,#e record strongly revealed t#at
4amon only came into ossession of t#e land by
reason of #is %ifeFs o%ners#i$ and not t#ro&g#
original occ&ancy.
3o%ever$ it modified t#e decision of t#e trial co&rt$
dismissing it$ not based on merits b&t based on
roced&ral gro&nds. Accordingly$ t#e case %as not
bro&g#t in t#e name of t#e real arty in interest$
b&t only in t#e name of t#e aoderados.
C0
An4 ) Fu-ton Fire Inuran*e (6ANCES)
+acts. -ally Ang ins&red #er ) P - 7eartment
-tore to +&lton +ire /ns&rance. 3er store consisted
mainly of dry goods. -oon after$ t#e goods %ere
destroyed by fire. ,#e laintiffs exec&ted a claim
form. ,#eir claim %as #o%ever denied s&bseG&ent
to t#e filing of c#arge for arson against )a&lo Ang.
,#ere received t#e denial of t#e claim on Aril 1($
1(C". 'r. Ang %as$ #o%ever$ acG&itted of t#e
crime. ,#e so&ses Ang$ t#en bro&g#t an action
against t#e )aramo&nt -&rety P /ns&rance
Comany on 'ay 11$ 1(C". /t %as dismissed
%it#o&t rej&dice on -etember @$ 1(CA. ,#ey t#en
bro&g#t an action against +&lton +ire /ns&rance on
'ay C$ 1(C!. +&lton +ire /ns&rance alleges t#at
since aragra# 1@ of t#e olicy states t#at if t#e
claim is made and rejected b&t no action is
commenced %it#in 12 mont#s after s&c# rejection$
all benefits &nder t#e olicy %o&ld be forfeited$ t#e
so&ses Ang can no longer claim t#e benefits of
t#e olicy.
4&ling.
C+/ O )laintiffs committed a roced&ral mistake in
first s&ing t#e agent instead of rincial b&t t#e
mistake being merely roced&ral$ decision %as
rendered in favor of laintiffs.
/ss&e. :2; t#e action s#o&ld be dismissed Y>9-Z
39=7. ,#e condition contained in t#e ins&rance
olicy is not merely a roced&ral reG&irement. ,#e
condition is an imortant matter$ essential to a
romt settlement of claims against ins&rance
comanies$ as it demands t#at ins&rance s&its be
bro&g#t by t#e ins&red %#ile t#e evidence as to t#e
origin and ca&se of destr&ction #ave not yet
disaeared. /t is in t#e nat&re of a condition
recedent to t#e liability of t#e ins&rer$ or in ot#er
terms$ a resol&tory ca&se$ t#e &rose of %#ic# is
to terminate all liabilities in case t#e action is not
filed by t#e ins&red %it#in t#e eriod sti&lated.
,#e bringing of t#e action against )aramo&nt
-&rety cannot #ave legal effect excet t#at of
notifying t#e agent of t#e claim.
7isosition. *&dgment set aside. Case dismissed.
K. Arti*-e #$$@
Art. 1!!@. /f an agent acts in #is o%n name$ t#e
rincial #as no rig#t of action against t#e ersons
%it# %#om t#e agent #as contractedE neit#er #ave
s&c# ersons against t#e rincial.
/n s&c# case t#e agent is t#e one directly bo&nd in
favor of t#e erson %it# %#om #e #as contracted$
as if t#e transaction %ere #is o%n$ excet %#en t#e
contract involves t#ings belonging to t#e rincial.
,#e rovisions of t#is article s#all be &nderstood to
be %it#o&t rej&dice to t#e actions bet%een t#e
rincial and agent.
#. di*-oed ). undi*-oed .rin*i.a-,
.artia--7 di*-oed .rin*i.a-
2. 4enera ru-eD e0*e.tion
@. *ae
Commer*ia- /an: ). !e.u8-i* Armored Car
Ser)i*e Cor.. a- (2A!K)
FAC"S
7efendants %ere given credit accommodation
by Commercial Bank in t#e form of an
overdraft line to %#ic# t#ey dre% reg&larly
certain amo&nts. 7emands %ere made for t#e
ayment of t#e dra%ings b&t defendants #ave
failed to ay t#e amo&nts demanded.
Commercial Bank t#&s filed comlaints against
t#em.
7efendants in t#eir ans%er admit t#e oening
of t#e credit line in t#eir favor and t#at
demands for t#e indebtedness %ere made
&on t#em$ 8ut a--e4e a .e*ia- de'ene
t#at t#e directors and officers of t#e defendant
cororation deliberately defra&ded and
mismanaged t#e said cororation breac# of
tr&st in order to derive 7amaso )ere6 of #is
control and majority interest in t#e defendant
cororation$ as a res&lt of %#ic# fra&d$
mismanagement and breac# of tr&st t#e
defendants s&ffered tremendo&s lossesE t#at
t#e amo&nts dra%n by defendant cororation
&on t#e credit line %ere received and &sed by
t#e former directors and officers and same
constit&te art of t#e f&nds of t#e defendant
cororation misalied and mismanaged by
said former officers and directors of said
cororation.
ISSUES
:2; t#e obligation of t#e defendants?aellants to
ay for t#e amo&nt d&e &nder t#e overdraft line
ceases d&e to t#e misaroriations on
mismanagement of t#e f&nds of t#e cororation by
t#e directors and emloyees t#ereof. ;2.
!A"I(NALE
,#e obligation of t#e defendants?aellants to
ay for t#e amo&nt d&e &nder t#e overdraft
line is not in any %ay G&alifiedE t#ere is no
statement t#at t#e resonsibility of t#e
defendants?aellants for t#e amo&nt taken on
overdraft %o&ld cease or be defeated or
red&ced &on misaroriations on
mismanagement of t#e f&nds of t#e
cororation by t#e directors and emloyees
t#ereof. ,#e secial defense is$ t#erefore$ a
s#am defense.
Under 4enera- ru-e and .rin*i.-e o' -a?
t1e mimana4ement o' t1e 8uine o' a
C1
.art7 87 1i a4ent doe not re-ie)e aid
.art7 'rom t1e re.oni8i-it7 t1at 1e 1ad
*ontra*ted to t1ird .eron$ esecially in
t#e case at bar %#ere t#e %ritten agreement
contains no limitation to defendants?aellantsK
liability.
(rte4a ) /auan4 Farmer Coo.erati)e (GEN)
7ec. 2($ 1(C(
'ontemayor$ *.
FAC"S> 2rtega sold and delivered to defendant
2$"D@ kilos of fl&e?c&red Mirginia leaf tobacco at
)A$1@".10. ,#e defendant aid 2rtega 2
installments leaving a balance of )@$1@".10. /n
site of reeated demands made$ t#e defendant
#as failed and ref&sed to ay. 2rtega filed an
action against t#e defendant to collect ayment.
,#e defendant admitted t#e allegations of t#e
comlaint b&t set & t#e affirmative defense.
,#at t#e tobacco leaf it bo&g#t %as s#ied
and delivered to and received by t#e ACC+A
0Agric&lt&ral Credit and Cooerative +inancing
Administration1$ in accordance %it# an agency
contract entered into bet%een ACC+A as
rincial$ and t#e defendant Ba&ang +AC2'A$
as agent$ for t#e &rc#ase of local Mirginia leaf
tobaccoE and
,#at final liG&idation #ad not been made
bet%een rincial and agent.
-#ortly after filing its ans%er$ defendant filed a
I'otion to Bring in ,#ird )arty 7efendant$I
attac#ing t#ereto its I,#ird )arty ComlaintI
against t#e ACC+A raying t#at j&dgment be
rendered against it for all s&ms t#at may be
adj&dged against defendant in favor of t#e laintiff.
,#e trial co&rt$ finding t#e ACC+A to be a necessary
arty in t#e case$ granted t#e motion to bring it as
a t#ird?arty defendant. 3o%ever$ it later ordered
t#at t#e t#ird?arty comlaint be stricken o&t
beca&se it %as filed %it#o&t leave of co&rt.
,#e C+/ of =a 8nion ordered t#e defendant to ay
2rtega t#e s&m of )@$1@".10$ %it# legal interest
from t#e date of t#e filing of t#e comlaint$ l&s
costs.
ISSUE> :2; t#e defendant acted in be#alf of
ACC+A<
,EL&> >9-. Alt#o&g# at t#e time of t#e &rc#ase
of t#e tobacco in G&estion$ t#e attention of t#e
laintiff %as not called to t#e existence of t#e
agency agreement bet%een t#e ACC+A and t#e
Ba&ang +AC2'A$ t#ere is reason to believe t#at #e
act&ally kne% t#at agency and t#at t#e tobacco
leaf %as &rc#ased not on acco&nt of t#e Ba&ang
+AC2'A$ b&t act&ally for t#e ACC+A$ %#ic# is t#e
agency of t#e 5overnment c#arged %it# t#e
&rc#ase of Mirginia leaf tobacco$ in t#e
imlementation of t#e olicy of t#e 5overnment to
b&y all Mirginia leaf tobacco gro%n locally$ for
&roses of aiding Mirginia tobacco gro%ers and to
foster t#e tobacco ind&stry.
,#e +AC2'A 0+armers Cooerative and 'arketing
Association1 as its name imlies$ is concerned
mainly$ if not excl&sively$ in t#e sale and marketing
of t#e agric&lt&ral rod&ce of t#e farmers. /t is not
engaged in t#e b&y and sell b&siness for rofit.
,#e )D$000.00 s&m total of t#e t%o installments of
)1$@2C.00 and )2$"AC.00 delivered to laintiff on
acco&nt of t#e total &rc#ase rice of )A$1@".10
%as act&ally aid by ACC+A itself.
Art. 1!!@ is not alicable beca&se t#e agent$ t#e
defendant$ did not act in its name$ b&t rat#er acted
in be#alf of t#e rincial$ ACC+A.
Appealed decision set aside.
PN/ ). A4ude-o, u.ra
S7 6u*o ). S7 6u*o (2AI)
*an&ary 12$ 1(20
AvanceBa$ *.
+acts. /n 1(02$ -antiago -y?j&co %as aointed by
t#e Micente and Ciriane -y?j&co as administrator
of t#eir roerty and t#e former acted as s&c# &ntil
*&ne @0$ 1(1"$ %#en #is a&t#ority %as cancelled.
,#e laintiffs are defendantKs fat#er and mot#er
%#o allege t#at d&ring #is administration t#e
defendant -antiago acG&ired t#e roerty claimed
in t#e comlaint in #is caacity as laintiffsK
administrator %it# t#eir money and for t#eir
benefit.
,#e trial co&rt ordered -antiago to ret&rn t#e
roerties in G&estion$ %#ic# #e bo&g#t in #is
name.
/ss&e. :#et#er or not t#e laintiffs #ave a ca&se of
action
3eld. >9-. +rom t#e r&le establis#ed in article 1A1A
of t#e Civil Code t#at$ ?1en an a4ent a*t in 1i
o?n name, t1e .rin*i.a- 1a-- 1a)e no ri41t
o' a*tion a4aint t1e .eron ?it1 ?1om t1e
a4ent 1a *ontra*ted, *ae in)o-)in4 t1in4
8e-on4in4 to t1e .rin*i.a- are e0*e.ted.
According to t#is excetion 0%#en t#ings belonging
to t#e rincial are dealt %it#1 the a#ent is bound
to the principal althou#h he does not assume the
character of such a#ent and appears actin# in his
own name 07ecision of t#e -&reme Co&rt of
-ain$ 'ay 1$ 1(001. ,#is means t#at in t#e case of
t#is excetion t#e agentKs aarent reresentation
yields to t#e rincialKs tr&e reresentation and
t#at$ in reality and in effect$ t#e contract m&st be
C2
considered as entered into bet%een t#e rincial
and t#e t#ird ersonE and$ conseG&ently$ if t#e
obligations belong to t#e former$ to #im alone m&st
also belong t#e rig#ts arising from t#e contract.
"1e mone7 ?it1 ?1i*1 t1e -aun*1 ?a 8ou41
1a)in4 *ome 'rom t1e .-ainti'', t1e e0*e.tion
eta8-i1ed in arti*-e #C#C i a..-i*a8-e to
t1e intant *ae.
7isosition.
-&reme Co&rt affirms t#e aealed decision. All
t#e roerties in G&estion$ excet t#e casco ;o.
2CDC %#ic# is o%ned by t#e defendant by virt&e of
a sale$ m&st be ret&rned to t#e laintiffs$ %#o are
t#e o%ners of s&c# roerties.
P1i-. /an: o' Commer*e ). Arue4o (!(G)
01(!11

Fa*t> )BC filed action for s&m of money )@Ck l&s
interest &ntil f&lly aid and commission of @L!N for
every @0d l&s attorneyKs fees 10N of total
amo&nt. Comlaint contains 22 ca&ses of action
referring to 22 transactions bet%een t#em. -&m
reresents cost of rinting of I:orld C&rrent
9ventsI$ a eriodical &blis#ed by Ar&ego. Ar&ego
#ad a credit accommodation from )BC. +or every
rinter$ t#e rinter$ 9ncal )ress collected cost by
dra%ing draft against )BC$ draft being sent later to
Ar&ego for accetance. As added sec&rity$ )BC also
reG&ired Ar&ego to exec&te a tr&st receit in favor
of bank.

?',7 filed by Ar&ego. %#en bills of exc#ange %ere
resented to #im for accetance$ t#e amo&nts #ad
already been aid by )BC to 9ncal %it#o&t formerKs
kno%ledge or consent.

?Ar&egoKs defense. a1 #e signed t#e bills of
exc#ange in a reresentative caacity as )res of
)#il. 9d&cation +o&ndation Comany$ &blis#er of
:orld C&rrent 9vents and 7ecision =a% *o&rnal. b1
3e signed not as rincial debtor b&t as
accommodation or additional arty.

Iue> :2; Arg&egoKs defense is valid< ;2

,e-d>
#. Ffirst defense. sec. 20 ;egotiable /nstr&ments
=a%. :#ere instr&ment contains or a erson adds
#is signat&re %ords indicating #e signs for or on
be#alf of a rincial or in a reresentative caacity$
#e is not liable on t#e instr&ment if #e %as d&ly
a&t#ori6edE b&t t#e mere addition of %ords
describing #im as an agent or as filing a
reresentative c#aracter$ %it#o&t disclosing #is
rincial$ does not exemt #im from ersonal
liability.

?7raft #ere s#o%s t#at no%#ere #as #e disclosed
t#at #e %as signing as a reresentative of t#e
)#iliine 9d&cation +o&ndation. 3e is t#erefore
ersonally liable for t#e drafts #e acceted.

2. ?Accommodation arty [ one %#o signed t#e
instr&ment as maker$ dra%er$ indorser$ %it#o&t
receiving val&e and for &rose of lending #is
name to some ot#er erson. /n lending #is name to
accommodated arty$ accommodation arty is in
effect a s&rety for latter. 3e lends name to enable
accommodated arty to obtain credit

?A dra%ee is rimarily liable. Ar&ego s#o&ld not
#ave signed as an accetor L dra%ee. /n doing so$
#e became rimarily liable for draft.
Ni*o-a ). /orma*1e*o ("(FF)
Arro7o ). Granada (!EG)
*. 'oreland
1(11
FAC"S> +elix 5ranada %as indebted to Blas
5erona$ %it# t#e debt made %#ile bot# %ere still
alive. A s&it %as commenced by /gnacio Arroyo as
t#e administrator of 5erona of t#e recovery of t#is
debt$ and t#at final and amicable settlement %as
arranged bet%een #im and defendants. %as not
comlied %it# by 'atias 5ranada$ and as a
settlement of t#at$ an arrangement %as made
bet%een #im and /gnacio Arroyo$ %#ereby 'atias
5ranada exec&ted a mortgage as sec&rity for t#e
ayment. 3o%ever$ 5ranada failed to comly
again.
/n 1(0A$ *ose '. Arroyo$ son of /gnacio and a
la%yer$ and %it# t#e f&ll o%er of attorney from #is
fat#er to transact #is affairs$ entered into a
settlement %it# 5ranada %#ereby t#e latter %o&ld$
instead of aying money$ %o&ld transfer a iece of
land$ %#ic# 5ranada said %as first G&ality land$
good for t#e raising of s&gar cane and rice.
9xerts testified later t#at t#e lands %ere of lo%
G&ality. ,rial co&rt fo&nd t#at t#e doc&ments in
G&estion %ere exec&ted by means of false and
fra&d&lent reresentations of t#e defendants in t#is
case and ordered t#eir ann&lment and
cancellation.
ISSUE> :2; etitioner *ose '. Arroyo #ad an
interest in t#e case.
!ULING> ;2. *ose '. Arroyo$ as apoderado$ #as
absol&tely no interest in t#is litigation. 3e #as
absol&tely no rig#t to bring t#e defendant into
co&rt or &t #im to t#e exense of a litigation. ,#e
real and only arty in interest is /gnacio Arroyo.
8nder articles 11D and 122 of t#e Code of Civil
)roced&re #e s#o&ld be laintiff.
A j&dgment for or against *ose '. Arroyo ersonally
or as apoderado in no %ay binds or affects /gnacio.
C@
As a necessary res&lt a decision in t#is case is
&tterly f&tile.
U7 + !o0a ). CA, ,on. !o8ert /a-ao, N,A
(A//Y)
+acts.
:illiam 8y and 4odel 4oxas are agents
a&t#ori6ed to sell eig#t arcels of land by t#e
o%ners t#ereof. By virt&e of s&c# a&t#ority$
etitioners offered to sell t#e lands$ located in
,&ba$ ,adiangan$ Beng&et to resondent
;ational 3o&sing A&t#ority 0;3A1 to be &tili6ed
and develoed as a #o&sing roject. ,#e ;3A
aid for t#e C arcels b&t after a test %as done$
t#e remaining @ arcels %ere fo&nd to be
&ns&itable for #o&sing or any civil str&ct&res.
,#e ;3A cancelled t#e contract and offered
)1.22C' to t#e lando%ners.
8y and 4oxas fo&nd a comlaint for damages
and t#e 4,C said t#e cancellation of t#e
contract %as j&stified b&t still a%arded t#e
)1.22C' damages.
,#e CA reversed t#e 4,C since t#ere %as
Is&fficient j&stifiable basisI in cancelling t#e
sale$ Iit sa% no reasonI for t#e a%ard of
damages. ,#e CA also noted t#at etitioners
%ere mere attorneys?in?fact and$ t#erefore$ not
t#e real arties?in?interest in t#e action before
t#e trial co&rt.
,#e damages rayed for %ere intended not for
t#e benefit of t#eir rincials b&t to indemnify
etitioners for t#e losses t#ey t#emselves
allegedly inc&rred as a res&lt of s&c#
termination. ,#ese damages consist mainly of
I&nearned incomeI and advances. ,#ey
bro&g#t t#e action in t#eir o%n name and in
t#eir o%n be#alf.
/ss&e. :o; t#e agents #ave a ca&se of action
against t#e ;3A s&ing in t#eir o%n name.
3eld. ;o. )etition dismissed.
)etitioners are not arties to t#e contract of
sale bet%een t#eir rincials and ;3A. ,#ey
are mere agents of t#e o%ners of t#e land
s&bject of t#e sale. As agents$ t#ey only render
some service or do somet#ing in
reresentation or on be#alf of t#eir rincials.
,#e rendering of s&c# service did not make
t#em arties to t#e contracts of sale exec&ted
in be#alf of t#e latter. -ince a contract may be
violated only by t#e arties t#ereto as against
eac# ot#er$ t#e real arties?in?interest$ eit#er
as laintiff or defendant$ in an action &on t#at
contract m&st$ generally$ eit#er be arties to
said contract.
An agent$ in #is o%n be#alf$ may bring an
action fo&nded on a contract made for #is
rincial$ as an assignee of s&c# contract.
)etitioners$ #o%ever$ #ave not s#o%n t#at t#ey
are assignees of t#eir rincials to t#e s&bject
contracts. :#ile t#ey alleged t#at t#ey made
advances and t#at t#ey s&ffered loss of
commissions$ t#ey #ave not establis#ed any
agreement granting t#em It#e rig#t to receive
ayment and o&t of t#e roceeds to reimb&rse
Yt#emselvesZ for advances and commissions
before t&rning t#e balance over to t#e
rincialYsZ.I
4estatement. 8nless ot#er%ise agreed$ an
agent %#o #as or %#o acG&ires an interest in a
contract %#ic# #e makes on be#alf of #is
rincial can$ alt#o&g# not a romisee$
maintain s&c# action t#ereon maintain s&c#
action t#ereon as mig#t a transferee #aving a
similar interest.
/t does not aear t#at etitioners are
beneficiaries of a sti&lation o&r a&tr&i &nder
t#e second aragra# of Article 1@11 of t#e
Civil Code. /ndeed$ t#ere is no sti&lation in
any of t#e 7eeds of Absol&te -ale Iclearly and
deliberatelyI conferring a favor to any t#ird
erson.
,#at etitioners did not obtain t#eir
commissions or reco& t#eir advances beca&se
of t#e non?erformance of t#e contract did not
entitle t#em to file t#e action belo% against
resondent ;3A.
As etitioners are not arties$ #eirs$ assignees$
or beneficiaries of a sti&lation o&r a&tr&i
&nder t#e contracts of sale$ t#ey do not$ &nder
s&bstantive la%$ ossess t#e rig#t t#ey seek to
enforce. ,#erefore$ t#ey are not t#e real
arties?in?interest in t#is case.
)etitioners not being t#e real arties?in?
interest$ any decision rendered #erein %o&ld
be ointless since t#e same %o&ld not bind t#e
real arties?in?
interest.
;o%$ on t#e merits of t#e case ;3A. ,#e
cancellation %as based on t#e negation of t#e
ca&se arising from t#e reali6ation t#at t#e
lands$ %#ic# %ere t#e object of t#e sale$ %ere
not s&itable for #o&sing. ,#e ;3A %as j&stified
in canceling t#e contract. ,#e reali6ation of t#e
mistake as regards t#e G&ality of t#e land
res&lted in t#e negation of t#e motiveLca&se
t#&s rendering t#e contract inexistent.
CD
Ass&ming t#at etitioners are arties$
assignees or beneficiaries to t#e contract of
sale$ t#ey %o&ld not be entitled to any a%ard
of damages.
A?ad). Fi-ma 2er*anti-e (EA!LA)
7ec 2D$ 1(2"
2strand$ *.
+acts. 9. A%ad P Co. delivered to C#&a =ioc
0oerating &nder t#e name of 3ang C#&an Co.1
certain merc#andise in t#e amo&nt of )11$1D0.
C#&a =ioc$ reresenting #imself as t#e o%ner of t#e
merc#andise sold t#em to +ilma 'ercantile for a
total of )12$1CC."0. After ded&cting C#&a =ioc
debts to +ilma and to t#e )#il. 'an&fact&ring Co.
0%#ic# +ilma agreed to ay1$ +ilma is still indebted
to C#&a =ioc in t#e amo&nt of )"$"CA.C2.
,#ereafter$ 9. A%ad obtained a&t#ori6ation from
C#&a =ioc to collect t#e )11$1D0 d&e it. +ilma
#o%ever ref&sed to directly ay to 9. A%ad t#e
&rc#ase rice.
-&bseG&ently$ t#e )#il. ,r&st Comany bro&g#t an
action against C#&a =ioc for t#e ayment of
)1$0@".@". As a res&lt$ t#e balance d&e from +ilma
%as attac#ed in t#at action. ,#is balance %as
f&rt#er attac#ed in anot#er action instit&ted by 9.
A%ad for t#e ayment of )11$1D0.
9. A%ad t#en filed a searate action against +ilma$
for t#e ayment of t#e &rc#ase rice. +ilma
#o%ever averred t#at it %as a b&yer in good fait#.
/t f&rt#er alleged t#at it %as #olding t#e balance of
)""CA.C2 0#aving been attac#ed in t%o searate
cases1 s&bject to t#e orders of t#e co&rt.
,#e trial co&rt dismissed t#e comlaint on t#e
gro&nd t#at t#e laintiff %as only entitled to
ayment of t#e s&m of )"$"CA.C2$ b&t %#ic# s&m
t#e defendant #ad t#e rig#t to retain s&bject to t#e
orders of t#e co&rt in t#e t%o searate cases.
/--89. :2; 9. A%ad can collect from +ilma.
39=7. ;o. According to t#e Co&rt$ t#e la%
alicable to t#e case is %ell settled. Article 2D" of
t#e Code of Commerce reads as follo%s. I:#en t#e
agent transacts b&siness in #is o%n name$ it s#all
not be necessary for #im to state %#o is t#e
rincial and #e s#all be directly liable$ as if t#e
b&siness %ere for #is o%n acco&nt$ to t#e ersons
%it# %#om #e transacts t#e same$ said ersons not
#aving any rig#t of action against t#e rincial$ not
t#e latter against t#e former$ t#e liabilities of t#e
rincial and of t#e agent to eac# ot#er al%ays
being reverse.I 3ence$ #e can #ave no rig#t of
action against t#e b&yer.
'oreover$ A%adFs claim t#at +ilma is not a b&yer in
good fait# and #ad kno%ledge of t#e condition
&nder %#ic# t#e merc#andise %as entr&sted to
C#&a =ioc$ %as not s&orted by evidence.
A?ad ). Fi-ma 2er*anti-e (2A!K)
D7ar&, promise hindi ito assi#ned sayo dun sa
email &o. "orryE
FAC"S
9arly in t#e mont# of -etember$ 1(2D$ t#e
laintiff$ doing b&siness in t#e )#iliine
/slands &nder t#e name of 9. A%ad P Co.$
delivered certain merc#andise of t#e invoice
val&e of )11$1D0 to C#&a =ioc$ a merc#ant
oerating &nder t#e name of 3ang C#&a Co. in
'anila$ said merc#andise to be sold on
commission by C#&a =ioc.
4eresenting #imself as being t#e o%ner of t#e
merc#andise$ C#&a =ioc sold it to t#e
defendant +ilma 'ercantile. ,#e merc#andise
so &rc#ased %as delivered to t#e defendant$
%#o immediately offered it for sale.
7. *. A%ad$ in be#alf of 9. A%ad P Co.$ %rote a
letter to t#e defendant cororation advising it
t#at$ inasm&c# as t#e merc#andise belonged
to 9. A%ad P Co.$ t#e &rc#ase rice s#o&ld be
aid to t#em. +ilma in its ans%er stated t#at
t#ey received t#e goods from C#&a =ioc #ence
ayment is d&e to C#&a =ioc.
,#e comlaint in t#e resent action %as filed
on ;ovember 2"$ 1(2D$ t#e laintiff demanding
ayment of t#e same s&m of )11$1D0 for %#ic#
action #ad already been bro&g#t against C#&a
=ioc. ,#e defendant$ its ans%er$ set & as
secial defense t#at it bro&g#t t#e
merc#andise in good fait# and %it#o&t any
kno%ledge %#et#er of t#e erson from %#om
or t#e condition &nder %#ic# t#e said
merc#andise #ad been acG&ired by C#&a =ioc
or 3ang C#&an Co.E t#at t#e defendant
t#erefore #ad acG&ired title to t#e merc#andise
&rc#asedE t#at t#e balance of )"$"CA.C2$ no%
in t#e #ands of t#e defendant #ad been
attac#ed in t#e t%o actions bro&g#t on
-etember 1!$ and 2ctober A$ resectively$
and garnis#ment served &on t#e defendant$
%#o t#erefore$ #olds t#e money s&bject to t#e
orders of t#e co&rt in t#e cases above?
mentioned$ b&t %#ic# s&m t#e defendant is
able and %illing to ay at any time %#en t#e
co&rt decides to %#om t#e money la%f&lly
ertains.
CC
ISSUES :2; A%ad can recover from +ilma
'ercantile. ;2.
4A,/2;A=9
Article 2D" of t#e Code of Commerce reads as
follo%s.
:#en t#e agent transacts b&siness in #is o%n
name$ it s#all not be necessary for #im to state
%#o is t#e rincial and #e s#all be directly
liable$ as if t#e b&siness %ere for #is o%n
acco&nt$ to t#e ersons %it# %#om #e
transacts t#e same$ said ersons not #aving
any rig#t of action against t#e rincial$ nor
t1e -atter a4aint t1e 'ormer$ t#e liabilities
of t#e rincial and of t#e agent to eac# ot#er
al%ays being reserved.
Smit1 /e-- + Co. ) Sote-o 2atti (6ANCES)
+acts. /n A&g&st 1(1!$ -mit#$ Bell P Co and -otelo
'atti entered into contracts %#ereby t#e former
obligated itself to sell and deliver 2 steel tanks$ 2
exellers and 2 electric motors. ,#e tanks %ere to
be delivered %it#in @?D mont#s$ t#e exellers -et
1! or as soon as ossible$ and t#e motors %it#in (0
days 0b&t not g&aranteed1. /n all t#e contracts$ it
%as stated t#at t#e seller %as not resonsible for
delays ca&sed by fires$ riots on land or on sea$
strikes or ot#er ca&ses kno%n as force maje&re.
;ote also t#at t#e contracts %ere exec&ted at t#e
time of t#e %orld %ar.
,#e tanks arrived at 'anila on Aril 2A$ 1(1($ t#e
exellers on 2ct 1!$ 1(1!$ and motors on +ebr&ary
2A$ 1(1(. ,#e laintiff cororation notified 'r.
-otelo of t#e arrival of t#e goods b&t 'r. -otelo
ref&sed to receive t#em.
-mit#$ Bell and Co. bro&g#t s&it against 'r. -otelo.
,#e latterFs defense %as t#at #e made t#e
contracts in G&estion as manager of t#e 'anila 2il
4efining and By?)rod&cts Co. 'anila 2il Co.
intervened and alleged t#at it %as notified by
-mit# Bell of t#e arrival only in 'ay 1(1(.
4&ling.
C+/. absolved defendants insofar as t#e tanks and
motors %ere concerned b&t ordered t#em to
receive t#e exellers.
-mit# Bell and -otelo 'atti aealed t#e j&dgment.
/ss&e. :2; -otelo 'atti can be ordered to receive
and ay for t#e goods Y>9-Z
39=7. ,#e term %#ic# t#e arties attemted to fix
%ere so &ncertain t#at one cannot tell j&st %#et#er
t#ose articles co&ld be bro&g#t to 'anila or not.
,#e obligations %ere conditional. /n cases like t#is$
t#e obligor %ill be deemed to #ave s&fficiently
erformed #is art of t#e obligation$ if #e #as done
all t#at %as in #is o%er$ even if t#e condition #as
not been f&lfilled in reality. -mit#$ Bell P Co %as
able to deliver t#e goods even t#o&g# t#e
conditions for delivery %ere not comletely
f&lfilled. YNo a#ency concept epressly discussed in
case. 7y #uess why 7r. "otelo was the one
ordered to accept and receive the #oods: 3!4 he
was notified by "mith Fell of the arrival of the
#oods and yet he did not inform 7anila Gil Co. H it
is his duty as the mana#er of the company to
inform his principal. 354 he was the only one who
appealed )ud#ment, intervenor 7anila Gil Co. did
notI
7isosition. 'r. -otelo 'atti is sentenced to accet
and receive from laintiff t#e tanks$ exellers$ and
motors in G&estion.
Smit1 /e-- ). Sotto 2atti (2A!K)
D7A%JE Ci rin ito assi#ned sayo. Andami mon#
#inawa :4

FAC"S
/n A&g&st$ 1(1!$ t#e laintiff cororation and
t#e defendant$ 'r. Micente -otelo$ entered into
contracts %#ereby t#e former obligated itself
to sell$ and t#e latter to &rc#ase from it$ t%o
steel tanks$ t%o exellers$ and t%o electric
motors. As to t#e delivery of %#ic# sti&lation
%as made$ co&c#ed in t#ese %ords.
IAroximate delivery %it#in ninety days. V
,#is is not g&aranteed.I
,#e tanks arrived at 'anila on t#e 2At# of
Aril$ 1(1(. t#e exellers on t#e 2"t# of
2ctober$ 1(1!E and t#e motors on t#e 2At# of
+ebr&ary$ 1(1(. ,#e laintiff cororation
notified t#e defendant$ 'r. -otelo$ of t#e arrival
of t#ese goods$ b&t 'r. -otelo ref&sed to
receive t#em and to ay t#e rices sti&lated.
,#e laintiff bro&g#t s&it against t#e
defendant.
/n t#eir ans%er$ t#e defendant$ 'r. -otelo$ and
t1e inter)enor, t1e 2ani-a (i- !e'inin4
and /7FProdu*t Co., In*.$ denied t#e
laintiffKs allegations as to t#e s#iment of
t#ese goods and t#eir arrival at 'anila$ t#e
notification to t#e defendant$ 'r. -otelo$ t#e
latterKs ref&sal to receive t#em and ay t#eir
rice$ and t#e good condition of t#e exellers
and t#e motors$ alle#in# as special defense
that 7r. "otelo had made the contracts in
Auestion as mana#er of the intervenor, the
7anila Gil %efinin# and Fy-*roducts Co., ,nc
which fact was &nown to the plaintiff$ and t#at
Iit %as only in 'ay$ 1(1($ t#at it notified t#e
intervenor t#at said tanks #ad arrived$ t#e
motors and t#e exellers #aving arrived
incomlete and long after t#e date sti&lated.I
C"
A a *ounter*-aim or etFo'', t1e7 a-o
a--e4e t1at, a a *oneIuen*e o' t1e
.-ainti''G de-a7 in ma:in4 de-i)er7 o' t1e
4ood, ?1i*1 t1e inter)enor intended to
ue in t1e manu'a*ture o' *o*oanut oi-,
t1e inter)enor u''ered dama4e
ISSUES
:2; t#e intervenor #as a ca&se of action against
laintiff d&e to t#e alleged delay in t#e delivery of
t#e mac#ineries. ;2.
!A"I(NALE
:#en an agent acts in #is o%n name$ t#e
rincial #as no rig#t of action against t#e
ersons %it# %#om t#e agent #as contracted$
or u*1 .eron a4aint t1e .rin*i.a-. /n
s&c# case$ t#e agent is directly liable to t#e
erson %it# %#om #e #as contracted$ as if t#e
transaction %ere #is o%n 0Art. 1A1A$ Civil
Code1.
2aritime A4en*ie + Ser)i*e ). CA (ALAIN)
*&ly 12$ 1((0
*. Cr&6
FAC"S>
"rana*tion. s#iment of bagged &rea from 8--4
to t#e )#iliines$ so need to c#arter a motor
vessel
2otor )ee-> named 3ongkong /sland
(?ner o' )ee-. 3ongkong /sland -#iing Co.
C1arterer> ,ranscontinental +ertili6er Comany of
=ondon
Coni4nee in t#e )#iliines. Atlas +ertili6er
Comany 0'anila and Ceb&1
Inurer of goods. 8nion /ns&rance -ociety of
Canton$ =td 0against all risks1
C1artererE a4ent> 'aritime Agencies P -ervices$
/nc.
(?nerE a4ent> 'acondray Comany$ /nc.
,#e arties signed for t#is &rose a 8niform
5eneral C#arter. B&t roblem occ&rred in t#e
transaction.
,rial co&rt fo&nd o&t t#at &on receit of goods$
1$@!@ bags %ere damaged or lost on board t#e
vessel before &nloading of t#e s#iment. ,#ere
%ere also goods t#at %ere damaged or lost d&ring
&nloading.
Consignee filed a formal claim$ and after its claims
rejected$ %ent to /ns&rer 8nion$ %#ic# on demand
aid t#e total indemnity &rs&ant to t#e ins&rance
contract. ,#&s$ as s&brogee of t#e consignee$
8nion filed comlaint for reimb&rsement against
3ongkong /sland Comany$ =td.$ 'aritime Agencies
P -ervices /nc$ and 'acondray Comany$ /nc.
Prin*i.a- Iue> :#o s#o&ld be #eld liable for t#e
loss or damaged cargos<
/n order to ans%er t#is$ t#e nat&re of t#e c#arter
m&st first be identified O %#et#er it is a demise or
bareboat c#arter$ a time c#arter or a voyage
c#arter. According to t#e co&rt$ t#e agreement
entered into 08niform 5eneral C#arter1 in t#e cases
at bar s#o&ld be considered.
A voyage c#arter being a rivate carriage$ t#e
arties may freely contract resecting liability for
damage to t#e goods and ot#er matters. ,#e basic
rincile is t#at t#e resonsibility for cargo loss
falls on t#e one %#o agreed to erform t#e d&ty
involved. ,#is is tr&e in t#e resent cases %#ere
t#e c#arterer %as resonsible for loading$ sto%age
and disc#arging at t#e orts visited$ %#ile t#e
o%ner %as resonsible for t#e care of t#e cargo
d&ring t#e voyage.
As t#e bags %ere in good order %#en received in
t#e vessel$ t#e res&mtion is t#at t#ey %ere
damaged or lost d&ring t#e voyage as a res&lt of
t#eir negligent imroer sto%age. +24 ,3/- ,39
-3/) 2:;94 -328=7 B9 =/AB=9 0so its agent$
'acondray is liable$ b&t action #as rescribed1.
Se*ondar7 ISSUE 0for o&r &roses1. :L; t#e
c#artererFs agent is liable considering t#e finding of
t#e co&rt t#at t#e ot#er goods %ere damaged or
lost d&ring t#e &nloading$ and &nloading %as t#e
rincial d&ty of t#e c#arterer according to t#e
8niform 5eneral C#arter< N(.
!atio> ,#e c#arterer ass&med t#is activity &nder
t#e c#arter arty. 3o%ever$ t#e liability imosable
against ,ranscontinental cannot be borned by
'aritime$ %#ic# as a mere agent$ is not ans%erable
for inj&ry ca&sed by its rincial. /t is a %ell?settled
rincile t#at t#e agent s#all be liable for t#e act or
omission of t#e rincial only if t#e latter is
&ndisclosed.
,#e agent may be #eld liable if it reresented t#e
vessel %#en it took c#arge of t#e &nloading of t#e
cargo and iss&ed cargo receits in its o%n name. /t
s#o&ld #ave also received and rocessed claims
against t#e vessel for t#e lossesLdamages
s&stained by t#e cargo. /f t#is is t#e case$ t#e
c#artererFs agent is also considered a s#i agent
and so s#o&ld be #eld to be solidarily liable %it# its
rincial.
,#e c#arterer in t#is case did not reresent itself
as a carrier and indeed ass&med resonsibility only
for t#e &nloading of t#e cargo$ i.e. after t#e goods
%ere already o&tside t#e c&stody of t#e vessel. /n
s&ervising t#e &nloading of t#e cargo and iss&ing
CA
7aily 2erations 4eort and -tatement of +acts
indicating and describing t#e day?to?day disc#arge
of t#e cargo$ 'aritime acted in reresentation of
t#e c#arterer and not of t#e vessel. /t t#&s cannot
be considered a s#i agent. As a mere c#artererFs
agent$ it cannot be #eld solidarily liable %it# t#e
,ranscontinental for t#e lossesLdamages to t#e
cargo o&tside t#e c&stody of t#e vessel. ;otably$
,ranscontinental %as disclosed as t#e c#artererFs
rincial and t#ere is no G&estion t#at 'aritime
acted %it#in t#e scoe of its a&t#ority.
II. (8-i4ation o' t1e A4ent
A. Arti*-e #$$A> Genera- and .e*i'i*
o8-i4ation (GEN)
Art. 1!!D. ,#e agent is bo&nd by #is accetance to
carry o&t t#e agency$ and is liable for t#e damages
%#ic#$ t#ro&g# #is non?erformance$ t#e rincial
may s&ffer.
3e m&st also finis# t#e b&siness already beg&n on
t#e deat# of t#e rincial$ s#o&ld delay entail any
danger.
#. E''e*t o' a**e.tan*e o'
a4en*7
PN/ ). 2ani-a Suret7 (!(G)
1("C

Fa*t> );B #ad oened a letter of credit and
advanced t#ereon U120k to 9dgington 2il for !k
tons of #ot as#alt. 2f t#is amo&nt$ 2k tons %ort#
U2A(k %ere released and delivered to Adams P
,ag&ba Cor 0A,AC21 &nder a tr&st receit
g&aranteed by 'anila -&rety & to amo&nt of )ACk.
,o ay for t#e as#alt$ A,AC2 constit&ted t#e Bank
its assignee and attorney?in?fact to receive and
collect from t#e B&rea& of )&blic :orks t#e amo&nt
o&t of f&nds ayable to t#e assignor &nder
)&rc#ase 2rder ;o. A1(DA.

Ataco delivered to t#e B&rea& of )&blic :orks and
t#e latter acceted as#alt %ort# )D@1k. 2f t#is
amo&nt t#e Bank reg&larly collected b&t t#e bank
s&bseG&ently ceased to collect for &nexlained
reasons$ &ntil its investigators fo&nd t#at more
moneys %ere ayable to A,AC2 from t#e )&blic
:orks office$ beca&se latter #ad allo%ed anot#er
creditor to collect f&nds d&e to A,AC2 &nder t#e
same &rc#ase order$ to a total of )@11k.

/ts demands on t#e rincial debtor and t#e -&rety
#aving been ref&sed$ t#e bank s&ed bot# in C+/ to
recover balance of )1C!k l&s interest and costs.
C+/. r&led for );B.

2nly -&rety Co erfected its aeal. Central Bank
did not aeal %#ile A,AC2 failed to erfect its
aeal.

CA. r&led against Bank and modified j&dgment as
to s&retyKs liability #ence t#is aeal by bank to
-C. CA fo&nd Bank negligent in #aving stoed
collecting from B&rea& t#e moneys falling d&e in
favor of rincial debtor A,AC2 before t#e debt
%as f&lly collected$ t#ereby allo%ing s&c# f&nds to
be taken and ex#a&sted by ot#er creditors to t#e
rej&dice of t#e s&rety$ and #eld t#at BankKs
negligence res&lted in exoneration of 'anila
-&rety.

);B. )o%er of attorney obtained from A,AC2 %as
merely an additional sec&rity in its favor and it %as
t#e d&ty of s&rety$ and not that of the creditor, to
see to it t#at obligor f&lfills #is obligation$ and t#at
t#e creditor o%ed t#e s&rety no d&ty of active
diligence to collect any s&m from t#e rincial
debtor.

Iue> :2; );B exercised d&e diligence in
collecting from B&rea& of )&blic :orks< ;2

,e-d>
#. /an: -ia8-e 'ro ne4-e*t in *o--e*tin4 mone7
due to .rin*i.a- de8tor.
);BKs arg&ment totally misses t#e oint. CA did not
#old it liable for negligence for failing to collect
from the principal debtor b&t for its neglect in
collecting t#e s&ms d&e to debtor from t#e B&rea&$
contrary to its d&ty as #older of an excl&sive and
irrevocable o%er of attorney to make s&c#
collections$ since an agent is reG&ired to act %it#
t#e care of a good fat#er of a family and becomes
liable for t#e damages %#ic# t#e rincial may
s&ffer t#ro&g# #is nonerformance.

BankKs o%er %as exressly made irrevocable s&c#
t#at B&rea& co&ld very %ell ref&se to ay to
rincial debtor itself$ and a fortiori reject any
demands by s&rety.

2. E)en aumin4 .o?er o' attorne7 ?a
mere additiona- e*urit7, /an: ti-- .re*-uded
'rom re*o)erin4 'rom uret7.
By allo%ing assigned f&nds to be ex#a&sted
%it#o&t notifying t#e s&rety$ );B derived s&rety
of any ossibility of reco&rsing against t#at
sec&rity. );B t#ereby exonerated s&rety &rs&ant
to Art. 20!0 of CC.

=etter of demand no bearing #ere since letter %as
addressed to A,ACo and f&nds %ere to come from
else%ere. As to letter of demand on B&rea&$ it does
not aear t#at any rely %as made nor t#at
demand %as ressed nor t#at debtor or t#e s&rety
%ere ever arised t#at aymnet %as not being
made. +act remains t#at beca&se of );BKs
inactivity t#e ot#er creditors %ere enabled to
C!
collect )1A@k %#en balance d&e to );B %as only
)1C!k. +inding of negligence by CA is not only
concl&sive on -C b&t also f&lly s&orted by
evidence.
/riti1 Air?a7 ). Court o' A..ea- (2ai)
*an&ary 2($ 1((!
4omero$ *.
+acts. 2n Aril 1"$ 1(!($ 'a#tani decided to visit
#is relatives in Bombay$ /ndia. /n anticiation of #is
visit$ #e obtained t#e services of a certain 'r.
5&mar to reare #is travel lans. ,#e latter$ in
t&rn$ &rc#ased a ticket from Britis# Air%ays. -ince
Britis# Air%ays #ad no direct flig#ts from 'anila to
Bombay$ 'a#tani #ad to take a flig#t to 3ongkong
via )A=$ and &on arrival in 3ongkong #e #ad to
take a connecting flig#t to Bombay on board Britis#
Air%ays.
)rior to #is deart&re$ 'a#tani c#ecked in at t#e
)A= co&nter in 'anila #is t%o ieces of l&ggage
containing #is clot#ing and ersonal effects$
confident t#at &on reac#ing 3ongkong$ t#e same
%o&ld be transferred to t#e Britis# Air%ays flig#t
bo&nd for Bombay.
8nfort&nately$ %#en 'a#tani arrived in Bombay #e
discovered t#at #is l&ggage %as missing and t#at
&on inG&iry from t#e Britis# Air%ays
reresentatives$ #e %as told t#at t#e same mig#t
#ave been diverted to =ondon. After atiently
%aiting for #is l&ggage for one %eek$ Britis#
Air%ays finally advised #im to file a claim by
accomlis#ing t#e )roerty /rreg&larity 4eort.
'a#tani s&bseG&ently filed a comlaint for
damages and attorneyFs fees against Britis#
Air%ays and 'r. 5&mar. Britis# Air%ays$ in t&rn$
filed a t#ird?arty comlaint against )A=. ,#e trial
co&rt r&led in favor of 'a#tani and dismissed t#e
t#ird?arty comlaint against )A=. ,#e Co&rt of
Aeals affirmed t#e decision$ stating t#at Britis#
Air%ays #ad no ca&se of action against )A=.
/ss&e. :#et#er or not t#e dismissal of t#e t#ird?
arty comlaint against )A= %as valid
3eld. ;2. ,#e contract of air transortation %as
excl&sively bet%een 'a#tani and Britis# Air%ays$
t#e latter merely endorsing t#e 'anila to
3ongkong leg of t#e formerFs jo&rney to )A=$ as its
s&bcontractor or agent. /n fact$ t#e fo&rt#
aragra# of t#e Conditions of Contracts of t#e
ticket iss&ed by Britis# Air%ays to 'a#tani confirms
t#at t#e contract %as one of contin&o&s air
transortation from 'anila to Bombay.
:ell?settled is t#e r&le t#at an agent is
also resonsible for any negligence in t#e
erformance of its f&nction and is liable for
damages %#ic# t#e rincial may s&ffer by reason
of its negligent act. 3ence$ t#e Co&rt of Aeals
erred %#en it oined t#at Britis# Air%ays$ being t#e
rincial$ #ad no ca&se of action against )A=$ its
agent or s&b?contractor.
Also$ it is %ort# mentioning t#at bot# Britis#
Air%ays and )A= are members of t#e /nternational
Air ,ransort Association 0/A,A1$ %#erein member
airlines are regarded as agents of eac# ot#er in t#e
iss&ance of t#e tickets and ot#er matters
ertaining to t#eir relations#i. ,#erefore$ in t#e
instant case$ t#e contract&al relations#i bet%een
Britis# Air%ays and )A= is one of agency$ t#e
former being t#e rincial$ since it %as t#e one
%#ic# iss&ed t#e confirmed ticket$ and t#e latter
t#e agent.
A carrier like )A=$ acting as an agent of anot#er
carrier$ is also liable for its o%n negligent acts or
omission in t#e erformance of its d&ties.
Accordingly$ to deny Britis# Air%ays t#e roced&ral
remedy of filing a t#ird?arty comlaint against )A=
for t#e &rose of &ltimately determining %#o %as
rimarily at fa&lt as bet%een t#em$ is %it#o&t legal
basis.
B. Arti*-e #$$B> E''e*t ?1en .eron de*-ine
a4en*7 (A//Y)
Art. 1!!C. /n case a erson declines an agency$ #e
is bo&nd to observe t#e diligence of a good fat#er
of a family in t#e c&stody and reservation of t#e
goods for%arded to #im by t#e o%ner &ntil t#e
latter s#o&ld aoint an agent or take c#arge of
t#e goods.
2bligation. Bo&nd to observe t#e diligence of a
good fat#er of a family in t#e c&stody and
reservation of t#e goods for%arded to #im by t#e
o%ner.
2%ner m&st as far as racticable.
1. aoint an agent
2. take c#arge of t#e goods
C. Arti*-e #$$%> E0*e.tion to t1e 4enera-
ru-e t1at t1e .rin*i.a- mut ad)an*e to
t1e a4ent t1e um ne*ear7 'or t1e
e0e*ution o' t1e a4en*7 (EA!LA)
C(
Art. 1!!". -#o&ld t#ere be a sti&lation t#at t#e
agent s#all advance t#e necessary f&nds$ #e s#all
be bo&nd to do so excet %#en t#e rincial is
insolvent.
? E0*e.tion to t1e
e0*e.tion
D. Arti*-e #$$C (6ANCES)
Art. 1!!A. /n t#e exec&tion of t#e agency$ t#e
agent s#all act in accordance %it# t#e instr&ctions
of t#e rincial.
/n defa&lt t#ereof$ #e s#all do all t#at a good fat#er
of a family %o&ld do$ as reG&ired by t#e nat&re of
t#e b&siness.
#. E''e*t o' )io-ation o' .rin*i.a-E
intru*tion
2. Intru*tion ). aut1orit7
@. !u-e in a8en*e o' intru*tion
A. 91en de.arture i =uti'ied
B. Cae
Gutierre5 ,ermano ). (ria ,ermano
(ALAIN)
'arc# @0$ 1(1C
,orres$ *..
FAC"S. ALLEGA"I(NS 87 de'endant (!IA
,E!2AN(S + C(.> By reason of mercantile
relations and t#e oening of a m&t&al c&rrent
acco&nt from 'ay 1$ 1(00$ t#e laintiff 05&tierre6
3ermanos1 #ad obligated itself eriodically to send
to t#e defendant firm a memorand&m or statement
of t#e c&rrent acco&nt$ and f&rt#er obligated itself$
in case t#e said mercantile relations s#o&ld be
finally terminated$ to resent a general and
comlete acco&nt$ d&ly s&orted by vo&c#ers and
ot#er roofsE t#at laintiff$ 5&tierre6 3ermanos$
#ad contended itself by sending to 2ria 3ermanos
and Co. some memoranda or abstracts of acco&nt$
acceted by defendant as s&c# Iabstract of
acco&nt$I %it#o&t t#e latterKs #aving %aived its
rig#t to demand t#e resentation$ as agreed &on$
of t#e vo&c#ers and ot#er roofs &on t#e closing
of t#e c&rrent acco&nt$ a sti&lation %#ic#
5&tierre6 3ermanos #ad failed to comly %it#.
7efendant t#erefore rayed t#at t#e laintiff$
5&tierre6 3ermanos$ be sentenced to render and
resent t#e said final acco&nt$ d&ly accomanied
by vo&c#ers$ in conformity %it# t#e agreement
made.
PLAIN"IFFES ALLEGA"I(NS. 5&tierre6
3ermanos denied in its ans%er t#e allegations
made by 2ria 3ermanos P Co. in its cross?
comlaint$ and set fort# t#at$ in conseG&ence of
t#e m&t&al c&rrent acco&nt oened bet%een t#e
arties from t#e year 1(00$ laintiff transmitted
%eekly or fortnig#tly$ according to circ&mstances$
a secific statement of t#e transactions effected$
as %ell as$ semiann&ally$ a general acco&nt of t#e
b&siness done d&ring t#e six mont#s last elased$
and t#at defendant$ after an examination of s&c#
semiann&al acco&nt toget#er %it# its details and
vo&c#ers$ and after some objections t#ereto #ad
been exlained$ %as acc&stomed to rove t#e
same. ,#is %as t#e rod&re carried on for more
t#an nine years d&ring %#ic# 2ria 3ermanos P Co.
from time to time aroved eac# one of t#e 1A
acco&nt t#at %ere resented to it$ and &on
5&tierre6 3ermanos closing t#e c&rrent acco&nt
from *an&ary to *&ne$ 1(0($ it also resented to
defendant a general detailed acco&nt$ %#ic#$
not#%it#standing t#at no objection %#atever %as
made to it$ %as not aroved. ,#erefore t#e
comlaint %as filed t#at initiated t#is litigation.
ISSUE. :#et#er or ;ot 5&tierre6 3ermanos
act&ally bo&nd itself to resent to 2ria 3ermanos
and Co.$ besides t#e semiann&al acco&nts
rendered$ a general acco&nt comrising all t#e
b&siness &ndertaken bet%een 1(00 and *&ne$
1(0($ on %#ic# latter date it %as considered by
5&tierre6 3ermanos as terminated.
,EL&> ,#e allegation made by defendant relative
to t#is oint #ad not been s&bstantiated by any
evidence %#atever$ and t#erefore t#ere is no
reason nor legal gro&nd %#ereby laintiff co&ld be
comelled to resent t#at general acco&nt
reG&ested in t#e first cross?comlaint.
/t is$ in o&r oinion$ aroriate it insert #ereinafter
%#at t#e trial co&rt$ in t#e j&dgment rendered$
says %it# resect to t#is matter. I/f commission
agents be obliged to render to t#eir rincials
itemi6ed acco&nts$ s&orted by vo&c#ers$ of t#e
s&ms t#ey collect as commission and of t#e
transactions effected by t#em in relation %it# t#eir
rincials$ as often as t#e latter may desire$ in
cases %#ere t#ere arises some tro&ble$ some
difference of oinion or a conflict of interests$ or
%#ere t#e commission agents close t#e acco&nt$ as
occ&rs in t#e case at bar beca&se t#e rincials did
not ay %#at t#ey %ere o%ing or beca&se$ instead
of t#e debt being diminis#ed$ it %as increased$ t#e
commission contract %o&ld become an
inex#a&stible and never ending so&rce of litigation
and of claims %it#o&t n&mber$ a formidable arm for
sitef&l rincials against %#ic# it %o&ld be
ins&fficient to oose an arsenal of vo&c#ers s&c#
as mig#t be treas&red by t#e most rescient
commission agent$ beca&se t#ere co&ld be avoided
neit#er t#e brot#er res&lting from t#eir necessary
examination$ nor t#e #eavy exenses and loss of
time t#at are t#e inevitable accomaniment of t#is
class of %ork.I
"0
:#en an acco&nt #as been resented or rendered
and #as been aroved by t#e arty
%#om it concerns or interests$ it is not roer to
revise it$ &nless it s#o&ld be roved t#at in its
aroval t#ere %as deceit$ fra&d$ or error serio&sly
rej&dicial to t#e arty %#o gave s&c# aroval.
Arts. 12"C and 12""$ Civil Code.1
/n t#e decision rendered in t#e case of *astor vs.
Nicasio$ 0" )#il. 4e.$ 1C21$ t#e follo%ing doctrine
%as laid do%nE
:#en acco&nts of t#e agent to t#e
rincial are once aroved by t#e
rincial$ t#e latter #as no rig#t to ask
after%ards for a revision of t#e same or for
a detailed acco&nt of t#e b&siness$ &nless
#e can s#o% t#at t#ere %as fra&d$ deceit$
error or mistake in t#e aroval of t#e
acco&nts V facts not roven in t#is case.
,#e record does not s#o% it to #ave been d&ly
roven t#at &on 2ria 3ermanos P Co. giving its
aroval to t#e 1A acco&nts resented by 5&tierre6
3ermanos t#ere %as deceit$ fra&d$ or mistake
rej&dicial to t#e formerKs interests. +or t#e sole
reason t#at 5&tierre6 3ermanos$ &on closing t#e
c&rrent acco&nt %it# 2ria 3ermanos P Co. %as
obliged$ certainly an &n%arranted obligation$ to
render a general acco&nt comre#ensive of all t#e
b&siness transacted bet%een bot# arties d&ring
more t#an nine years$ and t#ere being no roof of
t#e alleged agreement bet%een t#em$ it %o&ld be
imroer to #old t#at t#e laintiff is obliged to
render and resent a general acco&nt in t#e sense
reG&ested by 2ria 3ermanos P Co. in its first cross?
comlaint.
PN/ ). 2ani-a Suret7 + Fide-it7 Co., u.ra
E. Arti*-e #$$$> 91en a4ent 1a-- not *arr7
out a4en*7 (6ILL)
Art. 1!!!. An agent s#all not carry o&t an agency if
its exec&tion %o&ld manifestly res&lt in loss or
damage to t#e rincial. 0n1
,#e agent s#o&ld not carry o&t t#e agency if its
exec&tion %ill mani'et-7 res&lt in a loss or
damage to t#e rincial.
,#e reason is t#at t#e agent is a mere extension of
t#e ersonality of t#e rincial. 3is d&ty is to
render service +24 ,39 B9;9+/, of t#e rincial
and not to act to #is detriment. 'oreover$ agent
m&st exercise d&e diligence in carrying o&t t#e
agency.
F. Arti*-e #$$9 (6ILL)
Art. 1!!(. ,#e agent s#all be liable for damages if$
t#ere being a conflict bet%een #is interests and
t#ose of t#e rincial$ #e s#o&ld refer #is o%n
#. !u-e on *on'-i*t o' interet
,#e r&le is t#at t#e agent is not ermitted$ %it#o&t
t#e kno%ledge and consent of t#e rincial$ to
ass&me t%o distinct c#aracters in t#e same
transaction O for #imself and retending to act for
t#e rincial.
,#e agent %ill be liable for damages if$ t#ere being
a conflict$ #e c#ooses #is o%n t#an t#ose of t#e
rincial. 3o%ever$ if t#e rincial c#ooses to
%aive t#e benefit and #e does so %it# kno%ledge
of facts$ t#e r&le %ill not aly. ,#e r&le %ill not
also aly if t#e agentFs interests are s&erior 0e.g.
#e #as a sec&rity interest in t#e goodsE #e %ill be
exosed to great #ysical risks1.
,#e r&le does not disting&is# %#et#er t#e agency is
onero&s or grat&ito&s.
,#e basis for t#e r&le is t#e fid&ciary relations#i
bet%een t#e rincial and agent$ %it# t#e latter
exected to observe &tmost good fait# and loyalty
to%ards #is rincial. ,#e r&le s#o&ld also recl&de
an agent from temtations 0to engage in self?
dealing1.
,#is r&le is reventive$ not remedial j&stice.
2. Cae
A8oiti5 ). &e Si-)a (2A!K)
+acts.
Aboiti6 sold #is s#ares in 5. P 4. Aboiti6 and
Mi&da e 3ijos de ). Aboiti6$ artners#i to t#e
7e -ilvas.
,#ere %as an &naid balance of 1C($000.
Aboiti6 filed a comlaint to recover said
amo&nt.
7efendants maintains t#at t#eir liability &nder
t#e I3ioteca?MentaI #ad$ %it# t#e laintiffKs
imlied consent$ been transferred to Aboiti6 P
Co.
/--89. :2; defendantsF liability &nder t#e
I3ioteca?MentaI #ad$ %it# t#e laintiffKs imlied
consent$ been transferred to Aboiti6 P Co.
3eld. ;o
,#ere is not#ing in t#is contention. /t is tr&e
t#at t#e t#ree defendants transferred all t#e
assets and liabilities of 5. P 4. Aboiti6 to t#e
cororation Aboiti6 P Co.$ and t#at at t#e time
at least t%o of t#e defendants$ 5&illermo and
Midal Aboiti6$ #eld a general o%er of attorney
"1
from t#e laintiff. B&t$ in t#e first lace$ t#e
defendants aear to #ave acted for
t#emselves only and none of t#em retended
to act on be#alf of 4amon Aboiti6E in t#e
second lace$ t#e defendantKs liability &nder
t#e I3ioteca?MentaI %as a ersonal and
individ&al liability$ %#ile t#e transfer in
G&estion related to t#e b&siness of t#e
artners#i of 5. P 4. Aboiti6E and$ in t#e t#ird
lace$ t#e defendants %#o #eld o%ers of
attorney co&ld not reresent bot# t#emselves
and t#eir rincial in a transaction involving
t#e s#ifting of t#e liability from t#emselves to
anot#er arty.
;eit#er does t#e fact t#at t#e laintiff
s&bseG&ently acceted ayments on t#e
I3ioteca?Menta Acco&ntI from Aboiti6 P Co.
%ork a novation. ;ovation is never res&med.
8nless it is clearly s#o%n eit#er by exress
agreement of t#e arties or by acts of
eG&ivalent imort$ t#is defense %ill never be
allo%ed.
Se)erino ). Se)erino, u.ra
/arton ). Le7te A.1a-t + 2inera- (i- Co.
(AN6 S.)
0;ote. ,#e case #as too many facts irrelevant to
o&r toic. / decided not to incl&de in t#e digest t#e
facts t#at are irrelevant so as not to conf&se &s.
,#anks.1
Fa*t>
*ames 7. Barton$ an American citi6en residing in
t#e City of 'anila$ %as given by =eyte As#alt P
'ineral 2il Co. t#e sole and excl&sive sales
agency for t#e sale of t#eir bit&mino&s limestone
and ot#er as#alt rod&cts in t#e co&ntries of
A&stralia$ ;e% _ealand$ ,asmania$ -aigon$ /ndia$
-&matra$ *ava$ C#ina and 3ong Song &ntil 'ay 1$
1(22$ and &ntil 'ay 1$ 1(21 in -iam and t#e
-traits -ettlements of 8-. /t %as also sti&lated
in t#e letter of a&t#ority t#at s#o&ld t#e sales of
Barton in t#e 8- reac# C$000 tons on or before
'ay 1$ 1(21$ #e %o&ld be a%arded t#e sole
rig#ts for t#e said territory for an additional 1
year and s#o&ld #is sales in t#e second year
reac# or exceed 10$000 tons$ #e %o&ld be given
t#e otion to rene% t#e agreement for t#e said
territory on t#e same terms for an additional 2
years. +&rt#er$ it %as stated t#at s#o&ld #is sales
eG&al or exceed 10$000 in t#e year ending
2ctober 1$ 1(21$ or 20$000 tons by 'ay 1$1(22$
t#en t#e contract %ill a&tomatically be contin&ed
for an additional of @ years.
Mery soon after t#e contract became effective$
Barton reG&ested t#e comany to give #im a
similar selling agency for *aan. ,o t#is reG&est$
t#e comany t#ro&g# its resident$ Anderson$
relied t#at at t#at moment$ t#ey do not feel like
giving #im t#e same a&t#ority &ntil #e can make
some large si6ed sales t#ere$ beca&se some
ot#er eole #ave given t#e comany
ass&rances t#at t#ey can #andle t#e *aanese
sales$ t#erefore$ t#e comany #ave decided to
leave t#e agency for t#at comany oen for a
time.
'ean%#ile$ Barton embarked for -an +rancisco
and &on arriving at t#at ort$ #e entered into an
agreement %it# =&dvigsen P 'cC&rdy$ %#ereby
t#e said firm %as *ontituted a u8a4ent and
given t#e sole selling rig#ts for t#e bit&mino&s
limestone rod&cts of t#e comany for a eriod
of 1 year.
8on an earlier voyage d&ring t#e same year to
A&stralia$ Barton #ad already made an
agreement %it# +rank B. -mit# of -ydney$
%#ereby t#e latter %as to act as t1e .-ainti''E
a-e a4ent for limestone rod&cts of t#e
comany. =ater$ t#e same agreement %as
extended for a eriod of one year.
/n ,okio$ *aan$ Barton came in contact %it# 3.
3i%atari. /n a letter$ 3i%atari seaks of #imself as
if #e #ad been aointed e0*-ui)e a-e a4ent
for Barton in *aan$ b&t no doc&ment exressly
aointing #im s&c# is in evidence.
Barton t#en received a letter from =&dvigsen P
'cC&rdy t#at it mig#t enter an order for "$000
tons of bit&mino&s limestone. /n t&rn$ Barton
informed t#e comany to be reared to s#i t#e
rod&cts. Anderson$ #o%ever$ informed #im t#at
t#e comany$ %it# its c&rrent facilities$ %o&ldnFt
be able to #andle big contracts.
Barton exressed s&rrise at t#is and told
Anderson t#at #e #ad not only t#at artic&lar
order from -an +rancisco b&t ot#er orders for
large G&antities to be s#ied to A&stralia and
-#ang#ai.
-&bseG&ently$ Barton informed t#e comany at
different dates to reare s#iments to 8- and
A&stralia$ and later on$ to *aan.
/t %ill be noted t#at in connection %it# t#e letters
0totaling to D1 sent by Barton to t#e comany
informing t#e latter to reare s#iments$ no
mention %as made of t#e names of t#e ersons$
or firms$ for %#om t#e s#iments %ere really
intended. ,#e obvio&s exlanation t#at occ&rs in
connection %it# t#is is t#at t#e laintiff did not
care to reveal t#e fact t#at t1e order
ori4inated 'rom 1i o?n u8a4ent in San
Fran*i*o and S7dne7.
,#e comany$ in its rely to one of BartonFs
letter$ stated t#at no orders can be entertained
&nless cas# #as been act&ally deosited %it#
eit#er t#e /nternational Banking Cororation or
t#e C#artered Bank of /ndia$ A&stralia$ and C#ina$
at Ceb&.
,o t#is$ Barton$ in t&rn$ relied G&estioning t#e
rig#t of t#e comany to insist &on cas# deosit
in Ceb& rior to t#e filling of t#e orders. /n
concl&sion$ Barton gave some more orders for
s#iment to A&stralia in t#e G&antities of C$000
"2
tons$ and 10$000$ and stated t#at #e %o&ld
arrange for deosits to be made on t#ese
additional s#iments if t#e comany %ill signify
its ability to f&lfill t#e orders. Again$ no name %as
mentioned as t#e &rc#aser$ or &rc#asers$ of
t#ese intended consignments.
Barton t#en instit&ted in t#e C+/ of 'anila$ an
action to recover from =eyte As#alt P 'ineral
2il Co.$ =td.$ as damages for breac# of contract$
t#e s&m of U@1!$C"@.@0 and to sec&re a j&dicial
rono&ncement to t#e effect t#at t#e laintiff be
entitled to an extension of t#e terms of t#e sales
agencies secified in t#e contract.
,#e ,rial Co&rt absolved t#e comany from D of
t#e " ca&ses of action set fort# in t#e comlaint.
+or t#e t%o remaining ca&ses of action$ t#e co&rt
adj&dged t#e comany liable to ay Barton t#e
s&m of U202$C00 0eG&ivalent to D0C$000#1 as
damages. +rom t#is j&dgment$ t#e comany
aealed.
Iue> :2; t#e comany is liable to ay Barton
damages for breac# of contract.
,e-d;!atio> ;o.
,#e original contract by %#ic# t#e laintiff
%as aointed sales agent for a limited eriod of
time in A&stralia and t#e 8- contemlated t#at
#e s#o&ld find reliable and solvent b&yers %#o
s#o&ld be reared to obligate t#emselves to
take t#e G&antity of bit&mino&s limestone
contracted for &on terms consistent %it# t#e
contract. "1ee *ondition ?ere not met 87
t1e ta:in4 o' t1ee order 'rom /artonE
o?n u8a4ent, ?1i*1 ?a a i' t1e .-ainti''
1ad 8ou41t 'or 1ime-' t1e *ommodit7
?1i*1 1e ?a aut1ori5ed to e-- to ot1er.
Article 2"A of t#e Code of Commerce
declares t#at no agent s#all &rc#ase for #imself
or for anot#er t#at %#ic# #e #as ordered to sell.
"1e -a? 1a .-a*ed it 8an u.on a 8ro:erE
.ur*1ain4 'rom 1i .rin*i.a- un-e t1e
-atter ?it1 'u-- :no?-ed4e o' a-- t1e 'a*t
and *ir*umtan*e a*Iuie*e in u*1
*oureD and e)en t1en t1e 8ro:erE a*tion
mut 8e *1ara*teri5ed 87 utmot 4ood
'ait1.
A a-e made 87 a 8ro:er to 1ime-'
?it1out t1e *onent o' t1e .rin*i.a- i
ine''e*tua- ?1et1er t1e 8ro:er 1a 8een
4ui-t7 o' 'raudu-ent *ondu*t or not.
&i.oiti)e> *&dgment 4eversed.
2a-*o-m, &. dientin4>
;o%#ere in t#e contract %as t#e laintiff
ro#ibited to sec&re s&bagents.
,#e majority decision misses o&t on t#e oint
t#at t#e only objection of t#e comany %#en
t#e orders %ere comm&nicated %as related to
t#e manner of ayment.
G. Arti*-e #$90 (6ESSA)
Art. 1!(0. /f t#e agent #as been emo%ered to
borro% money$ #e may #imself be t#e lender at t#e
c&rrent rate of interest. /f #e #as been a&t#ori6ed
to lend money at interest$ #e cannot borro% it
%it#o&t t#e consent of t#e rincial.
#. !eaon 'or a--o?in4 a4ent to
8e t1e -ender
,#e agent cannot$ ?it1out .e*ia- .o?er
o' attorne7$ loan or borro% money 0-ee Art
1!A!YAZ1.
/f t#e agent is exressly emo%ered to
8orro? money$ #e may #imself be t#e lender
at t#e c&rrent rate of interest
o 49A-2;. ,#ere is no danger of t#e
rincial s&ffering any damage
since t#e c&rrent rate of interest
%o&ld #ave to be aid in any case
if t#e loan %ere obtained from a
t#ird erson
/f t#e agent is a&t#ori6ed to lend money at
interest$ #e cannot be t#e borro%er %it#o&t t#e
consent of t#e rincial
o 49A-2;-. t#e agent may rove to
be a bad debtorE ossible conflict of
interestE rej&dicial to t#e rincial
H. Arti*-e #$9# (/A2/I)
Art. 1!(1. 9very agent is bo&nd to render an
acco&nt of #is transactions and to deliver to t#e
rincial %#atever #e may #ave received by virt&e
of t#e agency$ even t#o&g# it may not be o%ing to
t#e rincial.
9very sti&lation exemting t#e agent from t#e
obligation to render an acco&nt s#all be void.
01A20a1
!ULE> /t is t#e d&ty of t#e agent to ACC28;, +24
and to 79=/M94 to t#e rincial A== money and
roerty %#ic# may #ave come into #is #ands or of
a s&b?agent aointed by #im B> M/4,89 2+ or A-
A 49-8=, of t#e agency.
#. &ut7 to render a**ount
2. Crimina- -ia8i-it7 o' a4ent
"?o o8-i4ation o' an a4ent under Art. #9$#
Obli#ation to render accounts
Agent m&st disclose to t#e rincial t#e follo%ing.
"@
1. -o&rce of rofits of agency
All rofits of t#e agency belong to t#e
rincial$ regardless of %#et#er rofit is t#e
res&lt of t#e erformance or violation of
t#e agency.
o %ationale for rule. /t is t#e rincial
%#o ass&mes resonsibility for t#e
transaction. Also$ t#e agent cannot
be ermitted to derive advantage
from #is o%n defa&lt
2. -ecret rofit agent may #ave received
An agent %#o takes secret rofit is g&ilty of
breac# of #is loyalty to t#e rincial and
forfeits #is rig#t to collect commission.
o 4egardless of benefitLinj&ry to t#e
rincial$ &sageLc&stom$ or
grat&ito&s nat&re of t#e agency.
9xemtions to obligation to acco&nt.
/f agent acted only as a middleman %it# t#e task of
merely bringing toget#er t#e vendor and
vendee$ %#o t#emselves t#ereafter %ill
negotiate t#e terms and conditions of t#e
transaction.
/f agent informed rincial of giftLbon&sLrofit #e
received from vendee and rincial did not
object t#ereto.
:#en rig#t of lien exists in favor of agent 0i.e.
Article 1(1D
2
E -ec. @A$ 4&le 1@!$ 42C
@
1
Obli#ation to turn over proceeds
2bligation to render an acco&nting and reort of
collections res&oses t#e d&ty of sim&ltaneo&sly
t&rning over collections.
'ature of a#ent"s possession of
#oods(proceeds received in a#ency
Agent #as physical and )uridical ossession
2
Art. 1(1D. ,#e agent may retain in ledge t#e t#ings
%#ic# are t#e object of t#e agency &ntil t#e rincial
effects t#e reimb&rsement and ays t#e indemnity set
fort# in t#e t%o receding articles. 01A@01
3
-ec. @A. AttorneysK liens. - An attorney s#all #ave a lien
&on t#e f&nds$ doc&ments and aers of #is client %#ic#
#ave la%f&lly come into #is ossession and may retain
t#e same &ntil #is la%f&l fees and disb&rsements #ave
been aid$ and may aly s&c# f&nds to t#e satisfaction
t#ereof. 3e s#all also #ave a lien to t#e same extent &on
all j&dgments for t#e ayment of money$ and exec&tions
iss&ed in &rs&ance of s&c# j&dgments$ %#ic# #e #as
sec&red in a litigation of #is client$ from and after t#e
time %#en #e s#all #ave ca&sed a statement of #is claim
of s&c# lien to be entered &on t#e records of t#e co&rt
rendering s&c# j&dgment$ or iss&ing s&c# exec&tion$ and
s#all #ave ca&sed %ritten notice t#ereof to be delivered
to #is client and to t#e adverse artyE and #e s#all #ave
t#e same rig#t and o%er over s&c# j&dgments and
exec&tions as #is client %o&ld #ave to enforce #is lien
and sec&re t#e ayment of #is j&st fees and
disb&rsements.
o 8nlike a servant or messenger %#o
only #as #ysical ossession
Agent #as autonomous ri#ht to retain
ossession of goodsLroceeds 0i.e.$ %#en
rincial fails to reimb&rse #im for advances or
indemnify #im for damages s&ffered %it#o&t
#is fa&lt1
o 8nlike a bank teller %#o$ as mere a
c&stodianLkeeer of f&nds received$
#as no indeendent rig#t to retain.
Other notes
Any sti&lation exemting t#e agent from #is
obligation to render acco&nts 0ar. 1 of 1!(11 is
)oid. 0ar 2. of 1!(11.
%ationale for rule. -ti&lation contrary to ar. 1
enco&rages fra&d and is contrary to &blic
olicy. /t is in t#e nat&re of a %aiver of an
action for f&t&re fra&d$ t#&s void.
/f agent fails to deliver and instead converts for #is
o%n &se t#e money of roerty belonging to t#e
rincial$ t#e agent is liable for eta'a.
Agent also cannot s&btract from #is collections t#e
commission d&e #im.
&omin4o ). &omin4o (!EK)
FAC"S 2n *&ne 2$ 1(C" Micente 7omingo granted
5regorio 7omingo$ a real estate broker$ t#e
excl&sive agency to sell a lot %it# an area of abo&t
!!k sG&are meters at t#e rate of 2 esos er sGm$
%it# a CN commission of t#e total rice if sold by
Micente or anyone else d&ring t#e @0 day d&ration
of t#e agency or if t#e roerty is sold by Micente
%it#in t#ree mont#s from t#e agencyFs termination
to a b&yer s&bmitted by 5regorio d&ring t#e
contin&ance of t#e agency %it# notice to Micente.
,#is contract %as in trilicate$ 1 coy given to
Micente$ t#e original and anot#er coy %it#
5regorio.
,#e next day$ 5regorio a&t#ori6ed one ,eofilo
)&risima to look for a b&yer$ romising #im #alf of
t#e CN commission. )&risima later t#en introd&ced
2scar de =eon to 5regorio as a rosective b&yer.
7e =eon s&bmitted a %ritten offer m&c# lo%er t#an
2 esos er sGm$ at 1.2 esos er sGm. Micente
directed 5regorio to ask 7e =eon to raise #is offer.
After several conferences bet%een 5regorio and
7e =eon$ t#e latter raised #is offer to 10(k$ to
%#ic# Micente agreed by signing on it. 8on
demand of Micente$ 2scar iss&ed a 1k c#eck as
earnest money$ after %#ic# Micente gave @00
esos to 5regorio.
"D
7e =eon confirmed #is former offer to ay for 1.20
esos er sGm$ and Micente asked for an additional
1k as earnest money$ %#ic# 7e =eon romised to
deliver. ,#e original 10(k offer signed by Micente
%as amended to t#e effect t#at 7e =eon %ill vacate
abo&t -etember #is #o&se and lot at HC %#ic# is
art of t#e &rc#ase rice$ and again amended to
7ecember.
)&rs&ant to #is romise to 5regorio$ 7e =eon gave
#im a gift or propina of 1k for s&cceeding in
ers&ading Micente to sell #is lot at a lo%er rice.
"1i 4i't ?a not di*-oed 87 Gre4orio to
3i*ente. 7e =eon also never aid t#e additional 1k
earnest money. By A&g&st t#e deed of sale still
#adnFt been exec&ted. 7e =eon t#en told 5regorio
t#at #e did not receive #is money from #is brot#er
in t#e 8-$ for %#ic# reason #e %as giving & t#e
negotiations and t#e amo&nts #e #ad already aid
and given.
5regorio t#en sensed somet#ing fis#y$ so #e %ent
to Micente and read t#e CN commission art of t#e
contract. Micente grabbed t#e contract and tore it
to ieces$ b&t 5regorio did not react as #e still #ad
anot#er coy. 5regorio t#en roceeded to t#e HC
4egister of 7eeds %#ere #e learned t#at a deed of
sale #ad been exec&ted by Amaro 7ia6$ 7e =eonFs
%ife$ over t#eir #o&se and lot on t#e &rc#ase rice
of MicenteFs roerty.
8on learning t#is$ #e demanded in %riting #is
commission on t#e sale rice of 10(k. 3e talked to
7e =eon %#o told #im t#at Micente %ent to #im and
asked #im to eliminate 5regorio in t#e transaction
and t#at #e %o&ld sell #is roerty for 10Dk only.
5regorio t#en %ent to co&rt$ %#ere t#e CA$ in
affirming t#e ,C$ sentenced Micente to ay
5regorio and )&risima t#eir commissions$ l&s
moral and exemlary damages %it# attorneyFs fees
and costs. MicenteFs #eirs no% seek t#e reversal of
t#is decision.
/--89-
1. :2; t#e fail&re of 5regorio to disclose t#e
gift by 7e =eon constit&tes fra&d as to ca&se
forfeit&re of t#e commission
2. :2; Micente s#o&ld be liable to )&risima
39=7L4A,/2
#. YES. ,#e CA %as %rong in not finding t#is
fra&d&lent. Article 1!(1Fs second aragra# is
a ne% addition designed to stress t#e #ig#est
loyalty reG&ired of an agent$ voiding any
sti&lation exemting t#e agent from t#e d&ty
and liability of rendering an acco&nt of
transactions received by virt&e of t#e agency$
even if t#e amo&nt is not d&e to t#e rincial.
Article 1(0( of t#e CC makes t#e agent liable
not only for fra&d$ b&t also negligence$ %#et#er
t#e agency %as grat&ito&s or for rice or
re%ard. ,#ese rovisions demand t#e &tmost
good fait# by t#e agent to #is rincial. An
agent %#o takes a secret rofit %it#o&t
revealing t#is to #is rincial is g&ilty of a
breac# of loyalty$ and forfeits #is rig#t to
collect t#e commission$ even if t#e rincial
does not s&ffer any inj&ry by reason of s&c#
breac# of fidelity$ or even gains from it. t#e
r&le is to revent ossible damage.
By taking s&c# rofit or bon&s$ t#e agent
ass&mes a osition %#olly inconsistent %it#
t#at of being an agent for #is rincial.
5regorioFs accetance of 7e =eonFs monetary
gift corr&ted #is d&ty to serve MicenteFs
interests only$ and #e s&cceeded in ers&ading
Micente in selling t#e roerty at a m&c# lo%er
rice t#an t#e original.
,#e d&ty of t#e agent in 1!(1 %ill not aly if
t#e agent acted only as middleman$ tasked
only %it# bringing t#e vendor and vendee
toget#er. ;eit#er %ill it aly if #e informs #is
rincial of t#e bon&s or gift #e received and
#is rincial did not object. 3ere$ 5regorio %as
not merely a middleman$ and Micente %as not
told of t#e gift.
,#e fact t#at t#e %ife of 7e =eon is no% t#e
b&yer in t#e deed of sale does not matter$
since 7e =eon #imself %o&ld still be t#e b&yer
bot# in la% and in fact$ #is consent being
needed as administrator of t#e conj&gal assets
of t#e #o&se %#ic# %as art of t#e &rc#ase
rice.
2. No. 2nly 5regorio %o&ld be liable$ since
)&risima is #is s&b?agent alone. 3e s#o&ld get
#is #alf s#are of %#atever amo&nts 5regorio
received from t#e agency %it# Micente 0@00
from Micente$ 1000 from de =eon$ 1$@00 total1$
%#ic# amo&nts to "C0 esos.
,#e -C also re%ards moral damages to Micente by
1k and attorneyFs fees in t#e same amo&nt. CA
re)ered.
Se)erino ). Se)erino, u.ra
(=ina4a ). Etate o' Pere5 (E3A)
U.S. ). Kiene ("(PE)
1(0A
+acts.
Siene %as an ins&rance agent.
2n acco&nt of #is emloyers$ C#ina '&t&al =ife
/ns&rance Comany$ )1$C@(.20$ %as aid to
#im$ %#ic# 1e 'ai-ed and re'ued to turn
o)er to t1em.
"C
3ence$ #e %as *on)i*ted o' t1e *rime o'
eta'a in t#e C+/ %#ic# sentenced #im to be
imrisoned in Bilibid.
7&ring t#e trial$ acc&sed offered no evidence
on #is o%n be#alf and rest #is aeal
s&bstantially &on t#e a--e4ed 'ai-ure o' t1e
.roe*ution to eta8-i1 t1e e0iten*e o'
a dut7 or o8-i4ation im.oed on t1e
de'endant to turn o)er 1i .rin*i.a- t1e
'und %#ic# #e is c#arged %it# aroriating
to #is o%n &se.
7efendant contends t#at t#e trial co&rt
erroneo&sly admitted in evidence a certain
doc&ment &rorting to be a contract of
agency signed by t#e defendant.
,#e name of t#e acc&sed is attac#ed to t#is
doc&ment$ and one of t#e %itnesses$ t#e
district agent of t#e /ns&rance Comany$
stated t#at it %as t#e contract of agency it
&rorted to be$ b&t failed to state secifically
t#at t#e signat&re attac#ed t#ereto %as t#e
signat&re of t#e defendant$ t#o&g# #e declared
t#at #e kne% #is signat&re and #ad seen #im
%rite it on vario&s occasions.
ISSUE> :o; defendant is obliged to ret&rn t#e
amo&nt in G&estion to #is rincial.
,EL&> YES.
Co&rt. itFs not anymore necessary to revie% t#e
action of t#e co&rt in admitting t#e alleged
doc&ment in evidence$ beca&se t#e o8-i4ation
o' t1e de'endant to de-i)er t1e 'und in
Iuetion to 1i em.-o7er i determined
87 t1e .ro)iion o' arti*-e #C20 o' t1e
Ci)i- Code.
I9very agent is bo&nd to give an acco&nt
of #is transactions and to ay to t#e
rincial all t#at #e may #ave received by
virt&e of t#e agency$ even t#o&g# %#at #as
been received is not o%ed to t#e rincial.I
-ince not#ing to t#e contrary aears in t#e
record$ and t#e e0iten*e o' t1e a4en*7 and
t#e collection of t#e f&nds on acco&nt of t#e
rincial #aving been eta8-i1ed$ t1e
o8-i4ation to de-i)er t1ee 'und to t1e
.rin*i.a- mut 8e 1e-d to 1a)e 8een
im.oed u.on t1e a4ent 87 )irtue o' t1e
*ontra*t o' a4en*7.
Aellant$ #o%ever$ contented t#at t#e co&rt
erred in admitting in evidence a certain letter
%ritten by t#e defendant %#erein #e admitted
t#e collection of certain f&nds on acco&nt of #is
rincial. Co&rt said t#at t#e exec&tion of t#is
letter %as concl&sively establis#ed$ and t#at it
%as roerly admitted$ being ertinent and
material to t#e iss&e in t#e case.
,#ere %ere ot#er objections to t#e admission
of certain testimony at t#e trial of t#e case$ b&t
Co&rt fo&nd no error in t#e roceedings
rej&dicial to t#e real rig#ts of t#e acc&sed$
and it is &nnecessary to disc&ss t#e
assignments of error based on t#ese
objections.
Gu5man ) Court o' A..ea- (GEN)
*&ly @1$ 1(C"
4eyes$ *.B.=.$ *
FAC"S> *onat#an 5&6man %as a traveling sales
agent of ;e% =ife Commercial$ selling vario&s =a
,ondena %ine in a tr&ck toget#er %it# a driver and
a #eler. 3e made cas# sales amo&nting to
)D$!A@."2 in Aarri$ Cagayan.
3e informed t#e driver t#at )2$!D0.C0 %as stolen
and reorted t#e matter to t#e olice. 'ean%#ile$
on t#eir %ay #ome$ t#ey %ere stoed by
a&t#orities reG&esting 5&6man to exec&te an
affidavit regarding t#e alleged t#eft. 5&6man
instr&cted t#e driver to deliver )1$"@0 in cas# and
)D0@.12 in c#eck to t#e manager$ 9nriG&e 5o.
5o reorted t#e matter to t#e olice and 5&6man
%as s&bseG&ently G&estioned. ,#e latter reG&ested
t#at 5o defer t#e filing of t#e comlaint and t#at
#e romised to ref&nd t#e amo&nt lost. 3o%ever$
5&6man %as still rosec&ted for t#eft for t#e
&nret&rned amo&nt of )!0D.A0.
ISSUE> :2; 5&6man %as liable for t#eft
,EL&> ;2. An agent$ &nlike a servant or
messenger$ #as bot# t#e #ysical and j&ridical
ossession of t#e goods received in agency$ or t#e
roceeds t#ereof$ %#ic# takes t#e lace of t#e
goods after t#eir sale by t#e agent. 3is d&ty to t&rn
over t#e roceeds of t#e agency deends &on #is
disc#arge$ as %ell as t#e res&lt of t#e acco&nting
bet%een #im and t#e rincialE and #e may set &
#is rig#t of ossession as against t#at of t#e
rincial &ntil t#e agency is terminated.
As t#e acc&sed converted to #is o%n &se roceeds
of sales of merc#andise delivered to #im as agent$
%#ic# #e received in tr&st for and &nder obligation
to deliver and t&rn over to #is rincial$ #e is g&ilty
of t#e crime of estafa. ,#is #as been t#e consistent
r&ling of t#e Co&rt in cases %#ere a sales agent
misaroriates or fails to t&rn over to #is rincial
roceeds of t#ings or goods #e %as commissioned
or a&t#ori6ed to sell for t#e latter.
,#e information failed to allege t#e essential
element of misaroriation or conversion to t#e
rej&dice of anot#erE #ence t#e acc&sed m&st be
acG&itted of t#e crime of t#eft.
C1uaF/ur*e ). Court o' A..ea- (2AI)
Aril 2A$ 2000
H&is&mbing$ *.
""
+acts. 2n A&g&st 1"$ 1(!C$ 4amon 4ocamora$ t#e
'anager of 'etrobank$ reG&ested +r&ct&oso
)eBaflor$ Assistant Cas#ier$ to cond&ct a #ysical
b&ndle co&nt of t#e cas# inside t#e va&lt$ %#ic#
s#o&ld total )D$000$000.00$ more or less. 7&ring
t#is initial cas# co&nt$ t#ey discovered t#at t#ere
%as a s#ortage of )1C0$000.00. ,#e 2ne 3&ndred
)eso bills act&ally co&nted %as )@$!C0$000.00 as
against t#e balance of )D$000$000.00 in t#e Cas# in
Ma&lt 0C/M1 -&mmary -#eet$ or a total s#ortage of
)1C0$000.00. ,#e next day$ to determine if t#ere
%as act&ally a s#ortage$ a re?verification of t#e
records and doc&ments of t#e transactions in t#e
bank %as cond&cted. ,#ere %as still a s#ortage of
)1C0$000.00.
+o&r investigations %ere cond&cted and t#ese
investigations concl&ded t#at t#ere %as a s#ortage
of )1C0$000.00$ and t#e erson rimarily
resonsible %as t#e bankFs Cas# C&stodian$
Cristeta C#&a?B&rce.
A criminal case for estafa %as filed against C#&a?
B&rce$ %#ile a civil case for s&m of money and
damages %L reliminary attac#ment and
garnis#ment %as filed against etitioner and #er
#&sband. ,#e trial co&rt rendered a consolidated
decision finding etitioner 0a1 g&ilty of estafa &nder
Article @1C 011 0b1 of t#e 4evised )enal Code in t#e
criminal case$ and 0b1 liable for t#e amo&nt of
)1C0$000.00 in t#e civil case.
/ss&e. :#et#er or not t#e elements of estafa
t#ro&g# conversion or misaroriation %ere
roven beyond reasonable do&bt
3eld. ;2.
,#e first element Ythat personal property is
received in trust, on commission, for
administration or under any other circumstance
involvin# the duty to ma&e delivery of or to return
the same, even thou#h the obli#ation is
#uaranteed by a bondZ is absent. :#en t#e money$
goods$ or any ot#er ersonal roerty is received
by t#e offender from t#e offended arty 011 in tr&st
or 021 on commission or 0@1 for administration$ t#e
offender acG&ires bot# material or #ysical
ossession and j&ridical ossession of t#e t#ing
received. *&ridical ossession means a ossession
%#ic# gives t#e transferee a rig#t over t#e t#ing
%#ic# t#e transferee may set & even against t#e
o%ner. /n t#is case$ etitioner %as a cas# c&stodian
%#o %as rimarily resonsible for t#e cas#?in?va&lt.
3er ossession of t#e cas# belonging to t#e bank is
akin to t#at of a bank teller$ bot# being mere bank
emloyees.
,#ere is an essential distinction bet%een t#e
ossession by a receiving teller of f&nds received
from t#ird ersons aid to t#e bank$ and an agent
%#o receives t#e roceeds of sales of merc#andise
delivered to #im in agency by #is rincial. /n t#e
former case$ ayment by t#ird ersons to t#e teller
is ayment to t#e bank itselfE t#e teller is a mere
c&stodian or keeer of t#e f&nds received$ and #as
no indeendent rig#t or title to retain or ossess
t#e same as against t#e bank. An a4ent, on t1e
ot1er 1and, *an e)en aert, a a4aint 1i
o?n .rin*i.a-, an inde.endent, autonomou,
ri41t to retain mone7 or 4ood re*ei)ed in
*oneIuen*e o' t1e a4en*7D a ?1en t1e
.rin*i.a- 'ai- to reim8ure 1im 'or ad)an*e
1e 1a made, and indemni'7 1im 'or dama4e
u''ered ?it1out 1i 'au-t.
)etitioner #erein being a mere cas# c&stodian #ad
no j&ridical ossession over t#e missing f&nds.
3ence$ t#e element of j&ridical ossession being
absent$ etitioner cannot be convicted of t#e crime
of estafa &nder Article @1C$ ;o. 1 0b1 of t#e 4evised
)enal Code.
I. Arti*-e #$92, #$9@ (!(G)
Art. 1!(2. ,#e agent may aoint a s&bstit&te if
t#e rincial #as not ro#ibited #im from doing soE
b&t #e s#all be resonsible for t#e acts of t#e
s&bstit&te.
011 :#en #e %as not given t#e o%er to aoint
oneE
021 :#en #e %as given s&c# o%er$ b&t %it#o&t
designating t#e erson$ and t#e erson aointed
%as notorio&sly incometent or insolvent.
All acts of t#e s&bstit&te aointed against t#e
ro#ibition of t#e rincial s#all be void. 01A211
Art. 1!(@. /n t#e cases mentioned in ;os. 1 and 2
of t#e receding article$ t#e rincial may
f&rt#ermore bring an action against t#e s&bstit&te
%it# resect to t#e obligations %#ic# t#e latter #as
contracted &nder t#e s&bstit&tion.
#. !e-ation amon4 .rin*i.a-,
a4ent, and u8Fa4ent
2. Genera- ru-e> A4ent ma7
a..oint u8titute
@. ConeIuen*e o' -a*: o'
.ro1i8ition
A. E''e*t o' u8titution
-&b?agent defined. a erson to %#om agent
delegates as #is agent$ t#e erformance of an act
for t#e rincial %#ic# t#e agent #as been
emo%ered to erform t#ro&g# #is reresentative.

"A
)o%er of agent to aoint s&b?agent or s&bstit&te
allo%ed. Agent #ere is a rincial %it# resect to
t#e s&bstit&te. =a% allo%s s&c# s&bstit&tion for
reasons of convenience and ractical &tility.
)rincial need not fear rej&dice as #e #as rig#t of
action not only against agent b&t also against
s&bstit&te %it# resect to obligation %#ic# latter
#as contracted &nder t#e s&bstit&tion. ,#is rig#t of
action against s&bstit&te is an excetion to general
r&le t#at contracts are binding only bet%een t#e
contracting arties.

4elation among rincial$ agent and s&b?agent.
1. -&b?agent aointed by agent on
latterKs sole acco&nt? s&b agent a stranger to
rincial %#o originally gave life to agency.
2. -&b?agent aointed by agent %it#
a&t#ority from rincial? %#ere agent
a&t#ori6ed to aoint s&b?agent$ relation of
rincial and agent$ exists bet%een rincial
and s&b?agent.
@. 9ffect of deat# of rincialLagent ?
if a&t#ority of s&b?agent roceeds from
rincial$ deat# of agent %#o aointed #im
does not affect #is a&t#ority.

9ffects of s&bstit&tion
-&bstit&tion ro#ibited ? %#en s&bstit&tion is
aointed by agent against t#e exress
ro#ibition of rincial agent exceeds limits of
#is a&t#ority t#&s acts of s&bstit&te %ill be
void.
-&bstit&tion a&t#ori6ed ? if agent given o%er to
aoint$ s&bstit&tion #as effect of releasing
agent from resonsibility &nless erson
aointed is notorio&sly incometent or
insolvent beca&se t#is %o&ld be ab&se of
rincialKs confidence.
-&bstit&tion not a&t#ori6ed$ b&t not ro#ibited ?
s&bstit&tion valid if it is beneficial to rincial
beca&se agency #as been exec&ted.
B. Cae
2a*ia + Co. ). 9arner /ro. (!EG)
*. *o#ns
1(22
FAC"S> 4esondent %as t#e resident agent of
ins&rance comanies ,#e C#ina fire /ns&rance
Comany$ =td.$ ,#e >ang?,s6e /ns&rance
Association$ =td.$ and ,#e -tate Ass&rance Co.$ =td.
%#ic# are all foreign comanies. 4esondent
served as t#e agent of etitioner for t#e acG&isition
of several ins&rance olicies. +ire occ&rred
sometime in 1(1($ in t#e b&ilding in %#ic# t#e
goods covered by t#e ins&rance olicies %ere
stored. )etitioner made a claim for damages &nder
its olicies against resondent.
ISSUE> :2; resondent %as a mere agent and
t#&s not liable for t#e loss.
!ULING> >9-. :arner$ Barnes P Co.$ %as j&st an
agent of t#e ins&rance comanies. /t did not make
any contract %it# t#e etitioner$ and is not liable to
t#e laintiff on any contract$ eit#er as rincial or
agent. +or s&c# reason$ etitioner is not entitled to
recover its losses from :arner$ Barnes P Co.$
eit#er as rincial or agent. ,#ere is no breac# of
any contract %it# t#e laintiff by :arners$ Barnes
P Co.$ eit#er as agent or rincial$ for t#e simle
reason t#at :arner as agent or rincial$ never
made any contract$ oral or %ritten$ %it# t#e
laintiff.
Serona ). CA (A//Y)
2002
*. >nares?-antiago
+acts.
=eonida H&ilatan delivered ieces of je%elry to
etitioner Mirgie -erona to be sold on commission
basis. By oral agreement of t#e arties$ -erona
s#all remit ayment or ret&rn t#e ieces of je%elry
if not sold to H&ilatan$ bot# %it#in @0 days from
receit of t#e items.
-erona #ad earlier entr&sted t#e je%elry to one
'aric#& =abrador for t#e latter to sell on
commission basis. )etitioner %as not able to collect
ayment from =abrador$ %#ic# ca&sed #er to
like%ise fail to ay #er obligation to H&ilatan.
H&ilatan sent a demand letter to -erona b&t s#e
failed to ay t#e rincial. =abrador says t#at s#e
sold some of t#e je%elry to a @
rd
erson %#o did
not ay #er.
-erano is c#arged %it# estafa and is no% aealing
to #ave t#e decision of t#e ,C reversed.
/ss&e. :o; -erona is liable for t#e acts of #er s&b?
agent =abrador
3eld. +o&nd ;ot 5&ilty on t#e 9stafa c#arge b&t
sentenced to ay t#e civil liability of t#e val&e of
t#e &nret&rned je%elry.
)etitioner did not iso facto commit t#e crime of
estafa t#ro&g# conversion or misaroriation by
delivering t#e je%elry to a s&b?agent for sale on
commission basis. :e are &nable to agree %it# t#e
lo%er co&rtsF concl&sion t#at t#is fact alone is
s&fficient gro&nd for #olding t#at etitioner
disosed of t#e je%elry Ias if it %ere #ers$ t#ereby
committing conversion and a clear breac# of tr&st.I
,#e la% on agency in o&r j&risdiction allo%s t#e
aointment by an agent of a s&bstit&te or s&b?
agent in t#e absence of an exress agreement to
t#e contrary bet%een t#e agent and t#e rincial.
"!
/n t#e case at bar$ t#e aointment of =abrador as
etitionerFs s&b?agent %as not exressly ro#ibited
by H&ilatan$ as t#e ackno%ledgment receit$ does
not contain any s&c# limitation. ;eit#er does it
aear t#at etitioner %as verbally forbidden by
H&ilatan from assing on t#e je%elry to anot#er
erson before t#e ackno%ledgment receit %as
exec&ted or at any ot#er time. ,#&s$ it cannot be
said t#at etitionerFs act of entr&sting t#e je%elry
to =abrador is c#aracteri6ed by ab&se of
confidence beca&se s&c# an act %as not roscribed
and is$ in fact$ legally sanctioned.
/n t#e case at bar$ it %as establis#ed t#at t#e
inability of etitioner as agent to comly %it# #er
d&ty to ret&rn eit#er t#e ieces of je%elry or t#e
roceeds of its sale to #er rincial H&ilatan %as
d&e$ in t&rn$ to t#e fail&re of =abrador to abide by
#er agreement %it# etitioner. ;otably$ =abrador
testified t#at s#e obligated #erself to sell t#e
je%elry in be#alf of etitioner also on commission
basis or to ret&rn t#e same if not sold. /n ot#er
%ords$ t#e ieces of je%elry %ere given by
etitioner to =abrador to ac#ieve t#e very same
end for %#ic# t#ey %ere delivered to #er in t#e first
lace. ConseG&ently$ t#ere is no conversion since
t#e ieces of je%elry %ere not devoted to a
&rose or &se different from t#at agreed &on.
-imilarly$ it cannot be said t#at etitioner
misaroriated t#e je%elry or delivered t#em to
=abrador I%it#o&t rig#t.I Aside from t#e fact t#at
no condition or limitation %as imosed on t#e
mode or manner by %#ic# etitioner %as to effect
t#e sale$ it is also consistent %it# &s&al ractice for
t#e seller to necessarily art %it# t#e val&ables in
order to find a b&yer and allo% insection of t#e
items for sale.
,#e agents to %#om ersonal roerty %as
entr&sted for sale$ concl&sively roves t#e inability
to ret&rn t#e same is solely d&e to malfeasance of
a s&bagent to %#om t#e first agent #ad act&ally
entr&sted t#e roerty in good fait#$ and for t#e
same &rose for %#ic# it %as receivedE t#ere
being no ro#ibition to do so and t#e c#attel being
delivered to t#e s&bagent before t#e o%ner
demands its ret&rn or before s&c# ret&rn becomes
d&e$ %e #old t#at t#e first agent can not be #eld
g&ilty of estafa by eit#er misaroriation or
conversion. ,#e ab&se of confidence t#at is
c#aracteristic of t#is offense is missing &nder t#e
circ&mstances.
An agent %#o is not ro#ibited from aointing a
s&b?agent b&t does so %it#o&t exress a&t#ority is
resonsible for t#e acts of t#e s&b?agent.
Considering t#at t#e civil action for t#e recovery of
civil liability arising from t#e offense is deemed
instit&ted %it# t#e criminal action$ etitioner is
liable to ay comlainant H&ilatan t#e val&e of t#e
&naid ieces of je%elry.
Peo.-e ). F-ore (EA!LA)
Lor*a ). &inero (6ANCES)
+ebr&ary 2!$ 1(C!
*. Beng6on
+acts. /n anot#er civil case$ 7ineros as 7e&ty
-#eriff and in name of s#eriff$ &rs&ant to t#e %rit
of exec&tion$ sold t#e roerty involved in t#at
case$ disregarding t#ird arty claim of =orca. =orca
t#en instit&ted action for damages against 7ineros.
4&ling. C+/ ? action dismissed. 4esonsibility s#o&ld
be attrib&ted to t#e s#eriff$ not #is de&ty.
/ss&e. :2; 7ineros as 7e&ty -#eriff is liable for
damages
39=7. -ec @@D of t#e 4evised Admin Code$ %#ic#
states t#at de&ties may be reG&ired to give
adeG&ate ersonal bond as sec&rity against lossR$
is alicable only %#en t#e de&ty acts in #is o%n
name or is g&ilty of active malfeasance or %#ere
#e exceeds t#e limits of #is agency. /n t#is case$
t#e certificate of sale clearly s#o%s t#at 7ineros
acted in t#e name of t#e 9x?2fficio )rovincial
-#eriff.
,#e -#eriff is t#e one liable to t#ird ersons on t#e
acts of #is de&ty$ in t#e same manner t#at t#e
rincial is resonsible for t#e acts of #is agent$
t#at is %#y #e is reG&ired to ost a bond for t#e
benefit of %#om it may concern &nder -ec @@0 of
t#e 4evised Admin Code.
7isosition. *&dgment affirmed.
2arIue5 ). 3are-a (ALAIN)
7ecember 2D$ 1(C2
=abrador$ *..
FAC"S> )laintiff 5&tierre6 =ora %as a&t#ori6ed by
defendants 0so&ses Marela1 to negotiate t#e sale
of t#eir s#are or interest in a arcel of land on
)la6a 5oiti$ 'anila$ and #aving meet #is co?laintiff
=. 5. 'arG&e6$ a real estate broker$ bot# of t#em
agreed to %ork toget#er for t#e sale of defendantKs
roertyE t#at t#ey fo&nd a ready$ %illing$ and able
b&yer$ %#ic# acceted defendantsK rice and
terms$ b&t t#at t#ereafter defendants$ %it#o&t any
j&stifiable reason$ ref&sed to carry o&t t#e sale and
exec&te t#e necessary deed t#ereforeE and t#at as
a conseG&ence laintiffs failed to receive t#e
commission %#ic# t#ey %ere entitled to receive.
,#&s$ laintiffs filed comlaint. 2bjection %as filed
by t#e defendants.
2bjection to t#e comlaint$ #o%ever$ is not t#at
'arG&e6 #as no rig#t to s#are in t#e comensation
to be aid =ora$ %#om defendants #ad directly
engaged$ b&t t#at 'arG&e6 can not join in t#is
action and enforce t#erein #is rig#ts directly
"(
against t#e defendants$ evidently beca&se
defendants never dealt %it# 'arG&e6$ directly or
indirectly$ or$ in ot#er %ords$ t#at bot# 'arG&e6
and #is services %ere not kno%n to dismiss s#o%
t#at s&c# in fact %as t#e objection
ISSUE> /s t#ere a ca&se of action in favor of
'arG&e6 against t#e defendants<
,e-d> /t is not denied t#at =ora$ if #e rendered t#e
service alleged in t#e comlaint$ %o&ld #ave a
rig#t to be aid comensation for t#e service #e
rendered jointly %it# 'arG&e6. 3e acted as a
broker$ and a broker is entitled to a commission for
#is services. ,#ere is no ro#ibition in la% against
t#e emloyment of a comanion to look for a
b&yerE neit#er is it against &blic olicy. ;eit#er
%as t#ere even any imlied &nderstanding
bet%een =ora and t#e defendants t#at no art of
t#e comensation to %#ic# =ora %o&ld be entitled
to receive co&ld be aid to any comanion or
#eler of =ora. 'arG&e6Ks rig#t to comensation
can not$ t#erefore$ be dis&ted &nder t#e oerative
facts set fort# in t#e comlaint.
8nder section " of 4&le @$ IAll ersons in %#om . . .
any rig#t to relief in resect to or arising o&t of t#e
same transaction . . . is alleged to exist$ %#et#er
jointly$ severally$ or in t#e alternative$ may$ . . . join
as laintiffs . . . %#ere any G&estion of la% or fact
common to all s&c# laintiffs . . . may arise in t#e
actionE )laintiff 'arG&e6$ in t#e case at bar$ clearly
falls &nder t#e above r&le. 3e is entitled to be aid
#is commission o&t of t#e very contract of agency
bet%een =ora and t#e defendantsE =ora and #e
acted jointly in rendering services to defendants
&nder =oraKs contract$ and t#e same G&estions of
la% and fact govern t#eir claims. ,#e r&les do not
reG&ire t#e existence of rivity of contract bet%een
'arG&e6 and t#e defendants as reG&ired &nder t#e
common la%E all t#at t#ey demand is t#at 'arG&e6
#as a material interest in t#e s&bject of t#e action$
t#e rig#t to s#are in t#e brokerKs commission to be
aid =ora &nder t#e latterKs contract$ %#ic# rig#t
=ora does not deny. ,#is is s&fficient to j&stify t#e
joinder of 'arG&e6 as a arty laintiff$ even in t#e
absence of rivity of contract bet%een #im and t#e
defendants.
J. Arti*-e #$9A, #$9B (2A!K)
Art. 1!(D. ,#e resonsibility of t%o or more agents$
even t#o&g# t#ey #ave been aointed
sim&ltaneo&sly$ is not solidary$ if solidarity #as not
been exressly sti&lated. 01A2@1
Art. 1!(C. /f solidarity #as been agreed &on$ eac#
of t#e agents is resonsible for t#e non?f&lfillment
of agency$ and for t#e fa&lt or negligence of #is
fello%s agents$ excet in t#e latter case %#en t#e
fello% agents acted beyond t#e scoe of t#eir
a&t#ority.
#. !u-e ?1en 2 a4ent a..ointed
inde.endent-7
2uni*i.a- Coun*i- o' I-oi-o ). E)an4e-ita
(AN6 S.)
Fa*t>
,an 2ng -6e Mda. 7e ,an ,oco %as a%arded by
t#e C+/ of /loilo D2$("".D0# for t#e stri of land
belonging to #er t#at %as taken by t#e '&nicial
Co&ncil to %iden a &blic street.
After t#e case %as remanded to t#e co&rt of
origin$ and t#e j&dgment rendered t#erein #ad
become final and exec&tory$ Attorney. *ose
9vangelista 0,an 2ng -6eFs co&nsel in t#e
exroriation case1$ in #is o%n be#alf and as
co&nsel for t#e administratrix of Attorney. *ose
'a. ArroyoFs intestate estate 0%#o %as t#e
revio&s co&nsel of ,an 2ng -6e in t#is case1$
filed a claim in t#e same case for rofessional
services rendered by t#em$ %#ic# t#e co&rt$
acting %it# t#e consent of ,an 2ng -6e$ fixed at
1CN of t#e amo&nt of t#e j&dgment.
At t#e #earing of t#e said claim$ )#iliine
;ational Bank 0);B1 and a reresentative of t#e
late Antero -oriano aeared. );B rayed t#at
t#e amo&nt of t#e j&dgment be t&rned over to it
beca&se t#e land taken over #ad been
mortgaged to t#e bank. ,#e reresentative of t#e
late Antero 0revio&s co&nsel of ,an 2ng in ot#er
cases concerning #er ot#er roerties1$ on t#e
ot#er #and$ claimed t#e amo&nt of t#e j&dgment
as it #ad been assigned to Antero by t#e
attorney?in?fact of ,an 2ng -6e$ ,an Boon ,iong.
Antero$ in t&rn$ assigned t#e said credit to
'a&rico Cr&6 P Co.$ /nc.
After #earing all t#e adverse claims on t#e
amo&nt of t#e j&dgment$ t#e co&rt ordered t#at
t#e attorneyFs lien in t#e amo&nt of 1CN of t#e
j&dgment$ be recorded in favor of Attorney *ose
9vangelista$ in #is be#alf and as co&nsel for t#e
administratrix of Attorney. *ose 'a. Arroyo$ and
directed t#e '&niciality of /loilo to file an action
of interleading against t#e adverse claimants$
);B$ Antero -oriano$ 'a&ricio Cr&6 P Co.$ *ose
9vangelista and *ose Arroyo at t#e C+/ of /loilo.
CFI I-oi-o> declared t#e deed of assignment of
credit exec&ted by ,an 2ng -6e$ t#ro&g# #er
attorney?in?fact ,an Boon ,iong$ in favor of t#e
late Antero -oriano %as validE like%ise$ t#e
assignment exec&ted by Antero -oriano in favor
of 'a&ricio Cr&6 P Co %as declared valid. ,an
2ng -6e %as also ordered to deosit said s&m in
a local bank %it#in t#e eriod of (0 days from
t#e time t#e j&dgment s#all become final$ at t#e
disosal of 'a&ricio Cr&6 P Co.$ and in case t#at
,an 2ng s#all not make s&c# deosit in t#e
A0
manner indicated$ said amo&nt s#all bear t#e
legal interest of "N er ann&m from t#e date
%#en ,an 2ng s#all fail to make t#e deosit
%it#in t#e eriod set fort#$ &ntil f&lly aid.
,an 2ng filed an aeal.
Iue>
1. :2; ,an Boon ,iong$ as attorney?in?fact of
,an 2ng$ %as emo%ered by #is rincial to
make an assignment of credits$ rig#ts$ and
interests$ in ayment of debts for rofessional
services rendered by la%yers for ,an 2ng.
2. 9(N t1e 'ai-ure o' t1e ot1er
attorne7FinF'a*t o' "an (n4, "an 2ontano,
to *onent to t1e deed o' ai4nment, t1e
-atter 8ein4 a-o aut1ori5ed to .a7 in t1e
name and 8e1a-' o' t1e .rin*i.a-, a-- 1er
de8t and t1e -ien and en*um8ran*e on
1er .ro.ert7, in)a-idate t1e ai4nment o'
*redit 87 "an /oon "ion4 to t1e -ate
Antero.
,e-d ; !atio>
1.>es$ #e %as emo%ered. /n )aragra# M/ of t#e
o%er of attorney exec&ted by ,an 2ng in favor
of ,an Boon ,iong$ ,an Boon ,iong is a&t#ori6ed
to emloy and contract t#e services of la%yers
&on s&c# conditions as #e may deem
convenient$ to take c#arge of any actions
necessary or exedient for t#e interests of #is
rincial$ and to defend s&its bro&g#t against
#er. ,#is o%er necessarily imlies t#e a&t#ority
to ay for t#e rofessional services t#&s
engaged.
/n t#e resent case$ t#e assignment made by ,an
Boon ,iong in favor of Attorney Antero for
rofessional services rendered in ot#er cases in
t#e interest of ,an 2ng and #er co#eirs$ %as t#at
credit %#ic# s#e #ad against t#e m&niciality of
/loilo$ and s&c# assignment %as eG&ivalent to t#e
ayment of t#e amo&nt of said credit to Antero
for rofessional services.
2. :it# regard to t#e fail&re of t#e ot#er
attorney?in?fact of ,an 2ng$ ,an 'ontano$ to
consent to t#e deed of assignment$ t#e latter
being also a&t#ori6ed to ay$ in t#e name and
be#alf of t#e rincial$ all #er debts and t#e liens
and enc&mbrances on #er roerty$ t#e very fact
t#at different letters of attorney %ere given to
eac# of t#ese t%o reresentatives s#o%s t#at it
%as not t#e rincialFs intention t#at t#ey s#o&ld
act jointly in order to make t#eir acts valid.
+&rt#ermore$ t#e aellant %as a%are of t#at
assignment and s#e not only did not re&diate it$
b&t s#e contin&ed emloying Attorney. Antero
-oriano to reresent #er in co&rt.
,#e Co&rt is of t#e oinion and so #olds t#at
%#en a erson aoints t%o attorneys?in?fact
indeendently$ t#e consent of one %ill not be
reG&ired to validate t#e acts of t#e ot#er &nless
t#at aears ositively to #ave been t#e
rincialFs intention.
&i.oiti)e> 7ecision Affirmed in its entirety.
K. Arti*-e #$9% (6ESSA)
Art. 1!(". ,#e agent o%es interest on t#e s&ms #e
#as alied to #is o%n &se from t#e day on %#ic#
#e did so$ and on t#ose %#ic# #e still o%es after
t#e exting&is#ment of t#e agency.
,%o distinct cases contemlated #ere.
11 s&ms belonging to t#e rincial %#ic#
t#e agent alied to #is o%n &se
agent is liable for interest
by %ay of comensation or
indemnity 0not to be conf&sed %it#
interest for delay1
interest s#all be com&ted
from t#e day on %#ic# t#e agent
did so 0alied to o%n &se1
agentFs liability is %it#o&t
rej&dice to a criminal action t#at
may be bro&g#t against #im
beca&se of conversion
21 s&ms %#ic# t#e agent still o%es t#e
rincial after t#e exiration of t#e
agency
general r&le. t#ere is no
liability for interest on s&ms %#ic#
#ave not been converted for
agentFs &se
excetion. t#e agent %#o is
fo&nd to o%e t#e rincial s&ms
after t#e exting&is#ment of t#e
agency is liable for interest
interest s#all be com&ted
from t#e date t#e agency is
disting&is#ed
2ende5ona ). C. 3iuda de Goitia (/A2/I)
'arc# 11$ 1(@0
Millamor$ *.
+acts.
Benigno 5oitia %as reresentative and
attorney?in?fact of laintiffs =eonor 'ende6ona
and Malentina /6ag&irre > ;a6abal in t#e joint?
acco&nt artners#i kno%n as t#e I,ren de
Ag&adas.I
As #e %as also manager of t#e artners#i
at t#at time and beca&se laintiffs lived in
-ain$ 5oitia collected t#e dividends d&e
laintiffs.
)rior to 1(1C$ Benigno 5oitia remitted to
laintiffs t#eir dividends every year.
A1
3o%ever$ from 1(1C &ntil #is deat# in
1(2"$ #e failed to remit any dividends to
laintiffs.
:#en 5oitia died$ co&nsel for bot#
laintiffs filed t#eir claims %it# t#e committee
of claims and araisal of 5oitiaFs estate.
C2''/,,99 disaroved laintiffsFclaims.
)laintiffs aealed to trial co&rt.
7&ring trial$ it %as fo&nd t#at from 1(1C to
1(2"$ Benigno 5oitia indeed failed to remit and
acco&nt for t#e dividends #e received in be#alf
of laintiffs.
,#&s$ trial co&rt directed resondent
9ncarnacion C. Mda$ de 5oitia$ %#o %as j&dicial
administratrix of #er #&sbandFs estate$ to
render a j&dicial acco&nt of.
1. ,#e intestate estate of t#e
deceased Benigno 5oitia and
2. ,#e amo&nts collected by #er
#&sband as attorney?in?fact and
reresentative of t#e laintiffs.
After #earing$ ,4/A= C284, ordered
resondent to ay t#e )1@$1D0 to 'ende6ona
and )C$2C" to /6ag&irre$ not# amo&nts %it#
legal interest from t#e date of filing of t#e
comlaint. ,#e amo&nts %ere based c#iefly on
t#e testimonies of 4&erto -antos$ Benigno
5oitiaFs s&ccessor as manager of t#e
artners#i$ and 4amon -alinas$ a stock#older
of t#e comany.
/ss&es
D
L3eld.
1. 9(N tria- *ourt 1ad =uridi*tion to
admit t1e amended *om.-aint, ?1i*1
*-aimed a 4reater amount t1an ?a
*-aimed 8e'ore t1e *ommittee.
B
>9-. -ection AA" of t#e Code of Civil
)roced&re rovides t#at &on t#e lodging of
s&c# aeal %it# t#e clerk$ t#e dis&ted claim
s#all stand for trial in t#e same manner as any
other action in the Court of +irst ,nstance$ t#e
creditor being deemed to be t#e laintiff$ and
t#e estate t#e defendant$ and leading as in
ot#er actions s#all be filed. Considering t#e
distance t#at searated t#e laintiffs from t#eir
attorney?in?fact and t#at t#e latter failed to
s&ly t#em %it# data from 1(1C to 1(2"$ it is
nat&ral t#at t#ey #ad to resort to calc&lating
t#e amo&nts d&e t#em from t#eir stocks in
I,ren de Ag&adas.I
,o deny t#em t#e rig#t to amend t#eir
comlaint in accordance %it# section AA"$
%#en t#ey #ad sec&red more definite
information as to t#e amo&nts d&e t#em$ %o&ld
be an inj&stice$ esecially since t#is action
4
9xcl&des 9vidence?related iss&es.
5
)laintiffs only asked for ann&al dividends before t#e
committee %#ereas t#e amended comlaint in t#e trial
co&rt asked for ordinary and extraordinary dividends.
arises from tr&st relations bet%een t#e
laintiffs and t#e deceased 5oitia.
2. 9(N .-ainti'' are t1e rea- .artie in
interet.
>9-. Benigno 5oitia recogni6ed t#at laintiffs
o%ned s#ares in t#e artners#i. ,#e
comanyFs balance s#eet also contains
laintiffsFnames are s#are#olders.
+&rt#ermore$ resondent failed to file a
dem&rrer on t#e gro&nd of misjoinder of
arties. /n accordance %it# -ec. (@ of t#e Code
of Civil )roced&re$ resondent is deemed to
#ave %aived any objection on t#is gro&nd.
3. 9(N tria- *ourt 1ad .o?er to order
de'endant to render an a**ount o'
di)idend u..oed to 1a)e 8een
re*ei)ed 87 1er de*eaed 1u8and.
>9-. ,#e &rose of t#e order %as to give
resondent an oort&nity of s#o%ing %#at
amo&nts #er #&sband received on acco&nt of
t#e aelleesK stock. ,#e comlaint demanded
t#e ret&rn of t#ese amo&nts alleged to #ave
been received by resondentFs deceased
#&sband so it %as necessary to determine
%#et#er s&c# amo&nts %ere really received or
not.
4. 9(N re.ondent i -ia8-e 'or interet
on t1e amount a--e4ed-7 due.
>9-. According to Article1A2D of t#e 02ld1 Civil
Code$ an agent s#all be liable for interest &on
any s&ms #e may #ave alied to #is o%n &se$
from t#e day on %#ic# #e did so$ and &on
t#ose %#ic# #e still o%es$ after t#e exiration
of t#e agency$ from t#e time of #is defa&lt.
A.L. Ammen "ran.ortation Co. ) &e
2ar4a--o (!EK)
+AC,-. /n +ebr&ary 1(2"$ A.=. Ammen
,ransortation Comany alied for a certificate of
&blic convenience %it# t#e )&blic -ervice
Commission 0)-C1 to oerate an a&totr&ck service
bet%een all rincial oints of Albay$ Camarines$
and -orsogon. At t#e time of t#e decision$ Ammen
%as already lying a ro&te bet%een =egasi and
BanG&ero#an.
=ater$ t#e )-C granted a similar certificate to +elie
=otivio to oerate an a&totr&ck service bet%een
=egasi and 'anito$ a fart#er destination. ,#is %as
aroved$ alt#o&g# t#e road %as not constr&cted
yet. +or val&e and consent and aroval of t#e
)-C$ Ammen &rc#ased and acG&ired t#e rig#ts
%#ic# #ad been granted to =otivio for t#e said
service.
A mont# before =otivio alied for #is certificate$
'aria de 'argallo 07e 'argallo1 alied for t#e
same certificate to oerate an a&tob&s line
A2
bet%een =egasi and 'anito. ,#is alication %as
set for #earing ;ovember of t#at year. :#en t#e
case %as called &on$ it %as ostoned$ t#e reason
being t#at t#e road over %#ic# t#e license %as
so&g#t %as not yet constr&cted. ;otably$ #o%ever$
in =otivioFs alication$ %#ic# %as aroved$ t#e
road #ad also not yet been constr&cted. /t %o&ld
take more t#an 2 years for #er alication to be
finally granted.
:#at #aened %as t#at$ alt#o&g# 7e 'argalloFs
alication %as earlier t#an =otivioFs by one mont#$
=otivio %as granted #is certificate more t#an t%o
years before 7e 'argallo %as granted #ers. ,#is is
como&nded by t#e fact t#at 7e 'argallo %as not
notified or a arty of =otivioFs #earing.
;o% =otivioFs rig#ts on #is certificate are no% #eld
by Ammen$ %#ic# in any case #ad already been
granted a certificate lying a ro&te D0 ercent of
t#e %ay bet%een =egasi and 'anito 0=egasi and
BanG&ero#an1$ and %as rendering good and
efficient services %it#o&t comlaint from t#e
&blic. Ammen no% contests t#e license granted to
de 'argallo by t#e )-C.
ISSUE>
:2; =otivioFs license is legally binding on de
'argallo
,EL&;!A"I(
N(. Alt#o&g# t#e co&rt gives Ammen t#e rig#t to
oerate bet%een =egasi and BanG&ero#an$ as
t#ey #ad t#e earliest alication and service$ t#e
story is different on t#e road bet%een
BanG&ero#an and 'anito #ad not yet been
constr&cted.
Idea--7, &e 2ar4a--o ?i-- 1a)e a*Iuired ri41t
8e'ore Loti)io 87 )irtue o' 1er .rior 'i-in4 to
o.erate 8et?een /anIuero1an and 2anito.
Sin*e 1e ?a not a .art7 to Loti)ioE 1earin4
and ?a not er)ed noti*e, none o' 1er ri41t
?i-- 8e di)eted on t1e 4rantin4 o' Loti)ioE
*erti'i*ate.
3o%ever t#e co&rt is not disosed to define t#e
legal rig#ts of eit#er arty beca&se t#e roads #ad
not yet been constr&cted bet%een BanG&ero#an
and 'anito. As for t#e =egasi and BanG&ero#an
ro&te$ an excl&sive certificate s#o&ld be iss&ed to
Ammen to oerate bet%een t#ese t%o oints.
&e*iion re)ered.
L. Arti*-e #$9C ("(PE)
Art. 1!(A. ,#e agent %#o acts as s&c# is not
ersonally liable to t#e arty %it# %#om #e
contracts$ &nless #e exressly binds #imself or
exceeds t#e limits of #is a&t#ority %it#o&t giving
s&c# arty s&fficient notice of #is o%ers.
#. Genera- ru-eD e0*e.tion
&utie and -ia8i-itie o' a4ent to t1ird
.eron
,#e r&le is t#at t#e rincial is resonsible for
t#e acts of t#e agent done %it#in t#e scoe of
#is a&t#ority and s#o&ld bear any damage
ca&sed to t#ird ersons 0Art 1(101
1. In 4enera-
,#e d&ties of an agent to t#ird ersons and #is
corresonding liabilities m&st be considered
%it# reference to t#e c#aracter of #is act as to
%#et#er it is a&t#ori6ed or &na&t#ori6ed$ and
also %it# reference to t#e nat&re of liability
%#ic# it so&g#t to assert as being in contract or
tort.
2. Unaut1ori5ed aum.tion o' a4en*7
2ne %#o &na&t#ori6edly ass&me to act for
anot#er is g&ilty of a %rong$ and is liable for
t#e damage to t#ose dealing %it# #im in
reliance on #is ass&med a&t#ority in t#at t#ey
are derived of t#e benefit of t#e rincial.
2f co&rse$ if no damages #ave been s&stained$
no liability for t#e agentFs false ass&mtion of
a&t#ority exists.
3. Nature o' -ia8i-it7
A &rorted agent %ill be #eld ersonally liable
as rincial on a contract exec&ted %it#o&t
a&t#ority if the contract contains apt words to
bind him personally$ or if s&c# %as t#e
intention of t#e arties.
32:9M94$ in t#e absence of an at exression
or intention$ t#e nat&re of #is liability is t#e
s&bject of some divergence in j&dicial oinion.
a. /n some j&risdictions$ in t#e absence of
stat&te$ t#e &rorted agent is #eld
liable as rincial on t#e contract itself$
based$ it #as been said on t#e t#eory
t#at since t#e contact %as intended to
bind someone$ it m&st necessarily bind
t#e &rorted agent even if t#e
rincial is &naffected.
b. According to t#e %eig#t of a&t#ority$
t#e &rorted agent is not liable on t#e
contract itself$ for t#e reason t#at t#ere
#as been no intention to bind t#e
agent$ and to #old t#at #e is bo&nd
%o&ld$ in effect$ create a ne% contract
for t#e arties. 2f co&rse$ if t#ere is a
stat&te$ t#e &rorted agent %ill be
#eld liable on t#e contract itself.
4. "ort *ae
Agency is no defense to action against an
agent based &on commission of tort$ #is
A@
liability being neit#er increased nor decreased
by t#e fact of #is agency. /f t#e tort is
committed by t#e agent %it#in t#e scoe of #is
a&t#ority$ bot# t#e rincial and t#e agent are
liable.
5. 91ere dut7 )io-ated o?ed o-e-7 to t1e
.rin*i.a-
An agent is liable to t#ird ersons for inj&ry
res&lting from #is misfeasance or malfeasance$
meaning by t#ese terms$ t#e breac# of a d&ty
o%ed to t#ird ersons generally indeendent of
t#e artic&lar d&ties imosed by #is agency.
B&t an agent is generally not liable to t#ird
ersons for inj&ry res&lting to nonfeasance$
meaning by t#at term$ t#e omission of t#e
agent to erform a d&ty o%ed solely to #is
rincial by reason of #is agency.
91en a4ent ma7 in*ur .erona- -ia8i-it7
An agent %#o acts as s&c# %it#in t#e scoe of
#is a&t#ority reresents t#e rincial so t#at
#is contract is really t#e rincialFs. 3ence$ t#e
agent is not ersonally liable to t#e arty %it#
%#om #e contracts &nless #e exressly binds
#imself or #e exceeds t#e limits of #is a&t#ority
%it#o&t giving s&c# arty s&fficient notice of
#is o%ers or by #is acts inc&rs liabilities of a
rincial &nder t#e contract.
:#en t#e agent exressly binds #imself$ #e
t#ereby obligates #imself ersonally and by #is
o%n act.
:#en t#e agent exceeds a&t#ority$ #e really
acts %it#o&t a&t#ority and$ t#erefore$ t#e
contract is &nenforceable against t#e rincial
&nless t#e latter ratifies t#e act.
o ,#e agent becomes ersonally liable
beca&se by #is %rong or omission$ #e
derives t#e t#ird erson %it %#om #e
contracts of any remedy against t#e
rincial.
o /nasm&c# as t#e non?disclos&re of t#e
limits agency carries %it# it t#e
imlication t#at a decetion %as
eret&ated on t#e &ns&secting
client$ t#e rovisions on Arts. 1($ 20$
and 21 come into lay.
o ,#at t#e agent exceeded #is a&t#ority
m&st be roved by t#e rincial if #e
denies liability$ or by t#ird erson if #e
%ants to #old t#e agent ersonally
liable$ on t#at gro&nd.
"1ird .art7E -ia8i-itie to?ard a4ent.
+o&r main instances in %#ic# a t#ird arty
s&bjects #imself to liability at t#e #ands of an
agent.
o :#ere t#e agent contracts in #is o%n
name for an &ndisclosed rincial$ in
%#ic# case$ t#e agent may s&e t#e
t#ird arty to enforce t#e contractE
o :#ere t#e agent ossesses a beneficial
interest in t#e s&bject matter of t#e
agency.
o :#ere t#e agent ays money of #is
rincial to t#ird arty by mistake or
&nder t#e contract %#ic# roves
s&bseG&ently to be illegal$ t#e agent
being ignorant %it# resect to its illegal
nat&reE and
o :#ere t#e t#ird arty commits a tort
against t#e agent.
2. Cae
&/P ). CA (E3A)
1((D
H&aison$ L.
+acts.
*&an B. 7ans$ toget#er %it# #is %ife Candida$
#is son and da&g#ter?in?la%$ alied for a loan
of )C00S %it# 7B) Basilan. As t#e rincial
mortgagor$ 7ans$ t#en A" years of age$ %as
advised by 7B) to obtain a mortgage
redemtion ins&rance 0'4/1 %it# t#e 7B)
'ortgage 4edemtion /ns&rance )ool 07B) '4/
)ool1.
,#e '4/ remi&m %as ded&cted by 7B) from
t#e aroved loan of )@00S and credited t#is
Yless 10N service feeZ to t#e '4/ )ool Acco&nt
on A&g. 20$ 1(!A. 7ans %as also made to
accomlis# and s&bmit t#e I'4/ Alication for
/ns&ranceI and t#e I3ealt# -tatement for 7B)
'4/ )ool.I
2n -et. @$ 1(!A 7ans died of cardiac arrest.
2n -et. 2@$ 1(!A t#e 7B) '4/ )ool notified
7B) t#at 7ans %as not eligible for '4/
coverage$ being over t#e accetance age limit
of "0 years at t#e time of alication.
7B) arised Candida 7ans of t#e disaroval
of #er late #&sbandKs '4/ alication. ,#e 7B)
offered to ref&nd t#e remi&m of )1$DA".00
%#ic# t#e deceased #ad aid$ b&t Candida
7ans ref&sed to accet t#e same$ demanding
ayment of t#e face val&e of t#e '4/ or an
amo&nt eG&ivalent to t#e loan. -#e$ like%ise$
ref&sed to accet an e #ratia
:
settlement of
)@0S$ %#ic# t#e 7B) later offered.
4esondent 9state$ t#ro&g# Candida 7ans as
administratrix$ filed a comlaint for Collection
of -&m of 'oney %it# 7amages against 7B)
and 7B) '4/ )ool
,C rendered a decision in favor of t#e 9state
and against 7B). ,#e 7B) '4/ )ool$ #o%ever$
%as absolved from liability$ after t#e trial co&rt
fo&nd no rivity of contract bet%een it and t#e
deceased. ,#e trial co&rt declared 7B) in
6
0;atin1 as a favor
AD
estoel for #aving led 7ans into alying for
'4/ and act&ally collecting t#e remi&m and
t#e service fee$ desite kno%ledge of #is age
ineligibility.
CA affirmed ,C decision in toto.
/--89. :2; 7B) s#o&ld be #eld liable<
39=7. YES$ b&t for a red&ced amo&nt.
/n dealing %it# 7ans$ 7B) %as %earing t%o
legal #ats. t#e first as a lender$ and t#e second
as an ins&rance agent.
As an ins&rance agent$ 7B) is not a&t#ori6ed to
accet alications for '4/ %#en its clients are
more t#an "0 years of age. Sno%ing all t#e
%#ile t#at 7ans %as ineligible for '4/ coverage
beca&se of #is advanced age$ 7B) exceeded
t#e scoe of its a&t#ority %#en it acceted
7anKs alication for '4/ by collecting t#e
ins&rance remi&m$ and ded&cting its agentKs
commission and service fee. Art. 1!(A alies.
,#e liability of an agent %#o exceeds t#e scoe
of #is a&t#ority deends &on %#et#er t#e
t#ird erson is a%are of t#e limits of t#e
agentKs o%ers. ,#ere is no s#o%ing t#at 7ans
kne% of t#e limitation on 7B)Ks a&t#ority to
solicit alications for '4/.
/f t#e t#ird erson dealing %it# an agent is
&na%are of t#e limits of t#e a&t#ority conferred
by t#e rincial on t#e agent and #e 0t#ird
erson1 #as been deceived by t#e non?
disclos&re t#ereof by t#e agent$ t#en t#e latter
is liable for damages to #im.
P1i-i..ine Produ*t ) Primateria So*iete
Anon7me Pour Le Commer*e (GEN)
;ov. 2($ 1("C
Beng6on$ C.*.
FAC"S> )rimateria _&ric# 0resondent1$ t#ro&g#
Alexander Baylin$ entered into an agreement %it#
)#iliine )rod&cts Comany 0))C1 %#ereby t#e
latter &ndertook to b&y Cora in t#e )#iliines for
t#e acco&nt of )rimateria _&ric#.
))C s#ied cora to foreign co&ntries &rs&ant to
t#e instr&ctions of )rimateria _&ric#$ t#ro&g#
)rimateria )#ils$ %it# Baylin and *ose Crame as
officers. ,#e total amo&nt d&e to etitioner %as
)@1$00(.A1.
))C filed a comlaint against )rimateria _&ric#$
)rimateria )#ils$ Baylin and Crame to recover t#e
amo&nt d&e. ,#e trial co&rt rendered a j&dgment
#olding _&ric# liable b&t absolved Baylin and
Crame. ))C aealed t#e decision as regards t#e
dismissal of t#e t#ree defendants.
))C alleges t#at _&ric# is a foreign cororation
&nder -ec. "! of t#e Cororation =a%E and since it
#as transacted b&siness in t#e )#iliines %it#o&t
t#e necessary license$ its agents #ere are
ersonally liable &nder Art. 1!(A for contracts
made in be#alf.
ISSUE> :2; )rimateria )#ils$ Baylin and Crame
may be #eld ersonally liable
,EL&> ;2. ,#ere is no roof t#at as agents t#ey
exceeded t#e limits of t#eir a&t#ority. ,#e
rincial$ %#o s#o&ld be t#e one to raise t#e oint$
never raised it$ denied its liability on t#e gro&nd of
excess of a&t#ority. Art. 1!(A does not #old t#at in
cases of excess of a&t#ority$ bot# t#e agent and
t#e rincial are liable to t#e ot#er contracting
arty.
/en4uet Cono-idated ). /CI Em.-o7ee
Union (2AI)
'arc# 2A$ 1("!
Beng6on$ *.).$ *.
Fa*t> Beng&et Consolidated$ /nc.$ is a domestic
cororation engaged in t#e mining ind&stry %it#
resondents -tanley :illimont$ 9&gene Sneebone$
C.:. 3erold$ 5.;. :rig#t$ 2.'. :esterfield$ A.).
7avidson and :illiam *o#nson as its officers.
4esondent BC/ 9mloyees and :orkers 8nion
0)A+=81 is a legitimate labor &nion %#ile
resondent 7onaciano Andrada is a member
t#ereof.
2n A&g&st 2!$ 1(CD$ Andrada and several ot#ers
etitioned t#e resondent comany t#at t#ey be
given t#e rates of ay as rescribed in t#e
collective bargaining contrac$ and etitioner
comany$ in comliance t#ereto made t#e
necessary salary adj&stment %it# t#e excetion of
comlainant Andrada %#o$ alt#o&g# #e %as
reclassified from clerk second class to clerk first
class$ did not receive any corresonding increase
in #is ay.
Andrada also declared t#at on or abo&t A&g&st 2"$
1("A$ on t#e occasion of a grievance meeting
concerning t#e adj&stment of #is %ages$ 9&gene
Sneebone$ one of t#e resondent #erein$ said to
#im$ Iam sending m&c# of my time for yo&r
comlaint. 'y time is recio&s. / tell yo& t#at as
long as / am still connected %it# Beng&et
Consolidated$ /nc.$ t#is office cannot give yo& any
c#ange of classification %#atsoeverIE ,#at 'r.
Sneebone f&rt#er said$ MFy representin# your
#rievance to the union, you are cuttin# your nec&
entirely, and , tell you to thin& it over or retract
your complaintM6 that complaint a#ain met 7r.
Jneebone who said to him, M<he Auestion with you
is, you are too vocal of your union activities. 9ad
you shut your mouth, your case should not have
happened li&e that.M
,#e lo%er co&rt ordered t#e etitioners to
imlement t#e salary scale %it# resect to t#e
AC
daily %age of comlainant 7onaciano -. Andrada
from 1(CD &ntil #is %age reac#es t#e level as
embodied in t#e collective bargaining agreements
bet%een t#e Beng&et?Balatoc :orkers 8nion$ t#e
comlainant labor organi6ation$ and t#e
resondent comany.I
/ss&e. :#et#er or not etitioners %ere liable for
discriminating against Andrada
3eld. >9-. +irst$ %#at %as c#arged %as not
discrimination committed in 1(CD alone b&t rat#er
contin&ing acts of discrimination committed
Istarting 1(CDI as alleged in ar. @ of t#e
comlaint for &nfair labor ractice. ,#e c#arge of
discrimination$ consisting in etitionersK ref&sal to
imlement t#e roer salary scale as to
resondent Andrada is adeG&ately s&orted by
t#e follo%ing findings of t#e co&rt a G&o. /n A&g&st$
1(CD$ AndradaKs category %as c#anged to clerk
first class b&t #e received no salary adj&stment
&nlike t#e ot#er emloyees. /n 1(CC$ after #e %as
transferred to t#e )&rc#asing 7eartment and %as
assigned to erform t#e %ork done by one 4amon
Alvia %#o #eld t#e category of bodeg&ero 0%it# a
#ig#er ay rate1 resondent Andrada still received
no corresonding ay increase. /n *&ly$ 1("2$ t#ere
%as a general ay #ike b&t Andrada %as not
benefitted.
-econd$ t#e militant &nion activity$ involved is not
AndradaKs #aving been elected as 8nion 7istrict
5overnor and -te%ard and #is act&ations as s&c#$
b&t rat#er AndradaKs #aving so&g#t t#e #el of #is
&nion in &rs&ing %#at #e believed %as #is rig#t to
salary adj&stment. /t s#o&ld be noted t#at t#e
damaging statement on t#is score im&ted to co?
etitioners -tanley :illimont and 9&gene
Sneebone by resondent Andrada in #is testimony
to %#ic# t#e co&rt a G&o gave credence$ %ere
never denied or controverted by t#em. And it is
&nG&estionable t#at t#e seeking of t#e &nionKs #el
by one of its members in connection %it# t#e
latterKs correct %ages constit&tes roer &nion
activity.
Agency related. 0j&st a g&ess beca&se t#ereFs
really not#ing in t#is case abo&t agency1
'r. :illimont and 'r. Sneebone are agents of t#e
etitioner comany. :#atever t#ey said is
considered to be acts of discrimination by t#e
etitioner comany$ beca&se t#ey are acting as
mere agents. ,#erefore$ t#ey are not ersonally
liable for t#ose statements.
NPC ). Nationa- 2er*1andiin4 Cor. (!(G)
1(!2

Fa*t> ,#is case is abo&t t#e recovery of
liG&idated damages from a sellerKs agent t#at
allegedly exceeded its a&t#ority in negotiating t#e
sale. ;)C and ;ational 'erc#andising Cor
0;amerco1 of 'anila$ as t#e reresentative of t#e
/nternational Commodities Cor of ;e% >ork City$
exec&ted in 'anila a contract for t#e &rc#ase by
;)C from t#e ;e% >ork firm of Dk long tons of
cr&de s&lf&r for it s 'aria Cristina +ertili6er )lant in
/ligan City. 2n t#at same date a erformance bond
for )(0k %as exec&ted by 7omestic /ns&rance C2
in favor of ;)C to g&arantee t#e sellerKs
obligations.

/t %as sti&lated in t#e contract of sale t#at seller
%o&ld deliver s&lf&r at /ligan City %it#in "0days
from notice of establis#ment in its favor of a letter
of credit for U212k and t#at fail&re to effect
delivery %o&ld s&bject seller and it s&rety to
ayment of liG&idated damages at rate of 2LC of
1N of t#e f&ll contract rice for t#e first @0 days of
defa&lt and DLC of 1N for every day t#ereafter &ntil
comlete delivery is made.

;)C advised *o#n -yci$ resident of ;amerco of
t#e oening of a letter of credit in favor of /nter
Commodities %#ic# %o&ld exire on *an @1$ 1(CA.
;otice of t#e letter of credit %as received by cable
by t#e ;e% >ork firm on ;ov 1C$ 1(C". ,#&s t#e
deadline for t#e delivery of t#e s&lf&r %as *an 1C$
1(CA.

,#e ;e% >ork s&lier %as not able to deliver t#e
s&lf&r d&e to its inability to sec&re s#iing sace.
7&ring eriod from *an20?2"$ 1(CA t#ere %as a
s#&tdo%n of t#e ;)CKs fertili6er lant beca&se
t#ere %as no s&lf&r. ;or fertili6er %as rod&ced.

;)CKs general manager advised ;amerco and
7omestic /ns&rance t#at &nder Art. ( of t#e
contract of sale Inonavailability of bottom or
vesselI %as not a fort&ito&s event t#at %o&ld
exc&se non?erformance and t#at ;)C %o&ld resort
to legal remedies to enforce its rig#ts.

5ovt Cororate Co&nsel in #is letter to -yci
rescinded t#e contract of sale d&e to ;e% >ork
s&lierKs non?erformance of its obligations. 3e
also demanded from ;amerco ayment of )@"0k
as liG&idated damages. 3e exlained t#at time %as
of t#e essence of t#e contract. A similar demand
also made &on t#e s&rety.

;)C s&ed t#e ;e% >ork firm$ ;amerco and
7omestic /ns&rance Co for recovery of sti&lated
liG&idated damages.

,C. dismissed case as to ;e% >ork firm for lack of
j&risdiction co6 it %as not doing b&siness in t#e
)#iliines. ;amerco and 7omestic /ns&rance
contend t#at delivery of s&lf&r %as conditioned on
availability of a vessel to carry t#e s#iment and
t#at ;amerco acted %it#in scoe of its a&t#ority as
agent in signing t#e contract of sale.

A"
Iue> :2; ;amerco and 7omestic /ns&rance
liable for liG&idated damages< >9-

,e-d>
#. Namer*o a*ted 8e7ond it aut1orit7 a
a4ent o' Ne? Yor: 'irm.
7oc&mentary evidence belies t#ese contentions.
,#e invitation to bid iss&ed by ;)C rovides t#at
nonavailability of a steamer to transort t#e s&lf&r
is a gro&nd for ayment of liG&idated damages in
case of non?erformance by seller.

;amercoKs bid or offer is even more exlicit. /t
rovides t#at it %as Iresonsible for availability of
bottom or vesselI and t#at it Ig&arantees t#e
availability of bottom or vessel to s#i t#e G&antity
of s&lf&r %it#in t#e time secified in t#is bidI.

/n t#e contract of sale itself$ item 1C of t#e
invitation to bid is rerod&ced in Art. ( %#ic#
rovides t#at Iit is clearly &nderstood t#at in no
event s#all seller be entitled to an extension of
time or be exemt from ayment of liG&idated
damages #erein secified fro reason of lack of
bottom or vesselI.

/t is tr&e t#at ;e% >ork cor in its cable to ;amerco
stated t#at sale %as s&bject to availability of a
steamer. 3o%ever$ ;amerco did not di*-oe
t1at *a8-e to NPC and *ontrar7 to it
.rin*i.a-G intru*tionD it a4reed t1at
nona)ai-a8i-it7 o' a teamer ?a not a
=uti'i*ation 'or non.a7ment o' -iIuidated
dama4e.
,C rig#tly concl&ded t#at ;amerco acted beyond
bo&nds of its a&t#ority beca&se it violated its
rincialKs cabled instr&ctions.

2. Namer*o -ia8-e to NPC 'or dama4e.
7efendants. it %as inc&mbent &on ;)C to inG&ire
into extent of agentKs a&t#ority and for its fail&re to
do so$ it co&ld not claim any liG&idated damages
%#ic# %ere rovided for merely to make seller
more diligent in looking for a steamer to transort
t#e s&lf&r.

;)C. ;amerco s#o&ld #ave advised ;)C of t#e
limitations on its a&t#ority to negotiate t#e sale.

-C. ,C correct t#at ;amerco liable for damages
beca&se &nder Art. 1(!A of ;CC t#e agent %#o
exceeds t#e limits of #is a&t#ority %it#o&t giving
t#e arty %it# %#om #e contracts s&fficient notice
of #is o%ers is ersonally liable to s&c# arty.

,#e tr&t# is t#at even before t#e contract of sale
%as signed ;amerco %as already a%are t#at its
rincial %as #aving diffic&lties in booking s#iing
sace. /n a cable one day before t#e contract of
sale %as signed$ t#e ;e% >ork s&lier advised
;amerco t#at latter s#o&ld not sign t#e contract
&nless ;amerco %is#ed to ass&me sole
resonsibility for t#e s#iment.

-yci$ ;amercoKs resident relied t#at #e #ad no
c#oice b&t to finali6e t#e contract of sale beca&se
t#e ;)C %o&ld forfeit ;amercoKs bidderKs bond of
)DCk osted by 7omestic /ns&rance if t#e contract
%as not formali6ed.

,#ree days later t#e ;e% >ork firm cabled ;amerco
t#at it did not consider itself bo&nd by contract t#at
;amerco signed on its o%n resonsibility. /t
informed ;amerco in its letters t#at since latter
acted contrary to its instr&ctions$ former
disclaimed resonbility for t#e contract and t#at
resonsibility for t#e sale rested on ;amerco.

@. !u-e t1at e)er7 .eron dea-in4 ?it1 an
a4ent i .ut u.on inIuir7 and mut di*o)er
u.on 1i .eri- t1e aut1orit7 o' a4ent ?ou-d
a..-7 i' .rin*i.a- i ou41t to 8e 1e-d -ia8-e
on t1e *ontra*t entered into 87 t1e a4ent
/U" It i not o in t1i *ae.
3ere it is t#e agent t#at is so&g#t to be #eld liable
on a contract of sale %#ic# %as exressly
re&diated by t#e rincial beca&se t#e agent took
c#ances$ it exceeded its a&t#ority and in effect$ it
acted in its o%n name.

Agent %#o exceeds limits of #is a&t#ority is
ersonally liable and t#e t#ird erson %#o
contracts %it# t#e agent in s&c# a case %o&ld be
defra&ded if #e %o&ld not be allo%ed to s&e t#e
agent

@. Sti.u-ation 'or -iIuidated dama4e i
en'or*ea8-e e)en i' e0e*uted 87 a4ent in
e0*e o' 1i aut1orit7.
Art. 1D0@ Icontract entered into in name of anot#er
erson by one %#o #as acted beyond #is o%ers is
&nenforceableI refers to &nenforceability against
t#e rincial. 3949$ t#e contract containing
sti&lation not being enforced against rincial b&t
against agent and its s&rety.

;amerco never disclosed to ;)C t#e cabled
instr&ctions of its rincial. +or t#at reason and
beca&se ;amerco exceeded its a&t#ority$ it
virt&ally acted in its o%n name and not as agent
and is t#erefore bo&nd by contract of sale %#ic#
#o%ever is not enforceable against rincial.

/f ;amerco is bo&nd &nder contract of sale$ t#en it
follo%s it is bo&nd by sti&lation for liG&idated
damages.
Nationa- /an: ). 9e-*1 (!EG)
*. -treet
1(2@
AA
FAC"S> =a ComaBà ;aviera$ a s#iing
comany$ %as instit&ted in 'anila in 1(1!. Among
its s#are#olders %as resondent :elc#$ +airc#ild P
Co. =a ComaBia ;aviera alied to t#e )#iliine
;ational Bank for a loan of U12C$000. %it# %#ic# to
&rc#ase a boat called Fenito Luare$. /t %as t#e
resident of :elc# %#ic# #eled in t#e transfer of
t#e Fenito Luare$ to )#iliine registry. 3o%ever$
t#e vessel needed reairs before it co&ld be
disatc#edE and it became imracticable to deliver
t#e bill of sale and ins&rance olicy t#at %ere
reG&ired by );B in -an +rancisco at t#e time t#e
money %as needed to effect t#e transfer. -o$
:elc# in 'anila$ addressed a letter on A&g&st !$
1(1!$ to t#e );B$ reG&esting it to cable its
corresondent in -an +rancisco to release t#e
money and make ayment for t#e vessel %it#o&t
reG&iring t#e delivery of t#e bill of sale or olicy of
ins&rance$ and t#at =a ComaBia %o&ld j&st deliver
t#e bill of sale and ins&rance olicy later. ,#e Bank
acceded. After t#e reair of t#e Fenito Luare$$ it
%as ins&red by :elc# P Co. for U1C0$000 and %as
disatc#ed to t#e )#iliines. A fe% mont#s after$
t#e vessel enco&ntered a storm off 3a%aii and
became a total loss.
,#e roceeds of t#e ins&rance came to t#e #ands
of :elc#$ +airc#ild P Co. in 'anila and #as been
alied by :elc#$ +airc#ild P Co. in art
satisfaction of indebtedness inc&rred by =a
ComaBà to it 0instead of aying t#e bank1. ,#is
disosition of t#e ins&rance money %as made %it#
t#e tacit aroval of =a ComaBà.
ISSUE> :2; );B #as a ca&se of action against
resondent.
!ULING> >9-. :#ile it is tr&e t#at an agent %#o
acts for a revealed rincial in t#e making of a
contract does not become ersonally bo&nd to t#e
ot#er arty in t#e sense t#at an action can
ordinarily be maintained &on s&c# contract
directly against t#e agent$ yet t#at r&le clearly
does not control in t#is caseE for even conceding
t#at t#e obligation created by t#e letter of A&g&st
!$ 1(1!$ %as directly binding only on t#e rincial$
and t#at in la% t#e agent may stand aart
t#erefrom$ yet one %#o #as intervened in t#e
making of a contract in t#e c#aracter of agent
cannot be ermitted to intercet and aroriate
t#e t#ing %#ic# t#e rincial is bo&nd to deliver$
and t#ereby make erformance by t#e rincial
imossible.
,#e agent in any event m&st be recl&ded from
doing any ositive act t#at co&ld revent
erformance on t#e art of #is rincial. ,#is
m&c#$ ordinary good fait# to%ards t#e ot#er
contracting arty reG&ires. ,#e sit&ation before &s
in effect is one %#ere$ not%it#standing t#e romise
#eld o&t jointly by rincial and agent in t#e letter
of A&g&st !$ t#e t%o #ave consired to make an
alication of t#e roceeds of t#e ins&rance
entirely contrary to t#e tenor of said letters.
A-8ert ). Uni)erit7 Pu8-i1n4 (A//Y)
1("C
*. Beng6on
+acts.
'ariano Albert s&ed 8niversity )&blis#ing
alleged inter alia t#at defendant %as a
cororation d&ly organi6ed and existing &nder
t#e la%s of t#e )#iliinesE t#at on *&ly 1($
1(D!$ defendant$ t#ro&g# *ose '. Ar&ego$ its
)resident$ entered into a contract %it#
laintififE t#at defendant #ad t#ereby agreed to
ay laintiff )@0$000.00 for t#e excl&sive rig#t
to &blis# #is revised Commentaries on t#e
4evised )enal Code and for #is s#are in
revio&s sales of t#e bookKs first editionE t#at
defendant #ad &ndertaken to ay in eig#t
G&arterly installments of )@$AC0.00 starting *&ly
1C$ 1(D!E t#at er contract fail&re to ay one
installment %o&ld render t#e rest d&eE and t#at
defendant #ad failed to ay t#e second
installment.
8)C admitted its cororate existence$ t#e
exec&tion and terms of t#e contract$ b&t t#at it
%as Albert %#o breac#ed t#e contract by
failing to deliver #is man&scrit and filed a
co&nterclaim.
/t is not #ard to deci#er %#y I8niversity
)&blis#ing Co.$ /nc.$I t#ro&g# co&nsel$ %o&ld
not %ant *ose '. Ar&ego to be considered a
arty to t#e resent case. s#o&ld a searate
action be no% instit&ted against *ose '.
Ar&ego$ t#e laintiff %ill #ave to reckon %it#
t#e stat&te of limitations.
Cororation by estoels not invoked nor
alicable.
,#e estate of Albert 0dead already1 say t#at
8)C %as not registered %it# t#e -9C and t#at
#e acted not on be#alf of 8)C b&t on #is o%n
and t#at #e s#o&ld be t#e real arty defendant.
/ss&e. :o; t#e real arty defendant is Ar&ego or
8)C
3eld. Ar&ego
*ose '. Ar&ego$ acting as reresentative of a
non?existent rincial$ %as t#e real arty to t#e
contract s&ed &onE t#at #e %as t#e one %#o
reaed t#e benefits res&lting from it$ so m&c#
so t#at artial ayments of t#e consideration
%ere made by #imE t#at #e violated its terms$
t#ereby reciitating t#e s&it in G&estionE and
t#at in t#e litigation #e %as t#e real defendant.
A erson acting or &rorting to act on be#alf
of a cororation %#ic# #as no valid existence
assumes such privile#es and obli#ations and
A!
becomes personally liable for contracts entered
into or for ot#er acts erformed as s&c# agent.
)arties to a s&it are Iersons %#o #ave a rig#t
to control t#e roceedings$ to make defense$ to
add&ce and cross?examine %itnesses$ and to
aeal from a decisionI 0"A C.*.-. !!A1 V and
Ar&ego %as$ in reality$ t#e erson %#o #ad and
exercised t#ese rig#ts. Clearly$ t#en$ Ar&ego
#ad #is day in co&rt as t#e real defendantE and
d&e rocess of la% #as been s&bstantially
observed.
&7 Pe1 ). CI! (EA!LA)
PN/ ). !itratto Grou. (6ANCES)
*&ly @1$ 2001
*. Sa&nan
+acts. );B?/+=$ s&bsidiary of );B extended a letter
of credit in favor of 4itratto /nc. to sec&red real
estate mortgages constit&ted over D arcels of
land in 'akati. 4itratto %as not able to ay$ t#&s
);B?/+= moved to foreclose t#e mortgages. 4itratto
filed comlaint for inj&nction %it# rayer for
iss&ance of %rit of reliminary inj&nction. )etitioner
filed a motion to dismiss comlaint for inj&nction
on gro&nds of fail&re to state a ca&se of action and
absence of any rivity bet%een t#e etitioner and
resondents.
4&ling. 4,C O iss&ed %rit of reliminary inj&nctionE
denied motion to dismiss. );B?/+= is a %#olly
o%ned s&bsidiary of defendant )#iliine ;ational
Bank$ t#e s&it against t#e defendant );B is a s&it
against );B?/+=.
CA O affirmed
/ss&e. :2; );B is t#e real arty?in?interest Y;2Z
39=7. );B %as s&ed beca&se it acted as an
attorney?in?fact of );B?/+= in initiating t#e
foreclos&re roceedings. A s&it against an agent
cannot %it#o&t comelling reasons be considered a
s&it against t#e rincial. 4esondents committed
t#e mistake of filing t#e case against t#e %rong
arty. ,#ey do not #ave a ca&se of action against
t#e etitioner as t#e latter is not rivy to t#e
contract t#e rovisions of %#ic# resondents seek
to declare void.
7isosition. etition granted.
2a*ia + Co. ). 9arner /ro., u.ra
Sa-)atierra ). Gar-ito (ALAIN)
Fa*t> -alvatierra o%ned a arcel of land in =eyte.
-#e entered into a contract of lease %it# )#iliine
+ibers )rod&cers Co.$ /nc. allegedly a cororation
d&ly organi6ed and existing &nder t#e )#iliine
la%s$ as reresented by its )resident 4&f&er6o. ,#e
land %ill be leased for ten years and t#e lessor
%o&ld be entitled to @0N of t#e net income
accr&ing from t#e #arvest of any cro.
,#e alleged cororation did not comly %it# said
obligation. -alvatierra filed %it# t#e C+/ a
comlaint against )+)C for acco&nting$ rescission
and damages. ,#e cororation defa&lted and t#e
co&rt rendered j&dgment in favor of -alvatierra.
,#e co&rt iss&ed a %rit of exec&tion and t#e t#ree
arcels of land &nder t#e name of 4&f&er6o %ere
attac#ed beca&se no roerty of )+)C %as fo&nd
available.
4&f&er6o filed a motion claiming t#at t#e decision
%as n&ll and void since t#ere %as no allegation of
#is ersonal liability. ,#e co&rt granted t#e motion
and released #is land from attac#ment. 3ence$ t#is
etition by -alvatierra.
,e-d. ,#e fail&re of -alvatierra to secify
4&f&er6oFs ersonal liability %as d&e to t#e fact
t#at -alvatierra %as &nder t#e imression t#at
)+)C$ reresented by 4&f&er6o %as a d&ly
registered cororation$ b&t s&bseG&ently$ inG&iry
%it# t#e -9C yielded ot#er%ise. :#ile as a general
r&le$ a erson %#o #as contracted of dealt %it# an
association in s&c# a %ay as to recogni6e its
existence as a cororate body is estoed from
denyng t#e same in an action arising o&t of s&c#
transaction or dealing. >et$ t#is doctrine is
inalicable %#ere fra&d takes a art in said
transaction. 3ere 4&f&er6o gave no confirmation of
denial as to )+)CFs j&ridical ersonality and
-alvatierra %as made to believe t#at t#e
cororation %as d&ly organi6ed.
,#e grant of searate j&ridical ersonality to
cororations refer merely to registered
cororations and cannot be made alicable to t#e
liability of members of an &nincororated
association. -ince an organi6ation %#ic#$ before
la%$ in non?existent and #as no ersonality and
%o&ld be incometent to act and aroriate for
itself t#e o%er and attrib&tes of a cororation$ it
cannot create agents or confer a&t#ority on
anot#er to act in its be#alf$ t#&s$ t#ose %#o act or
&rort to act as its reresentatives or agents do
so %it#o&t a&t#ority and at t#eir o%n risk.
A erson acting or &rorting to act in be#alf of a
cororation %#ic# #as no valid existence ass&mes
s&c# rivileges and obligations and becomes
ersonally liable for contracts entered into or for
ot#er acts erformed as s&c# agent.
3ere$ 4&f&er6o as resident of t#e &nregistered
cororation %as t#e sirit be#ind t#e
cons&mmation of t#e lease contract. ,#&s$ #is
liability cannot be limited or restricted to t#at
imosed &on cororate -3Fs. /n acting on be#alf
of a cororation$ %#ic# #e kne% to be &nregistered$
#e ass&mes t#e risk of reaing t#e conseG&ential
A(
damages or res&ltant rig#ts$ if any arising from t#e
transaction.
-ec. 21 Cororation by estoel O All ersons %#o
ass&me to act as a cororation kno%ing it to be
%it#o&t a&t#ority to do s#all be liable as general
artners for all debts$ liabilities and damages
inc&rred or arising as a res&lt t#ereofE )rovided$
#o%ever$ t#at %#en any s&c# ostensible
cororation is s&ed on any transaction entered by
it as a cororation or any tort committed by it as
s&c#$ it s#all not be allo%ed to &se a defense its
lack of cororate ersonality.
"uaon ). (ro5*o (2A!K)
+acts.
*&an de Margas y Amaya$ t#e defendantKs
#&sband$ exec&ted a o%er of attorney to
9nriG&e 5r&e$ a&t#ori6ing #im$ among ot#er
t#ings$ to disose of all #is roerty$ and
artic&larly of a certain #o&se and lot kno%n as
;o. 2D Calle ;&eva$ 'alate$ 'anila. 3e %as
also a&t#ori6ed to mortgage t#e #o&se for t#e
&rose of sec&ring t#e ayment of any
amo&nt advanced to #is %ife$ 7olores 2ro6co
de 4ivero$ %#o$ inasm&c# as t#e roerty #ad
been acG&ired %it# f&nds belonging to t#e
conj&gal artners#i$ %as a necessary arty to
its sale or inc&mbrance.
2n t#e 21st of *an&ary$ 1!(0$ 9nriG&e
5r&e and 7olores 2ro6co de 4ivero obtained a
loan from laintiff ,&a6on sec&red by a
mortgage on t#e roerty referred to in t#e
o%er of attorney. /n t#e cation of t#e
instr&ment evidencing t#e debt it is stated t#at
5r&e and 7olores 2ro6co aeared as t#e
arties of t#e first art and 5on6alo ,&ason$
t#e laintiff$ as t#e arty of t#e second artE
t#at 5r&e acted for #imself and also in be#alf
of *&an Margas by virt&e of t#e o%er granted
#im by t#e latter$ and t#at 7olores 2ro6co
aeared merely for t#e &rose of comlying
%it# t#e reG&irement contained in t#e o%er of
attorney. -aid instr&ment %as d&ly recorded in
t#e 4egistry of )roerty$
,&a6on filed an action to recover t#e debt.
/ss&e. :2; 2ro6co is liable.
3eld. >es.
,#e aellant claims t#at t#e instr&ment is
evidence of a debt ersonally inc&rred by
9nriG&e 5r&e for #is o%n benefit$ and not
inc&rred for t#e benefit of #is rincial$ Margas$
as alleged in t#e comlaint. As a matter of fact$
5r&e$ by t#e terms of t#e agreement$ bo&nd
#imself ersonally to ay t#e debt. ,#e
aellantKs contention #o%ever$ can not be
s&stained. ,#e agreement$ so far as t#at
amo&nt is concerned$ %as signed by 5r&e as
attorney in fact for Margas. )&rs&ant to
instr&ctions contained in t#e o%er of attorney
t#e money %as delivered to MargaKs %ife$ t#e
defendant in t#is case. ,o sec&re t#e ayment
of t#e debt$ MargaKs roerty %as mortgaged.
3is %ife like%ise took art in t#e exec&tion of
t#e mortgage as reG&ired in t#e o%er of
attorney.
A debt t#&s inc&rred by t#e agent is binding
directly &on t#e rincial$ rovided t#e former
acted$ as in t#e resent case$ %it#in t#e scoe
of #is a&t#ority. ,#e fact t#at t#e agent #as
also bo&nd #imself to ay t#e debt does not
relieve from liability t#e rincial for %#ose
benefit t#e debt %as inc&rred. ,#e individ&al
liability of t#e agent constit&tes in t#e resent
case a f&rt#er sec&rity in favor of t#e creditor
and does not affect or recl&de t#e liability of
t#e rincial. /n t#e resent case t#e latterKs
liability %as f&rt#er g&aranteed by a mortgage
&on #is roerty. ,#e la% does not rovide
t#at t#e agent can not bind #imself ersonally
to t#e f&lfillment of an obligation inc&rred by
#im in t#e name and on be#alf of #is rincial.
2n t#e contrary$ it rovides t#at s&c# act on
t#e art of an agent %o&ld be valid.
M. Arti*-e #$9$ (AN6)
Article 1!(!. /f t#e agent contracts in t#e name of
t#e rincial$ exceeding t#e scoe f #is a&t#ority$
and t#e rincial does not ratify t#e contract$ it
s#all be void if t#e arty %it# %#om t#e agent
contracted is a%are of t#e limits of t#e o%ers
granted by t#e rincial. /n t#is case$ #o%ever$ t#e
agent is liable if #e &ndertook to sec&re t#e
rincialFs ratification.
#. !eaon ?17 a4ent i -ia8-e
Article 1(10$ ar.2 states t#at if t#e agent acts in
excess of #is a&t#ority$ even if #e contracts in t#e
name of t#e rincial$ t#e agent is t#e one
ersonally liable &nless t#ere is s&bseG&ent
ratification by t#e rincial.
2. Statu o' *ontra*t entered
into 87 an a4ent in e0*e o'
1i aut1orit7
,#e r&le t#at a contract entered into by one %#o
#as acted beyond #is o%ers s#all be
&nenforceable 0Arts.1@1A$ ar 2E 1D0@ Y1Z1$ refers
to t#e &nenforceability of t#e contract against t#e
rincial$ and does not aly %#ere t#e action is
against t#e agent #imself$ for contracting in excess
of t#e limits of #is a&t#ority. ,#e contract$ %#ic# is
&nenforceable as against t#e rincial$ is void as
bet%een t#e agent and t#e t#ird erson$ and
conseG&ently$ not legally binding.
@. E''e*t o' rati'i*ation
!0
/f ratification is obtained$ t#en t#e rincial
becomes liable.
A. Lia8i-it7 o' a4ent ?1en 1e
e0*eed aut1orit7
,#e liability of an agent %#o exceeds t#e scoe of
#is a&t#ority deends &on :2; t#e t#ird erson
is a%are of t#e limits of t#e agentFs o%er.
,#e agent is not bo&nd or liable for damages in
case #e gave notice of #is o%ers to t#e t#ird
erson$ nor in a case %#ere t#e t#ird erson is
a%are of t#e limits of t#e o%ers granted by t#e
rincial.
/f t#e agent romised or &ndertook to sec&re t#e
rincialFs ratification and failed$ #e is ersonally
liable.
/f ratification is obtained$ t#en t#e rincial
becomes liable.
B. Cae
Lor*a ). &inero, u.ra
Sa-on4a ). 9arner (6ESSA)
*an&ary @1$ 1(C1
Ba&tista Angelo$ L.
+acts.
2n A&g&st 2!$ 1(D"$ :estc#ester +ire
/ns&rance Comany of ;e% >ork entered into a
contract %it# 5amboa %#ereby said comany
ins&red one case of rayon yardage %#ic# said
5amboa s#ied from -an +rancisco$
California$ on steamer Clovis =ictory$ to 'anila
and consigned to -alonga.
According to t#e contract of ins&rance$ t#e
ins&rance comany &ndertook to ay to t#e
sender or #er consignee t#e damages t#at may
be ca&sed to t#e goods s#ied s&bject to t#e
condition t#at t#e liability of t#e comany %ill
be limited to t#e act&al loss %#ic# t#e ins&red
may s&ffer not to t#e exceed t#e s&m of
)2$000
,#e s#i arrived in 'anila on -etember 10$
1(D".
2n 2ctober A$ t#e s#iment %as examined by
C. B. ;elson and Co.$ marine s&rveyors$ at t#e
reG&est of t#e laintiff$ and in t#eir
examination t#e s&rveyors fo&nd a s#ortage in
t#e s#iment in t#e amo&nt of )1$A2@$12.
2n 2ctober ($ laintiff filed a claim for
damages in t#e amo&nt of )1$A2@.12 against
t#e American )resident =ines$ agents of t#e
s#i Clovis =ictory$ demanding settlement
:#en aarently no action %as taken on t#is
claim$ laintiff demanded ayment t#ereof
from :arner$ Barnes and Co.$ =td.$ as agent of
t#e ins&rance comany in t#e )#iliines
:arner #aving ref&sed to ay t#e claim$ on
Aril 1A$ 1(DA$ laintiff instit&ted t#e resent
action.
American )resident =ines$ in a letter dated
;ovember 2C$ 1(D"$ agreed to ay to t#e
laintiff t#e amo&nt of )DA".1A &nder its
liability in t#e bill of lading
:#en t#is offer %as rejected$ t#e claim %as
finally settled in t#e amo&nt of )1$021.2C As
a res&lt$ t#e amo&nt claimed in t#e comlaint
as t#e &ltimate liability of :arner &nder t#e
ins&rance contract %as red&ced to )A1A.!2
only.
CFI> ordered :arner$ as agent of :estc#ester
+ire /ns&rance Comany of ;e% >ork$ to ay to
t#e laintiff t#e s&m of )A2A. !2 %it# legal
interest t#ereon from t#e filing of t#e
comlaint &ntil aid$ and t#e costs
/ss&e. 'ain iss&e. :2; t#e trial co&rt erred in
#olding t#at :arner$ as agent of :estc#ester +ire
/ns&rance Comany of ;e% >ork$ 8nited -tates of
America$ is resonsible &on t#e ins&rance claim
s&bject to t#e s&it
-&b?iss&es.
011 :2; :arner #as no contract&al relation %it#
eit#er t#e laintiff or #is consignor
021 :2; :arner is not t#e real arty in interest
against %#om t#e s&it s#o&ld be bro&g#t
0@1 :2; a j&dgment for or against an agent in no
%ay binds t#e real arty in interest.
3eld. YES 0t#e main iss&e is ans%ered by
ans%ering t#e s&b?iss&es1
1. >9-. /t is a %ell kno%n r&le t#at a contract&al
obligation or liability$ or an action e-contractu$
m&st be fo&nded &on a contract$ oral or %ritten$
eit#er exress or imlied. /f t#ere is no contract$
t#ere is no corresonding liability$ and no ca&se of
action may arise t#erefrom. ,#is is %#at is
rovided for in article 12CA of t#e Civil Code. ,#is
article rovides t#at contracts are binding &on t#e
arties %#o make t#em and t#eir #eirs$ exceting$
%it# resect to t#e latter$ %#ere t#e rig#ts and
obligations are not transmissible$ and %#en t#e
contract contains a sti&lation in favor of a t#ird
erson$ #e may demand its f&lfillment if #e gives
notice of #is accetance before it is revoked.
:arner #as not taken art$ directly or indirectly$ in
t#e contract in G&estion. ,#e evidence s#o%s t#at
:arner did not enter into any contract eit#er %it#
t#e laintiff or #is consignor 5amboa. ,#e contract
of marine ins&rance %as made and exec&ted only
by and bet%een t#e :estc#ester +ire /ns&rance
Comany of ;e% >ork and 5amboa. ,#e contract
%as entered in ;e% >ork. ,#ere is not#ing t#erein
!1
%#ic# may affect$ in favor or adversely$ :arner$
t#e f&lfillment of %#ic# may be demanded by or
against it. ,#at contract is &rely bilateral$ binding
only &on 5amboa and t#e ins&rance comany.
:#en t#e lo%er co&rt$ t#erefore$ imosed &on
:arner an obligation %#ic# it #as never ass&med$
eit#er exressly or imliedly$ or %#en it extended
to :arner t#e effects of a contract %#ic# %as
entered into excl&sively by and bet%een t#e
:estc#ester +ire /ns&rance Comany of ;e% >ork
and 5amboa$ t#e error it #as committed is evident.
,#is is contrary to la%.
,#ere is no material variance bet%een t#is case
and t#e case of 9. 'acias and Co. vs. :arner$
Barnes and Co. in so far as t#e rincile #erein
considered is concerned. Bot# cases involve similar
facts %#ic# call for t#e alication of a similar
r&ling. /n bot# cases t#e iss&e is %#et#er an agent$
%#o acts %it#in t#e scoe of #is a&t#ority$ can
ass&me ersonal liability for a contract entered
into by #im in be#alf of #is rincial. And in t#e
'acias case %e said t#at t#e agent did not ass&me
ersonal liability beca&se t#e only arty bo&nd %as
t#e rincial. And in t#is case t#is rincile
acG&ires added force and effect %#en %e consider
t#e fact t#at :arner did not sign t#e contract as
agent of t#e foreign ins&rance comany as :arner
did in t#e 'acias case. ,#e 'acias case$ t#erefore$
is on all fo&rs %it# t#is case and is decisive of t#e
G&estion &nder consideration.
2. >9-. -ection 2$ 4&le @ of t#e 4&les of Co&rt
reG&ires t#at Ievery action m&st be rosec&ted in
t#e name of t#e real arty in interest.I A corollary
roosition to t#is r&le is t#at an action m&st be
bro&g#t against t#e real arty in interest$ or
against a arty %#ic# may be bo&nd by t#e
j&dgment to be rendered t#erein. ,#e real arty in
interest is t#e arty %#o %o&ld be benefited or
inj&red by t#e j&dgment$ or t#e Iarty entitled to
t#e avails of t#e s&itI. /n t#e case at bar$ :arner is
s&ed &on in its caacity as agent of :estc#ester
+ire /ns&rance Comany of ;e% >ork in site of t#e
fact t#at t#e ins&rance contract #as not been
signed by it. :arner did not ass&me any obligation
t#ere&nder eit#er as agent or as a rincial. /t
cannot$ t#erefore$ be made liable &nder said
contract$ and #ence it can be said t#at t#is case
%as filed against one %#o is not t#e real arty in
interest.
:#ile :arner is a settlement and adj&stment agent
of t#e foreign ins&rance comany and t#at as s&c#
agent it #as t#e a&t#ority to settle all t#e losses
and claims t#at may arise &nder t#e olicies t#at
may be iss&ed by or in be#alf of said comany in
accordance %it# t#e instr&ctions it may receive
from time to time from its rincial$ it cannot be
t#at as s&c# adj&stment and settlement agent$
:arner #as ass&med ersonal liability &nder said
olicies$ and$ t#erefore$ it can be s&ed in its o%n
rig#t. An adj&stment and settlement agent is no
different from any ot#er agent from t#e oint of
vie% of #is resonsibility$ for #e also acts in a
reresentative caacity. :#enever #e adj&sts or
settles a claim$ #e does it in be#alf of #is rincial$
and #is action is binding not &on #imself b&t &on
#is rincial. And #ere again$ t#e ordinary r&le of
agency alies. /t$ t#erefore$ clearly aears t#at
t#e scoe and extent of t#e f&nctions of an
adj&stment and settlement agent do not incl&de
ersonal liability. 3is f&nctions are merely to settle
and adj&sts claims in be#alf of #is rincial if t#ose
claims are roven and &ndis&ted$ and if t#e claim
is dis&ted or is disaroved by t#e rincial$ like
in t#e instant case$ t#e agent does not ass&me any
ersonal liability. ,#e reco&rse of t#e ins&red is to
ress #is claim against t#e rincial.
@. >9-. An action is bro&g#t for a ractical &rose$
nay to obtain act&al and ositive relief. /f t#e arty
s&ed &on is not t#e roer arty$ any decision
t#at may be rendered against #im %o&ld be f&tile$
for it cannot be enforced or exec&ted. ,#e effort
t#at may be emloyed %ill be %asted. -&c# %o&ld
be t#e res&lt of t#is case if it %ill be allo%ed to
roceed against :arner$ for even if a favorable
j&dgment is obtained against it$ it cannot be
enforced beca&se t#e real arty is not involved.
:arner cannot be made to ay for somet#ing it is
not resonsible.
PN/ ) /a4ama.ad and Ferrer (/A2/I)
*&ne 2($ 1(C1
'ontemayor$ *.
Fa*t>
7&e to t#e ac&te food s#ortage res&lting from
t#e )acific :ar$ )resident 4oxas instr&cted );B
to extend cro loans to farmers to enable t#em
to re#abilitate t#eir farms.
/n comliance$ );B assed a resol&tion
a&t#ori6ing t#e granting of secial cro loans
to bona fide food rod&cers$ lando%ners or
t#eir tenants$ &nder secial conditions.
,#ereafter$ r&les and reg&lations in t#e
granting of said loans %ere iss&ed.
,%o circ&lars abo&t t#e r&les %ere distrib&ted
and a conference %as #eld for t#e bankFs
emloyees$ %#ic# incl&ded defendants
Bernardo Bamasad and Bienvenido +errer.
Bagamsad and +errer %ere t#en Agent and
Assistant Agent$ resectively$ of );BFs
Cotabato Agency.
+errer ersonally received t#e circ&lars and
attended t#e conference.
+rom *&ly 1(D" to 'arc# 1(DA$ t#e Cotabato
Agency$ &nder t#e management of defendants$
granted loans to C$000 borro%ers in t#e total
amo&nt of )!.C million.
!2
7&e to #eavy loan disb&rsements and
ex#a&stion of f&nds$ t#e Cotabato Agency$ on
several ocassions$ #ad to obtain additional
cas# from t#e _amboanga Agency
,#e central office reeatedly em#asi6ed to
defendants strict comliance %it# t#e r&les and
reg&lations in granting loans$ esecially in
making s&re t#at t#e borro%ers %ere G&alified.
Central office also informed defendants t#at
t#e additional f&nds from t#e _amboana
Agency is for t#e second installments of cro
loans only and not for granting ne% loans.
3o%ever$ defendants$ according to );B$
violated s&c# instr&ctions and even acted
negligently by releasing loans to &nG&alified
borro%ers.
,#&s$ );B instr&cted defendants %ere to
discontin&e granting ne% cro loans in a
telegram dated ;ovember 2"$ 1(D".
;ot%it#standing s&c# instr&ction$ defendants
still extended ne% secial cro loans.
/n 1(D!$ );B s&ed defendants to recover t#e
&ncollected balance of cro loans alleged to
#ave been imroerly released by defendants.
);B also s&ed t#e defa&lting borro%ers.
,4/A= C284, ordered defendants to ay );B
t#e &ncollected balance of cro loans$ %#ic#
amo&nted to )"(($ !0@.CA.
CA certified case to -C in vie% of t#e amo&nt
involved.
Iue and ,e-d>
#. 9(N de'endant )io-ated 8an:E
intru*tion in e0tendin4 ne? .e*ia- *ro.
-oan a'ter re*ei)in4 PN/E te-e4ram o'
No)em8er 2%, #9A%.
>9-. /t may be t#at t#ere %as no s&c# exress
instr&ction directly ordering t#e defendants to
sto granting ne% secial cro loans. 3o%ever$
defendants s#o&ld #ave gat#ered t#at idea
from t#e central officeFs letters. ,#at defendant
&nderstood t#is clearly %as evidenced by t#e
fact t#at Bagamasad$ in one of #is letters to
t#e central office$ asked still entertain ne%
alicants on -ecial Cro =oans.
2. 9(N de'endant a*ted ?it1 e0treme
-a0it7, ne4-i4en*e, and *are-ene in
4rantin4 aid ne? .e*ia- *ro. -oan.
>9-. -C agrees %it# t#e trial co&rt t#at all
reca&tions to rotect t#e interest of t#e
)#iliine ;ational Bank as t#e rincial of t#e
defendants %ere t#ro%n overboard. ,#is is
evidenced by t#e follo%ing facts.
7efendants released large loans to 10@
borro%ers %#o %ere neit#er
lando%ners or tenants b&t %ere
merely alicants for t#e &rc#ase of
&blic lands.
7efendants allo%ed intermediaries to
intervene in t#e granting of secial
cro loans$ contrrary to );BFs r&les.
7efendants released loans %it#o&t t#e
aroval of t#e loan board.
@. 9(N PN/, in uin4 t1e de'au-tin4
8orro?er, rati'ied de'endantE a*t.
;2. 2rdinarily$ a rincial %#o collects eit#er
j&dicially or extraj&dicially a loan made by an
agent %it#o&t a&t#ority$ t#ereby ratifies t#e
said act of t#e agent. /n t#e resent case$
#o%ever$ in filing s&its against some of t#e
borro%ers to collect at least art of t#e
&na&t#ori6ed loans$ t#ere %as no intention
on t1e .art o' PN/ to rati'7 t#e acts of
aellants. -&c# act of t#e bankFs %ill even
benefit defendants beca&se t#eir financial
liability %ill be decreased if t#e bank can
recover from t#e defa&lting borro%ers.
A. 9(N t1e a*tion ?a .remature 8e*aue
t1ere i no 1o?in4 t1at t1e de'au-tin4
8orro?er are ino-)ent.
;2. /t is not necessary for t#e laintiff Bank to
first go against t#e individ&al borro%ers$
ex#a&st all remedies against t#em and t#en
#old t#e defendants liable only for t#e balance
%#ic# cannot be collected.
Air Fran*e ). CA, u.ra
Cer)ante ). CA ("(FF)
&/P ). CA, u.ra
N. Arti*-e #$99 (!EK)
Article 1!((. /f a d&ly a&t#ori6ed agent acts in
accordance %it# t#e orders of t#e rincial$ t#e
latter cannot set & t#e ignorance of t#e agent as
to circ&mstances %#ereof #e #imself %as$ or o&g#t
to #ave been$ a%are.
Ne.omu*eno ). ,eredia ("(FF)
O. Arti*-e #900 ("(PE)
Art. 1(00. -o far as t#ird ersons are concerned$
an act is deemed to #ave been erformed %it#in
t#e scoe of t#e agentKs a&t#ority$ if s&c# act is
%it#in t#e terms of t#e o%er of attorney$ as
%ritten$ even if t#e agent #as in fact exceeded t#e
limits of #is a&t#ority according to an
&nderstanding bet%een t#e rincial and t#e
agent.
S*o.e o' a4entE aut1orit7 a to t1ird
.eron
!@
/ncl&des not only t#e act&al a&t#ori6ation
conferred &on t#e agent by #is rincial b&t
also t#at %#ic# #as aarently or imliedly
been delegated to #im.
1. :#ere t#e a&t#ority not in %riting
? 9very erson dealing %it# an agent is
&t in inG&iry and m&st discover &on
#is eril$ if #e %o&ld #old t#e rincial
liable$ not only t#e fact of t#e agency
b&t t#e nat&re and extent of a&t#ority
of t#e agent.
? 2ne m&st act %it# ordinary r&dence
and reasonable diligence to ascertain
%#et#er t#e agent is acting and
dealing %it# #im %it#in t#e scoe of #is
o%ers.
? ,#e fact t#at one is dealing %it# an
agent %#et#er t#e agency be general
or secial$ s#o&ld be a danger signal.
? ,#e mere oinion of an agent as to t#e
extent of #is o%ers %ill not bind t#e
rincial %#o may act on t#e
res&mtion t#at t#ird ersons dealing
%it# #is agent %ill not be negligent to
ascertain t#e extent of #is a&t#ority as
%ell as t#e existence of t#e agency.
2et1od o' 8roadenin4 and retri*tin4
a4entE aut1orit7
A rincial may ass&me rig#ts and inc&r
liabilities in resect of #is agentFs acts or
transactions ot#er t#an t#ose for %#ic# exress
a&t#ori6ation #as been given and an agentFs
a&t#ority may be enlarged or restricted in a
n&mber of %ays.
o /7 im.-i*ation
A&t#ority extends to acts and
transactions incidental to %#at
#ave been exressly
a&t#ori6ed.
o /7 ua4e and *utom (ma7 en-ar4e
a ?e-- a retri*t)
AgentFs a&t#ori6ation may not$
#o%ever$ be enlarged t#ro&g#
&sage and c&stom in t#e
follo%ing fo&r classes of cases.
:#ere it is so&g#t to
vary t#e terms of an
exress a&t#ori6ation$
as %#ere t#e agent
aointed to sell for
creditE
:#ere it is so&g#t
t#ereby to disense
%it# a legal
reG&irement enacted
for t#e rincialFs
benefitE
:#ere it is so&g#t
t#ereby to c#ange a
r&le of la% or to
disense %it# a
formality reG&ired 0as
in -tat&te of +ra&ds1
:#ere it is so&g#t to
vary an essential
G&ality of t#e agency
relations#i
,#e general r&le reG&ires t#at
t#e rincial m&st #ave notice
of t#e alleged c&stom before
t#e agentFs acts$ in accordance
t#ere%it#$ may bind t#e
rincial. B&t in t#e ff cases$
rincial deemed to #ave
notice of a given &sage$ even
t#o&g# #e did not in fact #ave
s&c# notice.
:#ere t#e rincial
and t#e agent reside in
t#e same comm&nity$
t#e &sage is definite
and %ell?kno%n$ and
t#e agent #as no notice
t#at #e is to act to t#e
contraryE and
:#ere t#e agent is
a&t#ori6ed to deal in a
artic&lar market or
exc#ange 0&on t#e
gro&nd t#at t#e
rincial $ as a
reasonable man$ m&st
#ave anticiated t#at
s&c# &sages %ere likely
to revail and$
t#erefore$ in t#e
absence of any
contrary intention$
m&st #ave a&t#ori6ed
t#e dealing in
contemlation of
t#em1.
o /7 ne*eit7
Act&ally$ an agency can never
be created by necessityE %#at
is created is additional
a&t#ority in agent aointed
and a&t#ori6ed before t#e
emergency arose. ,#e
existence of an emergency or
ot#er &n&s&al conditions may
oerate to invest in an agent
aointed and a&t#ori6ed to
meet t#e agency$ rovided.
,#e emergency really
existsE
,#e agent is &nable to
comm&nicate %it# t#e
rincialE
!D
,#e agentFs enlarged
a&t#ority is exercised
for t#e rincialFs
rotectionE and
,#e means adoted are
reasonable &nder t#e
circ&mstances
o /7 *ertain do*trine
2f aarent a&t#ority 0Art.
1(111
2f liability by estoel 0ibid1
2f ratification 0Art. 1(101
are additional met#ods by %#ic#
a&t#ori6ation may be created.
o /7 t1e ru-e o' e=udem 4eneri.F
A met#od for stating t#e r&le
t#at %#ere in an instr&ment of
any kind$ an en&meration of
secific matters is follo%ed by
a general #rase$ t#e general
#rase is #eld to be limited in
scoe by t#e secific matters.
!e.oni8i-it7 o' .rin*i.a- ?1ere a4ent a*ted
?it1 im.ro.er moti)e.
General rule
,#e motive of t#e agent in
entering into a contract %it# a t#ird erson
is immaterial.
:#ere a %ritten a&t#ority given
to an agent covers t#e t#ing done by #im
on be#alf of t#e rincial$ it is not
cometent to t#e co&rt to look into t#e
mind of t#e agent$ and if #e #ad alied #is
a&t#ority for #is o%n ends$ to #old t#at t#e
rincial is not bo&nd.
Eceptions
:#ere t#e t#ird erson kne%
t#at t#e agent %as acting for #is rivate
benefit 0t#at t#e rincial is not liable1
:#ere t#e o%ner is seeking
recovery of ersonal roerty %#ic# #e #as
been &nla%f&lly derived.
Prin*i.a-E re.oni8i-it7 'or a4entE
mire.reentation.
:it#in t#e scoe of agentFs a&t#ority.?
o A rincial is s&bject to liability for loss
ca&sed to anot#er by t#e ot#erFs
reliance &on a deceitf&l
reresentation of an agent in t#e
co&rse of #is emloyment if t#e
reresentation is a&t#ori6ed$ or %it#in
t#e imlied a&t#ority of t#e agent to
make for t#e rincial$ or aarently
a&t#ori6ed by #im or not to make t#e
reresentation
Beyond t#e scoe of agentFs a&t#ority.?
o )rincial not bo&nd by t#e
misreresentation of t#e agent.
+or t#e agentFs o%n benefit.?
o As to t#is asect$ t#e %eig#t of
a&t#ority says >9-$ rincial is liable$ if
t#e agent acted for #is o%n benefit and
even if t#e agent acted %it#in t#e
a&t#ority given.
Eu4enio ) CA and Pe.i Co-a /ott-in4 Co.
(E3A)
1((D
4egalado$ L.
+AC,-
;ora 9&genio %as a dealer of t#e softdrinks
rod&ct of resondent comany %#ile #er
#&sband Alfredo &sed to be a ro&te manager of
)esi
A
.
)esi filed a comlaint for a collection of
s&m of money against t#e 9&genio so&ses
alleging an o&tstanding acco&nt of )(D$"C1
reresenting balances bot# from t#e H&e6on
City and '&ntinl&a lants %#ere ;ora
maintains a reg&lar c#arge acco&nt %it# t#em.
7&ring trial$ t#e 9&genio so&ses
resented fo&r ,rade )rovisional 4eceits
0,)4s1 allegedly iss&ed and received by t#em
from )esiFs c&rrent ro&te manager *ovencio
9strada of its 'alate :are#o&se s#o%ing
ayments in t#e total amo&nt of )!0$C00.
,#e 9&genios contend t#at #ad t#e
amo&nts in t#e ,)4s been credited on t#eir
favor$ t#ey %o&ld not be indebted to )esi b&t
it is t#e latter %#o %o&ld be indebted to t#em
in t#e s&m of )@$CD" reresenting
overayment.
,C r&led for )esi. CA affirmed.
/--89. :2; t#e ,)4s are s&fficient evidence to
rove -s 9&genioFs ayment of t#eir
acco&ntabilities to )esi<
39=7. YES. CA j&dgment ann&lled and set asideE
)esi ordered to ay back etitioners
overayment.
4A,/2
,#e ,)4s resented in evidence are
dis&tably res&med as evidence of ayments
made on t#e acco&nts of t#e 9&genios. ,#ere
are res&mtions )uris tantum in la% t#at
rivate transactions #ave been fair and reg&lar
and t#at t#e ordinary co&rse of b&siness #as
been follo%ed. /n t#is case$ )esi failed to
reb&t t#e aforestated res&mtions. 0)esi
failed to resent 9strada as %itnessE it also
s&bmitted in evidence falsified doc&ments1.
9ven ass&ming ar#uendo t#at )esiFs
cas#ier never received t#e amo&nts reflected
7
)rior to t#e instant case$ Alfredo filed an illegal dismissal
case against )esi %#ic# %as decided in #is favor.
!C
in t#e ,)4s$ it still failed to rove t#at 9strada$
%#o is d&ly a&t#ori6ed agent %it# resect to
t#e 9&genio so&ses$ did not receive t#ose
amo&nts from t#e latter.
/n so far as t#e c&stomers are concerned$
for as long as t#ey ay t#eir obligations to t#e
sales reresentative of t#e rivate resondent
&sing t#e latterKs official receit$ said ayment
exting&is#es t#eir obligations. 2t#er%ise$ it
%o&ld &nreasonably cast t#e b&rden of
s&ervision over its emloyees from )esi to
its c&stomers.
,#e s&bstantive la% is t#at ayment s#all
be made to t#e erson in %#ose favor t#e
obligation #as been constit&ted$ or #is
s&ccessor?in?interest or any erson a&t#ori6ed
to receive it YArt. 12D0$CCZ. As far as t#ird
ersons are concerned$ an act is deemed to
#ave been erformed %it#in t#e scoe of t#e
agentKs a&t#ority$ if s&c# is %it#in t#e terms of
t#e o%er of attorney$ as %ritten$ even if t#e
agent #as in fact exceeded t#e limits of #is
a&t#ority according to an &nderstanding
bet%een t#e rincial and #is agent.

C1. 3e-oo and !oa-e ) La Ur8ana and &e-
2ar (GEN)
;ov. @$ 1(@@
/merial$ *.
FAC"S> )etitioner Cora6on C#. Meloso o%ned
&ndivided ortions of C arcels of land in 'anila.
7efendant 7el 'ar forged 2 o%ers of attorney
&rorting to #ave been exec&ted by t#e etitioner
so&ses conferring &on #im a&t#ority to mortgage
t#e etitionerFs articiation in t#e roerties.
,#ese o%ers of attorney %ere d&ly registered in
t#e office of t#e 4egister of 7eeds.
7el 'ar roceeded in mortgaging t#e etitionerFs
articiations to =a )revisora +iliina.
-&bseG&ently$ #e cancelled t#e mortgage and
transferred it to =a 8rbana %#ic# granted #im a
loan of )1@$DAC. 3e delivered t#e o%nerFs
d&licates of t#e certificates of title to =a 8rbana.
3o%ever$ 7el 'ar violated t#e conditions of t#e
mortgage %#ic# romted =a 8rbana to foreclose
t#e mortgages.
)etitioners filed a criminal action against 7el 'ar
for t#e fra&d&lent transactions %#ic# res&lted into
#is event&al conviction. ,#e trial co&rt also #eld
t#at &rs&ant to Art. 1A1D 02ld Civil Code1 and
,orrens Act$ t#e forged o%ers of attorney %ere
n&ll and void and co&ld not rej&dice t#e rig#ts of
t#e etitioners.
ISSUE> :2; =a 8rbana s#o&ld be liable for
damages
,EL&> >9-. /nasm&c# as 7el 'ar is not t#e
registered o%ner of t#e mortgaged roerties and
inasm&c# as t#e aellant %as f&lly a%are of t#e
fact t#at it %as dealing %it# #im on t#e strengt# of
t#e alleged o%ers of attorney &rorting to #ave
been conferred &on #im by t#e laintiff$ it %as #is
d&ty to ascertain t#e gen&ineness of t#e
instr&ments and not rely absol&tely and excl&sively
&on t#e fact t#at t#e o%ers of attorney aeared
to #ave been registered. /n vie% of its fail&re to
roceed in t#is manner$ it acted negligently and
s#o&ld s&ffer t#e conseG&ences and damages
res&lting from t#e transactions.
Sa'i* A-*an ). Im.eria- 3e4eta8-e (i- Co.
In*. (2AI)
'arc# 2!$ 2001
>nares O -antiago$ *.
+acts. 2n *&ly 1$ 1(!" and -etember 2C$ 1(!"$
-afic Alcan laced &rc#ase orders %it#
/M20/merial1 for 2$000 long tons of cr&de cocon&t
oil$ val&ed at 8-U222.C0 er ton$ covered by
)&rc#ase Contract ;os. A"01DD" and A"01"CC$
resectively$ to be delivered %it#in t#e mont# of
*an&ary 1(!A. )rivate resondent$ #o%ever$ failed
to deliver t#e said cocon&t oil and$ instead$ offered
a I%as# o&tI settlement$ %#ereby t#e cocon&t oil
s&bject of t#e &rc#ase contracts %ere to be Isold
backI to /M2 at t#e revailing rice in t#e
international market at t#e time of %as# o&t. ,#&s$
/M2 bo&nd itself to ay to -afic t#e difference
bet%een t#e said revailing rice and t#e contract
rice of t#e 2$000 long tons of cr&de cocon&t oil$
%#ic# amo&nted to 8-U2(@$C00.00. /M2 failed to
ay t#is amo&nt desite reeated oral and %ritten
demands.
,#e contracts erformed in 1(!C$ on one #and$ and
t#e 1(!" contracts s&bject of t#is case$ on t#e
ot#er #and$ differed in t#at &nder t#e 1(!C
contracts$ deliveries %ere to be made %it#in t%o
mont#s. ,#is$ as alleged by -afic$ %as t#e time
needed for milling and b&ilding & oil inventory.
'ean%#ile$ t#e 1(!" contracts sti&lated t#at t#e
cocon&t oil %ere to be delivered %it#in eriod
ranging from eig#t mont#s to eleven to t%elve
mont#s after t#e lacing of orders. ,#e cocon&ts
t#at %ere s&osed to be milled %ere in all
likeli#ood not yet gro%ing %#en 7ominador
'onteverde sold t#e cr&de cocon&t oil. As s&c#$
t#e 1(!" contracts constit&ted trading in f&t&res or
in mere exectations.
/ss&e. :#et#er or not /M2Ks )resident$ 7ominador
'onteverde$ validly entered into t#e 1(!"
contracts for and on be#alf of /M2
3eld. ;2.
/t can be clearly seen from /M2Ks By?la%s t#at
'onteverde #ad no blanket a&t#ority to bind /M2 to
any contract. 3e m&st act according to t#e
instr&ctions of t#e Board of 7irectors. 9ven in
instances %#en #e %as a&t#ori6ed to act according
!"
to #is discretion t#at discretion m&st not conflict
%it# rior Board orders$ resol&tions and
instr&ctions. ,#e evidence s#o%s t#at t#e /M2
Board kne% not#ing of t#e 1(!" contracts and t#at
it did not a&t#ori6e 'onteverde to enter into
sec&lative contracts. /n fact$ 'onteverde #ad
earlier roosed t#at t#e comany engage in s&c#
transactions b&t t#e /M2 Board rejected #is
roosal. -ince t#e 1(!" contracts marked a s#ar
deart&re from ast /M2 transactions$ -afic s#o&ld
#ave obtained from 'onteverde t#e rior
a&t#ori6ation of t#e /M2 Board. -afic can not rely
on t#e doctrine of imlied agency beca&se before
t#e controversial 1(!" contracts$ /M2 did not enter
into identical contracts %it# -afic. ,#e basis for
agency is reresentation and a erson dealing %it#
an agent is &t &on inG&iry and m&st discover
&on #is eril t#e a&t#ority of t#e agent. /n t#e
case of Bacaltos Coal 'ines v. Co&rt of Aeals$ %e
el&cidated t#e r&le on dealing %it# an agent t#&s.
Every person dealin# with an a#ent is put upon
inAuiry and must discover upon his peril the
authority of the a#ent. ,f he does not ma&e
such inAuiry, he is char#eable with &nowled#e
of the a#entKs authority, and his i#norance of
that authority will not be any ecuse. *ersons
dealin# with an assumed a#ent, whether the
assumed a#ency be a #eneral or special one,
are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the
a#ency but also the nature and etent of the
authority, and in case either is controverted,
the burden of proof is upon them to establish
it.
,#e most r&dent t#ing etitioner s#o&ld #ave
done %as to ascertain t#e extent of t#e a&t#ority of
7ominador 'onteverde. Being remiss in t#is
regard$ etitioner can not seek relief on t#e basis
of a s&osed agency.
,arr7 Kee-er ). !odri4ue5, u.ra
/PI ). &e Coter (!(G)
1(2C

Fa*t> B)/ alleges t#at for val&e$ 5abriela de
Coster #aving consent and ermission of #er
#&sband$ and #e acting as #er agent$ defendants
made romissory note to B)/ for )2(2k %#ic# also
rovided t#at in t#e event of a s&it or action$
defendants s#o&ld ay f&rt#er s&m of )10k$ as
attorneyKs fees. ,o sec&re ayment t#ereof$ *ean
)oi6at and *' )oi6at P Co. exec&ted a c#attel
mortgage to B)/ on t#e steamers 4oger )oi6at and
5abrielle )oi6at$ %it# mac#inery and materials
belonging to )oi6at Megetable 2il 'ills. 5abriela
Coster and #&sband ackno%ledged and delivered
to B)/ a mortgage on real roerty and s&c# real
roerty %as s&bject to a rior mortgage in favor
of =a 2rden de 7omincios or )) )redicadores dela
)rovincia del -anitsimo 4osario 0=a 2rden1 #ence it
is made a arty defendant.

)romissory is long ast d&e and o%ing. C+/. r&led
against 5abriela$ )oi6at to be solidarily liable for
)2(2k b&t s&c# amo&nt defendants #ave not aid.
B)/ no% rays for an order to direct s#eriff to take
immediate ossession of roerty described in t#e
c#attel mortgage and sell it. ?=a 2rden. rays t#at
its credit be also taken into acco&nt %#en 2nd
mortgage is foreclosed.
5abriela$ )oi6at and )oi6at Co declared in defa&lt
for fail&re to aear or ans%er.

C+/. granted B)/ and t#at 7ominican +at#ers s#o&ld
#ave j&dgment for amo&nt of t#eir claim and
roerty be sold and roceeds alied.

,#ro&g# #er attorney$ 5abriela filed motion
alleging. s#e is legit %ife of )oi6at$ s#e #ad been
absent from )#ils and living in )aris till 1(2D %#en
s#e ret&rned to 'anilaE at tiem of filing of
comlaint and iss&ance of s&mmons s#e %as not in
t#e )#ilsE t#at s&mmons %ere delivered by s#eriff
to #er #&sband and t#at t#ro&g# latterKs malicio&s
negligence$ defa&lt %as taken and j&dgment
enteredE t#at s#e never #ad any kno%ledge for t#e
amo&ntsE no kno%ledge of act&al facts till 1(2D
%#en t#ro&g# t#e local ne%saers$ s#e learned
t#at a defa&lt j&dgment been made against #erE
%#en s#e first fo&nd o&t$ s#e %as &nable to obtain
rendition of acco&nts$ beca&se #er #&sband #ad
left t#e )#ils 2 days revio&s and gone to 3ong
SongE t#at s#e %ent to 3S and learned t#at #er
#&bby #ad left t#ere &nder a false name and #ad
gone to -ingaore from %#ence #e %ent to ot#er
laces &nkno%n to #erE t#at s#e t#en ret&rned to
'anilaE and t#at in 1(2D$ s#e came into ossession
of docs s#o%ing t#e illegality of t#e notes and
mortgage in G&estion.

5abrielaKs defense. involves validity of order of
7ominican +at#ers in t#is$ t#at t#eir mortgage
does not g&arantee any loan made to #erE it is a
sec&rity only given for a credit of a @rd ersonE
mortgage exec&ted %it#o&t marital consent of
%ifeE 3&sband no a&t#ority to make #er liable as
s&rety on debt of a @rd erson.
As to notes to B)/. a1 it does not reresent
any money aid to 5abriela by B)/ b1 it is
excl&sively t#e ersonal debt of *ena )oi6at
and #is comany$ c1 it %as exec&ted by #er
#&sband$ beca&se B)/ desired more sec&rity
for ayment of #er #&sbandKs debt to t#e
bank$ d1 it %as exec&ted in excess of o%ers
given to #&sband &nder #is o%er of
attorney$ e1 it %as exec&ted as a res&lt of
coll&sion bet%een bank and #er #&sband for
&rose of making #er liable for oblig of @rd
erson.
!A

As to mortgage. a1 it %as exec&ted to sec&re
a void oblig b1it does not g&arantee any loan
made to #er c1it %as exec&ted %it#o&t
exress marital consent %#ic# la% reG&ires$
d1 exec&ted t#ro&g# coll&sion.

)rayer. ann&l j&dgment and case be
reoened and be ermitted to file ans%er
and case be tried on t#e merits. ??79;/97.

Iue> :2; 5abriala bo&nd by romissory notes
and mortgage signed by #er #&sband on #er
be#alf< ;2
,e-d>
#. Ser)i*e o' Ga8rie-aG ummon made to
1u8andG reiden*e N(" )a-id t1ere'ore
*ourt ne)er a*Iuired =uridi*tion.
/t is exressly admitted by B)/ t#at since 1(0! to
1(2D$ %ife %as residing in City of )aris. 4esidence
of %ife in )aris %as for 1" years.

4esidence of %ife %o&ld contin&e to remain to be
t#at of #&sbandKs if where in the ordinary course of
business wife is absent from husbandKs residence
on a pleasure trip or for business or to visit friends
or relatives. B&t 3949$ t#at is not so. +or 1" years
residence of #&sband %as in City of 'anila and
residence of %ife %as in City of )aris.
-ince residence of #&bby not t#e &s&al lace of
residence of %ife$ t#e s&bstit&ted service made is
n&ll and void and by s&c# service co&rt never
acG&ired j&risdiction over 5abrielaKs erson.

2. "1e *ontention t1at under 1u8andG
.o?er o' attorne7, 1e ?a t1e 4enera- a4ent
o' ?i'e ?it1 aut1roit7 to a**e.t er)i*e o'
.ro*e 'or 1er and in 1er name not )a-id.
;ot#ing in record to s#o% t#at #&sband acceted
service of nay rocess for %ife or as her a#ent, or
that he was actin# for or representin# her in his
failure and ne#lect to appear or answer.

@. ,u8and ?a ?it1 no aut1orit7 to i4n t1e
.romior7 note on 8e1a-' o' ?i'e Ga8rie-a.
5abriel. 8nder t#e o%er of attorney$ #&sband #ad
no a&t#ority for and on be#alf of %ife to exec&te a
joint and several note or to make #er liable as an
accommodation maker. 7ebt %as a reexisting
debt of #&sband and Comany to %#ic# s#e %as
not a arty and so s#e #ad no legal oblig to ay.
-#e never borro%ed any money from B)/ nor ever
#ad dealing %it# it nor %as s#e indebted to B)/.

4ecord s#o%s t#ere is no evidence to s#o% %ife
%as a arty to notes nor %as s#e &nder any legal
liability to ay t#em. ;otes %ere merely additional
sec&rity for t#e different debts of #&sband. At t#e
time notes %ere exec&ted$ #&sband %as attorney
in fact for %ife and bank kne% or s#o&ld #ave
kno%n nat&re and extent of #is a&t#ority and
limitation &on #is o%er.

)o%er of attorney does not contain any rovisions
giving #&sband a&t#ority to make %ife liable as
s&rety for ayment of reexisting debt of a @rd
erson.

)ar C of )o%er of attorney a&t#ori6es #&sband for
and in name of %ife Ito loan or borro% s&ms of
money or f&ngible t#ings$ etcI. [ s#o&ld be
constr&ed to mean t#at #&sband #ad o%er only to
loan #is %ifeKs money and to borro% money for or
on acco&nt of #is %ife as #er agent and attorney in
fact. ,#at does not carry %it# it or imly t#at #e
#ad legal rig#t to make %ife liable as s&rety for
reexisting debt of @rd erson.

A. 91i-e .o?er o' attorne7 aut1ori5e
1u8and toL a**e.t noti*e and ummon,
t1ere i no .roo' to 1o? 1u8and a**e.ted
er)i*e o' an7 noti*e or ummon in t1e
a*tion on 8e1a-' o' 8an: and e)en o, i' 1e
1ad, it ?ou-d not 8e a de'ene to o.en u.
and )a*ate a =ud4ment.
+act t#at agent failed and neglected to erform #is
d&ties and to reresent t#e interests of #is
rincial is not a bar to t#e rincial obtaining legal
relief for t#e negligence of #er agent$ rovided t#at
alication s&c# a relief is d&ly and roerly made.

<<<:#ole &rose and intent of o%er of attorney
%as to emo%er and a&t#ori6e #&sband to look
after and rotect %ifeKs interests and for #er and in
#er name to transact any and all of #er b&siness.
B&t no%#ere does it rovide or a&t#ori6e #im to
make #er liable as a s&rety for t#e ayment of t#e
reexisting debt of a @rd erson.

3&sband no a&t#ority to sign note on be#alf of %ife
t#erefore$ as to #er$ t#e note is void for %ant of
o%er of #er #&sband to exec&te it. -ame is tr&e
for t#e real mortgage to t#e bank.

6ud4ment> =o%er co&rt decision vacated and as to
bank case remanded to lo%er co&rt %it# leave for
%ife to file ans%er to B)/Ks ca&se of action and
#ave case tried on merits.

/a*a-to Coa- 2ine ). CA (!EG)
*. 7avide
1((C
FAC"S> /n an A&t#ori6ation$ etitioner Bacaltos
a&t#ori6ed -avellon$ to &se t#e coal oerating
contract of Bacaltos Coal 'ine of %#ic# #e is t#e
rorietor$ for any legitimate &rose t#at it may
serve and artic&larly. 011 to acG&ire &rc#ase
ordersE 021 to engage in tradingE 0@1 to collect all
receivables d&e or in arrearsE 0D1 to extend to any
erson or comany by s&bstit&tion t#e same
extent of a&t#ority t#at is granted to 4ene
!!
-avellonE 0C1 in connection %it# t#e receeding
aragra#s to exec&te and sign doc&ments$
contracts$ and ot#er ertinent aers.
/n 1(!!$ a ,ri C#arter )arty %as exec&ted
bet%een Bacaltos Coal 'ines 0reresented by
-avellon1 and -an 'ig&el. ,#e agreement %as t#at
for )# "C0$000 to be aid %it#in seven days after
t#e exec&tion of t#e contract$ it Ilets$ demisesI t#e
vessel to c#arterer -'C Ifor t#ree ro&nd tris to
7avao.I ,#e vessel %as able to make only one tri$
so -'C filed an action for secific erformance.
)etitioners alleged t#at -avellon %as not t#eir
C#ief 2erating 2fficer and t#at t#e o%ers
granted to #im are only t#ose clearly exressed in
t#e A&t#ori6ation %#ic# do not incl&de t#e o%er
to enter into any contract %it# -'C.
ISSUE> :2; -avellon %as d&ly a&t#ori6ed by t#e
etitioners to enter into t#e ,ri C#arter )arty.
!ULING> ;2. ,#e broadest scoe of -avellonKs
a&t#ority is limited to t#e &se of t#e coal oerating
contract and t#e cla&se cannot contemlate any
ot#er o%er not incl&ded in t#e en&meration or
%#ic# are &nrelated eit#er to t#e o%er to &se t#e
coal oerating contract or to t#ose already
en&merated. /n s#ort$ %#ile t#e cla&se allo%s some
room for flexibility$ it can comre#end only
additional rerogatives falling %it#in t#e rimary
o%er and %it#in t#e same class as t#ose
en&merated.
,#ere is no evidence at all t#at Bacaltos Coal 'ines
as a coal mining comany o%ns and oerates
vessels$ and even if it o%ned any s&c# vessels$ t#at
it %as allo%ed to c#arter or lease t#em.
Also$ t#e A&t#ori6ation is not a general o%er of
attorney. /t is a secial o%er of attorney for it
refers to a clear mandate secifically a&t#ori6ing
t#e erformance of a secific o%er and of exress
acts s&bs&med t#erein.
+&rt#ermore$ #ad -'C exercised d&e diligence and
r&dence$ it s#o&ld #ave kno%n in no time t#at
t#ere is absol&tely not#ing on t#e face of t#e
A&t#ori6ation t#at confers &on -avellon t#e
a&t#ority to enter into any ,ri C#arter )arty.
P. Arti*-e #90# (A//Y)
Art. 1(01. A t#ird erson cannot set & t#e fact
t#at t#e agent #as exceeded #is o%ers$ if t#e
rincial #as ratified$ or #as signified #is
%illingness to ratify t#e agentKs acts.
#. E''e*t o' rati'i*ation and
e0.reion o' ?i--in4ne to
rati'7
/f t#e rincial does not ratify t#e acts of t#e
agent it is &nenforceable and #e is not bo&nd
by it.
/f t#e rincial ratifies t#e acts of t#e agent$ i.e.
a&t#ori6es$ receives benefits$ t#e ,3/47
)94-2; cannot set & t#e fact t#at t#e agent
#as exceeded #is a&t#ority. ,#e ,34/7 )94-2;
may be comelled to abide by #is contract.
,#e ratification s#all #ave a retroactive effect.
/t is only t#e )4/;C/)A= ;2, ,39 A59;, %#o
may stam t#e imrimat&r of ratification.
Before ratification by t#e rincial or
exression of %illingness on #is art to ratify$
t#e t#ird erson may re&diate t#e acts of t#e
agent.
2. Im.-ied rati'i*ation
:#ere a erson acts for anot#er %#o accets
or retains t#e benefits or roceeds of #is effort
%it# kno%ledge of t#e material facts
s&rro&nding t#e transaction$ t#e latter m&s be
799'97 to #ave ratified t#e met#ods
emloyed.
)rincile of )rincial may not accet t#e
benefits of t#e transaction and re&diate t#e
b&rdens.
@. Cae
Commiion on Pu8-i* ,i41?a7 ) San &ie4o
(EA!LA)
!a''ert7 ). Pro)in*e o' Ce8u (6ANCES)
7ecember 2($ 1(2!
*o#ns
+acts. An instr&ment %as exec&ted by laintiff$ by
and t#ro&g# #is agent and attorney?in?fact$ in
%#ic# t#e said agent &ndertook to convey title of
t#e laintiff to "A00 sG. meters of a lot for a
consideration of )22". ,#e art of t#e lot %as to be
exroriated %it#in t#e rovincial ark. )laintiff
received and acceted t#e )22" consideration.
)laintiff$ #o%ever$ contends t#at t#e agent #ad no
a&t#ority to exec&te t#e instr&ment in G&estion.
4&ling. C+/ O dismissed laintiffFs comlaintE
j&dgment for defendantsF cross?comlaint.
/ss&e. :2; t#e instr&ment exec&ted is valid Y>9-Z
39=7. /f it be tr&e t#at t#e agent #ad no a&t#ority
to exec&te t#e instr&ment$ t#e laintiff o&g#t not
to #ave acceted and receited for its
consideration. 3aving received t#e consideration$
#e co&ld not %ait for fifteen years to rescind and
!(
set it aside &on t#e gro&nd of fra&d. ,#e actions
of t#e defendant after t#e instr&ment %as
exec&ted in taking ossession of t#e land and
making imrovements t#ereon %ere oen and
notorio&s and %ere a matter of common
kno%ledge and %ere kno%n or legally s#o&ld #ave
been kno%n to t#e laintiff.
7isosition. j&dgment of lo%er co&rt affirmed.
Sta. Cata-ina ). E.itero (ALAIN)
Q. Arti*-e #902 (2A!K)
Art. 1(02. A t#ird erson %it# %#om t#e agent
%is#es to contract on be#alf of t#e rincial may
reG&ire t#e resentation of t#e o%er of attorney$
or t#e instr&ctions as regards t#e agency. )rivate
or secret orders and instr&ctions of t#e rincial do
not rej&dice t#ird ersons %#o #ave relied &on
t#e o%er of attorney or instr&ctions s#o%n t#em.
#. E''e*t o' .ri)ate or e*ret
intru*tion u.on t1ird .eron
&i5on ) CA (6ESSA)
*an&ary 2!$ 200@
>nares?-antiago$ *.
+acts.
,#ese involve t%o consolidated etitions
seeking to set aside and ann&l t#e decisions
and resol&tions of resondent Co&rt of Aeals
essentially$ t#e facts are.
2verland 9xress =ines$ /nc. 0lessee1
entered into a Contract of =ease %it#
2tion to B&y %it# etitioners

0lessors1
involving a 1$ACC.!0 sG&are meter
arcel of land
term of t#e lease %as for one 011
year commencing from 'ay 1"$ 1(AD & to
'ay 1C$ 1(AC.
7&ring t#is eriod$ rivate
resondent %as granted an otion to
&rc#ase for t#e amo&nt of )@$000.00 er
sG&are meter. t#e lease s#all be on a er
mont# basis %it# a mont#ly rental of
)@$000.00
+or fail&re of rivate resondent to
ay t#e increased rental of )!$000.00 er
mont# effective$ etitioners filed an action
for ejectment
',C. rivate resondent to vacate t#e
leased remises and to ay t#e s&m of
)"2D$000.00 reresenting rentals in
arrears andLor as damages in t#e form
of reasonable comensation for t#e &se
and occ&ation of t#e remises d&ring
t#e eriod of illegal detainer
CA. t#e alleged G&estion of %#et#er
etitioner %as granted an extension of
t#e otion to b&y t#e roertyE %#et#er
s&c# otion$ if any$ extended t#e lease
or %#et#er etitioner act&ally aid t#e
alleged )@00$000.00 to +idela 7i6on$ as
reresentative of rivate resondents
in consideration of t#e otion and$
%#et#er etitioner t#ereafter offered to
ay t#e balance of t#e s&osed
&rc#ase rice$ are all merely
incidental and do not remove t#e
&nla%f&l detainer case
rivate resondent filed before t#e 4,C
an action for -ecific )erformance and
+ixing of )eriod for 2bligation %it#
rayer for t#e iss&ance of a restraining
order ending #earing on t#e rayer
for a %rit of reliminary inj&nction 0it
so&g#t to comel t#e exec&tion of a
deed of sale &rs&ant to t#e otion to
&rc#ase and t#e receit of t#e artial
ayment$ and to fix t#e eriod to ay
t#e balance1
8nable to sec&re an inj&nction$ rivate
resondent also filed a comlaint for
Ann&lment of and 4elief from *&dgment
%it# inj&nction and damages
dismissed t#e comlaint for ann&lment
on t#e gro&nd of res )udicata$ and t#e
%rit of reliminary inj&nction revio&sly
iss&ed %as dissolved
t%o cases %ere t#e after consolidated
before t#e 4,C 0bot# dismissed1
CA. concl&ded t#at t#ere %as a
erfected contract of sale bet%een t#e
arties on t#e leased remises and
t#at &rs&ant to t#e otion to b&y
agreement$ rivate resondent #ad
acG&ired t#e rig#ts of a vendee in a
contract of sale oined t#at ayment
by rivate resondent of )@00$000.00
as artial ayment for t#e leased
roerty$ %#ic# etitioners acceted
0t#ro&g# Alice A. 7i6on1 and for %#ic#
an official receit %as iss&ed$ %as t#e
oerative act t#at gave rise to a
erfected contract of sale$ and t#at for
fail&re of etitioners to deny receit
t#ereof$ rivate resondent can
t#erefore ass&me t#at Alice A. 7i6on$
acting as agent of etitioners$ %as
a&t#ori6ed by t#em to receive t#e
money in t#eir be#alf
/ss&e 0relevant1. :2; t#ere %as a erfected
contract of sale
3eld. ;2;9. ,#ere %as no erfected contract of
sale bet%een etitioners and rivate resondent.
)rivate resondent arg&ed t#at it delivered t#e
(0
c#eck of )@00$000.00 to Alice A. 7i6on %#o acted
as agent of etitioners &rs&ant to t#e s&osed
a&t#ority given by etitioner +idela 7i6on$ t#e
ayee t#ereof. )rivate resondent f&rt#er
contended t#at etitionersK filing of t#e ejectment
case against it based on t#e contract of lease %it#
otion to b&y #olds etitioners in estoel to
G&estion t#e a&t#ority of etitioner +idela 7i6on. /t
insisted t#at t#e ayment of )@00$000.00 as artial
ayment of t#e &rc#ase rice constit&ted a valid
exercise of t#e otion to b&y.
8nder Article 1DAC of t#e ;e% Civil Code$ It#e
contract of sale is erfected at t#e moment t#ere is
a meeting of minds &on t#e t#ing %#ic# is t#e
object of t#e contract and &on t#e rice. +rom
t#at moment$ t#e arties may recirocally demand
erformance$ s&bject to t#e rovisions of t#e la%
governing t#e form of contracts.I ,#&s$ t#e
elements of a contract of sale are consent$ object$
and rice in money or its eG&ivalent. /t bears
stressing t#at t#e absence of any of t#ese essential
elements negates t#e existence of a erfected
contract of sale. -ale is a consens&al contract and
#e %#o alleges it m&st s#o% its existence by
cometent roof.
/n an attemt to res&rrect t#e lased otion$
rivate resondent gave )@00$000.00 to etitioners
0t#r& Alice A. 7i6on1 on t#e erroneo&s res&mtion
t#at t#e said amo&nt tendered %o&ld constit&te a
erfected contract of sale &rs&ant to t#e contract
of lease %it# otion to b&y. ,#ere %as no valid
consent by t#e etitioners 0as co?o%ners of t#e
leased remises1 on t#e s&osed sale entered
into by Alice A. 7i6on$ as etitionersK alleged agent$
and rivate resondent. ,#e basis for agency is
reresentation and a erson dealing %it# an agent
is &t &on inG&iry and m&st discover &on #is
eril t#e a&t#ority of t#e agent. As rovided in
Article 1!"! of t#e ;e% Civil Code$ t#ere %as no
s#o%ing t#at etitioners consented to t#e act of
Alice A. 7i6on nor a&t#ori6ed #er to act on t#eir
be#alf %it# regard to #er transaction %it# rivate
resondent. ,#e most r&dent t#ing rivate
resondent s#o&ld #ave done %as to ascertain t#e
extent of t#e a&t#ority of Alice A. 7i6on. Being
negligent in t#is regard$ rivate resondent cannot
seek relief on t#e basis of a s&osed agency.
/n Facaltos Coal 7ines vs. Court of Appeals$ -C
exlained t#e r&le in dealing %it# an agent.
9very erson dealing %it# an agent is &t
&on inG&iry and m&st discover &on #is
eril t#e a&t#ority of t#e agent. /f #e does
not make s&c# inG&iry$ #e is c#argeable
%it# kno%ledge of t#e agentKs a&t#ority$
and #is ignorance of t#at a&t#ority %ill not
be any exc&se. )ersons dealing %it# an
ass&med agency$ %#et#er t#e ass&med
agency be a general or secial one$ are
bo&nd at t#eir eril$ if t#ey %o&ld #old t#e
rincial$ to ascertain not only t#e fact of
t#e agency b&t also t#e nat&re and extent
of t#e a&t#ority$ and in case eit#er is
controverted$ t#e b&rden of roof is &on
t#em to establis# it.
"o7ota S1a?, In*. 3 CA (/A2/I)
'ay 2@$ 1((C
7avide$ *r.$ *.
Fa*t>
=&na =. -osa %anted to &rc#ase a ,oyota
=ite Ace so #e and #is son$ 5ilbert$ %ent to
,oyota -#a%Fs office and met )oong
Bernardo$ a sales reresentative of ,oyota.
-osa em#asi6ed to Bernardo t#at #e
needed t#e =ite Ace not later t#an *&ne 1A$
1(!( beca&se #e$ #is family$ and a balikbayan
g&est %o&ld &se it on *&ne 1! for a tri to
'arind&G&e %#ere #e %o&ld celebrate #is
birt#day. 3e added t#at if #e does not arrive in
#is #ometo%n %it# t#e ne% car$ #e %o&ld
become a la&g#ing stock.
Bernardo ass&red -osa t#at a &nit %o&ld be
ready for ick & at 10.00 a.m. on *&ne 1A.
Bernardo t#en signed a doc&ment entitled
A#reement Fetween 7r. "osa N *opon#
Fernardo of <oyota "haw, ,nc$ sti&lating t#at.
o All necessary doc&ments %ill be
s&bmitted to ,oyota -#a% 0)oong
Bernardo1 &on arrival of 'r. -osa from
'arind&G&e.
o ,#e do%nayment of )100$000.00
%ill be aid by 'r. -osa on *&ne 1C.
o ,#e ve#icle %ill be released for
ick?& on *&ne 1A.
o /t %as also agreed &on by t#e
arties t#at t#e balance of t#e
&rc#ase rice %o&ld be aid by credit
financing t#ro&g# B.A. +inance.
2n *&ne 1C$ -osa and 5ilbert %ent to
,oyota to deliver t#e do%nayment of
)100$000.00.
,#ey met Bernardo %#o t#en accomlis#ed
a rinted =ehicle "ales *roposal 3="*4 >58$ on
%#ic# 5ilbert signed &nder t#e s&b#eading
conforme. /n t#is doc&ment$ t#e saces
rovided for delivery terms %ere not filled?
&.
4odrigo H&irante$ t#e -ales -&ervisor of
Bernardo$ c#ecked and aroved said M-).
2n *&ne 1A$ Bernardo called 5ilbert to
inform #im t#at t#e ve#icle %o&ld not be ready
for ick & at 10.00 a.m. b&t instead at 2.00
.m. t#at same day.
At 2.00 .m.$ -osa and 5ilbert met
Bernardo at t#e latterFs office. After %aiting for
abo&t an #o&r$ Bernardo told t#em t#at t#e car
(1
co&ld not be delivered beca&se nasulot an#
unit n# iban# mala&as.
,oyota contends.
o ,#e =ite Ace %as not delivered to
-osa beca&se B.A. +inance disaroved
-osaFs credit financing alication.
o A artic&lar &nit #ad already been
earmarked for -osa b&t co&ld not be
released d&e to t#e &ncertainty of
ayment of t#e balance of t#e
&rc#ase rice.
o ,oyota gave -osa t#e otion to
&rc#ase t#e &nit by aying t#e f&ll
&rc#ase rice in cas# b&t -osa
ref&sed.
o ,oyota ret&rned t#e do%nayment
to -osa &on #is reG&est.
,#ereafter$ -osa sent t%o letters to ,oyota
demanding t#e ref&nd of do%nayment as %ell
as t#e ayment of damages.
,oyota ref&sed to accede to t#e -osaFs
demands.
-osa filed a comlaint against ,oyota for
damages &nder Articles 1( and 21 of t#e Civil
Code in t#e total amo&nt of )1$2@0$000.00.
,4/A= C284, #eld t#at
o ,#e A#reement between 7r. "osa
and *opon# Fernardo$ %as a valid
erfected and contract of sale ,oyota
%#ic# bo&nd ,oyota to deliver t#e
ve#icle to -osa.
o ,oyota acted in bad fait# in selling
t#e car to anot#er erson.
o Bernardo$ as an a&t#ori6ed sales
exec&tive of ,oyota -#a%$ %as t#e
latterFs agent and t#&s bo&nd ,oyota
-#a%.
o ,#erefore$ ,oyota s#o&ld ay -osa
moral and exemlary damages as %ell
as attorneyFs fees$ comensation for
-osa and #is la%yerFs transortation
fare$ and t#e costs of t#e s&it.
CA affirmed in toto.
Iue and ,e-d>
#. 9(N t1ere ?a a .er'e*ted *ontra*t
o' a-e.
N(. Article 1DAC of t#e Civil Code secifically
rovides t#at t#e contract of sale is erfected
at t#e moment t#ere is a meeting of minds
&on t#e t#ing %#ic# is t#e object of t#e
contract and &on t#e rice. +rom t#at
moment$ t#e arties may recirocally demand
erformance$ s&bject to t#e rovisions of t#e
la% governing t#e form of contracts.
,#e Agreement is not a contract of sale
beca&se it imosed no obligation on t#e art of
,oyota to transfer o%ners#i and no correlative
obligation on t#e art of -osa to ay t#erefor a
rice certain. ,#is is tr&e not%it#standing t#e
rovision on t#e do%nayment of )100$000.00
beca&se s&c# rovision made no secific
reference to a sale of a ve#icle. ,f it %as
intended for a contract of sale$ it co&ld only
refer to a sale on installment basis. ;ot#ing
%as mentioned abo&t t#e f&ll &rc#ase rice
and t#e manner t#e installments %ere to be
aid. ,#e r&le is t#at a definite agreement on
t#e manner of ayment of t#e rice is an
essential element in t#e formation of a binding
and enforceable contract of sale. ,#is is so
beca&se disagreement on t#e manner of
ayment is tantamo&nt to a fail&re to agree on
t#e rice.
'oreover$ t#e IAgreementI s#o%s t#e absence
of a meeting of minds bet%een ,oyota and
-osa. +or one t#ing$ -osa did not even sign it. /t
%as clear from t#e title of t#e doc&ment$
MAgreement bet%een 'r. -osa P *opon#
Fernardo of <oyota "haw, ,ncJ t#at -osa %as
not dealing %it# ,oyota b&t %it# Bernardo %#o
not misreresent t#at #e #ad a&t#ority to sell
,oyota ve#icles.. -osa kne% Bernardo %as only
an agent and it %as inc&mbent &on -osa to
act %it# ordinary r&dence and reasonable
diligence to kno% t#e extent of BernardoKs
a&t#ority as an agent. A erson dealing %it# an
agent is &t &on inG&iry and m&st discover
&on #is eril t#e a&t#ority of t#e agent.
At most$ t#e transaction only reac#ed t#e
negotiation stage of a contract of sale %it# t#e
exec&tion of t#e M-). ,#e M-) %as a mere
roosal %#ic# %as aborted %#en BA +inance
disaroved -osaFs credit financing alication.
/t created no demandable rig#t in favor of -osa
for t#e delivery of t#e ve#icle to #im$ and its
non?delivery did not ca&se any legally
indemnifiable inj&ry.
Sired7 Enter.rie, In*. ). CA (!EK)
+AC,-. -iredy 9nterrises$ /nc. 0-iredy1 is t#e
o%ner and develoer of >smael Millage$ a
s&bdivision in B&lacan. /ts resident is /smael
>anga. /n its Articles of /ncororation$ -iredyFs
rimary cororate r&ose is to acG&ire and
develo lands$ erect b&ildings and #o&ses t#ereon$
and sell$ lease$ or ot#er%ise disose t#e said
roerties to b&yers.
-ometime before 2ctober 1(A!$ >anga exec&ted
an &ndated =etter of A&t#ority in favor of
3ermogenes -antos. /n t#is letter$ >anga
constit&ted in -antos to do and exec&te$ among
ot#er t#ings$ t#e a&t#ority of negotiating and
entering into contractLs to b&ild 3o&sing 8nits in
>smael Millage.
(2
2n 2ctober 1C$ 1(A!$ -antos entered into a deed
of agreement %it# Conrado de 5&6man. /n t#is
deed$ it exressly stated t#at -antos %as
reresenting -iredy$ %#ile 7e 5&6man %as referred
to as t#e contractor and -iredy %as t#e rincial.
+or almost 12 years$ &ntil Aril 1((0$ 7e 5&6man
constr&cted 2" residential &nits in >smael Millage.
1@ %ere f&lly aid$ b&t t#e ot#er 1@ remained
&naid. ,#e total rice exceeded D00k$ verified
correct and signed by -antos. 7e 5&6man t#en
tried to collect t#is from -iredy$ b&t failed. ,#&s #e
instit&ted an action for secific erformance
against -iredy$ >anga$ and -antos$ %#o all denied
liability.
7&ring t#e trial$ -antos disaeared. -iredy in its
defense resented testimonial evidence t#at -iredy
#ad no contract %it# 7e 5&6man and #ad not
a&t#ori6ed -antos to enter into a contract %it#
anyone to b&ild #o&ses in t#e said village.
,#e ,C r&led in favor of -iredy$ saying t#at t#e
deed of agreement %as bet%een 7e 5&6man and
-antos only$ and #eld t#at -iredy and >anga
cannot be #eld liable. -antos %as ordered to ay
t#e amo&nt and t#e case against -iredy and >anga
%as dismissed.
8on aeal$ t#e CA reversed$ saying t#at t#e
=etter of A&t#ority clearly constit&ted -antos as
-iredyFs agent. ConseG&ently -iredy cannot deny
liability for t#e contract bet%een -antos and 7e
5&6man$ and t#ere %as no need for >anga #imself
to be a signatory to it$ in order to be bo&nd. -iredy
no% aeals to t#e -C$ t1e re-e)ant ar4ument
in t1i *ae t1at SantoE intru*tion ?ere
on-7 to SELL t1e -ot and not 8ui-d 1oue.
ISSUE>
:2; t#ere %as an agency 0>9-1
9(N aumin4 Santo ?a an a4ent, Sired7
i -ia8-e under t1e &eed o' A4reement (YES)
,EL&;!A"I(
A reading of t#e =etter of Agreement bet%een
>anga and -antos &ndo&btedly constit&tes -antos
as an agent. ,#ere are exress sti&lations
contained t#erein$ and it %as on t#e a&t#ority of
t#is doc&ment t#at 7e 5&6man transacted
b&siness %it# -antos in t#e first lace.
As to -iredyFs defense t#at it %as only interested in
selling t#e lots$ it does not matter. +irst of all$ its
Articles of /ncororation s#o% t#at it &ndertakes
constr&ction of b&ildings and #o&ses. -&c# Articles$
co&led %it# t#e =etter of A&t#ority$ is s&fficient to
#ave given 7e 5&6man reason to believe t#at
-antos %as d&ly a&t#ori6e to reresent -iredy.
Se*ond-7, e)en aumin4 t1at SantoE
mandate ?a on-7 to e-- t1e -ot a Sired7
aert, Sired7 i ti-- 8ound to .a7 &e
Gu5man. &e Gu5man i a t1ird .art7 to t1e
a4en*7 ?1o 1ad no :no?-ed4e o' t1e .e*i'i*
intru*tion 8et?een .rin*i.a- and a4ent.
91at &e Gu5man a? ?a t1e Letter o'
Aut1orit7, and t1e *o.e o' t1e a4entE
aut1orit7 i ?1at a..ear ?ritten t1erein.
"1ird .eron ma7 8e 8ound to inIuire into
t1e e0tent or *o.e o' t1e a4entE aut1orit7,
8ut t1e7 are not reIuired to 4o 8e7ond t1e
term o' t1e ?ritten .o?er o' attorne7. "1ird
.eron *annot 8e ad)ere-7 a''e*ted 87 an
undertandin4 8et?een .rin*i.a- and a4ent
o' -imit o' t1at aut1orit7. In t1e ame ?a7,
t1ird .eron need not *on*ern t1eme-)e
?it1 intru*tion 4i)en 87 t1e .rin*i.a- to 1i
a4ent outide o' t1e ?ritten .o?er o'
attorne7.
As to t#e contention t#at t#e =etter of A&t#ority
%as defective and needed reformation$ t#is does
not %arrant consideration$ esecially %it# >anga
being an '7 and a b&sinessman. ,#at t#e resent
case is in effect a revocation of t#e =etter of
A&t#ority is also erroneo&s. As for an alleged
violation by 7e 5&6man of t#e 7eed of Agreement$
it %as only bro&g#t as an iss&e on aeal and %as
not raised in t#e co&rts belo%.
)9,/,/2; 79;/97$ CA A++/4'97.
R. Arti*-e #90@ ("(PE)
Art. 1(0@. ,#e commission agent s#all be
resonsible for t#e goods received by #im in t#e
terms and conditions and as described in t#e
consignment$ &nless &on receiving t#em #e
s#o&ld make a %ritten statement of t#e damage
and deterioration s&ffered by t#e same.
&e'inition
+actor or commission
agent
2rdinary agent
2ne %#ose b&siness
is to receive and sell
goods for a
commission
9ntr&sted by t#e
rincial %it# t#e
ossession of goods
to be sold$ and
&s&ally selling in #is
o%n name.
'ay act on #is o%n
name or in t#at of
t#e rincial
;eed not #ave t#e
ossession of t#e
goods of #is
rincial$ %#ile t#e
commission agent
m&st be in
ossession
Lia8i-it7 o' *ommiion a4ent a to 4ood
re*ei)ed
(@
/f t#e commission agent received goods
consigned to #im$ #e is resonsible for any
damage or deterioration s&ffered by t#e same
in t#e terms and conditions and as described in
t#e consignment.
,#e #rase in t#e terms and conditions and as
described in t#e consignment refers to t#e
G&antity$ G&ality$ and #ysical condition of t#e
goods.
,o avoid liability$ t#e commission agent s#o&ld
make a %ritten statement of t#e damage or
deterioration if t#e goods received by #im do
not agree %it# t#e descrition in t#e
consignment.
S. Arti*-e #90A (GEN)
Art. 1(0D. ,#e commission agent %#o #andles
goods of t#e same kind and mark$ %#ic# belong to
different o%ners$ s#all disting&is# t#em by
co&ntermarks$ and designate t#e merc#andise
resectively belonging to eac# rincial.
Santo ). /erna8e (2AI)
;ovember "$ 1(2(
Millareal$ *.
Fa*t> 8rbano -antos deosited in *ose BernabeFs
%are#o&se AA! cavans and @! kilos of alay %#ile
)ablo ,iongson deosited in t#e same %are#o&se
1$02" cavans and ( kilos of t#e same grain.
2n 'arc# 20$ 1(2!$ )ablo ,iongson filed %it# t#e
Co&rt of +irst /nstance of B&lacan a comlaint
against *ose C. Bernabe$ to recover from t#e latter
t#e 1$02" cavans and ( kilos of alay deosited in
t#e defendantKs %are#o&se. At t#e same time$ t#e
alication of )ablo ,iongson for a %rit of
attac#ment %as granted$ and t#e attac#able
roerty of *ose C. Bernabe$ incl&ding (2D cavans
and @1 1L2 kilos of alay fo&nd by t#e s#eriff in #is
%are#o&se$ %ere attac#ed$ sold at &blic a&ction$
and t#e roceeds t#ereof delivered to said
defendant )ablo ,iongson$ %#o obtained j&dgment
in said case.
/t does not aear t#at t#e sacks of alay of
8rbano -antos and t#ose of )ablo ,iongson$
deosited in *ose C. BernabeKs %are#o&se$ bore
any marks or signs$ nor %ere t#ey searated one
from t#e ot#er.
8rbano -antos contends t#at )ablo ,iongson
cannot claim t#e (2D cavans and @1 ] kilos of
alay attac#ed by t#e defendant s#eriff as art of
t#ose deosited by #im in *ose C. BernabeKs
%are#o&se$ beca&se$ in asking for t#e attac#ment
t#ereof$ #e imliedly ackno%ledged t#at t#e same
belonged to *ose C. Bernabe and not to #im.
/ss&e. :#et#er or not )ablo ,iongson can claim t#e
entire (2D cavans and @1 ] kilos of alay
3eld. ;2. ,#e AA! cavans and @! kilos of alay
belonging to t#e laintiff 8rbano -antos$ #aving
been mixed %it# t#e 1$02" cavans and ( kilos of
alay belonging to t#e defendant )ablo ,iongson in
*ose C. BernabeKs %are#o&seE t#e s#eriff #aving
fo&nd only (2D cavans and @1 1L2 kilos of alay in
said %are#o&se at t#e time of t#e attac#ment
t#ereofE and t#ere being no means of searating
form said (2D cavans and @1 1L2 of alay
belonging to 8rbano -antos and t#ose belonging to
)ablo ,iongson$ t#e follo%ing r&le rescribed in
article @!1 of t#e Civil Code for cases of t#is
nat&re$ is alicable.

Art. 18!. ,f, by the will of their owners, two
thin#s of identical or dissimilar nature are
mied, or if the miture occurs
accidentally, if in the latter case the thin#s
cannot be separated without in)ury, each
owner shall acAuire a ri#ht in the miture
proportionate to the part belon#in# to him,
accordin# to the value of the thin#s mied
or commin#led.

,#e n&mber of kilos in a cavan not #aving been
determined$ %e %ill take t#e roortion only of t#e
(2D cavans of alay %#ic# %ere attac#ed and sold$
t#ereby giving 8rbano -antos$ %#o deosited AA!
cavans$ @(!.D( t#ereof$ and )ablo ,iongson$ %#o
deosited 1$02" cavans$ C2C.C1$ or t#e val&e
t#ereof at t#e rate of )@ er cavan.
2onte-i8ano ). /a*o-odF2ur*ia 2i--in4 (!(G)
1(CD

Fa*t> 'ontelibano et al are s&gar lanter$
member of Bacolod '&rcia or assignees of s&gar
lanter. ,#ey #ave contracts %it# Bacolod 0Central1
for t#e delivery of t#eir s&gar cane to t#e s&gar mill
of Central for milling and rocessing into s&gar.
-&gar cane delivered by eac# lanter %as to be
divided bet%een lanter and Central t#is %ay. "0N
for lanter$ D0N for Central. Central %as to rovide
lanter from time to time as t#e milling rogressed
%it# info as to s#are of s&gar t#at lanter %as
entitled to receive$ give lanter G&edans or
%are#o&se receits t#erefor. After t#e milling$ and
for eriod of (0days$ Central %as to kee s&gar in
its %are#o&se free of c#arge$ and lanter to ay
Ccentavos er ic&l Lmont# for storage aside.

At time of *aanese occ&ation of ;egros
2ccidental on 'ay 1(D2 t#ere %ere on deosit at
CentralKs %are#o&se ""Dk ic&ls of s&gar$ of %#ic#
12!k belonged to 'ontelibano et al$ 2!Dk to
Central and t#e balance to lanters not arties
#ere. /n KD@$ *aanese 'ilitary Admin designated
+idel 3enares resident of -&gar )lantersK Assoc
%it# a&t#ority to Mcontract, deliver, to receive
(D
payments, to pay various accounts to members of
Assoc6 to open accounts, to contract overdraft
accounts with ban& of <aiwan, and perform such
other powers as may be necessary in the premises.

*aanese 'ilitary Admin iss&ed reg&lation
governing &rc#ases of s&gar by 'ilitary Admin by
virt&e of %#ic#$ &on &rc#ase of s&gar by Admin$
any claim of );B or any ot#er enemy cor t#ereto
s#all a&tomatically be cancelled$ and s&gar t#&s
&rc#ased deosited as ne% I4egenesis aLcI in t#e
name of b&yer$ Bank of ,ai%an. )lanters or o%ners
of s&gar %ere a&t#ori6ed$ if t#ey c#ose$ to borro%
f&nds from t#e Bank of ,ai%an. As er Admin
reg&lations$ c#ecks in ayment of s&gar bo&g#t
s#all be Bank of ,ai%an c#ecks %#ic# #o%ever
%ere to be deosited %it# said bank and set off
against mortgages on old cro loans of lanters as
+armer 4e#abilitation +&nds. ;e% cro loans co&ld
be granted %it#in limits of t#e roceeds of t#eir
s&gar sold.

'its&i B&ssan Sais#a =td. notified resident of
)lantersK Assoc t#at it %as b&ying all t#e s&gar of
t#e lanters$ %#et#er t#ey co&ld be located or not.
:are#o&se orders for release of s&gar #e #ad sold
%ere iss&ed at t#e reG&est of t#e resident of t#e
)lantersK Assoc. +rom t#e time Sais#a made
&rc#ases$ it began %it#dra%ing s&gar from
Central in sacks. :it#dra%als %ere made b&t
%it#o&t indication as to %#ose s&gar eac#
%it#dra%al %as being made. As t#e s&gar
belonging to t#e lanters and t#at of Central %ere
mixed &$ and t#ere being not#ing to s#o% %#at
b&yer %as %it#dra%ing$ it co&ld not be determined
%#ose s&gar #ad been act&ally sold or %it#dra%n.

At time of liberation$ t#ere %ere abo&t 1C0k ic&ls
s&gar b&t s&c# %as imo&nded by 8- 9nemy
)roerty C&stodian b&t %as finally released. )arties
agreed t#at "0N be rovisionally assigned to t#em
to be rorated among t#em accdg to s&gar t#ey
#ad on deosit %it# Central rior to military
occ&ation. After liberation and before t#is
roration$ 'ontelibano %it#dre% from %are#o&se
some 12k ic&ls.

'ontelibano. ,#is resent action no% is redicated
on claim t#at Central #as already been f&lly aid
for its s#are of s&gar as it #ad sold d&ring 1(D@ to
1(DC some 2!Dk ic&ls in excess of 1AC ic&ls of
its o%n s#are and #ad received total rice of )2.Dm
so t#at s&gar remaining ertained excl&sively
t#em.

,C. s&gar remaining at time of liberation %as
already &rc#ased by 'ilitary Admin b&t it co&ld
not %it#dra% same co6 of advent of liberationE as
s&gar %ere all mixed &$ none of o%ners co&ld
claim excl&sive o%ners#i. ,#is t#e arties #ad
already acceted and carried o&t by t#e roration.
,#e taking of s&gar belonging to 'ontelibano and
Central %as an act of confiscation by *aanese
%#ic# %as legal valid from %#ic# no reco&rse may
be #ad against *a 5ovt or against Central. Action
%as dismissed

Iue> %#o are t#e legal o%ners of t#e s&gar
remaining at CentralKs %are#o&se at time of
liberation<

,e-d>
,#e determination of nat&re or validity of act of
*aanese 'ilitary Admin in &rc#asing
'ontelibanoKs s&gar from resident of t#e lanters
%#om it aointed %it#o&t t#e lanters or o%ners
consent is absol&tely immaterialE %#et#er t#e act
of &rc#ase %as an act of confiscation of enemy
roerty by military occ&ant or one of reG&isition$
or one of vol&ntary sale$ is beside t#e f&ndamental
iss&e$ %#ic# is stated above.

/rresective of t#e legality or illegality of &rc#ase
of laintiffKs s&gar 0by *aanese 'ilitary Admin1 t#e
fact remains t#at in conseG&ence t#ereof of
%are#o&se orders for release of 'ontelibanoKs
s&gar %ere iss&ed and s&gar act&ally taken from
t#e %are#o&se. Also by sale of CentralKs s&gar$
release %ere a&t#ori6ed to t#e &rc#ase and
%it#dra%als made. As to t#e s&gar remaining$ title
t#ereto remained in t#e original o%ners$ beca&se
o%ners#i of ersonal roerty sold is not
transferred &ntil act&al delivery??non n&dis actis$
sed traditione dominia rer&m transfer&nt&r.

As s&gar of t#e lanters and of Central %ere stored
toget#er in a single mass itKs absol&tely imossible
#ysically or legally$ to determine %#ose s&gar it
%as t#at remained after t#e %it#dra%als. ,#ere is
no legal basis for lantersK osition t#at as taking
of s&gar %as %it#o&t t#eir consent$ and t#at of
CentralKs %as %it# its consent$ all t#at remained
%as t#eirs. ,#e only sol&tion is t#at t#e mass
remaining m&st ertain to original o%ners in
roortion of t#e original amo&nts o%ned by eac#
of t#em.
T. Arti*-e #90B (!EG)
Art. 1(0C. ,#e commission agent cannot$ %it#o&t
t#e exress or imlied consent of t#e rincial$ sell
on credit. -#o&ld #e do so$ t#e rincial may
demand from #im ayment in cas#$ b&t t#e
commission agent s#all be entitled to any interest
or benefit$ %#ic# may res&lt from s&c# sale.
/f sale is made %it#o&t a&t#ority$ t#e rincial
is given t%o alternatives.
1. reG&ire ayment in cas#E b&t t#e
interest or benefit from t#e sale on
credit s#all belong to t#e agent since
(C
t#e rincial cannot be allo%ed to
enric# #imself at t#e agentFs exense
2. ratify t#e sale on credit and #ave all
t#e risks and advantages to #imself
Green 3a--e7 Pou-tr7 ). IAC + SIui88 (A//Y)
1(!D
*. Abad -antos
+acts.
5reen Malley %as aointed as t#e
noexcl&sive distrib&tor of verinary rod&cts of
-G&ibb in nort#ern =&6on.
-G&ibb filed a s&it to collect on goods
delivered b&t &naid.
5reen Malley claimed t#at t#e contract %it#
-G&ibb %as a mere agency to sellE t#at it never
&rc#ased goods from -G&ibbE t#at t#e goods
received %ere on consignment only %it# t#e
obligation to t&rn over t#e roceeds$ less its
commission$ or to ret&rn t#e goods ff not sold$
and since it #ad sold t#e goods b&t #ad not
been able to collect from t#e &rc#asers
t#ereof$ t#e action %as remat&re.
8on t#e ot#er #and$ -G&ibb claimed t#at
t#e contract %as one of sale so t#at 5reen
Malley %as obligated to ay for t#e goods
received &on t#e exiration of t#e "0?day
credit eriod.
5reen Malley %as ordered by t#e CA to ay
t#e s&m of )D!$@AD.AD l&s )(".00 %it#
interest at "N er ann&m from t#e filing of t#is
actionE l&s attorneyKs fees in t#e amo&nt of
)C$000.00 and to ay t#e costs to -G&ibb.
/ss&e.
1.:o; it is a contract of sale or a contract to sell.
2. :o; 5reen Malley is liable to ay t#e &nsold
rod&cts
3eld. According to t#e -C.
:e do not #ave to categori6e t#e contract.
:#et#er vie%ed as an agency to sell or as a
contract of sale$ t#e liability of 5reen Malley is
ind&bitable. Adoting 5reen MalleyKs t#eory t#at
t#e contract is an agency to sell$ it is liable
beca&se it sold on credit %it#o&t a&t#ority from its
rincial. ,#e Civil Code #as a rovision exactly in
oint. /t reads.
Art. 1(0C. ,#e commission agent cannot$
%it#o&t t#e exress or imlied consent of t#e
rincial$ sell on credit. -#o&ld #e do so$ t#e
rincial may demand from #im ayment in
cas#$ b&t t#e commission agent s#all be
entitled to any interest or benefit$ %#ic# may
res&lt from s&c# sale.
U. Arti*-e #90%F#90$ (EA!LA)
Art. 1(0". -#o&ld t#e commission agent$ %it#
a&t#ority of t#e rincial$ sell on credit$ #e s#all so
inform t#e rincial$ %it# a statement of t#e names
of t#e b&yers. -#o&ld #e fail to do so$ t#e sale s#all
be deemed to #ave been made for cas# insofar as
t#e rincial is concerned. 0n1
Art. 1(0A. -#o&ld t#e commission agent receive on
a sale$ in addition to t#e ordinary commission$
anot#er called a g&arantee commission$ #e s#all
bear t#e risk of collection and s#all ay t#e
rincial t#e roceeds of t#e sale on t#e same
terms agreed &on %it# t#e &rc#aser. 0n1
Art. 1(0!. ,#e commission agent %#o does not
collect t#e credits of #is rincial at t#e time %#en
t#ey become d&e and demandable s#all be liable
for damages$ &nless #e roves t#at #e exercised
d&e diligence for t#at &rose.
3. Arti*-e #909 (6ANCES)
Art. 1(0(. ,#e agent is resonsible not only for
fra&d$ b&t also for negligence$ %#ic# s#all be
j&dged %it# more or less rigor by t#e co&rts$
according to %#et#er t#e agency %as or %as not
for a comensation.
2/"C ). CA (ALAIN)
+eb 1!$ 1((1
Cr&6$ *.
FAC"S> /n *an&ary 1(A($ a certain 9d&ardo 5ome6
oened an acco&nt %it# 5olden -avings and
deosited over a eriod of t%o mont#s @! treas&ry
%arrants %it# a total val&e of )1$ACC$22!.@A. ,#ey
%ere all dra%n by t#e )#iliine +is# 'arketing
A&t#ority and &rortedly signed by its 5eneral
'anager and co&ntersigned by its A&ditor. -ix of
t#ese %ere directly ayable to 5ome6 %#ile t#e
ot#ers aeared to #ave been indorsed by t#eir
resective ayees$ follo%ed by 5ome6 as second
indorser.
2n vario&s dates bet%een *&ne 2C and *&ly 1"$
1(A($ all t#ese %arrants %ere s&bseG&ently
indorsed by 5loria Castillo as Cas#ier of 5olden
-avings and deosited to its -avings Acco&nt ;o.
2D(! in t#e 'etrobank branc# in Calaan$ 'indoro.
,#ey %ere t#en sent for clearing by t#e branc#
office to t#e rincial office of 'etrobank$ %#ic#
for%arded t#em to t#e B&rea& of ,reas&ry for
secial clearing.
'ore t#an t%o %eeks after t#e deosits$ 5loria
Castillo %ent to t#e Calaan branc# several times
to ask %#et#er t#e %arrants #ad been cleared. -#e
%as told to %ait. Accordingly$ 5ome6 %as
mean%#ile not allo%ed to %it#dra% from #is
acco&nt. =ater$ #o%ever$ IexaseratedI over
("
5loriaKs reeated inG&iries and also as an
accommodation for a Ival&ed client$I t#e etitioner
says it finally decided to allo% 5olden -avings to
%it#dra% from t#e roceeds of t#e %arrants.
:it#dra%als %ere made on *&ly ($ 1(A($ *&ly 1@$
1(A($ and *&ly 1"$ 1(A(.
/n t&rn$ 5olden -avings s&bseG&ently allo%ed
5ome6 to make %it#dra%als from #is o%n acco&nt$
event&ally collecting t#e total amo&nt of
)1$1"A$C00.00 from t#e roceeds of t#e aarently
cleared %arrants.
2n *&ly 21$ 1(A($ 'etrobank informed 5olden
-avings t#at @2 of t#e %arrants #ad been
dis#onored by t#e B&rea& of ,reas&ry on *&ly 1($
1(A($ and demanded t#e ref&nd by 5olden -avings
of t#e amo&nt it #ad revio&sly %it#dra%n$ to
make & t#e deficit in its acco&nt.
,#e demand %as rejected. 'etrobank t#en s&ed
5olden -avings in t#e 4egional ,rial Co&rt of
'indoro.
ISSUE> :L; &ntil s&c# time as 'etrobank is
act&ally aid$ its obligation is t#at of a mere
collecting agent %#ic# cannot be #eld liable for its
fail&re to collect on t#e %arrants.
,EL&> 'etrobank ex#ibited extraordinary
carelessness. ,#e amo&nt involved %as not trifling
V more t#an one and a #alf million esos 0and t#is
%as 1(A(1. ,#ere %as no reason %#y it s#o&ld not
#ave %aited &ntil t#e treas&ry %arrants #ad been
clearedE it %o&ld not #ave lost a single centavo by
%aiting. >et$ desite t#e lack of s&c# clearance V
and not%it#standing t#at it #ad not received a
single centavo from t#e roceeds of t#e treas&ry
%arrants$ as it no% reeatedly stresses V it
allo%ed 5olden -avings to %it#dra% V not once$
not t%ice$ b&t thrice O from t#e uncleared treas&ry
%arrants in t#e total amo&nt of )("!$000.00. /tFs
reason< /t %as IexaseratedI over t#e ersistent
inG&iries of 5loria Castillo abo&t t#e clearance and
it also %anted to IaccommodateI a val&ed client. /t
Ires&medI t#at t#e %arrants #ad been cleared
simly beca&se of It#e lase of one %eek.I
,o gloss over its carelessness$ 'etrobank %o&ld
invoke t#e conditions rinted on t#e dorsal side of
t#e deosit slis t#ro&g# %#ic# t#e treas&ry
%arrants %ere deosited by 5olden -avings %it#
its Calaan branc#. ,#e conditions read as follo%s.
Jindly note that in receivin# items on
deposit, the ban& obli#ates itself only as
the depositorKs collectin# a#ent, assumin#
no responsibility beyond care in selectin#
correspondents, and &ntil s&c# time as
act&al ayment s#all #ave come into
ossession of t#is bank$ the ri#ht is
reserved to char#e bac& to the depositorKs
account any amount previously credited,
whether or not such item is returned. <his
also applies to chec&s dra%n on local banks
and bankers and t#eir branc#es as %ell as
on t#is bank$ which are unpaid due to
ins&fficiency of f&nds$ forgery$
&na&t#ori6ed overdraft or any other
reason. 09m#asis s&lied.1
According to 'etrobank$ t#e said conditions clearly
s#o% t#at it %as acting only as a collecting agent
for 5olden -avings and give it t#e rig#t to Ic#arge
back to t#e deositorKs acco&nt any amo&nt
revio&sly credited$ %#et#er or not s&c# item is
ret&rned. ,#is also alies to c#ecks I. . . %#ic# are
&naid d&e to ins&fficiency of f&nds$ forgery$
&na&t#ori6ed overdraft of any ot#er reason.I /t is
claimed t#at t#e said conditions are in t#e nat&re
of contract&al sti&lations and became binding on
5olden -avings %#en 5loria Castillo$ as its Cas#ier$
signed t#e deosit slis.
7o&bt may be exressed abo&t t#e binding force of
t#e conditions$ considering t#at t#ey #ave
aarently been imosed by t#e bank &nilaterally$
%it#o&t t#e consent of t#e deositor. /ndeed$ it
co&ld be arg&ed t#at t#e deositor$ in signing t#e
deosit sli$ does so only to identify #imself and
not to agree to t#e conditions set fort# in t#e given
ermit at t#e back of t#e deosit sli. :e do not
#ave to r&le on t#is matter at t#is time. At any
rate$ t#e Co&rt feels t#at even if t#e deosit sli
%ere considered a contract$ t#e etitioner co&ld
still not validly disclaim resonsibility t#ere&nder in
t#e lig#t of t#e circ&mstances of t#is case.
/n stressing t#at it %as acting only as a collecting
agent for 5olden -avings$ 'etrobank seems to be
s&ggesting t#at as a mere agent it cannot be liable
to t#e rincial. ,#is is not exactly tr&e. 2n t#e
contrary$ Article 1(0( of t#e Civil Code clearly
rovides t#at V
Art. 1(0(. V ,#e agent is resonsible not
only for fra&d$ b&t also for negligence$
%#ic# s#all be j&dged K%it# more or less
rigor by t#e co&rts$ according to %#et#er
t#e agency %as or %as not for a
comensation.
"an "ion4 "e*: ). SEC (2A!K)
/riti1 Air?a7 ). CA, u.ra
&omin4o ). &omin4o, u.ra
Autria ). CA (AN6)
Fa*t>
'aria 5. Abad received from 5&illermo A&stria
one endant %it# diamonds val&ed at D$C00##
to be sold on commission basis or to be ret&rned
(A
on demand. -aid transaction %as ackno%ledged
in a receit dated *an @0$ 1("1.
2n +eb 1$1("1$ %#ile %alking #ome to #er
residence in 'andal&yong$ Abad %as said to
#ave been accosted by t%o men$ one of %#om
#it #er on t#e face$ %#ile t#e ot#er snatc#ed #er
&rse containing cas# and ieces of je%elry$
%#ic# incl&ded t#e endant. ,#e incident
became a s&bject of a criminal case for robbery
filed in t#e C+/ of 4i6al.
As Abad failed to ret&rn t#e je%elry or ay its
val&e desite demands$ A&stria filed an action
against #er and #er #&sband for recovery of t#e
endant or of its val&e$ and damages before t#e
C+/ of 'anila.
,#e Abads set & t#e defense t#at t#e alleged
robbery #ad exting&is#ed t#eir obligation.
"ria- Court r&led in favor of A&stria$ ordering t#e
Abads to jointly and severally ay t#e s&m of
D$C00$ %it# legal interests$ l&s DC0 for
attorneyFs fees$ and costs. /t %as #eld t#at t#e
Abads failed to rove t#e fact of t#e robbery$ or$
if indeed it %as committed$ t#at 'aria Abad %as
4ui-t7 o' ne4-i4en*e %#en s#e %ent #ome
%it#o&t any comanion$ given t#at it %as already
getting dark and s#e %as carrying a large
amo&nt of cas# and val&ables on t#e day in
G&estion$ and s&c# negligence did not free #er
from liability for damages.
,#e Abads aealed to t#e Court o' A..ea-$
%#ic# rendered a decision in favor of t#e
defendants$ r&ling t#at t#e facts of t#e robbery
and 'aria AbadFs ossession of t#e endant on
t#at day #ad been d&ly establis#ed. ,#e CA
declared t#e Abads %ere not resonsible for t#e
loss of t#e je%elry on acco&nt of a 'ortuitou
e)ent$ and relieved t#em from liability for
damages.
Iue>
1.:2; t#e alleged robbery falls &nder t#e category
of fort&ito&s event and relieved t#e obligor from
#is obligation &nder t#e contract of agency
0consignment of goods for sale1$ &rs&ant to
Article 11AD of t#e Civil Code$ even t#o&g# t#ere
#as been no final j&dgment of conviction in t#e
robbery case.
2.:2; Abad$ as an agent$ is g&ilty of conc&rrent or
contrib&tory fa&lt or negligence$ making #er
liable for damages.
,e-d;!atio>
1. >es$ t#e robbery %as a fort&ito&s event t#at
relieved t#e Abads from liability.
,o constit&te a fort&ito&s event t#at %o&ld
exemt a erson from resonsibility$ it is
necessary t#at 011 t#e event m&st be
indeendent of t#e #&man %ill 0or rat#er$ of t#e
debtorFs or obligorFs1E 021 t#e occ&rrence m&st
render it imossible for t#e obligor to f&lfill t#e
obligation in a normal mannerE and t#at 0@1 t#e
obligor m&st be free of articiation in$ or
aggravation of$ inj&ry to t#e creditor.
/t m&st be noted t#at in Article 11AD
!
$ t#e
em#asis of t#e rovision is on t#e event$ not on
t#e factors resonsible for t#em. ,o avail of t#e
exemtion granted in la%$ it is not necessary t#at
t#e ersons resonsible for t#e occ&rrence
s#o&ld be fo&nd or &nis#edE it %o&ld only be
s&fficient to establis# t#at t#e &nforeseeable
event$ t#e robbery in t#is case$ did take lace
%it#o&t any conc&rrent fa&lt on t#e debtorFs art$
and t#is can be done by reonderant evidence.
,o reG&ire in t#e resent action for t#e rior
conviction of t#e c&lrits in t#e criminal case in
order to establis# t#e robbery as a fact$ %o&ld be
to demand roof beyond reasonable do&bt.
2. ;o$ 'aria Abad is not g&ilty of conc&rrent or
contrib&tory fa&lt or negligence.
As stated in Article 11A0
(
$ in order to comletely
exonerate t#e obligor from liabilities$ s&c#
obligor m&st be free of any conc&rrent or
contrib&tory fa&lt or negligence.
/n 1("1$ %#en t#e robbery in G&estion did take
lace$ criminality #ad not by far reac#ed t#e
level attained in t#e resent day 01(A11. 5iven
t#is$ 2aria A8ad *ou-d not 8e 1e-d
ne4-i4ent. -#o&ld t#e incident #ad #aen at
resent time$ %#ere t#ere is #ig# incidence of
crimes against ersons and roerty$ t#at
renders travel after nig#tfall a matter to be
sed&lo&sly avoided %it#o&t s&itable reca&tion
and rotection$ t#e cond&ct of 'aria$ carrying
je%elry of considerable val&e$ %o&ld be negligent
per se and %o&ld not exemt #er from
resonsibility in t#e case of a robbery.
&i.oiti)e> )etition for revie% 7/-'/--97.
III. (8-i4ation o' Prin*i.a-
A. Arti*-e #9#0 (E3A)
Article 1(10. ,#e rincial may revoke t#e agency
at %ill$ and comel t#e agent to ret&rn t#e
doc&ment evidencing t#e agency. -&c# revocation
may be exress or imlied.
8
Art. 11AD. 9xcet in cases exressly secified by la%$ or
%#en it is ot#er%ise declared by sti&lation$ or %#en t#e
nat&re of t#e obligation reG&ires t#e ass&mtion of risk$
no erson s#all be resonsible for t#ose events %#ic#
co&ld not be foreseen$ or %#ic#$ t#o&g# foreseen$ %ere
inevitable.
9
Art. 11A0. ,#ose %#o in t#e erformance of t#eir
obligations are g&ilty of fra&d$ negligence$ or delay$ and
t#ose %#o in any manner contravene t#e tenor t#ereof$
are liable for damages.
(!
59;94A= 2B=/5A,/2;-.
1. Contract&al obligations O d&ties and liabilities
of t#e rincial are rimarily based &on t#e
contract and t#e validity of t#e contract
bet%een t#em.
2. ,o deal %it# t#e agent fairly and in good fait#.
-)9C/+/C 2B=/5A,/2;-.
1. ,o comly %it# t#e obligations %#ic# t#e
agent may #ave contracted %it#in t#e scoe of
#is a&t#ority and in t#e name of t#e rincialE
2. ,o advance to t#e agent$ s#o&ld t#e latter so
reG&est$ t#e s&ms necessary for t#e exec&tion
of t#e agencyE
@. ,o reimb&rse t#e agent of all t#e advances
made by #im$ rovided t#e agent is free from
fa&ltE
D. ,o indemnify t#e agent for all t#e damages
%#ic# t#e exec&tion of t#e agency may #ave
ca&sed t#e latter %it#o&t t#e fa&lt or
negligence on #is artE and
C. ,o ay t#e agent t#e comensation agreed
&on$ or if no comensation %as secified$ t#e
reasonable val&e of t#e agentFs services.
Note> 9ven if t#e agent #as exceeded #is
a&t#ority$ t#e rincial is solidarily liable %it# t#e
agent if t#e former allo%ed t#e latter to act as
t#o&g# #e #ad f&ll o%ers Y9stoelZ.
=/AB/=/,> 2+ ,39 )4/;C/)A= ,2 ,3/47 )94-2;-
)eneral *ule+ :#ere t#e relation of agency
legally exists$ t#e rincial %ill be liable to t#ird
ersons for A== t#e acts committed by t#e agent in
#is be#alf in t#e co&rse and %it#in t#e act&al or
aarent scoe of #is a&t#ority$ and t#is is not
altered by t#e fact t#at t#e agent also may be
liable$ nor by t#e fact t#at some of t#e acts are to
t#e rincialFs advantage %#ile t#e ot#ers to #is
disadvantage.
*eason for the *ule
o +or epress and implied a#ency H t#e act of
agent is t#e act of rincial
o +or apparent authority and a#ency by estoppel
H to revent fra&d &on innocent t#ird arties
=/AB/=/,> 2+ ,3/47 )94-2;- ,2 )4/;C/)A=
An agent is t#e instr&mentality of t#e rincial
%#ose rimary design is to obtain rig#ts against
t#ird arties. ,#e rincialFs rig#ts are t#e t#ird
artiesF liabilities.
1. !n contract. O A t#ird erson is liable to t#e
rincial &on contracts entered into by #is
agent$ in t#e same manners as t#o&g# t#e
contract %ere entered into by t#e rincial
#imself. ,#is roosition res&lts from t#e
reresentative nat&re of agency.
2. !n tort. O ,#e t#ird ersonFs tort liability to t#e
rincial$ insofar as t#e agent is involved in
tort$ arises in t#ree fact&al sit&ations.
0a1 :#ere t#e t#ird erson damages or
inj&res roerty or interest of t#e
rincial in t#e ossession of t#e
agentE
0b1 :#ere t#e t#ird erson coll&des %it#
t#e agent to inj&re or defra&d t#e
rincialE and
0c1 :#ere t#e t#ird erson ind&ces t#e
agent to violate t#e contract %it# t#e
rincial to betray t#e tr&st reosed b
#im by t#e rincial.E
3. !n respect to property received. O An agent
does not #ave legal title to roerty entr&sted
to #is ossession by t#e rincial. /n t#e
absence of la% or t#e ossession of t#e agent
of aarent a&t#ority or circ&mstances %orking
on estoels against t#e rincial$ t#e latter
may recover roerty from t#e agentFs
transferee.
9xcetion. bona fide #olders of negotiable
instr&ments.
=/AB/=/,> 2+ )4/;C/)A= +24 ,24, 2+ A59;,
)eneral *ule+ ,#e rincial is civilly liable to t#ird
ersons for torts of an committed at t#e rincialFs
direction or in t#e co&rse of within the scope of the
a#ent0s employment.
*eason for liability+ based on t#e rincile t#at
#e %#o acts t#ro&g# anot#er does it #imself.
;ote. Agent is also liable O #e is -2=/7A4/=> liable
%it# t#e rincila to t#ird ersons and so s&c# t#ird
ersons may s&e bot#.
,-$, of liability .Motivation/deviation test0
,#e bo&nds of t#e agentFs a&t#ority are not t#e
limits of t#e rincialFs tort liability$ b&t rat#er t#e
scoe of emloyment %#ic# may or may not be
%it#in t#e bo&nd of a&t#orityE #ence$ %ider in
scoe. B&t an act is not necessarily done %it#in t#e
scoe of emloyment by reason merely of t#e fact
t#at it is done d&ring t#e emloyment.
,%o factors m&st conc&r for liability to be imosed.
1. satisfactory evidence t#at t#e emloyee in
doing t#e act$ in doing of %#ic# t#e tort %as
committed$ %as motivated in art$ at least$ by
desire to serve #is emloyerE A;7
2. satisfactory evidence t#at t#e act$ in doing of
%#ic# t#e tort is committed$ %as not an
extreme deviation from t#e normal cond&ct of
t#e emloyee.
Article 1213 par. 1+ :#en agent acts in a
reresentative caacity$ t#e rincial is evidently
liable
((
Article 1213 par. 4+ :#en agent exceeded #is
a&t#ority$ t#e rincial is not bo&nd &nless #e
4A,/+/9- t#at act of t#e agent exressly or
imliedly.
!A"IFICA"I(N is t#e adotion or t#e affirmance
by a erson of a rior act %#ic# did not bind #im$
b&t %#ic# %as done or rofessed to be done on #is
acco&nt t#&s giving effect to t#e acts as if
originally a&t#ori6ed.
Act of ratification purely voluntary: rincial #as
otion to ratify or not.
Conditions for ratification
011 ,#e rincial m&st #ave t#e caacity
or o%er to ratifyE
021 3e m&st #ave kno%ledge of material
factsE
o kno%ledge m&st be f&ll$ comlete and
act&al.
o material facts are t#ose %#ic# reasonably
o&g#t to be kno%n by t#e rincial$ #aving
in mind t#e time$ lace$ circ&mstances and
t#e sit&ation of t#e arties.
0@1 3e m&st ratify t#e acts in its entiretyE
0D1 ,#e act m&st be caable of ratificationE
and
o t#ose %#ic# may be a&t#ori6ed 0i.e. valid1$
voidable acts$ and &nrevoked acts
0ratification of &na&t#ori6ed contract m&st
be done before it is revoked by t#e ot#er
contracting arty.
o acts %#ic# are absol&tely void cannot be
ratified.
0C1 ,#e act m&st be done in be#alf of t#e
rincial.
)eneral rule+ !ati'i*ation 1a !E"!(AC"I3E
e''e*t.
Eceptions:
(1 :#ere to do so %o&ld be to defeat t#e ri41t
o' t1ird .artie %#ic# #ave accr&ed bet%een
t#e time of t#e making of t#e &na&t#ori6ed
contract and t#e time of ratification.
(2 :#ere to do so %o&ld be to render ?ron4'u-
an ot1er?ie ri41t'u- a*t or omission %#ic#
#as taken lace d&ring t#e intervening eriod.
(3 :#ere to do so %o&ld be to allo% t#e
*ir*um)ention o' a ru-e o' -a? form&lated
for t#e interest of &blic olicy.
(4 /f t#e t#ird erson #as ?it1dra?n from t#e
contract.
&omin4o ). !o8-e (/am8i)
'arc# 1!$ 200C
)anganiban$ *.
+acts.
)etitioner ;orma 7omingo and #er #&sband$
Malentino 7omingo o%ned a arcel of lot in a
s&bdivision in 'arikina.
Beca&se #er #&sband failed to come & %it#
eno&g# money to finis# t#e constr&ction of a
#o&se on t#e said lot$ etitioner decided to
disose of t#e roerty.
+lor Bacani$ etitionerFs friend$ vol&nteered to
act as etitionerFs agent in selling t#e lot.
)etitioner gave Bacani t#eir o%nerFs coy of
t#e ,C,$ %#ic# %as later said to #ave been
lost.
/n t#e etition for its reconstit&tion$ etitioner
gave Bacani all #er receits of ayment for real
estate taxes. At t#e same time$ Bacani asked
etitioner to sign %#at s#e recalled %as a
record of ex#ibits.
,#ereafter$ etitioner never sa% Bacani again.
:#en etitioner visited t#e lot$ s#e %as
s&rrised to see resondent >olanda 4obles
and #er family starting to b&ild a #o&se on t#e
s&bject lot.
8on verification %it# t#e 4egister of 7eeds$
s#e fo&nd o&t t#at t#e reconstit&ted ,C, #ad
alread7 been cancelled %it# t#e registration of
a 7eed of Absol&te -ale in favor of t#e
4obleses. 2n t#e 7eed %ere t#e signat&res of
etitioner and #er #&sband.
Claiming t#at s#e did not kno% t#e 4obleses
and t#at t#e signat&res on t#e 7eed %ere
forged$ etitioner filed a case to #ave t#e 7eed
of Abosl&te -ale n&llified and for t#e
reconveyance of t#e roerty.
,#e 4obleses$ for t#eir art claimed t#at t#ey
%ere b&yers in good fait#. According to t#em.
o ,#e s&bject lot %as offered to t#em by
+lor Bacani$ as t#e agent of t#e
o%nersE
o :#en t#ey %ere already reared to
b&y t#e lot$ Bacani introd&ced to t#em
t#e s&osed o%ners and agreed on
t#e saleE
o ,#ereafter$ Bacani resented a 7eed of
Absol&te -ale %#ic# #ad t#e signat&res
of etitioner and #er #&sband$ and t#e
o%nerFs coy of t#e ,C,.
o At t#at meeting$ 4obles aid f&ll
&rc#ase rice.
o -ometime later$ 4obles contracted to
sell t#e lot for )2C0$000. :#en only
)20$000 remained &naid$ #er b&yers
stoed ayment beca&se 4obles %as
notified t#at etitioner is s&ing #er.
4,C dismissed t#e comlaint.
CA affirmed in toto and #eld t#at etitioner
failed to disrove t#at t#e 4obleses %ere
&rc#asers in good fait#.
/ss&es and 3eld.
100
1. :2; t#e sale in favor of t#e 4obleses %as
valid. >9-.
A notari6ed instr&ment enjoys a rima facie
res&mtion of a&t#enticity and d&e exec&tion.
,o overcome t#at res&mtion$ clear and
convincing evidence m&st be resented.
+orgery cannot be res&med. 3ence$ it %as
inc&mbent &on etitioner to rove it. ,#is
etitioner failed to do.
)etitioner also failed to convince t#e trial co&rt
t#at t#e erson %it# %#om 4obles transacted
%as in fact not #er #&sband. -#e only alleged
t#at #er #&sband %as o&t of t#e co&ntry at t#e
time of t#e sale. 3o%ever$ bare allegations$
&ns&bstantiated by evidence$ are not
eG&ivalent to roof.
+&rt#ermore$ t#e sale %as admittedly made
%it# t#e aid of Bacani$ etitionerFs agent$ %#o
#ad %it# #im t#e original of t#e o%nerFs
d&licate Certificate of ,itle to t#e roerty$
free from any liens or enc&mbrances. ,#e
registered o%ner %#o laces in t#e #ands of
anot#er an exec&ted doc&ment of transfer of
registered land effectively reresents to a t#ird
arty t#at t#e #older of s&c# doc&ment is
a&t#ori6ed to deal %it# t#e roerty.
2. :2; t#e 4obleses are b&ers in good fait#.
)49-8'97 ,2 B9 >9-.
/n t#e absence of a finding of fra&d and a
conseG&ent finding of a&t#enticity and d&e
exec&tion of t#e 7eed of Absol&te -ale$ a
disc&ssion of %#et#er resondents %ere
&rc#asers in good fait# is %#olly
&nnecessary. :it#o&t a clear and ers&asive
s&bstantiation of bad fait#$ a res&mtion of
good fait# in t#eir favor stands.

Lim:et:ai + Son 2i--in4 ). CA (!EK)
!ura- /an: o' 2i-aor ). (*'emia, @2B SC!A 99
(6ESSA)
Fa*t>
2n Aril 10$ 1(("$ 4&ral Bank %as declared
in defa&lt on motion of t#e resondents for
fail&re to file an ans%er %it#in t#e
reglementary?eriod after it %as d&ly served
%it# s&mmons
2n Aril 2"$ 1(("$ bank filed a motion to
set aside t#e order of defa&lt %it# objection
t#ereto filed by resondents
2n *&ne 1A$ 1(("$ an order %as iss&ed
denying bankKs motion to set aside t#e order of
defa&lt
2n *&ly @1$ 1(("$ resondents filed a
motion to set case for #earing.
,#e bank did not file any oosition and so
resondents %ere allo%ed to resent t#eir
evidence e-parte.
A certiorari case %as filed by t#e bank %it#
t#e Co&rt of Aeals b&t t#e etition %as
denied in a decision and t#e same is no% final.
,#e evidence resented by t#e
resondents t#ro&g# t#e testimony of ;iBo$
one of t#e resondents in t#is case$ s#o%s
t#at.
s#e is t#e da&g#ter of +rancisca
2cfemia$ a co?resondent in t#is case$
and t#e late 4enato 2cfemia
0deceased1
t#e arents of #er fat#er$ 4enato
2cfemia$ %ere *&anita Arellano 2cfemia
and +elicisimo 2cfemia
#er ot#er co?resondents 4o%ena
2. Barrogo$ +elicisimo 2cfemia$ 4enato
2cfemia$ *r. and :inston 2cfemia are
#er brot#ers and sisters
;iBo kno%s t#e five 0C1 arcels of land
%#ic# are located in Bombon$ Camarines -&r
and t#at t#ey are t#e ones ossessing t#em
%#ic# %ere originally o%ned by #er
grandarents$ *&anita Arellano 2cfemia and
+elicisimo 2cfemia.
7&ring t#e lifetime of #er grandarents$
resondents mortgaged t#e said five 0C1
arcels of land and t%o 021 ot#ers to t#e bank
as s#o%n by t#e 7eed of 4eal 9state 'ortgage
and t#e )romissory ;ote
,#e so&ses +elicisimo 2cfemia and *&anita
Arellano 2cfemia %ere not able to redeem t#e
mortgaged roerties consisting of seven 0A1
arcels of land and so t#e mortgage %as
foreclosed and t#ereafter o%ners#i t#ereof
%as transferred to t#e bank.
2&t of t#e seven 0A1 arcels t#at %ere
foreclosed$ five 0C1 of t#em are in t#e
ossession of t#e resondents beca&se t#ese
five 0C1 arcels of land %ere sold by t#e bank
to t#e arents of ;iBo as evidenced by a 7eed
of -ale exec&ted in *an&ary 1(!!
,#e aforementioned five 0C1 arcels of land
s&bject of t#e deed of sale$ #ave not been$
#o%ever transferred in t#e name of t#e arents
of ;iBo after t#ey %ere sold to #er arents by
t#e bank beca&se according to t#e AssessorKs
2ffice t#e five 0C1 arcels of land$ s&bject of t#e
sale$ cannot be transferred in t#e name of t#e
b&yers as t#ere is a need to #ave t#e
doc&ment of sale registered %it# t#e 4egister
of 7eeds of Camarines -&r.
;iBo %ent to t#e 4egister of 7eeds of
Camarines -&r %it# t#e 7eed of -ale in order to
#ave t#e same registered.
,#e 4egister of 7eeds$ #o%ever$ informed
#er t#at t#e doc&ment of sale cannot be
registered %it#o&t a board resol&tion of bank.
;iBo t#en %ent to t#e bank$ s#o%ed to if
t#e 7eed of -ale$ t#e tax declaration and
receit of tax ayments and reG&ested t#e
101
bank for a board resol&tion so t#at t#e roerty
can be transferred to t#e name of 4enato
2cfemia t#e #&sband of etitioner +rancisca
2cfemia and t#e fat#er of t#e ot#er
resondents #aving died already.
,#e bank ref&sed #er reG&est for a board
resol&tion and made many alibis.
-#e %as told t#at t#e bank #ad a
ne% manager and it #ad no record of
t#e saleE -#e %as asked and s#e
comlied %it# t#e reG&est of t#e bank
for a coy of t#e deed of sale and
receit of aymentE ,#e resident of
t#e bank told #er to get an a&t#ority
from #er arents and ot#er
resondents and receits evidencing
ayment of t#e consideration
aearing in t#e deed of saleE -#e
comlied %it# said reG&irements and
after s#e gave all t#ese doc&ments$
;iBo %as again told to %ait for t%o 021
%eeks beca&se t#e bank %o&ld still
st&dy t#e matter.
After t%o 021 %eeks$ ;iBo ret&rned to t#e
bank and s#e %as told t#at t#e resol&tion of
t#e board %o&ld not be released beca&se t#e
bank #ad no records from t#e old manager.
Beca&se of t#is$ ;iBo %rote to t#e bank
inG&iring %#y no action %as taken by t#e board
of t#e reG&est for t#e iss&ance of t#e resol&tion
considering t#at t#e bank %as already f&lly
aid for t#e consideration of t#e sale since
*an&ary 1(!! as s#o%n by t#e deed of sale
itself
2n *an&ary 1C$ 1((" t#e bank ans%ered
resondentsK la%yerKs letter informing t#e
latter t#at t#e reG&est for board resol&tion #ad
already been referred to t#e board of directors
of t#e bank %it# anot#er reG&est t#at t#e latter
s#o&ld be f&rnis#ed %it# a certified mac#ine
coy of t#e receit of ayment covering t#e
sale bet%een t#e resondents and t#e bank
,#is reG&est of t#e bank %as already comlied
%it# by ;iBo even before s#e bro&g#t t#e
matter to #er la%yer.
2n *an&ary 2@$ 1((" resondentFs la%yer
%rote back t#e branc# manager of t#e bank
informing t#e latter t#at t#ey %ere already
f&rnis#ed t#e receits t#e bank %as asking for
and t#at t#e resondents %anted already to
kno% t#e stand of t#e bank %#et#er t#e board
%o&ld iss&e t#e reG&ired board resol&tion as
t#e deed of sale itself already s#o%ed t#at t#e
resondents %ere clearly entitled to t#e land
s&bject of t#e sale
,#e manager of t#e bank received t#e
letter %#ic# %as served ersonally to #im and
t#e latter told ;iBo t#at since #e %as t#e one
#imself %#o received t#e letter #e %o&ld not
sign anymore a coy s#o%ing #im as #aving
already received said letter
After several days from receit of t#e letter
%#en ;iBo %ent to t#e bank again and
reiterated #er reG&est$ t#e manager of t#e
bank told #er t#at t#ey co&ld not iss&e t#e
reG&ired board resol&tion as t#e bank #ad no
records of t#e sale.
Beca&se of t#is$ t#is etition is filed
,#e resondents are interested in #aving
t#e roerty transferred to t#eir names
beca&se t#eir mot#er and co?etitioner$
+rancisca 2cfemia$ is very sickly and t#ey %ant
to mortgage t#e roerty for t#e medical
exenses of +rancisca 2cfemia.
,#e illness of +rancisca 2cfemia began
after #er #&sband died and #er s&ffering from
art#ritis and &lmonary disease already
became serio&s before 7ecember 1((C.
;iBo declared t#at #er mot#er is no% in
serio&s condition and t#ey co&ld not #ave #er
#ositali6ed for treatment as t#ey do not #ave
any money and t#is is ca&sing t#e family
sleeless nig#ts and mental ang&is#$ t#inking
t#at t#eir mot#er may die beca&se t#ey co&ld
not s&bmit #er for medication as t#ey do not
#ave money.
!"C> 4ranted t1e .etition
CA> a''irmed
Iue> :2; t#e bank manager %as a&t#ori6ed by
t#e bank to sign on its be#alf
,e-d>
YES. /n failing to file its ans%er secifically denying
&nder oat# t#e 7eed of -ale$ t#e bank admitted
t#e d&e exec&tion of t#e said contract. -&c#
admission means t#at it ackno%ledged t#at t#e
manager %as a&t#ori6ed to sign t#e 7eed of -ale
on its be#alf.
,#e bank ackno%ledged$ by its o%n acts or fail&re
to act$ t#e a&t#ority of t#e manager to enter into
binding contracts. After t#e exec&tion of t#e 7eed
of -ale$ resondents occ&ied t#e roerties in
dis&te and aid t#e real estate taxes d&e t#ereon.
/f t#e bank management believed t#at it #ad title
to t#e roerty$ it s#o&ld #ave taken some
meas&res to revent t#e infringement or invasion
of its title t#ereto and ossession t#ereof.
=ike%ise$ t#e manager #ad revio&sly transacted
b&siness on be#alf of t#e bank$ and t#e latter #ad
ackno%ledged #er a&t#ority. A bank is liable to
innocent t#ird ersons %#ere reresentation is
made in t#e co&rse of its normal b&siness by an
agent like t#e manager$ even t#o&g# s&c# agent is
ab&sing #er a&t#ority.

Clearly$ ersons dealing
%it# #er co&ld not be blamed for believing t#at s#e
%as a&t#ori6ed to transact b&siness for and on
be#alf of t#e bank.
102
Board of 5i6uidators v. 7ala8. -ettled
j&risr&dence #as it t#at %#ere similar acts #ave
been aroved by t#e directors as a matter of
general ractice$ c&stom$ and olicy$ t#e general
manager may bind t#e comany %it#o&t formal
a&t#ori6ation of t#e board of directors. /n varying
lang&age$ existence of s&c# a&t#ority is
establis#ed$ by roof of t#e co&rse of b&siness$ t#e
&sages and ractices of t#e comany and by t#e
kno%ledge %#ic# t#e board of directors #as$ or
m&st be res&med to #ave$ of acts and doings of
its s&bordinates in and abo&t t#e affairs of t#e
cororation. -o also$ a&t#ority to act for and bind a
cororation may be res&med from acts of
recognition in ot#er instances %#ere t#e o%er %as
in fact exercised. ,#&s$ ?1en, in t1e uua-
*oure o' 8uine o' a *or.oration, an
o''i*er 1a 8een a--o?ed in 1i o''i*ia-
*a.a*it7 to mana4e it a''air, 1i aut1orit7
to re.reent t1e *or.oration ma7 8e im.-ied
'rom t1e manner in ?1i*1 1e 1a 8een
.ermitted 87 t1e dire*tor to mana4e it
8uine.
;ot%it#standing t#e &tative a&t#ority of t#e
manager to bind t#e bank in t#e 7eed of -ale$ t#e
bank #as failed to file an ans%er to t#e etition
belo% %it#in t#e reglementary eriod. ,#&s$ t#e
bank is estoed from G&estioning t#e a&t#ority of
t#e bank manager to enter into t#e contract of
sale. /f a cororation kno%ingly ermits one of its
officers or any ot#er agent to act %it#in t#e scoe
of an aarent a&t#ority$ it #olds t#e agent o&t to
t#e &blic as ossessing t#e o%er to do t#ose
actsE t#&s$ t#e cororation %ill$ as against anyone
%#o #as in good fait# dealt %it# it t#ro&g# s&c#
agent$ be estoed from denying t#e agentKs
a&t#ority.
8nG&estionably$ .etitioner 1a aut1ori5ed "ena
to enter into t1e &eed o' Sa-e. Accordingly$ it
#as a *-ear -e4a- dut7 to iue t1e 8oard
reo-ution ou41t 87 re.ondentG.
C1ina Air-ine ). C1io: (2A!K)
+acts.
2n -etember 1!$ 1(!1$ 7aniel C#iok
&rc#ased from C#ina Airlines a assenger
ticket for air transortation covering 'anila?
,aiei?3ongkong?'anila. -aid ticket %as
excl&sively endorseable to )#iliine Airlines.
-&bseG&ently$ on ;ovember 21$ 1(!1$ C#iok
took #is tri from 'anila to ,aiei &sing Yt#eZ
CA= ticket. Before #e left for said tri$ t#e tris
covered by t#e ticket %ere re?sc#ed&led and
confirmed by t#e former. :#en #e arrived in
,aiei$ #e %ent to t#e CA= office and confirmed
#is 3ongkong to 'anila tri on board )A= +lig#t
;o. )4 @11. ,#e CA= office attac#ed a yello%
sticker aroriately indicating t#at #is flig#t
stat&s %as 2S.
:#en C#iok reac#ed 3ongkong$ #e %ent to t#e
)A= office and so&g#t to reconfirm #is flig#t
back to 'anila. ,#e )A= office confirmed #is
ret&rn tri on board +lig#t ;o. )4 @11 and
attac#ed its o%n sticker.
o 2n ;ovember 2D$ 1(!1$ C#iok
roceeded to 3ongkong /nternational
Airort for #is ret&rn tri to 'anila.
3o%ever$ &on reac#ing t#e )A=
co&nter$ C#iok sa% a oster stating
t#at )A= +lig#t ;o. )4 @11 %as
cancelled beca&se of a ty#oon in
'anila. 3e %as t#en informed t#at all
t#e confirmed ticket #olders of )A=
+lig#t ;o. )4 @11 %ere a&tomatically
booked for its next flig#t$ %#ic# %as to
leave t#e next day.
o 2n ;ovember 2C$ 1(!1$ C#iok %ent to
t#e airort. =ok called t#e attention of
Carmen C#an$ )A=Fs terminal
s&ervisor$ and informed t#e latter t#at
C#iokFs name %as not in t#e com&ter
list of assengers. -&bseG&ently$
Carmen informed C#iok t#at #is name
did not aear in )A=Fs com&ter list of
assengers and t#erefore co&ld not be
ermitted to board )A= +lig#t ;o. )4
@0A.
o C#iok t#en decided to &se anot#er CA=
ticket %it# ;o. 2(A.DD02.00D.@A0.C
and asked if t#is ticket co&ld be &sed
to book #im for t#e said flig#t. 3e %as$
once again$ booked and confirmed$ t#is
time on board )A= +lig#t ;o. )4 @11
sc#ed&led to deart t#at evening.
=ater$ C#iok %ent to t#e )A= c#eck?in
co&nter and it %as Carmen %#o
attended to #im. As t#is j&nct&re$
C#iok #ad already laced #is travel
doc&ments$ incl&ding #is cl&tc# bag$ on
to of t#e )A= c#eck?in co&nter.
,#ereafter$ Carmen directed )A=
ersonnel to transfer co&nters. /n t#e
ens&ing commotion$ C#iok some of #is
ersonal belongings. -&bseG&ently$ #e
%as laced on stand?by and at aro&nd
A.@0 .m.$ )A= ersonnel informed #im
t#at #e co&ld no% c#eck?in.
C#iok filed a comlaint for damages.
/--89. :2; CA= is liable.
3eld. >es.
/t is significant to note t#at t#e contract of air
transortation %as bet%een etitioner and
resondent$ %it# t#e former endorsing to )A=
t#e 3ong Song?to?'anila segment of t#e
jo&rney. -&c# contract of carriage #as al%ays
been treated in t#is j&risdiction as a single
oeration. ,#is j&risr&dential r&le is s&orted
by t#e :arsa% Convention$ to %#ic# t#e
)#iliines is a arty$ and by t#e existing
10@
ractices of t#e /nternational Air ,ransort
Association.
/n American Airlines v. Co&rt of Aeals$ t#e
co&rt #ave noted t#at &nder a general ool
artners#i agreement$ t#e ticket?iss&ing
airline is t#e rincial in a contract of carriage$
%#ile t#e endorsee?airline is t#e agent.
/n t#e instant case$ follo%ing t#e j&risr&dence
cited above$ )A= acted as t#e carrying agent of
CA=. /n t#e same %ay t#at %e r&led against
Britis# Air%ays and =&ft#ansa in t#e
aforementioned cases$ %e also r&le t#at CA=
cannot evade liability to resondent$ even
t#o&g# it may #ave been only a ticket iss&er
for t#e 3ong Song?'anila sector.
Cuion ). CA, 22C SC!A @9# ("(PE)
Fa*t>
)etitioner S&e C&ison is a sole rorietors#i
engaged in t#e &rc#ase and sale of ne%srint$
bond aer and scra %#ile )rivate
resondent Maliant /nvestment Associates$ on
t#e ot#er #and$ is a artners#i d&ly organi6ed
and existing &nder t#e la%s.
+rom 7ecember D$ 1(A( to +ebr&ary 1C$ 1(!0$
resondent delivered vario&s kinds of aer
rod&cts amo&nting to )2(A$D!A.@0 to a
certain =ilian ,an of =, ,rading.
,#e deliveries %ere made by resondent
&rs&ant to orders allegedly laced by ,i& 3&y
,iac %#o %as t#en emloyed in t#e Binondo
office of etitioner.
/t %as like%ise &rs&ant to ,iacKs instr&ctions
t#at t#e merc#andise %as delivered to =ilian
,an.
8on delivery$ =ilian ,an aid for t#e
merc#andise by iss&ing several c#ecks ayable
to cas# at t#e secific reG&est of ,i& 3&y ,iac.
/n t&rn$ ,iac iss&ed ( ostdated c#ecks to
rivate resondent as ayment for t#e aer
rod&cts.
8nfort&nately$ sad c#ecks %ere later
dis#onored by t#e dra%ee bank.
4esondent made several demands &on
etitioner to ay for t#e merc#andise in
G&estion$ claiming t#at ,i& 3&y ,iac %as d&ly
a&t#ori6ed by etitioner as t#e manager of #is
Binondo office$ to enter into t#e G&estioned
transactions %it# rivate resondent and =ilian
,an.
4esondent filed an action against etitioner
for t#e collection of )2(A$D!A.@0 reresenting
t#e rice of t#e merc#andise.
,rial co&rt dismissed. Co&rt of Aeals
reversed.
Iue> :#et#er or not ,i& 3&y ,iac ossessed t#e
reG&ired a&t#ority from etitioner s&fficient to #old
t#e latter liable for t#e dis&ted transaction.
,e-d> YES.
/t is a %ell?establis#ed r&le t#at one %#o
clot#es anot#er %it# aarent a&t#ority as #is
agent and #olds #im o&t to t#e &blic as s&c#
cannot be ermitted to deny t#e a&t#ority of
s&c# erson to act as #is agent$ to t#e
rej&dice of innocent t#ird arties dealing %it#
s&c# erson in good fait# and in t#e #onest
belief t#at #e is %#at #e aears to be.
/t is evident from t#e records t#at by #is o%n
acts and admission$ etitioner #eld o&t ,i& 3&y
,iac to t#e &blic as t#e manager of #is store.
'ore artic&larly$ etitioner exlicitly
introd&ced ,i& 3&y ,iac to Bernardino
Millan&eva$ resondentKs manager$ as #is
0etitionerKs1 branc# manager as testified to by
Bernardino Millan&eva.
-econdly$ =ilian ,an$ %#o #as been doing
b&siness %it# etitioner for G&ite a %#ile$ also
testified t#at s#e kne% ,i& 3&y ,iac to be t#e
manager of etitionerKs -to. Cristo$ Binondo
branc#.
,#is general ercetion of ,i& 3&y ,iac as t#e
manager of etitionerKs -to. Cristo store is
even made manifest by t#e fact t#at ,i& 3&y
,iac is kno%n in t#e comm&nity to be t#e
IkinakaatidI 0godbrot#er1 of etitioner.
)etitionerKs &nexlained delay in diso%ning t#e
transactions entered into by ,i& 3&y ,iac
desite several attemts made by resondent
to collect t#e amo&nt from #im$ roved all t#e
more t#at etitioner %as a%are of t#e
G&estioned commission %as tantamo&nt to an
admission by silence.
/n a f&tile attemt to discredit Millan&eva$
etitioner alleges t#at t#e formerKs testimony is
clearly self?serving inasm&c# as Millan&eva
%orked for rivate resondent as its manager.
Co&rt said$ ,#e arg&ment t#at Millan&evaKs
testimony is self?serving and t#erefore
inadmissible on t#e lame exc&se of #is
emloyment %it# rivate resondent &tterly
misconstr&es t#e nat&re of IKself?serving
evidenceI and t#e secific gro&nd for its
excl&sion.
)etitioner cites Millan&evaKs fail&re$ desite #is
commitment to do so on cross?examination$ to
rod&ce t#e very first invoice of t#e transaction
bet%een etitioner and rivate resondent as
anot#er gro&nd to discredit Millan&evaKs
testimony.
Co&rt. it %as etitionerKs co&nsel #imself %#o
%it#dre% t#e reservation to #ave Millan&eva
rod&ce t#e doc&ment in co&rt.
/n t#e same manner$ etitioner assails t#e
credibility of =ilian ,an by alleging t#at ,an %as
art of an intricate lot to defra&d #im.
3o%ever$ etitioner failed to s&bstantiate or
rove t#at t#e s&bject transaction %as
designed to defra&d #im.
'oreover$ etitionerKs &nexlained delay in
diso%ning t#e transactions entered into by ,i&
10D
3&y ,iac desite several attemts made by
resondent to collect t#e amo&nt from #im$
roved all t#e more t#at etitioner %as a%are
of t#e G&estioned commission %as tantamo&nt
to an admission by silence &nder 4&le 1@0
-ection 2@ of t#e 4&les of Co&rt.
All of t#ese oint to t#e fact t#at at t#e time of
t#e transaction ,i& 3&y ,iac %as admittedly
t#e manager of etitionerKs store in -to. Cristo$
Binondo. ConseG&ently$ t#e transaction in
G&estion as %ell as t#e concomitant obligation
is valid and binding &on etitioner.
By #is reresentations$ etitioner is no%
estoed from disclaiming liability for t#e
transaction entered by ,i& 3&y ,iac on #is
be#alf. /t matters not %#et#er t#e
reresentations are intentional or merely
negligent so long as innocent$ t#ird ersons
relied &on s&c# reresentations in good fait#
and for val&e.
,i& 3&y ,iac$ t#erefore$ by etitionerKs o%n
reresentations and manifestations$ became
an agent of etitioner by estoel$ an
admission or reresentation is rendered
concl&sive &on t#e erson making it$ and
cannot be denied or disroved as against t#e
erson relying t#ereon 0Article 1D@1$ Civil Code
of t#e )#iliines1.
)etitioner is liable for t#e transaction entered
into by ,i& 3&y ,iac on #is be#alf. ,#&s$ even
%#en t#e agent #as exceeded #is a&t#ority$
t#e rincial is solidarily liable %it# t#e agent if
t#e former allo%ed t#e latter to fact as t#o&g#
#e #ad f&ll o%ers 0Article 1(11 Civil Code1$ as
in t#e case at bar.
)etition 79;/97
9ood*1i-d ,o-din4 ). !o0a E-e*tri* (2A!K)
+acts.
,#e resondent 4oxas 9lectric and
Constr&ction Comany$ /nc. 049CC/1$ formerly
t#e 4oxas 9lectric and Constr&ction Comany$
%as t#e o%ner of t%o arcels of land. 2n 'ay
1A$ 1((1$ t#e resondentFs Board of 7irectors
aroved a resol&tion a&t#ori6ing t#e
cororation$ t#ro&g# its resident$ 4oberto B.
4oxas$ to sell t#e lots at a rice$ and &nder
s&c# terms and conditions$ %#ic# #e deemed
most reasonable and advantageo&s to t#e
cororation. 3e %as like%ise a&t#ori6ed to
exec&te$ sign$ and deliver t#e ertinent sales
doc&ments and receive t#e roceeds of t#e
sale for and on be#alf of t#e comany.
)etitioner :3/ bo&g#t one of t#e lots and a
ortion of t#e ot#er. /t %as sti&lated in t#e
7eed of -ale t#at the vendor a#rees, in the
event that the ri#ht of way is insufficient for
the vendee0s use 3e entry of a ?--foot
container4, to sell additional sAuare meters
from its current ad)acent property.
:3/ constr&cted a %are#o&se. -aid %are#o&se
%as leased by )onderosa =eat#er 5oods
Comany s&bject to a mont#ly rental of
@00$000 #. /n t#e meantime$ :3/
comlained to 4oberto 4oxas t#at t#e ve#icles
of 49CC/ %ere arked on a ortion of t#e
roerty over %#ic# :3/ #ad been granted a
rig#t of %ay. 4oxas romised to look into t#e
matter. 7y and 4oxas disc&ssed t#e need of
:3/ to b&y a C00?sG&are?meter ortion of t#e
ot#er b&t 4oxas died soon t#ereafter.
,#e :3/ demanded t#at t#e 49CC/ sell a
ortion of t#e ot#er lot for its beneficial &se
ot#er%ise t#e aroriate action %o&ld be filed
against it. 49CC/ rejected t#e demand of :3/.
2n *&ne 1A$ 1((2$ t#e :3/ filed a comlaint
against t#e 49CC/ %it# t#e 4egional ,rial Co&rt
of 'akati$ for secific erformance and
damages.
/--89. :2; 4oxas 9lectric is bo&nd by t#e
rovisions of t#e deed of absol&te sale granting to
t#e :3/ beneficial &se and a rig#t of %ay over a
ortion of t#e ot#er lot.
3eld. ;o.
5enerally$ t#e acts of t#e cororate officers
%it#in t#e scoe of t#eir a&t#ority are binding
on t#e cororation. 3o%ever$ &nder Article
1(10
10
of t#e ;e% Civil Code$ acts done by
s&c# officers beyond t#e scoe of t#eir
a&t#ority cannot bind t#e cororation &nless it
#as ratified s&c# acts exressly or tacitly$ or is
estoed from denying t#em. 9vidently$ 4oxas
%as not secifically a&t#ori6ed &nder t#e said
resol&tion to grant a rig#t of %ay agree to sell
to t#e etitioner a ortion t#ereof.
;eit#er may s&c# a&t#ority be imlied from
t#e a&t#ority granted to 4oxas to sell on s&c#
terms and conditions %#ic# #e deems most
reasonable and advantageo&s. 8nder
aragra# 12$ Article 1!A! of t#e ;e% Civil
Code$ a secial o%er of attorney is reG&ired to
convey real rig#ts over immovable roerty.
Article 1@C! of t#e ;e% Civil Code reG&ires t#at
contracts %#ic# #ave for t#eir object t#e
creation of real rig#ts over immovable roerty
m&st aear in a &blic doc&ment. ,#e
etitioner cannot feign ignorance of t#e need
for 4oxas to #ave been secifically a&t#ori6ed
in %riting by t#e Board of 7irectors to be able
to validly grant a rig#t of %ay and agree to sell
a ortion of t#e adjacent lot. ,#e r&le is t#at if
t#e act of t#e agent is one %#ic# reG&ires
10
Art. 1(10. ,#e rincial m&st comly %it# all
t#e obligations %#ic# t#e agent may #ave
contracted %it#in t#e scoe of #is a&t#ority.
As for any obligation %#erein t#e agent #as
exceeded #is o%er$ t#e rincial is not bo&nd
excet %#en #e ratifies it exressly or tacitly.
10C
a&t#ority in %riting$ t#ose dealing %it# #im are
c#arged %it# notice of t#at fact.
+or t#e rincile of aarent a&t#ority to aly$
t#e etitioner %as b&rdened to rove t#e
follo%ing. 0a1 t#e acts of t#e resondent
j&stifying belief in t#e agency by t#e etitionerE
0b1 kno%ledge t#ereof by t#e resondent %#ic#
is so&g#t to be #eldE and$ 0c1 reliance t#ereon
by t#e etitioner consistent %it# ordinary care
and r&dence. /n t#is case$ t#ere is no
evidence on record of secific acts made by
t#e resondent s#o%ing or indicating t#at it
#ad f&ll kno%ledge of any reresentations
made by 4oxas to t#e etitioner t#at t#e
resondent #ad a&t#ori6ed #im to grant to t#e
resondent an otion to b&y a ortion of t#e
ot#er lot or to create a b&rden or lien t#ereon$
or t#at t#e resondent allo%ed #im to do so.
PN/ ). /a4ama.ad, $9 P1i- @%B (I3Y)
3i*ente ). Gera-de5, B2 SC!A 2#0 (E3A)
1(A@
Antonio$ L.
%elate rulin# to: ;iability of principal to
thirdpersons@principal ratified the unauthori$ed
acts of his a#ent@full and complete &nowled#e by
ratifier of material facts essential
+AC,-.
3/ Cement Cororation acG&ired from
Bana#a% -#ale 'ining Association a )lacer
=ease Contract covering 2 mining claimsE t#is
incl&ded t#ree arcels of land o%ned by
)etitioners Micente$ Bernabe and Angeles.
,#e Cororation$ several occasions$
informed t#e etitioners$ of its acG&isition
aforesaid lacer mining claims %#ic# incl&ded
t#e areas occ&ied by t#em. /t also reG&ested
t#em to allo% its %orkers to enter t#e area in
G&estion for exloration$ develoment and
extraction of minerals t#erefrom$ romising to
ay t#em reasonable amo&nts as damages$
b&t t#ey ref&sed to allo% entry of t#e
CororationFs reresentatives.
3ence$ t#e Cororation filed a comlaint
for inj&nction and damages against etitioners.
,C iss&ed a %rit of inj&ction and named
Commissioners to cond&ct a s&rvey and lan
on t#e s&ggested relocation of t#e bo&ndaries
of t#e CororationFs claim.
-&bseG&ently$ t#e resective co&nsels
conferred among t#emselves t#e ossibility of
terminating t#e case by comromise. +or t#is
&rose$ t#ey exec&ted and s&bmitted for
co&rt aroval a Comromise Agreement
%#ic# contains.
!. <hat the plaintiff is willin# to buy the
properties sub)ect of liti#ation, and the
defendants are willin# to sell their respective
properties6
5. <hat this 9onorable Court authori$es the
plaintiff and the defendants to appoint their
respective commissioners, that is, one for the
plaintiff and one for each defendant6
,C aroved t#e Comromise Agreement
and enjoined t#e arties to comly %it# its
terms and conditions. ,#e Commissioners t#&s
aointed s&bmitted a Consolidated 4eort
regarding t#e recommended &nit rices %#ic#
t#e co&rt aroved.
3o%ever$ Atty. Ment&ra$ one of
CororationFs co&nsel$ filed a manifestation to
t#e co&rt t#at t#e Board of 7irectors did not
arove of t#e Comromise Agreement.
)etitioner Bernabe asked t#e co&rt to
ignore Atty. Ment&raFs manifestation$ saying
t#at
- %#en t#e co&rt inG&ired from t#e
arties and t#eir resective la%yers if
all t#e attorneys aearing in t#e case
#ad been d&ly a&t#ori6ed andLor
emo%ered to enter into a comromise
agreement$ and t#e t#ree la%yers for
t#e Cororation ans%ered in t#e
affirmative
- it %as Atty. Ment&ra #imself %#o
reared t#e draft of t#e Comromise
Agreement in #is o%n #and%riting and
%as t#e first to sign t#e agreement
- one of t#e t#ree la%yers for t#e
laintiff$ Atty. +lorentino M. Cardenas$
%#o also signed t#e Comromise
Agreement$ %as t#e official
reresentative and exec&tive official$ of
cororation
- t#at t#e nomination laintiff of 'r.
=arry 5. 'arG&e6 as its Commissioner
&rs&ant to t#e Comromise
Agreement$ %as a clear indication of
t#e CororationKs tacit aroval of t#e
terms and conditions of t#e
Comromise Agreement$ if not an
imlied ratification of Atty. Ment&raKs
acts.
2n '4$ t#e ,C declared t#e Agreement
contrary to la%.
/--89. :2; t#e Comromise Agreement is valid
39=7. N( +irst$ t#e la%yers %#o entered t#e
Comromise Agreement #ave no -)A in violation of
Art. 1!A! CC and 4&le 1@!$ -ec. 2@ 42C.
Contrary to t#e etitionersF contention$ Atty.
Cardenas$ as administrative manager of t#e
Cororation$ did not tacitly ratify t#e agreement
entered into by t#e arties as #e #as no a&t#ority
to do so.
10"
"o rati'7 t1e unaut1ori5ed a*t o' an a4ent
and ma:e it 8indin4 on t1e *or.oration, it
mut 8e 1o?n t1at t1e 4o)ernin4 8od7 or
o''i*er aut1ori5ed to rati'7 1ad 'u-- and
*om.-ete :no?-ed4e o' a-- t1e materia- 'a*t
*onne*ted to t1e trana*tion. ,#e etitioner
failed to do t#is.
!ati'i*ation 87 a *or.oration *annot 8e made
87 t1e ame .eron ?1o ?ron4'u--7 aumed
t1e .o?er to ma:e t1e *ontra*t.
2ani-a Par: Cemeter7 ). Lin an4an (6ESSA)
+acts.
-ometime in 1(!D$ +lorencia Bal&yot offered
Atty. )edro =. =insangan a lot called 5arden
-tate at t#e 3oly Cross 'emorial )ark o%ned
by '')C/
According to Bal&yot$ a former o%ner of a
memorial lot %as no longer interested in
acG&iring t#e lot and #ad oted to sell #is
rig#ts s&bject to reimb&rsement of t#e
amo&nts #e already aid.
,#e contract %as for )(C$000.00.
Bal&yot reass&red Atty. =insangan t#at once
reimb&rsement is made to t#e former b&yer$
t#e contract %o&ld be transferred to #im.
Atty. =insangan agreed and gave Bal&yot
)@C$2(C.00 reresenting t#e amo&nt to be
reimb&rsed to t#e original b&yer and to
comlete t#e do%n ayment to '')C/.
Bal&yot iss&ed #and%ritten and tye%ritten
receits for t#ese ayments.
-ometime in 'arc# 1(!C$ Bal&yot informed
Atty. =insangan t#at #e %o&ld be iss&ed a ne%
contract covering t#e s&bject lot in t#e name of
t#e latter.
Atty. =insangan rotested$ b&t Bal&yot ass&red
#im t#at #e %o&ld still be aying t#e old rice
of )(C$000.00 %it# )1($!@!.00 credited as f&ll
do%n ayment leaving a balance of abo&t
)AC$000.00.
-&bseG&ently$ on ! Aril 1(!C$ Bal&yot bro&g#t
an 2ffer to )&rc#ase a lot for t#e amo&nt of
)1($!@!.00.
Contract #as a listed rice of )1@2$2C0.00.
Atty. =insangan objected to t#e ne% contract
rice$ as t#e same %as not t#e amo&nt
revio&sly agreed &on.
,o convince Atty. =insangan$ Bal&yot exec&ted
a doc&ment confirming t#at %#ile t#e contract
rice is )1@2$2C0.00$ Atty. =insangan %o&ld
ay only t#e original rice of )(C$000.00
Bal&yot %rote Atty =insangan saying t#at %#ile
t#e offer to &rc#ase &nder t#e contract states
t#at t#e total rice of )1@2$2C0.00$ t#e
&ndertaking is to ay only t#e total s&m of
)(C$000.00 &nder t#e old rice
By virt&e of t#is letter$ Atty. =insangan signed
t#e contract
As reG&ested by Bal&yot$ Atty. =insangan
iss&ed 12 ostdated c#ecks of )1$!00.00 eac#
in favor of '')C/.
,#e next year$ Atty. =insangan again iss&ed 12
ostdated c#ecks in favor of '')C/.
Bal&yot verbally advised Atty. =insangan t#at
t#e contract %as cancelled for reasons t#e
latter co&ld not exlain$ and resented to #im
anot#er roosal for t#e &rc#ase of an
eG&ivalent roerty.
3e ref&sed t#e ne% roosal and insisted t#at
Bal&yot and '')C/ #onor t#eir &ndertaking.
+or t#e alleged fail&re of '')C/ and Bal&yot to
conform to t#eir agreement$ Atty. =insangan
filed a Comlaint for Breac# of Contract and
7amages against t#e former.
,C. '')C/ and Bal&yot jointly and severally
liable Bal&yot %as an agent of '')C/ and
t#at t#e latter %as estoed from denying t#is
agency$ #aving received and enc#ased t#e
c#ecks iss&ed by Atty. =insangan and given to
it by Bal&yot. :#ile '')C/ insisted t#at
Bal&yot %as a&t#ori6ed to receive only t#e
do%n ayment$ it allo%ed #er to contin&e to
receive ostdated c#ecks from Atty. =insangan$
%#ic# it in t&rn consistently encas#ed.
CA. affirmed 4,C &#eld t#e trial co&rtKs
finding t#at Bal&yot %as an agent of '')C/ at
t#e time t#e dis&ted contract %as entered
into$ #aving reresented '')C/Ks interest and
acting on its be#alf in t#e dealings %it# clients
and c&stomersE if an agent misreresents to a
&rc#aser and t#e rincial accets t#e
benefits of s&c# misreresentation$ #e cannot
at t#e same time deny resonsibility for s&c#
misreresentation
/ss&e.
1. :2; ''C/ is liable
2. :2; t#ere is ratification
@. :2; t#e contract %as validly entered into by
''C/ and Atty =insangan
3eld. 1. ;2. By t#e contract of agency$ a erson
binds #imself to render some service or to do
somet#ing in reresentation or on be#alf of
anot#er$ %it# t#e consent or a&t#ority of t#e latter.
,#&s$ t#e elements of agency are 0i1 consent$
exress or imlied$ of t#e arties to establis# t#e
relations#iE 0ii1 t#e object is t#e exec&tion of a
j&ridical act in relation to a t#ird ersonE 0iii1 t#e
agent acts as a reresentative and not for #imselfE
and 0iv1 t#e agent acts %it#in t#e scoe of #is
a&t#ority.
As roerly fo&nd bot# by t#e trial co&rt and t#e
Co&rt of Aeals$ Bal&yot %as an agent of '')C/$
#aving reresented t#e interest of t#e latter$ and
#aving been allo%ed by '')C/ to reresent it in
#er dealings %it# its clientsLrosective b&yers.
10A
;evert#eless$ contrary to t#e findings of t#e Co&rt
of Aeals$ 22PCI *annot 8e 8ound 87 t1e
*ontra*t .ro*ured 87 Att7. Linan4an and
o-i*ited 87 /a-u7ot.
Bal&yot %as a&t#ori6ed to solicit and remit to
'')C/ offers to &rc#ase interment saces
obtained on forms rovided by '')C/. ,#e terms
of t#e offer to &rc#ase$ t#erefore$ are contained in
s&c# forms and$ %#en signed by t#e b&yer and an
a&t#ori6ed officer of '')C/$ becomes binding on
bot# arties.
,#e 2ffer to )&rc#ase d&ly signed by Atty.
=insangan$ and acceted and validated by '')C/
s#o%ed a total list rice of )1@2$2C0.00. =ike%ise$
it %as clearly stated t#erein t#at I)&rc#aser agrees
t#at #e #as read or #as #ad read to #im t#is
agreement$ t#at #e &nderstands its terms and
conditions$ and t#at t#ere are no covenants$
conditions$ %arranties or reresentations ot#er
t#an t#ose contained #erein.I By signing t#e 2ffer
to )&rc#ase$ Atty. =insangan signified t#at #e
&nderstood its contents. "1at 1e and /a-u7ot
1ad an a4reement di''erent 'rom t1at
*ontained in t1e (''er to Pur*1ae i o' no
moment, and 1ou-d not a''e*t 22PCI, a it
?a o8)iou-7 made outide /a-u7otG
aut1orit7. "o re.eat, /a-u7otG aut1orit7 ?a
-imited on-7 to o-i*itin4 .ur*1aer. S1e 1ad
no aut1orit7 to a-ter t1e term o' t1e ?ritten
*ontra*t .ro)ided 87 22PCI. "1e
do*ument;-etter N*on'irmin4N t1e a4reement
t1at Att7. Linan4an ?ou-d 1a)e to .a7 t1e
o-d .ri*e ?a e0e*uted 87 /a-u7ot a-one.
No?1ere i t1ere an7 indi*ation t1at t1e
ame *ame 'rom 22PCI or an7 o' it o''i*er.
/t is a settled r&le t#at ersons dealing %it# an
agent are bo&nd at t#eir eril$ if t#ey %o&ld #old
t#e rincial liable$ to ascertain not only t#e fact of
agency b&t also t#e nat&re and extent of a&t#ority$
and in case eit#er is controverted$ t#e b&rden of
roof is &on t#em to establis# it. ,#e basis for
agency is reresentation and a erson dealing %it#
an agent is &t &on inG&iry and m&st discover
&on #is eril t#e a&t#ority of t#e agent. /f #e does
not make s&c# an inG&iry$ #e is c#argeable %it#
kno%ledge of t#e agentKs a&t#ority and #is
ignorance of t#at a&t#ority %ill not be any exc&se.
,#e ignorance of a erson dealing %it# an agent as
to t#e scoe of t#e latterKs a&t#ority is no exc&se to
s&c# erson and t#e fa&lt cannot be t#ro%n &on
t#e rincial. A erson dealing %it# an agent
ass&mes t#e risk of lack of a&t#ority in t#e agent.
3e cannot c#arge t#e rincial by relying &on t#e
agentKs ass&mtion of a&t#ority t#at roves to be
&nfo&nded. ,#e .rin*i.a-, on t1e ot1er 1and,
ma7 a*t on t1e .reum.tion t1at t1ird
.eron dea-in4 ?it1 1i a4ent ?i-- not 8e
ne4-i4ent in 'ai-in4 to a*ertain t1e e0tent o'
1i aut1orit7 a ?e-- a t1e e0iten*e o' 1i
a4en*7.
/n t#e instant case$ it #as not been establis#ed t#at
Atty. =insangan even bot#ered to inG&ire %#et#er
Bal&yot %as a&t#ori6ed to agree to terms contrary
to t#ose indicated in t#e %ritten contract$ m&c#
less bind '')C/ by #er commitment %it# resect
to s&c# agreements. 9ven if Bal&yot %as Atty.
=insanganKs friend and kno%n to be an agent of
'')C/$ #er declarations and actions alone are not
s&fficient to establis# t#e fact or extent of #er
a&t#ority. Atty. =insangan as a racticing la%yer
for a relatively long eriod of time %#en #e signed
t#e contract s#o&ld #ave been &t on g&ard %#en
t#eir agreement %as not reflected in t#e contract.
'ore imortantly$ Atty. =insangan s#o&ld #ave
been alerted by t#e fact t#at Bal&yot failed to
effect t#e transfer of rig#ts earlier romised$ and
%as &nable to make good #er %ritten commitment$
nor convince '')C/ to assent t#ereto$ as
evidenced by several attemts to ind&ce #im to
enter into ot#er contracts for a #ig#er
consideration. As roerly ointed o&t by '')C/$
as a la%yer$ a greater degree of ca&tion s#o&ld be
exected of Atty. =insangan esecially in dealings
involving legal doc&ments. 3e did not even bot#er
to ask for official receits of #is ayments$ nor
inG&ire from '')C/ directly to ascertain t#e real
stat&s of t#e contract$ blindly relying on t#e
reresentations of Bal&yot. A la%yer by rofession$
#e kne% %#at #e %as doing %#en #e signed t#e
%ritten contract$ kne% t#e meaning and val&e of
every %ord or #rase &sed in t#e contract$ and
more imortantly$ kne% t#e legal effects %#ic#
said doc&ment rod&ced. 3e is bo&nd to accet
resonsibility for #is negligence.
2. ;2;9. 4atification in agency is t#e adotion or
confirmation by one erson of an act erformed on
#is be#alf by anot#er %it#o&t a&t#ority. ,#e
s&bstance of t#e doctrine is confirmation after
cond&ct$ amo&nting to a s&bstit&te for a rior
a&t#ority. 2rdinarily$ t#e rincial m&st #ave f&ll
kno%ledge at t#e time of ratification of all t#e
material facts and circ&mstances relating to t#e
&na&t#ori6ed act of t#e erson %#o ass&med to act
as agent. ,#&s$ if material facts %ere s&ressed
or &nkno%n$ t#ere can be no valid ratification and
t#is regardless of t#e &rose or lack t#ereof in
concealing s&c# facts and regardless of t#e arties
bet%een %#om t#e G&estion of ratification may
arise. ;evert#eless$ t#is rincile does not aly if
t#e rincialKs ignorance of t#e material facts and
circ&mstances %as %illf&l$ or t#at t#e rincial
c#ooses to act in ignorance of t#e facts. 3o%ever$
in t#e absence of circ&mstances &tting a
reasonably r&dent man on inG&iry$ ratification
cannot be imlied as against t#e rincial %#o is
ignorant of t#e facts.
10!
A er&sal of Bal&yotKs Ans%er reveals t#at t#e real
arrangement bet%een #er and Atty. =insangan %as
for t#e latter to ay a mont#ly installment of
)1$!00.00 %#ereas Bal&yot %as to s#o&lder t#e
co&nterart amo&nt of )1$DCC.00 to meet t#e
)@$2CC.00 mont#ly installments as indicated in t#e
contract. ,#&s$ every time an installment falls d&e$
ayment %as to be made t#ro&g# a c#eck from
Atty. =insangan for )1$!00.00 and a cas#
comonent of )1$DCC.00 from Bal&yot. 3o%ever$ it
aears t#at %#ile Atty. =insangan iss&ed t#e ost?
dated c#ecks$ Bal&yot failed to come & %it# #er
art of t#e bargain. ,#is %as s&orted by
Bal&yotKs statements in #er letter to 'r. Clyde
:illiams$ *r.$ -ales 'anager of '')C/$ t%o days
after s#e received t#e coy of t#e Comlaint. /n t#e
letter$ s#e admitted t#at s#e %as remiss in #er
d&ties %#en s#e consented to Atty. =insanganKs
roosal t#at #e %ill ay t#e old rice %#ile t#e
difference %ill be s#o&ldered by #er. -#e like%ise
admitted t#at t#e contract s&ffered arrearages
beca&se %#ile Atty. =insangan iss&ed t#e agreed
c#ecks$ s#e %as &nable to give #er s#are of
)1$DCC.00 d&e to #er o%n financial diffic&lties.
Bal&yot even asked for comassion from '')C/ for
t#e error s#e committed.
Atty. =insangan failed to s#o% t#at '')C/ #ad
kno%ledge of t#e arrangement. As far as '')C/ is
concerned$ t#e contract rice %as )1@2$2C0.00$ as
stated in t#e 2ffer to )&rc#ase signed by Atty.
=insangan and '')C/Ks a&t#ori6ed officer. ,#e
do%n ayment of )1($!@!.00 given by Atty.
=insangan %as in accordance %it# t#e contract as
%ell. )ayments of )@$2@C.00 for at least t%o
installments %ere like%ise in accord %it# t#e
contract$ albeit made t#ro&g# a c#eck and artly in
cas#. /n vie% of Bal&yotKs fail&re to give #er s#are
in t#e ayment$ '')C/ received only )1$!00.00
c#ecks$ %#ic# %ere clearly ins&fficient ayment. /n
fact$ Atty. =insangan %o&ld #ave inc&rred
arrearages t#at co&ld #ave ca&sed t#e earlier
cancellation of t#e contract$ if not for '')C/Ks
alication of some of t#e c#ecks to #is acco&nt.
3o%ever$ t#e c#ecks alone %ere not s&fficient to
cover #is obligations.
/f '')C/ %as a%are of t#e arrangement$ it %o&ld
#ave ref&sed t#e latterKs c#eck ayments for being
ins&fficient. /t %o&ld not #ave alied to #is
acco&nt t#e )1$!00.00 c#ecks. 'oreover$ t#e fact
t#at Bal&yot #ad to ractically exlain to '')C/Ks
-ales 'anager t#e details of #er IarrangementI
%it# Atty. =insangan and admit to #aving made an
error in entering s&c# arrangement confirm t#at
''C)/ #ad no kno%ledge of t#e said agreement. /t
%as only %#en Bal&yot filed #er Ans%er t#at s#e
claimed t#at ''C)/ %as f&lly a%are of t#e
agreement.
"1e a*t o' t1e a4ent 8e7ond t1e *o.e o' 1i
aut1orit7 do not 8ind t1e .rin*i.a- un-e t1e
-atter rati'ie t1e ame. /t also bears em#asis
t#at ?1en t1e t1ird .eron :no? t1at t1e
a4ent ?a a*tin4 8e7ond 1i .o?er or
aut1orit7, t1e .rin*i.a- *annot 8e 1e-d -ia8-e
'or t1e a*t o' t1e a4ent. /f t#e said t#ird erson
%as a%are of s&c# limits of a&t#ority$ #e is to
blame and is not entitled to recover damages from
t#e agent$ &nless t#e latter &ndertook to sec&re
t#e rincialKs ratification.
@. >9-. ,#e contract %as validly entered into bot#
by '')C/ and Atty. =insangan. By affixing #is
signat&re in t#e contract$ Atty. =insangan assented
to t#e terms and conditions t#ereof. :#en Atty.
=insangan inc&rred delinG&encies in ayment$
''C)/ merely enforced its rig#ts &nder t#e said
contract by canceling t#e same.
Being a%are of t#e limits of Bal&yotKs a&t#ority$
Atty. =insangan cannot insist on %#at #e claims to
be t#e terms of contract. ,#e agreement$ insofar
as t#e )(C$000.00 contract rice is concerned$ is
void and cannot be enforced as against '')C/.
;eit#er can #e #old Bal&yot liable for damages
&nder t#e same contract$ since t#ere is no
evidence s#o%ing t#at Bal&yot &ndertook to sec&re
'')C/Ks ratification. At best$ t#e IagreementI
bet%een Bal&yot and Atty. =insangan bo&nd only
t#e t%o of t#em. As far as '')C/ is concerned$ it
bo&nd itself to sell its interment sace to Atty.
=insangan for )1@2$2C0.00 &nder contract$ and #ad
in fact received several ayments in accordance
%it# t#e same contract. /f t#e contract %as
cancelled d&e to arrearages$ Atty. =insanganKs
reco&rse s#o&ld only be against Bal&yot %#o
ersonally &ndertook to ay t#e difference
bet%een t#e tr&e contract rice of )1@2$2C0.00
and t#e original roosed rice of )(C$000.00. ,o
s&rmise t#at Bal&yot %as acting on be#alf of
'')C/ %#en s#e romised to s#o&lder t#e said
difference %o&ld be to concl&de t#at '')C/
&ndertook to ay itself t#e difference$ a concl&sion
t#at is very illogical$ if not antit#etical to its
b&siness interests.
/. Arti*-e #9## (!EK)
Article 1(11. 9ven %#en t#e agent #as exceeded
#is a&t#ority$ t#e rincial is solidarily liable %it#
t#e agent if t#e former allo%ed t#e latter to act as
t#o&g# #e #ad f&ll o%ers.
Lutan ). CA, 2%% SC!A %%@ (6ESSA)
+acts.
=&stan is t#e registered o%ner of a arcel of
land
etitioner leased t#e roerty to )arangan for
a term of 10 years and an ann&al rent of
)1$000.00
7&ring t#e eriod of lease$ )arangan %as
reg&larly extending loans in small amo&nts to
10(
etitioner to defray #er daily exenses and to
finance #er da&g#terKs ed&cation
etitioner exec&ted an -)A in favor of
)arangan to sec&re an agric&lt&ral loan from
);B %it# t#e aforesaid lot as collateral
a second -)A %as exec&ted by etitioner$ by
virt&e of %#ic#$ )arangan %as able to sec&re D
additional loans
t#e last t#ree loans %ere %it#o&t t#e
kno%ledge of #erein etitioner and all t#e
roceeds t#erefrom %ere &sed by )arangan for
#is o%n benefit 0b&t t#ese enc&mbrances %ere
d&ly annotated on t#e certificate of title1
etitioner signed a 7eed of *acto de %etro -ale
in favor of )arangan %#ic# %as s&erseded by
t#e 7eed of 7efinite -ale

%#ic# etitioner
signed &on )aranganKs reresentation t#at
t#e same merely evidences t#e loans extended
by #im &nto t#e former
+or fear t#at #er roerty mig#t be rej&diced
by t#e contin&ed borro%ing of )arangan$
etitioner demanded t#e ret&rn of #er
certificate of title.
/nstead of comlying %it# t#e reG&est$
)arangan asserted #is rig#ts over t#e roerty
%#ic# allegedly #ad become #is by virt&e of
t#e aforementioned 7eed of 7efinite -ale.
Y8nder said doc&ment$ etitioner conveyed t#e
s&bject roerty and all t#e imrovements
t#ereon &nto )arangan absol&tely for and in
consideration of t#e s&m of -eventy +ive
,#o&sand 0)AC$000.001 )esosZ
Aggrieved$ etitioner filed an action for
cancellation of liens$ G&ieting of title$ recovery
of ossession and damages against )arangan
and );B
!"C> 7eeds of -ale 0%it# acto de retro and
absol&te1 are n&ll and void eG&itable
mortgage
CA> reversed
/ss&es.
A. :2; t#e 7eed of 7efinite -ale is in reality an
eG&itable mortgage
/. 9(N .etitionerG .ro.ert7 i -ia8-e to PN/
'or t1e -oan *ontra*ted 87 Paran4an 87
)irtue o' t1e .e*ia- .o?er o' attorne7
3eld.
1. YES. A contract is erfected by mere
consent. 'ore artic&larly$ a contract of sale is
erfected at t#e moment t#ere is a meeting of
minds &on t#e t#ing %#ic# is t#e object of t#e
contract and &on t#e rice.

,#is meeting of
t#e minds seaks of t#e intent of t#e arties in
entering into t#e contract resecting t#e
s&bject matter and t#e consideration t#ereof. /f
t#e %ords of t#e contract aear to be contrary
to t#e evident intention of t#e arties$ t#e
latter s#all revail over t#e former.

/n t#e case
at benc#$ t#e evidence is s&fficient to %arrant
a finding t#at etitioner and )arangan merely
intended to consolidate t#e formerKs
indebtedness to t#e latter in a single
instr&ment and to sec&re t#e same %it# t#e
s&bject roerty. 9ven %#en a doc&ment
aears on its face to be a sale$ t#e o%ner of
t#e roerty may rove t#at t#e contract is
really a loan %it# mortgage by raising as an
iss&e t#e fact t#at t#e doc&ment does not
exress t#e tr&e intent of t#e arties. /n t#is
case$ arol evidence t#en becomes cometent
and admissible to rove t#at t#e instr&ment
%as in tr&t# and in fact given merely as a
sec&rity for t#e reayment of a loan.
Art. 1"02$ 0"1$ in relation to Art 1"0D rovides
t#at a contract of sale is res&med to be an
eG&itable mortgage in any ot#er case %#ere it
may be fairly inferred t#at t#e real intention of
t#e arties is t#at t#e transaction s#all sec&re
t#e ayment of a debt or t#e erformance of
any ot#er obligation. ,#at t#e case clearly falls
&nder t#is category can be inferred from t#e
circ&mstances s&rro&nding t#e transaction as
#erein set fort#.
)etitioner #ad no kno%ledge t#at t#e
contract s#e signed is a deed of sale.
,#e contents of t#e same %ere not
read nor exlained to #er so t#at s#e
may intelligibly form&late in #er mind
t#e conseG&ences of #er cond&ct and
t#e nat&re of t#e rig#ts s#e %as ceding
in favor of )arangan. )etitioner is
illiterate and #er condition constrained
#er to merely rely on )aranganKs
ass&rance t#at t#e contract only
evidences #er indebtedness to t#e
latter. :#en one of t#e contracting
arties is &nable to read$ or if t#e
contract is in a lang&age not
&nderstood by #im$ and mistake or
fra&d is alleged$ t#e erson enforcing
t#e contract m&st s#o% t#at t#e terms
t#ereof #ave been f&lly exlained to
t#e former. -ettled is t#e r&le t#at
%#ere a arty to a contract is illiterate
or cannot read or cannot &nderstand
t#e lang&age in %#ic# t#e contract is
%ritten$ t#e b&rden is on t#e arty
interested in enforcing t#e contract to
rove t#at t#e terms t#ereof are f&lly
exlained to t#e former in a lang&age
&nderstood by #im.

,#is b&rden #as
not been satisfactorily disc#arged.
2. YES. ,#ird ersons %#o are not arties to a
loan may sec&re t#e latter by ledging or
mortgaging t#eir o%n roerty. -o long as valid
consent %as given$ t#e fact t#at t#e loans %ere
solely for t#e benefit of )arangan %o&ld not
110
invalidate t#e mortgage %it# resect to
etitionerKs roerty. /n consenting t#ereto$
even granting t#at etitioner may not be
ass&ming ersonal liability for t#e debt$ #er
roerty s#all nevert#eless sec&re and resond
for t#e erformance of t#e rincial obligation.
/t is admitted t#at etitioner is t#e o%ner of t#e
arcel of land mortgaged to );B on five 0C1
occasions by virt&e of t#e -ecial )o%ers of
Attorney exec&ted by etitioner in favor of
)arangan. )etitioner arg&es t#at t#e last t#ree
mortgages %ere void for lack of a&t#ority. -#e
totally failed to consider t#at said S.e*ia-
Po?er o' Attorne7 are a *ontinuin4 one
and a8ent a )a-id re)o*ation du-7
'urni1ed to t1e mort4a4ee, t1e ame
*ontinue to 1a)e 'or*e and e''e*t a
a4aint t1ird .eron ?1o 1ad no
:no?-ed4e o' u*1 -a*: o' aut1orit7 as
rovided in Article 1(21 of t#e Civil Code YArt.
1(21. /f t#e agency #as been entr&sted for t#e
&rose of contracting %it# secified ersons$
its revocation s#all not rej&dice t#e latter if
t#ey %ere not given notice t#ereof.Z
,#e -)A by etitioner in favor of )arangan d&ly
a&t#ori6ed t#e latter to reresent and act on
be#alf of t#e former. 3aving done so$ etitioner
clot#ed )arangan %it# a&t#ority to deal %it#
);B on #er be#alf and in t#e absence of any
roof t#at t#e bank #ad kno%ledge t#at t#e
last t#ree loans %ere %it#o&t t#e exress
a&t#ority of etitioner$ it cannot be rej&diced
t#ereby. As far as t#ird ersons are concerned$
an act is deemed to #ave been erformed
%it#in t#e scoe of t#e agentKs a&t#ority if s&c#
is %it#in t#e terms of t#e o%er of attorney as
%ritten even if t#e agent #as in fact exceeded
t#e limits of #is a&t#ority according to t#e
&nderstanding bet%een t#e rincial and t#e
agent. ,#e -)A artic&larly rovides t#at t#e
same is good not only for t#e rincial loan b&t
also for s&bseG&ent commercial$ ind&strial$
agric&lt&ral loan or credit accommodation t#at
t#e attorney?in?fact may obtain and &ntil t#e
o%er of attorney is revoked in a &blic
instr&ment and a coy of %#ic# is f&rnis#ed to
);B. 9ven %#en t#e agent #as exceeded #is
a&t#ority$ t#e rincial is solidarily liable %it#
t#e agent if t#e former allo%ed t#e latter to act
as t#o&g# #e #ad f&ll o%ers 0Article 1(11$
Civil Code1. ,#e mortgage directly and
immediately s&bjects t#e roerty &on %#ic#
it is imosed. ,#e roerty of t#ird ersons
%#ic# #as been exressly mortgaged to
g&arantee an obligation to %#ic# t#e said
ersons are foreign$ is directly and jointly liable
for t#e f&lfillment t#ereofE it is t#erefore
s&bject to exec&tion and sale for t#e &rose
of aying t#e amo&nt of t#e debt for %#ic# it is
liable. 3o%ever$ etitioner #as an
&nG&estionable rig#t to demand roortional
indemnification from )arangan %it# resect to
t#e s&m aid to );B from t#e roceeds of t#e
sale of #er roerty in case t#e same is sold to
satisfy t#e &naid debts.
C. Arti*-e #9#2, #9#@, #9#A (ANGELA)
Art. 1(12. ,#e rincial m&st advance to t#e
agent$ s#o&ld t#e latter so reG&est$ t#e s&ms
necessary for t#e exec&tion of t#e agency.
-#o&ld t#e agent #ave advanced t#em$ t#e
rincial m&st reimb&rse #im t#erefor$ even if t#e
b&siness or &ndertaking %as not s&ccessf&l$
rovided t#e agent is free from all fa&lt.
,#e reimb&rsement s#all incl&de interest on t#e
s&ms advanced$ from t#e day on %#ic# t#e
advance %as made.
(8-i4ation o' .rin*i.a- to t1e a4ent under
t1i Arti*-e>
1. Obli#ation to advance funds. O ,#e agent is
bo&nd by #is accetance to carry o&t t#e
agencyE on t#e ot#er #and$ t#e rincial is
&nder obligation to rovide t#e means %it#
%#ic# it exec&te t#e agency.
/n t#e absence of sti&lation t#at t#e agent
s#all advance t#e necessary f&nds$ t#e
rincial m&st advance to t#e agent t#e s&ms
necessary for t#e exec&tion of t#e agencyE
ot#er%ise$ #e cannot #eld t#e liable for
damages %#ic# #e may inc&rred by t#e latterFs
non?erformance.
2. Obli#ation to reimburse a#ent for funds
advance by latter. 9 An agency is for t#e
rincialFs benefit. /n case t#e agent advanced
t#e s&ms necessary for t#e exec&tion of t#e
agency$ %#et#er in #is o%n initiative or by
sti&lation$ t#e said advances m&st be
reimb&rsed by t#e rincial %it# /;,949-,
from t#e day t#e advance %as made.
7emand is not necessary in order t#at delay on
art of t#e rincial s#all exist.
-&c# obligation is fo&nded on the implied
promise to repay since t#e roer exec&tion of
t#e agency involves an imlied reG&est on art
of t#e rincial to inc&r t#e necessary
exenses.
'oreover$ t#e obligation is NG< affected even if
the underta&in# turns out to be unsuccessful.
Art. 1(1@. ,#e rincial m&st also indemnify t#e
agent for all t#e damages %#ic# t#e exec&tion of
t#e agency may #ave ca&sed t#e latter$ %it#o&t
fa&lt or negligence on #is art. 01A2(1
111
A. Phere dama#es caused by the
eecution of the a#ency O rincial is liable.
C. Phere dama#es is caused by wron#ful acts of
third persons O rincial not liable if #e is not
resonsible for s&c# t#ird ersons.
D. Phere a#ent acted upon his own account O no
obligation to indemnify since no agency exists
in t#e legal sense.
Art. 1(1D. ,#e agent may retain in ledge t#e
t#ings %#ic# are t#e object of t#e agency &ntil t#e
rincial effects t#e reimb&rsement and ays t#e
indemnity set fort# in t#e t%o receding articles.
*i#ht of a#ent to retain in pled#e ob:ect of
a#ency O an examle of a le#al ledge 0i.e.
imosed by la%$ as oosed to contract&al
ledges1.
'A,U*- of a#ent"s ri#ht of lien+
(1 4ig#t -imited to t1e u8=e*t matter of
t#e agency O it is a secific$ not a general lien.
(2 4ig#t reG&ires t#e .oeion$ c&stody$
control or disosing o%er of t#e agent of t#e
s&bject matter.
(3 4ig#t generally on-7 in 'a)or o' a4ent
0not to be extended to a s&b?agent in t#e
absence of ratification by t#e rincial of s&b?
agentFs acts1.
A-8a-ade=o ). P1i-. !e'inin4, A$ P1i- BB%
("(PE)
FAC"S>
Albaladejo y Cia. %as engaged in t#e
b&ying and selling of cora.
Misayan 4efining Co %as engaged in
man&fact&re cocon&t oil.
2n A&g&st 2!$ 1(1!$ t#e laintiff made a
contract %it# t#e Misayan %#erein t#e former
bind itself to sell to t#e latter 0Misayan1 all t#e
Cora it %ill b&y in Albay.
)&rs&ant to t#is agreement t#e laintiff$
d&ring t#e year t#erein contemlated$ bo&g#t
cora extensively for t#e Misayan 4efining Co.
At t#e end of said year bot# arties fo&nd
t#emselves satisfied %it# t#e existing
arrangement$ and t#ey t#erefore contin&ed by
tacit consent to govern t#eir f&t&re relations by
t#e same agreement.
,#is sit&ation affairs remained &ntil *&ly ($
1(20$ %#en t#e Misayan 4efining Co. closed
do%n its factory at 2on$ Ceb& and %it#dre%
from t#e cora market.
:#en t#e contract %as originally made$
Albaladejo y Cia. aarently #ad only one
commercial establis#ment$ i.e.$ t#at at =egasiE
b&t t#e large reG&irements of t#e Misayan
4efining Co. for cora aeared so far to j&stify
t#e extension of t#e laintiffKs b&siness t#at
d&ring t#e co&rse of t#e next t%o or t#ree
years it establis#ed some 20 agencies$ or
s&bagencies$ in vario&s orts and laces of t#e
)rovince of Albay and neig#boring rovinces.
After t#e Misayan 4efining Co. #ad ceased
to b&y cora$ as above stated$ of %#ic# fact t#e
laintiff %as d&ly notified$ t#e s&lies of cora
already &rc#ased by t#e laintiff %ere
grad&ally s#ied o&t and acceted by t#e
Misayan 4efining Co.
/n t#e co&rse of t#e next ! or 10 mont#s
t#e acco&nts bet%een t#e t%o arties %ere
liG&idated.
,#e last acco&nt rendered by t#e Misayan
4efining Co. to t#e laintiff %as for t#e mont#
of Aril$ 1(21$ and it s#o%ed a balance of )2!!
in favor of t#e defendant. 8nder date of *&ne
2C$ 1(21$ t#e laintiff comany addressed a
letter from =egasi to t#e )#iliine 4efining
Co. 0%#ic# #ad no% s&cceeded to t#e rig#ts
and liabilities of t#e Misayan 4efining Co.1$
exressing its aroval of said acco&nt.
/n t#is letter no dissatisfaction %as
exressed by t#e laintiff as to t#e state of
affairs bet%een t#e artiesE b&t abo&t six
%eeks t#ereafter t#e resent action %as
beg&n.
,#e ca&se of action %as #inged from t#e
cla&se in t#e contract %#ic# says t#at Misayan
%as obligated to rovide transortation for t#e
cora collected by t#e laintiff and deosited
for s#iment at vario&s laces. ,o G&ote t#e
allegation.
,#at$ from t#e mont# of -etember$
1(1!$ &ntil t#e mont# of *&ne$ 1(20$
t#e laintiff oort&nely advised t#e
Misayan of t#e stocks t#at t#e former
#ad for s#iment$ and$ from time to
time$ reG&ested t#e Misayan to send
vessels to take & said stocksE b&t t#at
t#e Misayan c&lably and negligently
allo%ed a great n&mber of days to
elase before sending t#e boats for t#e
transortation of t#e cora to 2on$
Ceb&R
,C said t#ereFs no negligence on art of
Misayan in roviding for t#e transortation$
#ence t#ey did not ca&se t#e s#rinkage of t#e
cora.
Co&rt said Misayan %as still liable and t#e
fact t#at it aid an amo&nt of )1C$"10.D1 does
not mean it already aid its liability for t#e
amo&nt %as for anot#er claim.
)laintiff t#en claimed t#at its exense in
maintaining and extending its organi6ation for
t#e &rc#ase of cora in t#e eriod bet%een
*&ly$ 1(20$ to *&ly$ 1(21$ %ere inc&rred at t#e
instance and reG&est of t#e defendant$ or &on
112
any romise of t#e defendant to make t#e
exendit&re good. Co&rt said a caref&l
examination of t#e evidence$ mostly of a
doc&mentary c#aracter$ is$ in o&r oinion$
convincing t#at t#e s&osed liability does not
exist.
)laintiff t#en advanced its contention is
advanced t#at t#e contract bet%een t#e
laintiff and t#e Misayan 4efining Co. created
t#e relation of rincial and agent bet%een t#e
arties$ and t#e reliance is laced &on article
1A2( of t#e Civil Code %#ic# reG&ires t#e
rincial to indemnify t#e agent for damages
inc&rred in carrying o&t t#e agency.
Iue> 9a an a4en*7 re-ation1i.
*reatedO
,e-d> N(.
,#e relation bet%een t#e arties %as not
t#at of rincial and agent in so far as
relates to t#e &rc#ase of cora by t#e
laintiff. /t is tr&e t#at t#e Misayan 4efining
Co. made t#e laintiff one of its
instr&ments for t#e collection of coraE b&t
it is clear t#at in making its &rc#ases from
t#e rod&cers t#e laintiff %as b&ying &on
its o%n acco&nt and t#at %#en it t&rned
over t#e cora to t#e Misayan 4efining Co.$
&rs&ant to t#at agreement$ a second sale
%as effected.
/n aragra# @ of t#e contract it is
declared t#at d&ring t#e contin&ance of
t#is contract t#e Misayan 4efining Co.
%o&ld not aoint any ot#er agent for t#e
&rc#ase of cora in =egasiE and t#is
gives rise indirectly to t#e inference t#at
t#e laintiff %as considered its b&ying
agent.
Co&rt said t#at t#e &se of t#is term in one
cla&se of t#e contract cannot dominate t#e
real nat&re of t#e agreement as revealed in
ot#er cla&ses$ no less t#an in t#e cation of
t#e agreement itself.
/n some of t#e trade letters also t#e
vario&s instr&mentalities &sed by t#e
Misayan 4efining Co. for t#e collection of
cora are soken of as agents.
Co&rt said t#at t#is designation %as
evidently &sed for convenienceE and it is
very clear t#at in its activities as a b&yer
t#e laintiff %as acting &on its o%n
acco&nt and not as agents$ in t#e legal
sense$ of t#e Misayan 4efining Co.
,#e title to all of t#e cora &rc#ased by
t#e laintiff &ndo&btedly remained in it
&ntil it %as delivered by %ay of s&bseG&ent
sale to said comany.
Aealed j&dgment %ill t#erefore be
affirmed

&. Arti*-e #9#B, #9#%, #9#C, #9#$
(2A!K)
Art. 1(1C. /f t%o or more ersons #ave aointed
an agent for a common transaction or &ndertaking$
t#ey s#all be solidarily liable to t#e agent for all t#e
conseG&ences of t#e agency. 01A@11
Art. 1(1". :#en t%o ersons contract %it# regard
to t#e same t#ing$ one of t#em %it# t#e agent and
t#e ot#er %it# t#e rincial$ and t#e t%o contracts
are incomatible %it# eac# ot#er$ t#at of rior date
s#all be referred$ %it#o&t rej&dice to t#e
rovisions of Article 1CDD. 0n1
Art. 1(1A. /n t#e case referred to in t#e receding
article$ if t#e agent #as acted in good fait#$ t#e
rincial s#all be liable in damages to t#e t#ird
erson %#ose contract m&st be rejected. /f t#e
agent acted in bad fait#$ #e alone s#all be
resonsible. 0n1
Art. 1(1!. ,#e rincial is not liable for t#e
exenses inc&rred by t#e agent in t#e follo%ing
cases.
011 /f t#e agent acted in contravention of t#e
rincialKs instr&ctions$ &nless t#e latter s#o&ld
%is# to avail #imself of t#e benefits derived from
t#e contractE
021 :#en t#e exenses %ere d&e to t#e fa&lt of t#e
agentE
0@1 :#en t#e agent inc&rred t#em %it# kno%ledge
t#at an &nfavorable res&lt %o&ld ens&e$ if t#e
rincial %as not a%are t#ereofE
0D1 :#en it %as sti&lated t#at t#e exenses %o&ld
be borne by t#e agent$ or t#at t#e latter %o&ld be
allo%ed only a certain s&m.
&e Catro ). CA, @$A SC!A %0C (I3Y)
Sta. !omana ). Im.erio, #B SC!A %2B (I3Y)
I3. 2ode o' E0tin4ui1ment
A. Arti*-e #9#9, #920 (I3Y)
Art. 1(1(. Agency is exting&is#ed.
011 By its revocationE
021 By t#e %it#dra%al of t#e agentE
0@1 By t#e deat#$ civil interdiction$ insanity or
insolvency of t#e rincial or of t#e agentE
0D1 By t#e dissol&tion of t#e firm or cororation
%#ic# entr&sted or acceted t#e agencyE
0C1 By t#e accomlis#ment of t#e object or &rose
of t#e agencyE
0"1 By t#e exiration of t#e eriod for %#ic# t#e
agency %as constit&ted. 01A@2a1
Art. 1(20. ,#e rincial may revoke t#e agency at
%ill$ and comel t#e agent to ret&rn t#e doc&ment
evidencing t#e agency. -&c# revocation may be
exress or imlied.
Pere5 ). PN/, #C SC!A $@@ (I3Y)
11@
/i*o- Sa)in4 and Loan Ao*. ) CA (GEN)
'arc# @1$ 1(!(
'elencio?3errera$ *.
FAC"S> *&an de *es&s %as t#e o%ner of a arcel of
land in ;aga City. 3e exec&ted a -ecial )o%er of
Attorney in favor of #is son$ *ose de *es&s.
I,o negotiate$ mortgage my real roerty in any
bank eit#er rivate or &blic entity referably in
t#e Bicol -avings Bank$ ;aga City$ in any amo&nt
t#at may be agreed &on bet%een t#e bank and
my attorney?in?fact.I
*ose de *es&s obtained a loan of )20$000 from
etitioner bank. ,o sec&re ayment$ #e exec&ted a
deed of mortgage on t#e real roerty referred to
in t#e -ecial )o%er of Attorney. ,#en$ *&an de
*es&s died.
*ose failed to ay t#e loan. 3ence t#e bank
extraj&dicially foreclosed t#e mortgage. /n t#e
s&bseG&ent &blic a&ction$ t#e mortgaged roerty
%as sold to t#e bank as t#e #ig#est bidder to
%#om a )rovisional Certificate of -ale %as iss&ed.
)rivate resondents failed to redeem t#e roerty
%it#in one year from t#e date of t#e registration of
t#e )rovisional Certificate of -ale. 3ence$ a 7efinite
Certificate of -ale %as iss&ed in favor of t#e bank.
,#ey negotiated %it# t#e bank for t#e re&rc#ase
of t#e roerty. B&t no agreement %as reac#ed.
,#e bank s&bseG&ently sold t#e roerties to t#ird
arties.
)rivate resondents filed a Comlaint %it# t#e C+/
of ;aga City for t#e ann&lment of t#e foreclos&re
sale or for t#e re&rc#ase by t#em of t#e roerty.
/t dismissed t#e case$ r&ling t#at t#e title of t#e
bank over t#e mortgaged roerty #ad become
absol&te &on t#e iss&ance and registration of t#e
said deed in its favor.
CA reversed t#e r&ling of t#e C+/. /t alied Article
1!A( and stated t#at since t#e secial o%er to
mortgage granted to *ose de *es&s did not incl&de
t#e o%er to sell$ t#e foreclos&re roceedings and
a&ction sale #eld %ere n&ll and void beca&se t#e
-ecial )o%er of Attorney given by *&an de *es&s to
*ose de *es&s %as merely to mortgage #is roerty$
and not to extraj&dicially foreclose t#e mortgage
and sell t#e mortgaged roerty in t#e said
extraj&dicial foreclos&re. ,#e bank s#o&ld #ave
resorted to j&dicial foreclos&re.
ISSUE> :2; t#e agent?son exceeded t#e scoe of
#is a&t#ority in agreeing to a sti&lation in t#e
mortgage deed t#at etitioner bank co&ld
extraj&dicially foreclose t#e mortgaged roerty.
,EL&> ;2. ,#e sale roscribed by a secial o%er
to mortgage &nder Article 1!A( is a vol&ntary and
indeendent contract$ and not an a&ction sale
res&lting from extraj&dicial foreclos&re$ %#ic# is
reciitated by t#e defa&lt of a mortgagor. Absent
t#at defa&lt$ no foreclos&re res&lts. ,#e sti&lation
granting an a&t#ority to extraj&dicially foreclose a
mortgage is an ancillary sti&lation s&orted by
t#e same ca&se or consideration for t#e mortgage
and forms an essential or insearable art of t#at
bilateral agreement
,#e o%er to foreclose is not an ordinary agency
t#at contemlates excl&sively t#e reresentation of
t#e rincial by t#e agent b&t is rimarily an
a&t#ority conferred &on t#e mortgagee for t#e
latterKs o%n rotection. ,#at o%er s&rvives t#e
deat# of t#e mortgagor.
,#e rig#t of t#e mortgagee bank to extraj&dicially
foreclose t#e mortgage after t#e deat# of t#e
mortgagor *&an de *es&s$ acting t#ro&g# #is
attorney?in?fact$ *ose de *es&s$ did not deend on
t#e a&t#ori6ation in t#e deed of mortgage
exec&ted by t#e latter. ,#at rig#t existed
indeendently of said sti&lation and is clearly
recogni6ed in -ection A$ 4&le !" of t#e 4&les of
Co&rt$ %#ic# grants to a mortgagee t#ree remedies
t#at can be alternatively &rs&ed in case t#e
mortgagor dies$ to %it. 011 to %aive t#e mortgage
and claim t#e entire debt from t#e estate of t#e
mortgagor as an ordinary claimE 021 to foreclose
t#e mortgage j&dicially and rove any deficiency as
an ordinary claimE and 0@1 to rely on t#e mortgage
excl&sively$ foreclosing t#e same at any time
before it is barred by rescrition$ %it#o&t rig#t to
file a claim for any deficiency.
/t matters not t#at t#e a&t#ority to extraj&dicially
foreclose %as granted by an attorney?in?fact and
not by t#e mortgagor ersonally. ,#e sti&lation in
t#at regard$ alt#o&g# ancillary$ forms an essential
art of t#e mortgage contract and is insearable
t#erefrom. ;o creditor %ill agree to enter into a
mortgage contract %it#o&t t#at sti&lation
intended for its rotection.
/arretto ). Santa 2arina, 20 P1i- AA0 (2AI)
&io-oa ). CA, #@0 SC!A @B0 F !(G
&anon ). /rimo, AA P1i- #@@, u.ra
97-ie ). 2arine Nationa- /an:, A2 P1i- #@@ F
"(FF
Se)i--a ). CA, #%0 SC!A #C#, u.ra
3a-en5ue-a ). CA, #90 SC!A # F !EG
F-orentino ). Sandi4an8a7an, 202 SC!A @09
FEA!LA
C2S Lo44in4 ). CA, 2## SC!A @CA, u.ra
3a-era ). 3e-a*o, B# P1i- %9B F 6ANCES
'arc# 1@$ 1(2!
*. Milla?4eal
11D
+acts. )laintiff aointed defendant as #is
attorney?in?fact %it# a&t#ority to manage #is
roerty consisting of &s&fr&ct of real roerty in
'anila. /n t#e liG&idation of t#e acco&nts made my
defendant$ laintiff %as revealed to o%e defendant
)1100. 'is&nderstanding arose bet%een t#em$
t#&s t#e defendant bro&g#t s&it against t#e
laintiff. *&dgment %as rendered in favor of
defendant. ,#e s#eriff t#en levied &on t#e
laintiffKs rig#t of &s&fr&ct$ sold it at &blic a&ction
and adj&dicated it to t#e defendant in ayment of
all of #is claim.
)laintiff sold #is rig#t of redemtion to a erson b&t
recovered t#e same after some time. After %#ic#$
#is rig#t of redemtion %as sold by t#e s#eriff at a
&blic a&ction to Mallejo d&e to j&dgment rendered
against laintiff in anot#er civil case. Mallejo t#en
sold t#is rig#t to defendant Melasco. )laintiff t#en
filed a comlaint against Melasco alleging t#at t#e
sale of t#e rig#t to redemtion to Melasco %as n&ll
and void since Melasco %as still #is agent$ t#ere
being no exress ren&nciation.
4&ling. C+/ O dismissed comlaintE no rig#t of
action.
/ss&e. :2; t#e agency %as terminated desite
lack of exress ren&nciation Y>9-b
39=7. :#en t#e agent filed a comlaint against #is
rincial for recovery of a s&m of money arising
from t#e liG&idation of t#e acco&nts bet%een t#em
in connection %it# t#e agency$ +ederico Malera
co&ld not #ave &nderstood ot#er%ise t#an t#at
'ig&el Melasco reno&nced t#e agencyE beca&se #is
act %as more exressive t#an %ords and co&ld not
#ave ca&sed any do&bt.
,#e fact t#at an agent instit&tes an action against
#is rincial for t#e recovery of t#e balance in #is
favor res&lting from t#e liG&idation of t#e acco&nts
bet%een t#em arising from t#e agency$ and
renders and final acco&nt of #is oerations$ is
eG&ivalent to an exress ren&nciation of t#e
agency$ and terminates t#e j&ridical relation
bet%een t#em.
7isosition. *&dgment aealed from affirmed.
/. Arti*-e #92#, #922, #92@ P ALAIN
Art. 1(21. /f t#e agency #as been entr&sted for t#e
&rose of contracting %it# secified ersons$ its
revocation s#all not rej&dice t#e latter if t#ey
%ere not given notice t#ereof. 01A@D1
Art. 1(22. /f t#e agent #ad general o%ers$
revocation of t#e agency does not rej&dice t#ird
ersons %#o acted in good fait# and %it#o&t
kno%ledge of t#e revocation. ;otice of t#e
revocation in a ne%saer of general circ&lation is
a s&fficient %arning to t#ird ersons. 0n1
Art. 1(2@. ,#e aointment of a ne% agent for t#e
same b&siness or transaction revokes t#e revio&s
agency from t#e day on %#ic# notice t#ereof %as
given to t#e former agent$ %it#o&t rej&dice to t#e
rovisions of t#e t%o receding articles.
9ffect of revocation in relation to t#ird ersons.
1. A#ent authori$ed to contract with specified
persons 3!>5!4 H ,#e reason for t#e la% is
obvio&s. -ince t#e t#ird ersons #ave been
made to believe by t#e rincial t#at t#e agent
is a&t#ori6ed to deal %it# t#em$ t#ey #ave a
rig#t to res&me t#at t#e reresentation
contin&es to exist in t#e absence of notification
by t#e rincial. 2f co&rse$ notice is not
reG&ired if t#e t#ird ersons already kno% of
t#e revocation.
2. A#ent authori$ed to contract with public in
#eneral O /n case t#e agent #as general o%ers
0as %#en t#e agent #as been aointed to
manage a b&siness1$ innocent t#ird ersons
dealing %it# t#e agent %ill not be rej&diced b
t#e revocation before t#ey #ad kno%ledge
t#ereof. /n t#is case$ #o%ever$ t#e fact t#at t#e
revocation %as advertised in a ne%saer of
general circ&lation %o&ld be s&fficient %arning
to t#ird ersons.
8nder Article 1(21$ t#e notice of revocation m&st
be ersonalE &nder Article 1(22$ it may be
ersonal.
4evocation by aointment of ne% agent.
1. ,mplied revocation of previous a#ency. O
,#ere is imlied revocation of t#e revio&s
agency %#en t#e rincial aoints a ne%
agent for t#e same b&siness or transaction
rovided t#ere is no incomatibility. B&t t#e
revocation does not become effective as
bet%een t#e rincial and t#e agent &ntil it is
in some %ay comm&nicated to t#e latter.
,#ere is no imlied revocation %#ere t#e
aointment of anot#er agent is not
incomatible %it# t#e contin&ation of a like
a&t#ority in t#e first agent$ or t#e first agent is
not given notice of t#e aointment of t#e ne%
agent.
2. "ubstitution of counsel of record. O ;o
s&bstit&tion of co&nsel of record is allo%ed
&nless t#e follo%ing essential reG&isites of a
valid s&bstit&tion of co&nsel conc&r.
a. ,#ere m&st be a %ritten reG&est for
s&bstit&tionE
b. /t m&st be filed %it# t#e %ritten
consent of t#e clientE
c. /t m&st be %it# t#e %ritten consent
of t#e attorney to be s&bstit&tedE and
11C
d. /n case$ t#e consent of t#e attorney
to be s&bstit&ted cannot be obtained$
t#ere m&st be at least a roof of
notice$t#at t#e motion for s&bstit&tion
%as served on #im in t#e manner
rescribed by t#e 4&les of Co&rt.
Lutan ). CA, 2%% SC!A %$@, u.ra
!ammani ). CA, #9% SC!A C@# P ALAIN
Centra- Suret7 ) ,od4e (6ESSA)
+acts.
)rior to *an&ary 1C$ 1(CD$ lots #ad been sold by
C. ;. 3odges to Micente '. =ayson$ for t#e s&m
of )D@$000.(0$ ayable on installments.
As of *an&ary 1C$ 1(CD$ t#e o&tstanding
balance of =aysonKs debt$ after ded&cting t#e
installments aid by #im rior t#ereto$
amo&nted to )1C$C1".00.
/n order t#at #e co&ld &se said lots as sec&rity
for a loan #e intended to aly from a bank$
=ayson ers&aded 3odges to exec&te in #is
favor a deed of absol&te sale over t#e
roerties$ %it# t#e &nderstanding t#at #e
%o&ld &t & a s&rety bond to g&arantee t#e
ayment of said balance.
Accordingly$ =ayson exec&ted$ in favor of
3odges$ a romissory note for )1C$C1".00$ %it#
interest t#ereon at t#e rate of 1N er mont#$
and t#e s&m of )1$CC1."0$ for attorneyKs fees
and costs$ in case of defa&lt in t#e ayment of
t#e rincial or interest of said note.
,o g&arantee t#e same$ on *an&ary 2@$ 1(CD$
t#e etitioner t#ro&g# t#e manager of its
branc# office in /loilo$ 'rs. 4osita 'esa$
exec&ted in favor of 3odges t#e s&rety bond$
%#ic# %as good for 12 mont#s from t#e date
t#ereof.
:#en =ayson defa&lted in t#e disc#arge of #is
aforesaid obligation$ 3odges demanded
ayment from t#e etitioner$ %#ic#$ desite
reeated extensions of time granted t#ereto$
at its reG&est$ failed to #onor its commitments
&nder t#e s&rety bond.
2n 2ctober 2D$ 1(CC$ 3odges commenced$ t#e
resent action against =ayson and etitioner
#erein$ to recover from t#em$ jointly and
severally$ t#e s&ms of )1A$!2".0!$
reresenting t#e rincial and interest d&e &
to said date$ and )1$CC1."0$ as attorneyKs fees.
3aving failed to file its ans%er %it#in t#e
reglementary eriod$ t#e etitioner %as$ on
*an&ary 1!$ 1(C"$ declared in defa&lt.
:#en t#e case %as called for trial$ insofar as
=ayson %as concerned$ t#e latter did not
aear$ and 3odges %as allo%ed to introd&ce
#is evidence.
4,C. rendered a artial decision against =ayson
0etitioner #aving$ in t#e meantime$ filed a
motion to set aside t#e order of defa&lt$ %#ic#
motion %as still ending resol&tion1
,#ereafter$ said motion %as denied$ and &on
resentation of t#e evidence of 3odges against
#erein etitioner$ j&dgment %as rendered
against t#e latter as rayed for in t#e
comlaint.
,#ere&on$ etitioner filled a motion for
reconsideration and a motion for relief &nder
4&le @!.
4,C later set aside its decision against t#e
etitioner and admitted its ans%er$ attac#ed to
t#e motion to set aside t#e order of defa&lt.
/n its ans%er$ etitioner disclaimed liability
&nder t#e s&rety bond in G&estion$ &on t#e
gro&nd 0a1 t#at t#e same is n&ll and void$ it
#aving been iss&ed by 'rs. 4osita 'esa after
#er a&t#ority t#erefor #ad been %it#dra%n on
'arc# 1C$ 1(C2E 0b1 t#at even &nder #er
original a&t#ority 'rs. 'esa co&ld not iss&e
s&rety bonds in excess of )!$000.00 %it#o&t
t#e aroval of etitionerKs main office %#ic#
%as not given to t#e s&rety bond in favor of
3odgesE and 0c1 t#at t#e resent action is
barred by t#e rovision in t#e s&rety bond to
t#e effect t#at all claims and actions t#ereon
s#o&ld be filed %it#in t#ree 0@1 mont#s from
t#e date of its exiration on *an&ary 2@$ 1(CC
4,C. Central -&rety ordered to ay 3odges
)!000
3odges aealed insofar as limiting #is a%ard
to )!000 and &on t#e gro&nd t#at t#e trial
co&rt #ad erred in #olding etitioner liable
&nder a contract entered into by its agent in
excess of #er a&t#ority
CA. etitioner %as liable on a bond iss&ed by
an agent
etitioner #as aealed to -C$ alleging t#at t#e
CA #as erred in finding t#at etitioner %as
liable on a bond iss&ed by an agent %#ose
a&t#ority #ad already been %it#dra%n and
revoked 0t#is is redicated &on t#e fact t#at
rior to %#en t#e s&rety bond involved in t#is
case %as exec&ted$ etitioner #erein #ad
%it#dra%n t#e a&t#ority of its branc# manager
'rs. 4osita 'esa$ to iss&e s&rety bonds1
/ss&es.
1. :2; t#e s&rety bond iss&ed by 'esa is valid
2. :2; Article 1(22 is alicable
3eld.
1. >9-
-aid s&rety bond is valid. /n t#e first lace$ t#ere
aears to be no 1o?in4 t1at t1e re)o*ation
o' aut1orit7 ?a made :no?n to t1e .u8-i* in
4enera- 87 .u8-i*ation, nor ?a ,od4e
noti'ied o' u*1 re)o*ation de.ite t1e 'a*t
t1at 1e ?a a re4u-ar *-ient o' t1e 'irm.
-econdly$ some s&rety bonds iss&ed by 'rs. 'esa
in favor of 3odges after #er a&t#ority #ad allegedly
been c&rtailed$ %ere #onored by t#e Central -&rety
desite t#e fact t#at t#ese %ere not reorted to t#e
11"
main office at t#e time of t#eir iss&ance. ,#ese
acco&nts %ere aid and by t#ese acts$ Central
-&rety ratified 'rs. 'esaKs &na&t#ori6ed acts and
as s&c# it is no% estoed from setting fort# 'rs.
'esaKs lack of a&t#ority to iss&e s&rety bonds. It
1a 8een 1e-d t1at a-t1ou41 t1e a4ent ma7
1a)e a*ted 8e7ond t1e *o.e o' 1i aut1orit7,
or ma7 1a)e a*ted ?it1out aut1orit7 at a--,
t1e .rin*i.a- ma7 7et u8eIuent-7 ee 'it to
re*o4ni5e and ado.t t1e a*t a 1i o?n.
!ati'i*ation 8ein4 a matter o' aent to and
a..ro)a- o' t1e a*t a done on a**ount o' t1e
.eron rati'7in4 an7 ?ord or a*t ?1i*1
1o? u*1 aent and a..ro)a- are ordinari-7
u''i*ient. 'oreover$ t#e re-o*ation o' a4en*7
doe not .re=udi*e t1ird .eron ?1o a*ted in
4ood 'ait1 ?it1out :no?-ed4e o' t1e
re)o*ation.
2. >9-
/ndeed$ Article 1(22 of o&r Civil Code rovides.
/f t#e agent #ad general o%ers$ revocation of t#e
agency does not rej&dice t#ird ersons %#o acted
in good fait# and %it#o&t kno%ledge of t#e
revocation. ;otice of t#e revocation in a ne%saer
of general circ&lation is a s&fficient %arning to t#ird
ersons.
/t is not dis&ted t#at etitioner #as not ca&sed to
be &blis#ed any notice of t#e revocation of 'rs.
'esaKs a&t#ority to iss&e s&rety bonds on its
be#alf$ not%it#standing t#e fact t#at t#e o%ers of
'rs. 'esa$ as its branc# manager in /loilo$ %ere of
a general nat&re$ for s#e #ad excl&sive a&t#ority$
to reresent etitioner #erein$ not %it# a artic&lar
erson$ b&t %it# t#e &blic in general$ Iin all t#e
negotiations$ transactions$ and b&siness in %#erein
t#e Comany may la%f&lly transact or engage on
s&bject only to t#e restrictions secified in t#eir
agreement$ coy of %#ic# %as attac#ed to
etitionerKs ans%er.

Contrary to etitionerKs claim$
Arti*-e #922 a..-ie ?1ene)er an a4ent 1a
4enera- .o?er, not mere-7 ?1en t1e
.rin*i.a- 1a .u8-i1ed t1e ame, aart from
t#e fact t#at t#e oening of etitionerKs branc#
office amo&nted to a &blication of t#e grant of
o%ers to t#e manager of said office. ,#en$ again$
by #onoring several s&rety bonds iss&ed in its
be#alf by 'rs. 'esa$ etitioner ind&ced t#e &blic
to believe t#at s#e #ad a&t#ority to iss&e s&c#
bonds. As a conseG&ence$ etitioner is no%
estoed from leading$ artic&larly against a
reg&lar c&stomer t#ereof$ like 3odges$ t#e absence
of said a&t#ority.
&7 /un*io + Co., In*. ) (n4 Guan Can (6ESSA)
+AC,-
2ng 5&an Can *4. as agent of 2ng 5&an Can
sells t#e rice mill and camarin for 1@$000 and
gives as o%er of attorney dated 2a7 2@,
#92$. A coy of t#is &blic instr&ment is
attac#ed to t#e deed and recorded %it# t#e
deed in t#e office of t#e 4egistry of 7eeds in
Cai6
7y B&ncio 0as creditor1 claims t#at t#at t#e
roerty belongs to its j&dgment creditor$ 2ng
5&an Can$ t#&s can be s&bject to exec&tion.
7efendants *&an ,ong and )&an 5iok 9ng claim
as o%ner and lessee of t#e o%ner by virt&e of a
deed dated 6u-7 @#, #9@#$ by 2ng 5&an Can$
*r.
C+/ Cai6 #eld t#at t#e deed %as invalid and
t#at t#e roerty %as s&bject to t#e exec&tion
%#ic# #as been levied on said roerties by
t#e j&dgment creditor of t#e o%ner.
*&an ,ong and )&a 5iok aealed.
/--89. :2; t#e deed of *&ly @1$ 1(@1 is valid.
39=7. N(.
,#e 1(2! o%er of attorney is not a general
o%er of attorney b&t a limited one and does
not give t#e exress o%er to alienate t#e
roerties in G&estion.
)etioners claim t#at t#e t#at t#is defect is
c&red by 9x#.1$ %#ic# &rorts to be a general
o%er of attoney given to t#e same agent in
1(20.
"1e ma:in4 and a**e.tin4 o' a ne? .o?er
o' attorne7, ?1et1er it en-ar4e or
de*reae t1e .o?er an a4ent under a
.rior .o?er o' attorne7, mut 8e 1e-d to
u..-ant and re)o:e t1e -atter .ro)ided
t1ere i INC(NSIS"ENCY or
in*om.ati8i-it7.
/f t#e ne% aointment %it# t#e limited o%ers
does not revoke t#e general o%er of attorney$
t#e exec&tion of t#e second o%er of attorney
%o&ld be a mere f&tile gest&re.
,#e title of 2ng 5&an Can not #aving been
divested by t#e so?called deed of *&ly @1$ 1(@1$
#is roerties are s&bject to attac#ment and
exec&tion.
Gar*ia ). de 2an5ano, @9 P1i- BCC P ANGELA
1(1(
'oir$ L.
+AC,-
;arciso gave a general o%er of attorney
to #is son$ Angel =. 'an6ano on t#e (t# of
+ebr&ary$ 1(10$ and on t#e 2Ct# of 'arc# a
second general o%er?of?attorney to #is %ife$
*osefa -amson.
Angel$ acting &nder #is 5)A sold ;arcisoFs
#alf interest to t#e steamer "an Nicolas$ and
mortgaged @ arcels of land in Antimonan to
*&an 5arcia.
8on ;arcisoFs deat#$ *osefa %as named
administratrix to ;arcisoFs roerties.
11A
5arcia bro&g#t action against ;arcisoFs
9state to foreclose t#e mortgage.
/--89- Qas raised in Losefa0s counterclaimI
1. :2; t#e o%er of attorney of *osefa revoked
t#at of Angel<
2. :2; AngelFs 5)A a&t#ori6e #er to sell t#e boat <
39=7L4A,/2.
1. N(
Art. 1A@C Yno% 1(2@aZ rovides. <he
appointment of a new a#ent for the same
business produces a revocation of the previous
a#ency from the day on which notice was
#iven to the former a#ent, eceptin# the
provisions of the net precedin# article.
,#ere is no roof in t#e record t#at t#e first
agent$ t#e son$ kne% of t#e o%er?of?attorney
to #is mot#er.
/t %as necessary for t#e defendants to
rove t#at t#e son #ad notice of t#e second
o%er?of?attorney. As t#ey #ave not done so$
and it m&st be considered t#at Angel =.
'an6ano %as acting &nder a valid o%er?of?
attorney from #is fat#er %#ic# #ad not been
legally revoked on t#e date of t#e sale of t#e
#alf interest in t#e steamer to t#e 5arcia.
2. YES.
,#e o%er?of?attorney does not exressly
state t#at t#e agent may sell t#e boat$ b&t a
o%er so f&ll and comlete a&t#oring t#e sale
of real roerty$ m&st necessarily carry %it# it
t#e rig#t to sell a #alf interest in a small boat.
,#e record f&rt#er s#o%s t#e sale %as
necessary in order to get money or a credit
%it#o&t %#ic# it %o&ld be imossible to
contin&e t#e b&siness %#ic# %as being
cond&cted in t#e name of ;arciso =. 'an6ano
and for #is benefit.
SantanaFCru5 ). CA, @%# SC!A B20 F 6ESSA
+acts.
*&anson?C&i6on$ reresenting rivate
resondents 0t#e #eirs of t#e late Maleriana
'arilao1$ filed against etitioner and
Concecion$ a Comlaint for
4evivalL9xec&tion of *&dgment After =ase
of +ive >ears
4,C.in favor of t#e laintiffs and against
t#e defendants +rancisco -antana and t#e
3eirs of Catalina 4eyes$ ordering t#e latter
to reconvey in favor of t#e laintiffs$ as
3eirs of Maleriana 'arilao
CA. affirmed in toto
etitioner filed an 2mnib&s 'otion$ raying
t#at t#e Comlaint be dismissed on t#e
gro&nd t#at it failed to state a ca&se of
action$ t#at it %as barred by t#e stat&te of
limitations$ and t1at it 8e e0.un4ed
'rom t1e re*ord o' t1e *ae 'or
1a)in4 8een 'i-ed 87 a .eron not
aut1ori5ed to .ra*ti*e -a?
4,C. denied modified. 4egister of 7eeds
is ordered to cancel t#e ,ransfer Certificate
of ,itle and all t#e res&ltant titles derived
t#erein and in lie& t#ereof$ t#e
corresonding ne% transfer certificates of
title be iss&ed in t#e name of t#e
etitioners
etitioner filed a )etition for Certiorari and
)ro#ibition %it# a )rayer for t#e /ss&ance of
a ,emorary 4estraining 2rder

%it# t#e
Co&rt of Aeals alleging t#at t#e co&rt a
Auo acted %it# grave ab&se of discretion
CA. granted etition s&bseG&ently
reversed and set aside 4,CFs orders
Atty. *&lian -. >a %#o filed #is aearance
as co&nsel for rivate resondents$ also
filed a 'otion for 4econsideration$ %#ic#$
among ot#ers$ stated t#at rivate
resondents$ some of %#om #ave died and
are s&cceeded by t#eir #eirs$ #ad revoked
t#e a&t#ority of t#eir Attorney?in?+act$
)atrocinia *. C&i6on$ to reresent t#em
CA received anot#er 'otion for
4econsideration filed by t#e co&nsel of
record$ Atty. 4a&l A. 'ora$ for rivate
resondents
etitioner filed #er 2osition stating
among ot#ers$ t#at s#e received t%o 021
motions for reconsideration of rivate
resondents filed by different co&nsels$
and t#at s#e %as bo&nd to treat Atty. 4a&l
A. 'ora as rivate resondentsK co&nsel of
record as s#e #ad not received any notice
of roer s&bstit&tion of rivate
resondentsK co&nsel
CA. denied t#e motion for reconsideration
filed by Atty 'ora s&bseG&ently granted
/ss&es.
1. :2; Atty 'ora may be s&bstit&ted by Atty.
*&lian -. >a merely from t#e filing of a formal
aearance by t#e latter
2. :2; CA erred in granting t#e motion for
reconsideration of Atty 'ora
3eld.
1. ,#e rivate resondents filed %it# t#e CA 2
searate motions for reconsideration t#ro&g# 2
co&nsels$ namely$ Atty. 4a&l A. 'ora and Atty.
*&lian -. >a. ,#e motion for reconsideration filed
by Atty. >a stated$ among ot#ers$ t#at d&e to acts
inimical to t#eir interests$ t#e rivate resondents
#ad revoked t#e a&t#ority of Attorney?in?+act
)atrocinia *&anson?C&i6on to reresent t#em and
t#ro&g# t#eir ne%ly designated Attorneys?in?+act
decided to take over from #er t#e cond&ct of t#e
instant case and to retain Atty. *&lian -. >a as
t#eir co&nsel considering t#at Atty. 4a&l A. 'ora
11!
%as t#e ersonal co&nsel of )atrocinia *&anson?
C&i6on.CA stated t#at It#ere is no s#o%ing t#at all
t#e rivate resondents #ave revoked t#e
a&t#ority granted to )atrocinia *&anson?C&i6on.I Be
t#at as it may$ a revocation of a&t#ority of
)atrocinia *&anson?C&i6on as Attorney?in?+act of
rivate resondents #eirs of Maleriana 'arilao$ %#o
are recogni6ed as t#e real arties in interest in t#is
case$ s#o&ld not affect Att7. !au- A. 2ora$ %#o
remain *oune- o' re*ord o' .ri)ate
re.ondent a8ent a )a-id u8titution o'
*oune-. Att7. !au- A. 2ora ma7 not 8e
.reumed u8tituted 87 Att7. 6u-ian S. Ya.
mere-7 'rom t1e 'i-in4 o' a 'orma- a..earan*e
87 t1e -atter. No u8titution o' *oune- o'
re*ord i a--o?ed un-e t1e 'o--o?in4
eentia- reIuiite o' a )a-id u8titution o'
*oune- *on*ur> (#) t1ere mut 8e a ?ritten
reIuet 'or u8titutionD (2) it mut 8e 'i-ed
?it1 t1e ?ritten *onent o' t1e *-ientD (@) it
mut 8e ?it1 t1e ?ritten *onent o' t1e
attorne7 to 8e u8titutedD and (A) in *ae
t1e *onent o' t1e attorne7 to 8e u8tituted
*annot 8e o8tained, t1ere mut 8e at -eat a
.roo' o' noti*e t1at t1e motion 'or
u8titution ?a er)ed on 1im in t1e
manner .re*ri8ed 87 t1e !u-e o' Court.
/n t#e -&lemental 'otion for 4econsideration
filed by Atty. 4a&l A. 'ora %it# t#e Co&rt of
Aeals$ #e stated t#at t#e #eirs of Maleriana
'arilao never dismissed #im nor relaced #im as
t#eir co&nsel$ t#&s$ t#e aearance of Atty. *&lian
-. >a %as imroer. /n etitionerKs 2osition$
s#e stated t#at s#e received 2 motions for
reconsideration from rivate resondents filed by
different co&nsels$ and %as bo&nd to treat Atty.
4a&l A. 'ora as rivate resondentsK co&nsel of
record as s#e #ad not received any notice of
roer s&bstit&tion of rivate resondentsK co&nsel.
In t1e a8en*e o' *om.-ian*e ?it1 t1e
eentia- reIuirement 'or )a-id u8titution
o' t1e *oune- o' re*ord, Att7. 2ora, t1e
*ourt *an a'e-7 .reume t1at 1e i
re.oni8-e 'or t1e *ondu*t o' t1e *ae. ,#e
r&le is intended to ens&re t#e orderly disosition of
cases.
2. N(. CA did not err in acting on t#e motion for
reconsideration of rivate resondents$ %#ic# %as
seasonably filed t#ro&g# t#eir co&nsel of record$
Atty. 4a&l A. 'ora and received by t#e Co&rt. /n
fact$ t#e resondent co&rt s#o&ld #ave acted only
on t#e said motion for reconsideration. ,#e
inadvertence on t#e art of t#e resondent co&rt
and t#e delay in se%ing t#e original coy of said
motion for reconsideration in t#e rollo of t#e case
s#o&ld not rej&dice t#e legal interest of rivate
resondents %#o %ere &nder t#e roer
reresentation and c#arge of t#eir co&nsel of
record$ Atty. 4a&l A. 'ora. ,o set t#ings straig#t$
inasm&c# as Att7. Ya. 1ad no aut1orit7 to
re.reent .ri)ate re.ondent, a8ent a )a-id
u8titution o' t1eir *oune-, t1e motion 'or
re*onideration 'i-ed 87 1im i deemed a
mere *ra. o' .a.er.
C. Art*i-e #92A, #92B F !EK
Art. 1(2D. ,#e agency is revoked if t#e rincial
directly manages t#e b&siness entr&sted to t#e
agent$ dealing directly %it# t#ird ersons. 0n1
Art. 1(2C. :#en t%o or more rincials #ave
granted a o%er of attorney for a common
transaction$ any one of t#em may revoke t#e same
%it#o&t t#e consent of t#e ot#ers
C2S Lo44in4 ). CA ("(PE)
1((2
*. ;ocon
+acts.
)etitioner C'- is a forest concessionaire
engaged in t#e logging b&siness$ %#ile rivate
resondent 74AC24 is engaged in t#e
b&siness of exorting and selling logs and
l&mber. 2n A&g&st 2!$ 1(CA$ C'- and 74AC24
entered into a contract of agency %#ereby t#e
former aointed t#e latter as its excl&sive
exort and sales agent for all logs t#at t#e
former may rod&ce$ for a eriod of five 0C1
years.
2ne of t#e rovisions indicated t#at 74AC24
%as to #andle all negotiations.
" mont#s before t#e CoAgency %as abo&t to
exire C'-F resident %ent to ,okyo and fo&nd
o&t t#at 74AC24 sold C'- logs t#ro&g# -#inko
,rading and earned a commission of U1 er
1000 bd. +t. of logs.
C'- claimed t#at t#is commission aid to
-#inko %as in violation of t#e agreement and
t#at it 0C'-1 is entitled to t#is amo&nt as art
of t#e roceeds of t#e sale of t#e logs. C'-
contended t#at since 74AC24 #ad been aid
t#e CN commission &nder t#e agreement$ it is
no longer entitled to t#e additional commission
aid to -#inko as t#is tantamo&nt to 74AC24
receiving do&ble comensation for t#e services
it rendered.
C'- later s#ied and sold directly to *aanes
b&yers %it#o&t t#e #el of 74AC24.
74AC24 co&nterclaims for t#e commissions on
t#ese transactions.
CA fo&nd no evidence t#at -#inko collected t#e
commissions
/ss&e.
1. :o; -#inko received t#e commissions
2. :o; 74AC24 is entitled to t#e commissions on
t#e 7irect -ales of C'- to *aanese b&yers
3eld.
11(
1. )etition &nmeritorio&s$ no evidence. ,#e
finding of fact %as only based on a s&mmary
from C'- itself.
'oreover$ even if it %as s#o%n t#at -#inko did in
fact receive t#e commissions in G&estion$ C'- is
not entitled t#ereto since t#ese %ere aarently
aid by the buyers to -#inko for arranging t#e sale.
,#is is t#erefore not art of t#e gross sales of
C'-Ks logs.
2. ;o. :e find merit in C'-Ks contention t#at
t#e aellate co&rt erred in #olding t#at
74AC24 %as entitled to its commission from
t#e sales made by C'- to *aanese firms.
,#e rincial may revoke a contract of agency at
%ill$ and s&c# revocation may be exress$ or
imlied$ and may be availed of even if t#e eriod
fixed in t#e contract of agency as not yet exired.
As t#e rincial #as t#is absol&te rig#t to revoke
t#e agency$ t#e agent can not object t#eretoE
neit#er may #e claim damages arising from s&c#
revocation$ &nless it is s#o%n t#at s&c# %as done
in order to evade t#e ayment of agentKs
commission.
/n t#e case at bar$ C'- aointed 74AC24 as its
agent for t#e sale of its logs to *aanese firms. >et$
d&ring t#e existence of t#e contract of agency$
74AC24 admitted t#at C'- sold its logs directly to
several *aanese firms. ,#is act constit&ted an
imlied revocation of t#e contract of agency &nder
Article 1(2D of t#e Civil Code$ %#ic# rovides.
Art. 1(2D ,#e agency is revoked if t#e
rincial directly manages t#e b&siness
entr&sted to t#e agent$ dealing directly
%it# t#ird ersons.
-ince t#e contract of agency %as revoked by C'-
%#en it sold its logs to *aanese firms %it#o&t t#e
intervention of 74AC24$ t#e latter is no longer
entitled to its commission from t#e roceeds of
s&c# sale and is not entitled to retain %#atever
moneys it may #ave received as its commission for
said transactions. ;eit#er %o&ld 74AC24 be
entitled to collect damages from C'-$ since
damages are generally not a%arded to t#e agent
for t#e revocation of t#e agency$ and t#e case at
bar is not one falling &nder t#e excetion
mentioned$ %#ic# is to evade t#e ayment of t#e
agentKs commission.
&. Arti*-e #92% F 2A!K
Art. 1(2". A general o%er of attorney is revoked
by a secial one granted to anot#er agent$ as
regards t#e secial matter involved in t#e latter.
&7 /un*io + Co., In*. ) (n4 Guan Can (GEN)
2ct. 2$ 1(@D
3&ll$ *.
FAC"S> 2ng 5&an Can$ *r. exec&ted on be#alf of
t#e 2ng 5&an Can$ t#e deed covering t#e sale of a
rice?mill and camarin$ in favor of b&yers %#o relied
&on a 1(2! o%er of attorney attac#ed to t#e
deed$ b&t %#ic# t&rned o&t %as not a general
o%er of attorney b&t a limited one and YdidZ not
give t#e exress o%er to alienate t#e roerties
in G&estion.
,#e creditors of 2ng 5&an Can so&g#t to #ave t#e
sale declared void. B&t t#e b&yers$ defendants *&an
,ong and )&a 5iok 9ng claimed t#at t#ey %ere t#e
o%ners and lessees of t#e roerty.
7efendants claimed t#at t#e defect in t#e sonFs
a&t#ority to sell on be#alf of t#e fat#er %as c&red
by an earlier 1(20 general o%er of attorney
given to t#e same agent YsonZ by t#e fat#er.
,#e C+/ of Cai6 #eld t#at t#e deed %as invalid and
t#at t#e roerty %as s&bject to t#e exec&tion
%#ic# #as been levied on t#e roerties by t#e
j&dgment creditor of t#e o%ner.
ISSUE> :2; t#e deed of sale %as invalid
,EL&> >9-. ,#e sale is void. ,#e making and
acceting of a ne% o%er of attorney$ %#et#er it
enlarges or decreases t#e o%er of t#e agent
&nder a rior o%er of attorney$ m&st be #eld to
s&lant and revoke t#e latter %#en t#e t%o are
inconsistent. /f t#e ne% aointment %it# limited
o%ers does not revoke t#e general o%er of
attorney$ t#e exec&tion of t#e second o%er of
attorney %o&ld be a mere f&tile gest&re.
-ince t#e title of 2ng 5&an Can #as not been
divested by deed of sale$ #is roerties are s&bject
to attac#ment and exec&tion.
Gar*ia ). de 2an5ano, @9 P1i- BCC F 2AI
E. Arti*-e #92C F !(G
Art. 1(2A. An agency cannot be revoked if a
bilateral contract deends &on it$ or if it is t#e
means of f&lfilling an obligation already contracted$
or if a artner is aointed manager of a
artners#i in t#e contract of artners#i and #is
removal from t#e management is &nj&stifiable.
Ne? 2ani-a Lum8er Co. ). !e.u8-i* F "(FF
/a*a-in4 ). 2u7a, @$0 SC!A C#A F !EG
Nationa- Su4ar "radin4 ). PN/, @9% SC!A B2$
F EA!LA
Se)i--a, u.ra
&e- !oario ). A8ad, #0A P1i- %A$ F A//Y
1(C!E )adilla
+acts.
120
)laintiffs are t#e c#ildren and #eirs of ,ib&rcio
del 4osario. 7el 4osario %as a grantee of a
#omestead atent in ;&eva 9cija. ,#e
Certificate %as iss&e +eb 11$ 1(@A. 3e obtained
a loan from )rimitivo Abad +eb 2D$ 1(@A
0remember t#e C yr ro#ibition from
enc&mbrance r&le1 for )2000 at 12N a
ayable 7ec 1(D1.
,#e sec&rity for t#e ayment %as t#e
imrovement on t#e arcel of land. An
irrevocable secial o%er of attorney %as also
exec&ted a&t#ori6ing Abad to sell and convey
t#e arcel of land.
7ecember 1(DC ,ib&rcio died leaving t#e
mortgage debt &naid. =ater$ )rimitivo sold
t#e land to #is son ,eodorico Abad for )1. ,itle
no% registered in ,eodoricoFs name.
7el 4osario #eirs filed s&it for recovery and
ossession of t#e land.
/ss&e.
1. :o; )o%er of Attorney created an agency
co&led %it# an interest
2. :o; t#e land %as sold validly
3eld. ;o. ,#e o%er of attorney exec&ted by t#e
#omesteader in favor of Abad did not create an
agency nor did it clot#e t#e agency %it#
irrevocable c#aracter. A mere statement in t#e
o%er of attorney t#at it is co&led %it# an interest
is not eno&g#. /n %#at does s&c# interest consist
m&st be stated in t#e o%er of attorney. ,#e
mortgage #as not#ing to do %it# t#e o%er of
attorney and may be foreclosed by t#e mortgagee
&on t#e fail&re of t#e mortgagor to comly %it#
#is obligation. As t#e agency %as not co&led %it#
an interest$ it %as terminated &on t#e deat# of
t#e rincial$ and t#e agent co&ld no longer validly
convey t#e land. 3ence$ t#e sale %as n&ll and void.
5ranting t#at t#e )oA in G&estion %as valid it
%o&ld s&bject t#e land to an enc&mbrance.
0exec&ted %it#in C yrs after iss&ance of t#e atent$
t#e same is n&ll and void.1
2a*ondra7, u.ra
Co-eon4*o ). C-a.aro-, #0 SC!A BCC F 6ANCES
F#. Arti*-e #92$, #929 P ALAIN
Art. 1(2!. ,#e agent may %it#dra% from t#e
agency by giving d&e notice to t#e rincial. /f t#e
latter s#o&ld s&ffer any damage by reason of t#e
%it#dra%al$ t#e agent m&st indemnify #im
t#erefor$ &nless t#e agent s#o&ld base #is
%it#dra%al &on t#e imossibility of contin&ing t#e
erformance of t#e agency %it#o&t grave
detriment to #imself. 01A@"a1
Art. 1(2(. ,#e agent$ even if #e s#o&ld %it#dra%
from t#e agency for a valid reason$ m&st contin&e
to act &ntil t#e rincial #as #ad reasonable
oort&nity to take t#e necessary stes to meet
t#e sit&ation.
4ig#t of t#e agent to %it#dra%.
*&st as t#e rincial may revoke generally t#e
agency at %ill$ t#e agent may like%ise reno&nce or
%it#dra% from t#e agency at any time$ %it#o&t t#e
consent of t#e rincial$ even in violation of t#e
latterFs contract&al rig#tsE s&bject to liability for
breac# of contract or for tort.
1. Pithout )ust cause O ,#e reason for t#e
indemnity imosed by la% is t#at t#e agent
fails in #is obligation and as s&c#$ #e ans%ers
for losses and damages occasioned by t#e non?
f&lfillment.
2. Pith )ust cause O /f t#e agent %it#dra%s from
t#e agency for a valid reason$ as %#en t#e
%it#dra%al is based on t#e imossibility of
contin&ing %it# t#e agency %it#o&t grave
detriment to #imself$ or is d&e to a fort&ito&s
event$ t#e agent cannot be #eld liable.
2bligation of agent to contin&e to act after
%it#dra%al.
,#e &rose of t#e la% is to revent damage or
rej&dice to t#e rincial. ,#e la% reconciles t#e
interests of t#e agent %it# t#ose of t#e rincial$
and if ermits t#e %it#dra%al of t#e agent$ it is on
t#e condition t#at no damage res&lts to t#e
rincial$ and if t#e agent desires to be relieved of
t#e obligation of making rearation %#en #e
%it#dra%s for a j&st ca&se$ #e m&st contin&e to act
so t#at no inj&ry may be ca&sed to t#e rincial.

F2. Arti*-e #9@0, #9@#, #9@2 P E3A
&e-a Pena ). ,ida-4o (ANGELA)
3<his case is supra and rather complicated so ,0ll
)ust include the relevant details4
,#e CA-9 %as instit&ted by t#e #eirs of *ose 5omi6
y 7ela )eBa to recover s&ms of money from
+ederico 3idalgo %#ic# #e allegedly o%es t#e
estate of *ose reresenting &nremitted acco&nts
d&ring t#e administration of +ederico of t#e
roerties of *ose 5omi6 y 7ela )eBa.
+AC,-
/n 1!!A$ +ederico 3idalgo took c#arge of
administration of *ose 5omi6 y 7ela )eBaFs
roerties by virt&e of a o%er of attorney
exec&ted by t#e latter in favor of D agents
0+ederico incl&ded1 before #e embarked for
-ain.
After several years of agency$ +ederico
3idalgo %rote to *ose 5omi6 reG&esting #im to
designate a erson to s&bstit&te #im in t#e
121
osition beca&se one of t#ose aointed in t#e
o%er of attorney #ad died and t#e ot#ers did
not %is# to take c#arge of t#e administration of
5omi6F roerties.
5omi6 did not ans%er +edericoFs letters nor
did #e arove or object to +edericoFs acco&nts
nor did #e aoint or designate anot#er erson
to s&bstit&te +ederico.
/n 1!(D$ +ederico %as obliged to embark
for -ain for #ealt# reasons. 2n rearing for
#is deart&re$ #e rendered t#e acco&nts of t#e
administration.
+ederico also informed 5omi6 of #is
intended deart&re from t#e )#iliines and of
#is t&rning over t#e administration to #is
co&sin Antonio 3idalgo$ &on %#om #e
conferred a 5)A. B&t beca&se #e deemed s&c#
5)A to be ins&fficient$ #e also asked 5omi6 to
send a ne% -)A in favor or Antonio.
:#en Antonio died$ +rancisco 3idalgo took
AntonioFs lace.
5omi6 died %it#o&t #aving said anyt#ing
regarding t#e s&bstit&tion of agents
/--89. :2; t#ere %as valid ren&nciation of t#e
agency.
39=7. YES.
8nder t#e circ&mstances of t#e case$ it is
reasonable to concl&de t#at t#e agency %as
d&ly terminated.
Alt#o&g# +ederico did not &se t#e %ords
reno&ncing t#e agency$ s&c# %ords %ere
&ndo&btedly &nderstood and acceted by t#e
rincial beca&se if t#e lase of nearly ( years
& to time of rincialFs deat#$ #e never
interrogated t#e reno&ncing agent and
disaroved %#at #e #ad done nor t#e o%er
conferred to t#e s&bstit&ting agent.
,#e agent %#o %as obliged to leave #is
c#arge for a legitimate ca&se and %#o d&ly
informed #is rincial$ is released and freed
from t#e res&lts and t#e conseG&ences of t#e
s&bstit&te agent it %as %it# t#e consent$ even
tacit of t#e rincial.
,#e agent is not reG&ired to sacrifice #is
#ealt#$ life$ and #is o%n interests$ if it is s#o%n
t#at it %as imossible for #im to contin&e t#e
disc#arge of #is d&ties.
!a--o ). Fe-i0 Go C1an, u.ra
/-ondeau ). Nano (/A2/I)
Fa*t>
An action %as bro&g#t in t#e Co&rt of +irst
/nstance of 'anila to foreclose a mortgage
alleged to #ave been made by t#e defendants
Ag&stin ;ano and *ose Mallejo to t#e laintiff
Angela Blondea&$ bearing date ;ovember C$
1(@1$ to sec&re t#e ayment of t#e s&m of
)12$000$ and covering roerty sit&ated on
Calle 5eorgia$ 'anila.
;ano$ &rorting to reresent bot# defendants$
after filing an ans%er$ %as fo&nd in contemt
of co&rt. ,#e ot#er defendant MallejoFs defense
%as t#at #is signat&re to t#e mortgage %as a
forgery. +ollo%ing t#e trial$ j&dgment %as
rendered against ;ano b&t not against Mallejo.
3ence$ t#is aeal.
Iue> 9oN t1ere ?a a )a-id mort4a4e
*ontra*t e0e*uted in 'a)or o' /-ondeau. YES.
,#e &rorted signat&re of t#e defendant
Mallejo to t#e mortgage %as not a forgery.
/t needs to be recalled t#at t#e mortgage %as
exec&ted in t#e #ome of t#e laintiffs$ and t#at
of t#ose resent$ t#e rincial laintiff Angela
Blondea& and #er #&sband +ernando de la
Cantera$ toget#er %it# t#e instr&mental
%itness )edro *imene6 _oboli$ identified Mallejo
as t#e erson %#o signed t#e doc&ment.
8on its face$ t#e mortgage aears to be
reg&lar and to #ave been d&ly exec&ted and
acceted by Mallejo on ;ovember C$ 1(@1.
'oreover$ A#ustin Nano had possession of Lose
=alle)oKs title papers. :it#o&t t#ose title aers
#anded over to ;ano %it# t#e acG&iescence of
Mallejo$ a fra&d co&ld not #ave been
eretrated. :#en +ernando de la Cantera$ a
la%yer and t#e #&sband of Blondea&$ t#e
rincial laintiff$ searc#ed t#e registration
records$ #e fo&nd t#em in d&e form$ incl&ding
t#e o%er of attorney of Mallejo$ in favor of
;ano.
/f t#is #ad not been so and if t#ereafter t#e
roer notation of t#e enc&mbrance co&ld not
#ave been made$ Angela Blondea& %o&ld not
#ave lent )12$000 to t#e defendant Mallejo.
,#e ,orrens system is intended for t#e
registration of title$ rat#er t#an t#e m&niments
of title. /t reresents a deart&re from t#e
ort#odox rinciles of roerty la%. 8nder t#e
common la%$ if t#e retended signat&re of t#e
mortgagor is a forgery$ t#e instr&ment is
invalid for every &rose and %ill ass on t#e
title or rig#ts to anyone$ &nless t#e s&rio&s
doc&ment is ratified and acceted by t#e
mortgagor.
,#e ,orrens Act on t#e contrary ermits a
forged transfer$ %#en d&ly entered in t#e
registry$ to become t#e root of a valid title in a
bona fide &rc#aser. ,#e act erects a
safeg&ard against a forged transfer being
registered$ by t#e reG&irement t#at no transfer
s#all be registered &nless t#e o%nerKs
certificate %as rod&ced along %it# t#e
instr&ment of transfer.
An eecuted transfer of re#istered lands
placed by the re#istered owner thereof in the
hands of another operates as a representation
122
to a third party that the holder of the transfer
is authori$ed to deal with the lands.
:it# resect to t#e concl&siveness of t#e
,orrens title and t#e binding force and effect of
annotations t#ereon even %#en t#ro&g# a
forged deed t#e land asses into t#e
ossession of an innocent &rc#aser for val&e$
t#e basic r&le is fo&nd in t#e oinion delivered
by 'r. C#ief *&stice Arellano in 7e la Cr&6 vs.
+abie %#ic# sates t#at innocent b&yers may
still #ave valid title.
Co&rt mentions Margas P 'aBalac in t#eir
treatise on t#e )#iliine =and 4egistration =a%
G&ote %it# aroval t#e comment of 'r. )o%ell
in #is book on =and 4egistration$ section 21@.
,#e G&estion %#ic# t#e a&t#or roo&nded
%as. :#y does t#e la% say t#at t#e erson %#o
#ad no title at all and only a forged deed as a
color of title s#o&ld become t#e tr&e o%ner of
t#e land by merely contin&ing to occ&y and
enjoy t#e land %#ic# in fact does not belong to
#im$ b&t %#ic# belongs to t#e victim of t#e
forgery<
R)&blic olicy$ exediency$ and t#e need of
reose and certainty as to land titles demand
t#at t#e bona fide &rc#aser of a certificate of
title to registered land$ %#o$ t#o&g# #e b&ys on
a forged transfer$ s&cceeds in #aving t#e land
registered in #is name$ s#o&ld nevert#eless
#old an &nimeac#able title.
R/n t#e first lace$ a forger cannot effect&ate
#is forgery in t#e case of registered land by
exec&ting a transfer %#ic# can be registered$
&nless t#e o%ner #as allo%ed #im$ in some
%ay$ to get ossession of t#e o%nerKs
certificate.
.,#e Act #as erected in favor of t#e o%ner$ as a
safeg&ard$ against a forged transfer being
eretrated against #im$ t#e reG&irement t#at
no vol&ntary transfer s#all be registered &nless
t#e o%nerKs certificate is rod&ced along %it#
t#e instr&ment of transfer.
,#erefore$ if t#e o%ner #as vol&ntarily or
carelessly allo%ed t#e forger to come into
ossession of #is o%nerKs certificate #e is to be
j&dged according to t#e maxim$ t#at %#en one
of t%o innocent ersons m&st s&ffer by t#e
%rongf&l act of a t#ird erson t#e loss fall on
#im %#o &t it into t#e o%er of t#at t#ird
erson to eretrate t#e %rong.
+&rt#ermore$ even if t#e forger stole t#e
o%nerKs certificate$ t#e o%ner is & against no
greater #ards#i t#an is exerienced by one
%#ose money or negotiable aer ayable to
bearer is stolen and transferred by t#e t#ief to
an innocent &rc#aser.
)laintiffKs mortgage s&stained.
"errado ). CA, #@# SC!A @C# F !EK
7anoto& Fros. v. CA
'anotok Bros. 0)etitioner1 o%ned a arcel of land
and b&ilding %#ic# %ere formerly leased by City of
'anila and &sed by Claro '. 4ecto 3ig# -c#ool.
By means of a letter$ 'anotok a&t#ori6ed -alvador
-alig&mba 0resondent1 to negotiate %it# t#e City
of 'anila for t#e sale of t#e roerty for not less
t#an D2CS %it# CN commission in t#e event t#at
t#e sale is cons&mmated. ,#is a&t#ority %as
extended for 120 days and anot#er 120 days.
Anot#er letter signed by t#e )resident of t#e Cor.
a&t#ori6ed resondent to finali6e and cons&mmate
t#e sale for not less t#an D10S and extended t#e
a&t#ority for anot#er 1!0 days.
,#e City of 'anila assed an ordinance
aroriating for t#e ayment of t#e D10S before
t#e exiration of t#e a&t#ority of t#e resondent.
3o%ever$ t#e City 'ayor signed it after @ days of
exiration of t#e a&t#ority.
,#e sale %as cons&mmated b&t resondent never
received any commission. ,#is %as beca&se t#e
etitioner ref&sed to ay #im as t#ey did not
recogni6e t#e resondentFs role as agent in t#e
transaction.
4esondent filed a case against t#e etitioner for
t#e negotiation. 2n ans%er$ etitioner insisted t#at
t#e resondent is not entitled beca&se. 011 t#e sale
%as not cons&mmated %it#in t#e eriod of #is
a&t#orityE and 021 t#e ),A resident %as t#e one
resonsible for t#e negotiation.
4,C. ordered 'anotok to ay resondent t#e
commission fees %it# legal interest from t#e date
of filing of comlaint.
CA. affirmed 4,C decision.
-C. affirmed 4,C P CA decision.
1. ,#o&g# t#e sale %as cons&mmated &on
exiration of #is a&t#ority$ #e is still entitled to
commission. /t is %it#in t#e excetion as in t#e
case of *rats v. CA, etitioner #ad diligently
taken stes to bring back 7oronilla and t#e
---. Wxx )ratsF efforts some#o% instr&mental
in bringing t#em toget#er xxx alt#o&g# t#e
finali6ation %as after t#e exiration of )ratsF
extended a&t#ority
/n t#e case of )rats$ agent %as not even t#e
efficient roc&ring ca&se bringing abo&t t#e sale$
&nlike in t#e case at bar$ it %as still #eld t#erein
t#at t#e agent %as entitled to comensation. /n t#e
case at bar$ resondent is t#e efficient roc&ring
ca&se for %it#o&t #is efforts$ t#e m&niciality
%o&ld not #ave anyt#ing to ass and t#e 'ayor
%o&ld not #ave anyt#ing to arove.
12@
2. :#en t#ere is a *-oe .ro0imate and *aua-
*onne*tion bet%een t#e agentFs efforts and
labor ant #e rincialFs sale of #is roerty$
t#e agent is entitled to a commission.
@. :#ile it may be tr&e t#at t#e ),A resident
follo%ed?& t#e matter %it# t#e a&t#or of t#e
ordinance and 'ayor Millegas$ #is intervention
regarding t#e &rc#ase came only after t#e
ordinance #ad already been assed. :it#o&t
t#e efforts of t#e resondent t#en$ t#e 'ayor
%o&ld #ave #ad not#ing to arove.
Abalade)o y Cia v. *%C
Albaladejo y Cia 0laintiff1 is a b&siness engaged in
selling of cora in =egasi and in ot#er laces
%#ere it maintained agencies$ or s&b?agencies.
,#e Misayan 4efining Co. 0resondent1 is a
cororation engaged in oerating at 2on$ Ceb&$
for t#e man&fact&re of cocon&t oil.
)laintiff and resondent entered into a contract
entitled 'emorand&m of Agreement 4e )&rc#ase
of Cora %#ic# stated t#at t#e resondent s#all
contin&ally &rc#ase large G&antities of cora. /t
stated t#e follo%ing.
1. ,#at resondent binds itself to b&y from
laintiff for a eriod of one year A== t#e cora
&rc#ased by t#e laintiff from Albay.
2. ,#at laintiff agrees to ay t#e laintiff for t#e
cora at t#e market rice at t#e date of t#e
&rc#ase$ ded&cting t#e cost of transortation
by sea to t#e factory at Ceb&. ,#e market
rice s#all be from t#e rates given by t#e
&blic &tility commission. ,#ere is also a
ded&ction for t#e s#rinkage of cora from time
of its delivery xxx.
@. ,#at d&ring t#e contract$ resondent %ill not
b&y any cora from any vendor in =egasi.
D. ,#at resondent %ill advise t#e revailing
rices of cora in t#e Ceb& market.
C. ,#at resondent %ill rovide for transortation
by sea to Ceb& b&t t#e laintiff %ill deliver t#e
cora free on board t#e boats of t#e
resondent or on t#e ier.
,#e comaniesF relations#i %ent smoot#ly d&ring
t#e first year and t#ey decided to contin&e t#eir
dealings &ntil resondent closed do%n its factory
and %it#dre% from t#e cora market.
:#en t#e contract above %as entered into$ laintiff
#ad only one commercial establis#ment. B&t t#e
large reG&irements of t#e resondent j&stified t#e
extension of t#e laintiffFs b&siness$ t#at it
establis#ed aro&nd 20 agencies in vario&s orts.
Acco&nts %ere liG&idated after resondent ceased
to b&y cora. ,#e last acco&nt rendered by
resondent to laintiff s#o%ed a balance of )2!! in
favor of t#e defendant. ;o dissatisfaction %as
exressed by laintiff. 3o%ever$ abo&t six %eeks
after$ t#e resent action %as beg&n.
,#is action %as instit&ted in t#e Co&rt of +irst
/nstance of t#e )rovince of Albay by Albaladejo y
Cia.$ -. en C.$ to recover a s&m of money from t#e
)#iliine 4efining Co.$ as s&ccessor to t#e Misayan
4efining Co.$ t%o ca&ses of action being stated in
t#e comlaint. 8on #earing t#e ca&se t#e trial
j&dge absolved t#e defendant from t#e first ca&se
of action b&t gave j&dgment for t#e laintiff to
recover t#e s&m of )D($"2"."!$ %it# costs$ &on
t#e second ca&se of action. +rom t#is j&dgment t#e
laintiff aealed %it# resect to t#e action taken
&on t#e first ca&se of action$ and t#e defendant
aealed %it# resect to t#e action taken &on t#e
second ca&se of action. /t res&lts t#at$ by t#e
aeal of t#e t%o arties$ t#e decision of t#e lo%er
co&rt is #ere &nder revie% as regards t#e action
taken &on bot# gro&nds of action set fort# in t#e
comlaint.
:#et#er #e defendant liable for t#e exenses
inc&rred by t#e laintiff in keeing its organi6ation
intact d&ring t#e eriod no% &nder consideration.
-C. Affirmed.
,#ere %ere several letters from t#e )#iliine
4efining Cororation b&t -C fo&nd not#ing in
corresondence %#ic# reflects an attit&de different
from t#at reflected in t#e matter above G&oted. /t
is only necessary to add t#at t#e #oe so
freG&ently exressed in t#e letters$ to t#e effect
t#at )4C %o&ld soon enter t#e market as a b&yer
of cora on a more extensive scale t#an its
redecessor %as not destined to be reali6ed.
,#ere %as a contention in t#e aellantFs brief
%#ic# states t#at t#e contract bet%een laintiff
and t#e Misayan 4efining Co. created a relation of
rincial and agent bet%een t#e arties$ and
reliance is laced &on article 1A2( of t#e Civil
Code %#ic# reG&ires t#e rincial to indemnify t#e
agent for damages inc&rred in carrying o&t t#e
agency. Attentive er&sal of t#e contract is$
#o%ever$ convincing to t#e effect t#at t#e relation
bet%een t#e arties %as not t#at of rincial and
agent in so far as relates to t#e &rc#ase of cora
by t#e laintiff. /t is tr&e t#at t#e Misayan 4efining
Co. made t#e laintiff one of its instr&ments for t#e
collection of coraE b&t it is clear t#at in making its
&rc#ases from t#e rod&cers t#e laintiff %as
b&ying &on its o%n acco&nt and t#at %#en it
t&rned over t#e cora to t#e Misayan 4efining Co.$
&rs&ant to t#at agreement$ a second sale %as
effected. /n aragra# t#ree of t#e contract it is
declared t#at d&ring t#e contin&ance of t#is
contract t#e Misayan 4efining Co. %o&ld not
aoint any ot#er agent for t#e &rc#ase of cora
in =egasiE and t#is gives rise indirectly to t#e
inference t#at t#e laintiff %as considered its
b&ying agent. B&t t#e &se of t#is term in one
cla&se of t#e contract cannot dominate t#e real
nat&re of t#e agreement as revealed in ot#er
cla&ses$ no less t#an in t#e cation of t#e
agreement itself. /n some of t#e trade letters also
t#e vario&s instr&mentalities &sed by t#e Misayan
4efining Co. for t#e collection of cora are soken
of as agents. B&t t#is designation %as evidently
&sed for convenienceE and it is very clear t#at in its
activities as a b&yer t#e laintiff %as acting &on
its o%n acco&nt and not as agents$ in t#e legal
sense$ of t#e Misayan 4efining Co. ,#e title to all of
12D
t#e cora &rc#ased by t#e laintiff &ndo&btedly
remained in it &ntil it %as delivered by %ay of
s&bseG&ent sale to said comany
Ce Castro v. CA
C(NS"AN"E A2(! &E CAS"!( ). CA
(G! ##B$@$, 6u-7 $ 2002)
+AC,-.
Aellants
C
%ere co?o%ners of fo&r 0D1 lots
located at 97-A corner ;e% >ork and 7enver
-treets in C&bao$ H&e6on City. /n a letter dated
*an&ary 2D$ 1(!D$ aellee
"
%as a&t#ori6ed by
aellants to act as real estate broker in t#e sale of
t#ese roerties for t#e amo&nt of )2@$000$000.00$
five ercent 0CN1 of %#ic# %ill be given to t#e
agent as commission. /t %as aellee %#o first
fo&nd ,imes ,ransit Cororation$ reresented by its
resident 'r. 4ondaris$ as rosective b&yer %#ic#
desired to b&y t%o 021 lots only$ secifically lots 1D
and 1C. 9vent&ally$ sometime in 'ay of 1(!C$ t#e
sale of lots 1D and 1C %as cons&mmated. Aellee
received from aellants )D!$!(@.A" as
commission.
/t %as t#en t#at t#e rift bet%een t#e contending
arties soon emerged. Aellee aarently felt
s#ort c#anged beca&se according to #im$ #is total
commission s#o&ld be )@C2$C00.00 %#ic# is five
ercent 0CN1 of t#e agreed rice of )A$0C0$000.00
aid by ,imes ,ransit Cororation to aellants for
t#e t%o 021 lots$ and t#at it %as #e %#o introd&ced
t#e b&yer to aellants and &nceasingly facilitated
t#e negotiation %#ic# &ltimately led to t#e
cons&mmation of t#e sale. 3ence$ #e s&ed belo%
to collect t#e balance of )@0@$"0".2D after #aving
received )D!$!(@.A" in advance.
2n t#e ot#er #and$ aellants comletely traverse
aelleeKs claims and essentially arg&e t#at
aellee is selfis#ly asking for more t#an %#at #e
tr&ly deserved as commission to t#e rej&dice of
ot#er agents %#o %ere more instr&mental in t#e
cons&mmation of t#e sale. Alt#o&g# aellants
readily concede t#at it %as aellee %#o first
introd&ced ,imes ,ransit Cor. to t#em$ aellee
%as not designated by t#em as t#eir excl&sive real
estate agent b&t t#at in fact t#ere %ere more or
less eig#teen 01!1 ot#ers %#ose collective efforts in
t#e long r&n d%arfed t#ose of aelleeKs$
considering t#at t#e first negotiation for t#e sale
%#ere aellee took active articiation failed and
it %as t#ese ot#er agents %#o s&ccessf&lly
brokered in t#e second negotiation. B&t desite
t#is and o&t of aellantsK I&re liberality$
beneficence and magnanimityI$ aellee
nevert#eless %as given t#e largest c&t in t#e
commission 0)D!$!(@.A"1$ alt#o&g# on t#e rincile
of Auantum meruit #e %o&ld #ave certainly been
entitled to less. -o aellee s#o&ld not #ave been
#eard to comlain of getting only a ittance %#en
#e act&ally got t#e lionKs s#are of t#e commission
and %orse$ #e s#o&ld not #ave been allo%ed to get
t#e entire commission. +&rt#ermore$ t#e &rc#ase
rice for t#e t%o lots %as only )@." million as
aearing in t#e deed of sale and not )A.0C million
as alleged by aellee. ,#&s$ even ass&ming t#at
aellee is entitled to t#e entire commission$ #e
%o&ld only be getting CN of t#e )@." million$ or
)1!0$000.00.I
)rivate resondent +rancisco Artigo
0IArtigoI for brevity1 s&ed etitioners Constante A.
7e Castro 0IConstanteI for brevity1 and Cora6on A.
7e Castro 0ICora6onI for brevity1 to collect t#e
&naid balance of #is brokerKs commission from t#e
7e Castros. ,#e ,rial Co&rt finds defendants
Constante and Cora6on Amor de Castro jointly and
solidarily liable to laintiff.
,#e Co&rt of Aeals affirmed in toto t#e
decision of t#e 4,C. 3ence$ t#is etition.
/--89.
:#et#er t#e comlaint merits dismissal for fail&re
to imlead ot#er co?o%ners as indisensable
arties
39=7.
,#e 7e Castros arg&e t#at ArtigoKs comlaint
s#o&ld #ave been dismissed for fail&re to imlead
all t#e co?o%ners of t#e t%o lots. ,#e 7e Castros
claim t#at Artigo al%ays kne% t#at t#e t%o lots
%ere co?o%ned by Constante and Cora6on %it#
t#eir ot#er siblings *ose and Carmela %#om
Constante merely reresented. ,#e 7e Castros
contend t#at fail&re to imlead s&c# indisensable
arties is fatal to t#e comlaint since Artigo$ as
agent of all t#e fo&r co?o%ners$ %o&ld be aid %it#
f&nds co?o%ned by t#e fo&r co?o%ners.
,#e 7e CastrosK contentions are devoid of legal
basis.
An indisensable arty is one %#ose interest %ill
be affected by t#e co&rtKs action in t#e litigation$
and %it#o&t %#om no final determination of t#e
case can be #ad.
A
,#e joinder of indisensable
arties is mandatory and co&rts cannot roceed
%it#o&t t#eir resence.
!
:#enever it aears to
t#e co&rt in t#e co&rse of a roceeding t#at an
indisensable arty #as not been joined$ it is t#e
d&ty of t#e co&rt to sto t#e trial and order t#e
incl&sion of s&c# arty.
(

3o%ever$ t#e r&le on mandatory joinder of
indisensable arties is not alicable to t#e
instant case.
,#ere is no dis&te t#at Constante aointed
Artigo in a #and%ritten note dated *an&ary 2D$
1(!D to sell t#e roerties of t#e 7e Castros for
)2@ million at a C ercent commission. ,#e
a&t#ority %as on a first come$ first serve basis.
Constante signed t#e note as o%ner and as
reresentative of t#e ot#er co?o%ners. 8nder t#is
note$ a contract of agency %as clearly constit&ted
bet%een Constante and Artigo. :#et#er Constante
aointed Artigo as agent$ in ConstanteKs individ&al
or reresentative caacity$ or bot#$ t#e 7e Castros
cannot seek t#e dismissal of t#e case for fail&re to
imlead t#e ot#er co?o%ners as indisensable
arties. ,he ;e Castros admit that the other
12C
co/o8ners are solidarily liable under the
contract of a#ency$
10
citing Article 1(1C of t#e
Civil Code$ %#ic# reads.
Art. 1(1C. /f t%o or more ersons #ave aointed
an agent for a common transaction or &ndertaking$
t#ey s#all be solidarily liable to t#e agent for all t#e
conseG&ences of t#e agency.
,#e solidary liability of t#e fo&r co?o%ners$
#o%ever$ militates against t#e 7e CastrosK t#eory
t#at t#e ot#er co?o%ners s#o&ld be imleaded as
indisensable arties.
:#en t#e la% exressly rovides for solidarity of
t#e obligation$ as in t#e liability of co?rincials in a
contract of agency$ eac# obligor may be comelled
to ay t#e entire obligation.
12
,#e agent may
recover t#e %#ole comensation from any one of
t#e co?rincials$ as in t#is case.
/ndeed$ Article 121" of t#e Civil Code rovides t#at
a creditor may s&e any of t#e solidary debtors.
,#is article reads.
Art. 121". ,#e creditor may roceed against any
one of t#e solidary debtors or some or all of t#em
sim&ltaneo&sly. ,#e demand made against one of
t#em s#all not be an obstacle to t#ose %#ic# may
s&bseG&ently be directed against t#e ot#ers$ so
long as t#e debt #as not been f&lly collected.
,#&s$ t#e Co&rt #as r&led in Gperators
,ncorporated vs. American Fiscuit Co., ,nc. t#at
Ix x x solidarity does not make a solidary
obli#or an indispensable party in a suit filed
by the creditor. Article 121" of t#e Civil Code
says t#at t#e creditor \may roceed against
anyone of t#e solidary debtors or some or all of
t#em sim&ltaneo&slyK.I 09m#asis s&lied1
2ode o' E0tin4ui1ment o' A4en*7
Garcia v Ce 7an$ano
;arciso 'an6ano %as a merc#ant %#o %ent to
-ain in 'ay 1(10 and died t#ere in -etember
1(1@. 3e gave a general o%er of atty to #is son$
Angel 'an6ano on t#e (
t#
of +ebr&ary 2010$ and a
second general o%er of atty to #is %ife$ *osefa
-amson on t#e 2C
t#
of 'arc#
'an6ano %as t#e o%ner of a #alf interest in a small
steamer$ -an ;icolas t#is interest %as
s&bseG&ently bo&g#t by *&an 5arcia from ;arciso$
t#ro&g# Angel 'an6ano. /t %as named after #is
son$ Ag&stin 5arcia %#o %as a minor and %#o
died s#ortly t#ereafter.
2n t#e 2@
rd
of *&ly 2010$ Angel 'an6ano exec&ted
a contract$ by virt&e of t#e 5)A$ %it# *&an 5arcia
for a loan of )12S %it# mortgage &on t#ree lands
to be &sed by t#e #o&se of 'an6ano. ,#e
registration of t#e mortgage %as ref&sed by t#e
registrar.
After t#e deat# of ;arciso$ #is %ife$ *osefe -amson
%as named as administratrix. ;o claims %ere
resented against t#e estate.
2n t#e 1C
t#
of 'ay 1(1C$ 5arcia filed #is action in
t#e C+/ to foreclose t#e so?called mortgage. *osefa
de 'an6ano filed a leading stating t#at t#e estate
#ad already been dividedE t#at t#e roerty #as
already been assigned to #er and #er c#ildren.
)laintiff filed #is amended comlaint and made t#e
%#ole family individ&al defendants and t#e minors
to be reresented by t#eir g&ardian ad litem asking
t#em for )1DS being t#e amo&nt t#en d&e on t#e
oen acco&ntE and t#at in case t#e j&dgment %as
not aid$ t#at t#e mortgaged roerty be sold to
ay t#e debt.
7efendants alleged t#at t#ey kne% s&c# a
mortgage doc&ment set & in t#e comlaint
existed$ b&t t#ey denied t#e doc&ment as t#ey
%ere not certain t#at it %as an exact coyE t#ey
denied its efficacy and legal effectE t#ey denied t#e
j&risdiction of t#e co&rt to #ear and decide t#e
case$ and alleged t#at t#e action #ad rescribed.
,#ey also filed a co&nter?claim against 5arcia in
%#ic# t#ey alleged t#at ;arciso 'an6ano %as t#e
o%ner of one #alf of t#e small steamer$ t#at 5arcia$
taking advantage of t#e yo&t# and inexerience of
Angel$ falsely and malicio&sly made #im believe
t#at #e #ad a&t#ority &nder t#e 5)A to sell t#e #alf
interest in t#e -an ;icolas and t#at #e did so. And
since t#e date of said sale$ t#e laintiff #ad illegally
aroriated all rents and rofits of t#e boat to #is
o%n &se %#ic# amo&nt to )@0SLyear. ,#ey ask t#e
co&rt to absolve t#em from t#e comlaint$ to
declare t#em o%ners of #alf of t#e steamer$ and to
order 5arcia to render a detailed acco&nt of all t#e
rofits received from t#e steamer.
4,C. no legal mortgage and ordered *osefa -amson
to ay )12S and dismissed ot#er claims.
-C.
1. &e8t i a4aint t1e etate. ,#ere %as
no novation of t#e obligation and t#e art
of t#e j&dgment #olding only *osefa liable
m&st be reversed.
2. No .roo' in t1e re*ord t1at t1e on
:ne? o' t1e u8eIuent GPA to 1i
mot1er. Civil code states t#at. the
appointment of a new a#ent for the same
business produces a revocation of the
previous a#ency from the day on which
notice was #iven to the former a#ent, (.
/t %as necessary for t#e defendants to
establis# t#eir co&nterclaim to rove t#at
t#e son #ad notice of t#e second 5)A.
Angel 'an6ano %as acting &nder a valid
5)A from #is fat#er %#ic# #ad not been
legally revoked on t#e date of t#e sale of
t#e #alf interest in t#e steamer to t#e
laintiffFs son.
3. "1e GPA aut1ori5e t1e a-e o' rea-
.ro.ert7. ,#e b&ying and mortgaging t#e
same$ t#e borro%ing of money and in fact
is general and comlete. ,#e o%er does
not exressly state t#at t#e agent may sell
t#e boat$ b&t a o%er so f&ll and comlete
and a&t#ori6ing t#e sale of real roerty
m&st necessarily carry %it# it t#e rig#t to
sell a #alf interest in a small boat. ,#e sale
12"
%as necessary in order to get money or a
credit %it#o&t %#ic# it %o&ld be imossible
to contin&e t#e b&siness %#ic# %as being
cond&cted in t#e name of ;arciso and for
#is benefit.
Cissentin#:
7efendant *osefa s#o&ld be obliged to ay #alf of
t#e s&m stated in #er letter %it# interest at
"NLann&m. Conj&gal artners#i roerty is
directly liable for t#e ayment of t#e debts of s&c#
artners#i and t#at in order to determine %#at
t#is roerty is$ it is indisensable t#at a
liG&idation be made of t#e roerty t#at may #ave
been left by t#e deceased. =iG&idation and
artition #ad already been effected.
CM$ 5o##in# v CA
)etitioner C'- is a forest concessionaire engaged
in t#e logging b&siness$ %#ile rivate resondent
74AC24 is engaged in t#e b&siness of exorting
and selling logs and l&mber. 2n A&g&st 2!$ 1(CA$
C'- and 74AC24 entered into a contract of
agency 1 %#ereby t#e former aointed t#e latter
as its excl&sive exort and sales agent for all logs
t#at t#e former may rod&ce$ for a eriod of five
0C1 years.
Abo&t six mont#s rior to t#e exiration of t#e
agreement$ %#ile on a tri to ,okyo$ *aan$ C'-Ks
resident and general manager and legal co&nsel$
discovered t#at 74AC24 #ad &sed -#inko ,rading
Co.$ =td. 0-#inko for brevity1 as agent$
reresentative or liaison officer in selling C'-Ks
logs in *aan for %#ic# -#inko earned a
commission of 8.-. U1.00 er 1$000 board feet
from t#e b&yer of t#e logs. 8nder t#is
arrangement$ -#inko %as able to collect a total of
8.-. UAA$2"D."A.
C'- claimed t#at t#is commission aid to -#inko
%as in violation of t#e agreement and t#at it 0C'-1
is entitled to t#is amo&nt as art of t#e roceeds of
t#e sale of t#e logs. C'- contended t#at since
74AC24 #ad been aid t#e CN commission &nder
t#e agreement$ it is no longer entitled to t#e
additional commission aid to -#inko as t#is
tantamo&nt to 74AC24 receiving do&ble
comensation for t#e services it rendered.
After t#is discovery$ C'- sold and s#ied logs
val&ed at 8.-. UA@($@21.1@ or
)2$!!@$@C1.(0$ D directly to several firms in *aan
%it#o&t t#e aid or intervention of 74AC24.
C'- s&ed 74AC24 for t#e commission received by
-#inko and for moral and exemlary damages$
%#ile 74AC24 co&nterclaimed for its commission$
amo&nting to )1DD$1"A.C($ from t#e sales made by
C'- of logs to *aanese firms. /n its rely$ C'-
averred as a defense to t#e co&nterclaim t#at
74AC24 #ad retained t#e s&m of )101$1"A.C( as
art of its commission for t#e sales made by
C'-. ,#&s$ as its co&nterclaim to 74AC24Ks
co&nterclaim$ C'- demanded 74AC24 ret&rn t#e
amo&nt it &nla%f&lly retained. 74AC24 later filed
an amended co&nterclaim$ alleging t#at t#e
balance of its commission on t#e sales made by
C'- %as )D2$"@0.!2$ t#&s imliedly admitting t#at
it retained t#e amo&nt alleged by C'-.
4,C. dismissed t#e comlaint. o evidence %as
resented to s#o% t#at -#inko received t#e
commission of 8.-. UAA$2"D."A arising from t#e
sale of C'-Ks logs in *aan$ t#o&g# t#e trial co&rt
stated t#at I-#inko %as able to collect t#e total
amo&nt of UAA$2"D."A 8- 7ollars.
CA. Affirmed 4,C decision.
-C. Affirmed. 3o%ever$ Co&rt finds merit in C'-Ks
contention t#at t#e aellate co&rt erred in #olding
t#at 74AC24 %as entitled to its commission from
t#e sales made by C'- to *aanese firms.
1. ,#e rincial may revoke a contract of
agency at %ill$ and s&c# revocation may be
exress$ or imlied$ and may be availed of
even if t#e eriod fixed in t#e contract of
agency as not yet exired. As t#e rincial
#as t#is absol&te rig#t to revoke t#e
agency$ t#e agent can not object t#eretoE
neit#er may #e claim damages arising from
s&c# revocation$ &nless it is s#o%n t#at
s&c# %as done in order to evade t#e
ayment of agentKs commission.
2. -ince t#e contract of agency %as revoked
by C'- %#en it sold its logs to *aanese
firms %it#o&t t#e intervention of 74AC24$
t#e latter is no longer entitled to its
commission from t#e roceeds of s&c# sale
and is not entitled to retain %#atever
moneys it may #ave received as its
commission for said transactions. ;eit#er
%o&ld 74AC24 be entitled to collect
damages from C'-$ since damages are
generally not a%arded to t#e agent for t#e
revocation of t#e agency$ and t#e case at
bar is not one falling &nder t#e excetion
mentioned$ %#ic# is to evade t#e ayment
of t#e agentKs commission.
;y Buncio and Co v On# )uan Ca
,#is is a s&it over a rice mill
and camarin sit&ated at 7ao$ )rovince of Cai6.
)laintiff claims t#at t#e roerty belongs to its
j&dgment debtor$ 2ng 5&an Can$ %#ile defendants
*&an ,ong and )&a 5iok 9ng claim as o%ner and
lessee of t#e o%ner by virt&e of a deed dated *&ly
@1$ 1(@1$ by 2ng 5&an Can$ *r.
After trial$ t#e Co&rt of +irst /nstance of Cai6
#eld t#at t#e deed %as invalid and t#at t#e
roerty %as s&bject to t#e exec&tion %#ic# #as
been levied on said roerties by t#e j&dgment
creditor of t#e o%ner. 7efendants *&an ,ong and
)&a 5iok bring t#is aeal and insist t#at t#e deed
of t#e @1st of *&ly$ 1(@1$ is valid.
,#e first recital of t#e deed is t#at 2ng 5&an
Can$ *r.$ as agent of 2ng 5&an Can$ t#e rorietor
of t#e commercial firm of 2ng 5&an Can P -ons$
sells t#e rice?mill and camarin for )1@$000 and
gives as #is a&t#ority t#e o%er of attorney dated
12A
t#e 2@d of 'ay$ 1(2!$ a coy of t#is &blic
instr&ment being attac#ed to t#e deed and
recorded %it# t#e deed in t#e office of t#e register
of deeds of Cai6. ,#e receit of t#e money
ackno%ledged in t#e deed %as to t#e agent$ and
t#e deed %as signed by t#e agent in #is o%n name
and %it#o&t any %ords indicating t#at #e %as
signing it for t#e rincial.
=eaving aside t#e irreg&larities of t#e deed
and coming to t#e o%er of attorney referred to in
t#e deed and registered t#ere%it#$ it is at once
seen t#at it is not a general o%er of attorney b&t
a limited one and does not give t#e exress o%er
to alienate t#e roerties in G&estion. 0Article 1A1@
of t#e Civil Code.1
Aellants claim t#at t#is defect is c&red by
9x#ibit 1$ %#ic# &rorts to be a general o%er of
attorney given to t#e same agent in 1(20. Article
1A@2 of t#e Civil Code is silent over t#e artial
termination of an agency. "1e ma:in4 and
a**e.tin4 o' a ne? .o?er o' attorne7,
?1et1er it en-ar4e or de*reae t1e .o?er
o' t1e a4ent under a .rior .o?er o' attorne7,
mut 8e 1e-d to u..-ant and re)o:e t1e
-atter ?1en t1e t?o are in*onitent. I' t1e
ne? a..ointment ?it1 -imited .o?er doe
not re)o:e t1e 4enera- .o?er o' attorne7,
t1e e0e*ution o' t1e e*ond .o?er o'
attorne7 ?ou-d 8e a mere 'uti-e 4eture.
,#e title of 2ng 5&an Can not #aving been
divested by t#e so?called deed of *&ly @1$ 1(@1$ #is
roerties are s&bject to attac#ment and
exec&tion.
A secial o%er of atty giving t#e son t#e a&t#ority
to sell t#e rincials roerties is deemed revoked
by a s&bseG&ent general o%er of atty t#at does
not give s&c# o%er to t#e son$ and any sale
effected t#ereafter by t#e son in t#e name of t#e
fat#er %o&ld be void.
,#e j&dgment aealed from is t#erefore
affirmed. Costs against aellants. -o ordered.
*epublic v -van#elista
=egasi is t#e o%ner of a land located in Bigte$
;or6agaray$ B&lacan. /n ;ovember 1((($ etitioner
Calimlim$ reresenting t#e 4e&blic of t#e
)#iliines$ and as t#en #ead of t#e /ntelligence
-ervice of t#e Armed +orces of t#e )#iliines and
t#e )residential -ec&rity 5ro&$ entered into a
'emorand&m of Agreement 0'2A1 %it# one Ciriaco
4eyes. ,#e '2A granted 4eyes a ermit to #&nt for
treas&re in a land in Bigte$ ;or6agaray$ B&lacan.
2n +ebr&ary 1C$ 2000$ =egasi exec&ted a secial
o%er of attorney 0-)A1 aointing #is ne#e%$
rivate resondent 5&tierre6$ as #is attorney?in?
fact. 5&tierre6 %as given t#e o%er to deal %it#
t#e treas&re #&nting activities on =egasiKs land
and to file c#arges against t#ose %#o may enter it
%it#o&t t#e latterKs a&t#ority. egasi agreed to give
5&tierre6 D0N of t#e treas&re t#at may be fo&nd in
t#e land.
2n +ebr&ary 2($ 2000$ 5&tierre6 filed a case for
damages and inj&nction against etitioners for
illegally entering =egasiKs land. 3e #ired t#e legal
services of Atty. 3omobono Ada6a. ,#eir contract
rovided t#at as legal fees$ Atty. Ada6a s#all be
entitled to @0N of =egasiKs s#are in %#atever
treas&re may be fo&nd in t#e land. /n addition$
5&tierre6 agreed to ay Atty. Ada6a )C$000.00 as
aearance fee er co&rt #earing and defray all
exenses for t#e cost of t#e litigation.
2n 'arc# A$ 2000$ t#e -)A %as revoked by =egasi
t#ro&g# a deed of revocation.
4,C. )reliminary inj&nction is granted.
CA. affirmed 4,C decision.
-C. Affirmed 4,C and CA.
Art. 1!"! of t#e Civil Code rovides t#at by t#e
contract of agency$ an agent binds #imself to
render some service or do somet#ing in
reresentation or on be#alf of anot#er$ kno%n as
t#e rincial$ %it# t#e consent or a&t#ority of t#e
latter.
A contract of agency is generally revocable as it is
a ersonal contract of reresentation based on
tr&st and confidence reosed by t#e rincial on
#is agent. As t#e o%er of t#e agent to act
deends on t#e %ill and license of t#e rincial #e
reresents$ t#e o%er of t#e agent ceases %#en
t#e %ill or ermission is %it#dra%n by t#e rincial.
,#&s$ generally$ t#e agency may be revoked by t#e
rincial at %ill.
3o%ever$ an excetion to t#e revocability of a
contract of agency is %#en it is co&led %it#
interest$ i.e.$ if a bilateral contract deends &on
t#e agency. ,#e reason for its irrevocability is
beca&se t#e agency becomes art of anot#er
obligation or agreement. /t is not solely t#e rig#ts
of t#e rincial b&t also t#at of t#e agent and t#ird
ersons %#ic# are affected. 3ence$ t#e la%
rovides t#at in s&c# cases$ t#e agency cannot be
revoked at t#e sole %ill of t#e rincial. /t is clear
t#at t#e treas&re t#at may be fo&nd in t#e land is
t#e s&bject matter of t#e agencyE t#at &nder t#e
-)A$ 5&tierre6 can enter into contract for t#e legal
services of Atty. Ada6aE and$ t#&s 5&tierre6 and
Atty. Ada6a #ave an interest in t#e s&bject matter
of t#e agency$ i.e.$ in t#e treas&res t#at may be
fo&nd in t#e land. ,#is bilateral contract deends
on t#e agency and t#&s renders it as one co&led
%it# interest$ irrevocable at t#e sole %ill of t#e
rincial =egasi.
:#en an agency is constit&ted as a cla&se in a
bilateral contract$ t#at is$ %#en t#e agency is
inserted in anot#er agreement$ t#e agency ceases
to be revocable at t#e leas&re of t#e rincial as
t#e agency s#all no% follo% t#e condition of t#e
bilateral agreement. ConseG&ently$ t#e 7eed of
4evocation exec&ted by =egasi #as no effect. ,#e
a&t#ority of 5&tierre6 to file and contin&e %it# t#e
rosec&tion of t#e case at bar is &naffected.
2n t#e second iss&e$ %e #old t#at t#e iss&ance of
t#e %rit of reliminary inj&nction is j&stified. A %rit
of reliminary inj&nction is an ancilliary or
reventive remedy t#at is resorted to by a litigant
to rotect or reserve #is rig#ts or interests and for
12!
no ot#er &rose d&ring t#e endency of t#e
rincial action.
'ational $u#ar ,radin# v P'B
;A-8,4A$ in order to finance its &ndertaking as t#e
marketing agent of )3/=-8C2' 0%#ic# %as by la%
t#e sole b&ying and selling agent of s&gar on t#e
Auedan ermit level1$ alied for and %as granted
a )D0!' 4evolving Credit =ine %it# );B$ by %#ic#
every time ;A-8,4A availed of t#e credit line$ it
exec&ted a romissory note in favor of );B.
9vent&ally$ in order to stabili6e s&gar liG&idation
rices at a targeted minim&m rice er picul$
)3/=-8C2' P ;A-8,4A made a liG&idation
sc#eme of t#e s&gar Auedans by constit&ting );B
as t#e atty?in?fact &nder %ritten instr&ctions 8on
notice from ;A-8,4A$ );B s#all credit t#e
individ&al rod&cer and millers loan acco&nts for
t#eir s&gar roceeds and s#all treat t#e same as
loans of ;A-8,4A.
9eld: Also$ t#e relations#i bet%een
;A-8,4AL-4A and );B %#en t#e former
constit&ted t#e latter as its atty?in?fact is not a
simle agency. ;A-8,4AL-4A #as assigned and
ractically s&rrendered its rig#ts in favor of );B for
a s&bstantial consideration. ,o reiterate$
;A-8,4AL-4A exec&ted romissory notes in favor
of );B every time it availed of t#e credit line. ,#e
agency establis#ed bet%een t#e arties is one
co&led %it# interest %#ic# cannot be revoked or
cancelled at %ill by any of t#e arties.
Bacalin# v Muya
)etitioner ;elita Bacaling and #er so&se %ere t#e
o%ners of t#ree 0@1 arcels of land$ %it# a total
area of (.("@1 #ectares. /n 1(CC t#e land#olding
%as s&bdivided into one #&ndred ten 110 s&b?lots.
2n 'ay 1"$ 1(CC$ t#e land#olding %as rocessed
and aroved as IresidentialI or Is&bdivisionI by
t#e ;ational 8rban )lanning Commission 0;8)C1.
2n 'ay 2D$ 1(CC t#e B&rea& of =ands aroved
t#e corresonding s&bdivision lan for &roses of
develoing t#e said roerty into a lo%?cost
residential comm&nity %#ic# t#e so&ses referred
to as t#e Bacaling?'oreno -&bdivision.
/n 1(CA$ a real estate loan %as made by Bacaling
for ) "00$000 from 5-/-. ,#is loan %as sec&red by
a mortgage on t#e 110 lots. ,#e Bacalings failed to
ay t#e amorti6ations on t#e loan and
conseG&ently t#e mortgage constit&ted on t#e 110
s&b?lots %as foreclosed by t#e 5-/-. After a co&rt
case t#at reac#ed all t#e %ay to t#is Co&rt$ ;elita
Bacaling 0by t#en a %ido%1 in 1(!( %as event&ally
able to restore to #erself o%ners#i of t#e 110 s&b?
lots.
/n 1(A2 and t#ereafter$ resondents '&ya$ Amor$
*ere6a$ =a6arte and ,onocante clandestinely
entered and occ&ied t#e entire 110 s&b?lots and
grabbed excl&sively for t#emselves t#e said (.("@1
#ectare land#olding. Aarently$ resondents took
advantage of t#e roblematic eace and order
sit&ation at t#e onset of martial la% and t#e
foreclos&re of t#e lots by 5-/-. ,#ey so%ed t#e lots
as if t#e same %ere t#eir o%n$ and altered t#e
roads$ drainage$ bo&ndaries and mon&ments
establis#ed t#ereon.
/n A&g&st 21$ 1((0$ etitioner *ose *&an ,ong$
toget#er %it# *&an and -iady$ bo&g#t from ;elita
Bacaling t#e s&bject 110 s&b?lots for 2ne 'illion
-even 3&ndred ,#o&sand )esos
0)1$A00$000.001. ,#e said sale %as effected after
Bacaling #as re&rc#ased t#e s&bject roerty
from t#e 5overnment -ervice /ns&rance -ystem.
,o sec&re erformance of t#e contract of absol&te
sale and facilitate t#e transfer of title of t#e lots to
*ose *&an ,ong$ Bacaling aointed #im in 1((2 as
#er attorney?in?fact$ &nder an irrevocable secial
o%er of attorney.
/t is significant to note t#at ten 0101 years after t#e
erfection and exec&tion of t#e sale$ or on Aril 2"$
2000$ Bacaling filed a comlaint to n&llify t#e
contract of sale. ,#e s&it %as$ #o%ever$ dismissed
%it# rej&dice and t#e dismissal #as long become
final and exec&tory.
+ollo%ing t#e sale of t#e 110 s&b?lots and &sing t#e
irrevocable secial o%er of attorney exec&ted in
#is favor$ etitioner ,ong 0toget#er %it# Bacaling1
filed a etition for cancellation of t#e certificates of
land transfer against resondents and a certain
*aime 4&el %it# t#e 07A41 2ffice in /loilo City. ,#e
7A4$ #o%ever$ dismissed t#e etition on t#e
gro&nd t#at t#ere #ad been no legitimate
conversion of t#e classification of t#e 110 s&b?lots
from agric&lt&ral to residential rior to 2ctober 21$
1(A2 %#en 2eration =and ,ransfer &nder ).7. ;o.
A2 took effect. Bacaling and ,ong aealed to t#e
7A4 Central 2ffice b&t t#eir aeal %as similarly
rejected.
2n -etember 1($ 1((A$ Bacaling and ,ong
aealed t#e adverse 7A4 2rders to t#e 2ffice of
t#e )resident %#ic# reversed t#em in toto.
Co&rt of Aeals reversed t#e 2) 7ecision and
validated t#e certificates of land transfers in favor
of resondents %it#o&t #o%ever rom&lgating a
r&ling on etitioner ,ongKs s&osedly ens&ing lack
of material interest in t#e controversy as a res&lt of
t#e manifestation.
=ong after iss&es %ere joined in t#e instant
roceedings$ or on 2ctober !$ 2001$ etitioner
;elita Bacaling res&rrected #er manifestation %it#
t#e Co&rt of Aeals and moved to
%it#dra%Ldismiss t#e resent etition on t#e
gro&nd t#at t#e irrevocable o%er of attorney in
favor of etitioner *ose *&an ,ong #ad been
n&llified by #er and t#at ,ong conseG&ently lacked
t#e a&t#ority to aear before t#is Co&rt. -#e also
manifested t#at$ contrary to t#e arg&ments of
etitioner ,ong$ resondents %ere bona
fide tenants of t#e one #&ndred ten 110 s&b?lots
%#ic# %ere allegedly agric&lt&ral and not
residential ieces of realty.
12(
-C. -&bstantively$ %e r&le t#at Bacaling cannot
revoke at #er %#im and leas&re t#e irrevocable
secial o%er of attorney %#ic# s#e #ad d&ly
exec&ted in favor of etitioner *ose *&an ,ong and
d&ly ackno%ledged before a notary &blic. ,#e
agency$ to stress$ is one co&led %it# interest
%#ic# is exlicitly irrevocable since t#e deed of
agency %as reared and signed andLor acceted
by etitioner ,ong and Bacaling %it# a vie% to
comleting t#e erformance of t#e contract of sale
of t#e 110 s&b?lots. /t is for t#is reason t#at t#e
mandate of t#e agency constit&ted ,ong as t#e
real arty in interest to remove all clo&ds on t#e
title of Bacaling and t#at$ after all t#ese cases are
resolved$ to &se t#e irrevocable secial o%er of
attorney to &ltimately Ica&se and effect t#e
transfer of t#e aforesaid lots in t#e name of t#e
vendees Y,ong %it# t%o 021 ot#er b&yersZ and
exec&te and deliver doc&mentLs or instr&ment of
%#atever nat&re necessary to accomlis# t#e
foregoing acts and deeds.I ,#e fid&ciary
relations#i in#erent in ordinary contracts of
agency is relaced by material consideration %#ic#
in t#e tye of agency #erein establis#ed bars t#e
removal or dismissal of etitioner ,ong as
BacalingKs attorney?in?fact on t#e gro&nd of alleged
loss of tr&st and confidence.
:#ile Bacaling alleges fra&d in t#e erformance of
t#e contract of agency to j&stify its revocation$ it is
significant to note t#at allegations are not roof$
and t#at roof reG&ires t#e intervention of t#e
co&rts %#ere bot# etitioners ,ong and Bacaling
are #eard. -tated ot#er%ise$ Bacaling cannot vest
in #erself j&st like in ordinary contracts t#e
&nilateral a&t#ority of determining t#e existence
and gravity of gro&nds to j&stify t#e rescission of
t#e irrevocable secial o%er of attorney. /n -evilla
v. Co&rt of AealsD2 %e t#&s #eld?
B&t &nlike simle grants of a o%er of attorney$ t#e
agency t#at %e #ereby declare to be comatible
%it# t#e intent of t#e arties$ cannot be revoked at
%ill. ,#e reason is t#at it is one co&led %it# an
interest$ t#e agency #aving been created for t#e
m&t&al interest of t#e agent and t#e rincial xxx
Y)etitionerFsZ interest$ obvio&sly$ is not limited to
t#e commissions s#e earned as a res&lt of #er
b&siness transactions$ b&t one t#at extends to t#e
very s&bject matter of t#e o%er of management
delegated to #er. /t is an agency t#at$ as %e said$
cannot be revoked at t#e leas&re of t#e rincial.
Accordingly$ t#e revocation comlained of s#o&ld
entitle t#e etitioner x x x to damages.
<alen=uela v CA
)etitioner Art&ro ). Malen6&ela 0Malen6&ela for
s#ort1 is a 5eneral Agent of rivate resondent
)#iliine American 5eneral /ns&rance Comany$
/nc. 0)#ilamgen for s#ort1 since 1("C. As s&c#$ #e
%as a&t#ori6ed to solicit and sell in be#alf of
)#ilamgen all kinds of non?life ins&rance$ and in
consideration of services rendered %as entitled to
receive t#e f&ll agentKs commission of @2.CN from
)#ilamgen. +rom 1(A@ to 1(AC$ Malen6&ela
solicited marine ins&rance from one of #is clients$
t#e 7elta 'otors$ /nc. 07ivision of 9lectronics
Airconditioning and 4efrigeration1 in t#e amo&nt of
)D.D 'illion from %#ic# #e %as entitled to a
commission of @2N 09x#ibit IBI1. 3o%ever$
Malen6&ela did not receive #is f&ll commission
%#ic# amo&nted to )1." 'illion from t#e )D.D
'illion ins&rance coverage of t#e 7elta 'otors.
7&ring t#e eriod 1(A" to 1(A!$ remi&m
ayments amo&nting to )1$(D"$!!".00 %ere aid
directly to )#ilamgen and Malen6&elaKs commission
to %#ic# #e is entitled amo&nted to )"@2$A@A.00.
)#ilamgen and its )resident$ Bienvenido '. Aragon
insisted on t#e s#aring of t#e commission %it#
Malen6&ela at C0?C0 s#aring. Malen6&ela firmly
reiterated #is objection to t#e roosals of
resondents.
Beca&se of t#e ref&sal of Malen6&ela$ )#ilamgen
and its officers took drastic action against
Malen6&ela. ,#ey. 0a1 reversed t#e commission d&e
#im by not crediting in #is acco&nt t#e commission
earned from t#e 7elta 'otors$ /nc. ins&ranceE 0b1
laced agency transactions on a cas# and carry
basisE 0c1 t#reatened t#e cancellation of olicies
iss&ed by #is agencyE and 0d1 started to leak o&t
ne%s t#at Malen6&ela #as a s&bstantial acco&nt
%it# )#ilamgen. All of t#ese acts res&lted in t#e
decline of #is b&siness as ins&rance agent. ,#en$
)#ilamgen terminated t#e 5eneral Agency
Agreement of Malen6&ela.
,#e etitioners so&g#t relief by filing t#e comlaint
against t#e rivate resondents.
4,C. reinstate laintiff Art&ro ). Malen6&ela as its
5eneral Agent$ and to ay laintiffs.
CA. )laintiff?aellee Malen6&ela to ay defendant?
aellant )#ilamgen t#e s&m of one million nine
#&ndred t#irty t%o t#o&sand five #&ndred t#irty?
t%o esos and seventeen centavos
0)1$(02$C@2.1A1$ %it# legal interest t#ereon from
t#e date of finality of t#is j&dgment &ntil f&lly aid.
-C. affirmed 4,CFs decision on t#e ayments b&t
declared t#at t#e contract&al relations#i bet%een
Art&ro ). Malen6&ela and )#iliine American
5eneral /ns&rance Comany s#all be deemed
terminated &on t#e satisfaction of t#e j&dgment
as modified.
/n t#e ins&rance b&siness in t#e )#iliines$ t#e
most diffic&lt and fr&strating eriod is t#e
solicitation and ers&asion of t#e rosective
clients to b&y ins&rance olicies. ;ormally$ agents
%o&ld enco&nter m&c# embarrassment$ diffic&lties$
and oftentimes fr&strations in t#e solicitation and
roc&rement of t#e ins&rance olicies. ,o sell
olicies$ an agent exerts great effort$ atience$
erseverance$ ingen&ity$ tact$ imagination$ time
and money. /n t#e case of Malen6&ela$ #e %as able
to b&ild & an Agency from scratc# in 1("C to a
#ig#ly rod&ctive enterrise %it# gross billings of
abo&t ,%o 'illion +ive 3&ndred ,#o&sand )esos
0)2$C00$000.001 remi&ms er ann&m. ,#e records
s&stain t#e finding t#at t#e rivate resondent
1@0
started to covet a s#are of t#e ins&rance b&siness
t#at Malen6&ela #ad b&ilt &$ develoed and
n&rt&red to rofitability t#ro&g# over t#irteen 01@1
years of atient %ork and erseverance. :#en
Malen6&ela ref&sed to s#are #is commission in t#e
7elta acco&nt$ t#e boom s&ddenly fell on #im.
,#e rivate resondents by t#e simle exedient of
terminating t#e 5eneral Agency Agreement
aroriated t#e entire ins&rance b&siness of
Malen6&ela. :it# t#e termination of t#e 5eneral
Agency Agreement$ Malen6&ela %o&ld no longer be
entitled to commission on t#e rene%al of ins&rance
olicies of clients so&rced from #is agency. :orse$
desite t#e termination of t#e agency$ )#ilamgen
contin&ed to #old Malen6&ela jointly and severally
liable %it# t#e ins&red for &naid remi&ms. 8nder
t#ese circ&mstances$ it is clear t#at Malen6&ela #ad
an interest in t#e contin&ation of t#e agency %#en
it %as &nceremonio&sly terminated not only
beca&se of t#e commissions #e s#o&ld contin&e to
receive from t#e ins&rance b&siness #e #as
solicited and roc&red b&t also for t#e fact t#at by
t#e very acts of t#e resondents$ #e %as made
liable to )#ilamgen in t#e event t#e ins&red fail to
ay t#e remi&ms d&e. ,#ey are estoed by t#eir
o%n ositive averments and claims for damages.
,#erefore$ t#e resondents cannot state t#at t#e
agency relations#i bet%een Malen6&ela and
)#ilamgen is not co&led %it# interest. I,#ere may
be cases in %#ic# an agent #as been ind&ced to
ass&me a resonsibility or inc&r a liability$ in
reliance &on t#e contin&ance of t#e a&t#ority
&nder s&c# circ&mstances t#at$ if t#e a&t#ority be
%it#dra%n$ t#e agent %ill be exosed to ersonal
loss or liabilityI 0-ee '9C C"( . D0"1.
+&rt#ermore$ t#ere is an excetion to t#e rincile
t#at an agency is revocable at %ill and t#at is %#en
t#e agency #as been given not only for t#e interest
of t#e rincial b&t for t#e interest of t#ird ersons
or for t#e m&t&al interest of t#e rincial and t#e
agent. /n t#ese cases$ it is evident t#at t#e agency
ceases to be freely revocable by t#e sole %ill of t#e
rincial.
$evilla v CA
,o&rist :orld -ervice 0,:-1$ reresented by
Canilao leased t#e remises belonging to ;og&era.
-evilla #eld #erself solidarily liable %it# t#e
ayment of t#e rental agreed on. 2n t#e leased
remise oened a branc# of ,:- ran by -evilla.
,#eir arrangement %as t#at of t#e AN commission
from airline ticket sales$ DN %as to go to -evilla
and @N %as to be %it##eld by ,:-.
,:- aears to #ave been informed t#at -evilla
%as connected %it# a rival firm. ,:- considered
closing do%n its office. ,%o board resol&tions %ere
assed$ t#e first abolis#ing t#e office of t#e
manager and vice?resident of t#e ,o&rist :orld
-ervice$ /nc.$ 9rmita Branc#$ and t#e
second$a&t#ori6ing t#e cororate secretary to
receive t#e roerties of t#e ,o&rist :orld -ervice
t#en located at t#e said branc# office.
,#e Cororate secretary Canilao %ent over to t#e
branc# office on one nig#t$ and$ finding t#e
remises locked$ and$ being &nable to contact =ina
-evilla$ #e adlocked t#e remises on *&ne D$ 1("2
to rotect t#e interests of t#e ,o&rist :orld
-ervice. :#en neit#er t#e aellant =ina -evilla
nor any of #er emloyees co&ld enter t#e locked
remises$ a comlaint %all filed by t#e #erein
aellants against t#e aellees %it# a rayer for
t#e iss&ance of mandatory reliminary inj&nction.
4,C. ,:- #ad a&t#ority to terminate t#e lease and
adlock t#e remises. =ina -evilla %as a mere
emloyee.
CA. Affirmed 4,C decision.
-C. 4eversed.
,#e records %ill s#o% t#at t#e etitioner$ =ina
-evilla$ %as not s&bject to control by t#e rivate
resondent ,o&rist :orld -ervice$ /nc.$ eit#er as to
t#e res&lt of t#e enterrise or as to t#e means &sed
in connection t#ere%it#. /n t#e first lace$ &nder
t#e contract of lease covering t#e ,o&rist :orlds
9rmita office$ s#e #ad bo&nd #erself in solid&mas
and for rental ayments$ an arrangement t#at
%o&ld be like claims of a master?servant
relations#i. ,r&e t#e resondent Co&rt %o&ld later
minimi6e #er articiation in t#e lease as one of
mere g&aranty$ 12 t#at does not make #er an
emloyee of ,o&rist :orld$ since in any case$ a
tr&e emloyee cannot be made to art %it# #is
o%n money in &rs&ance of #is emloyerKs
b&siness$ or ot#er%ise$ ass&me any liability
t#ereof.
/t is f&rt#er admitted t#at -evilla %as not in t#e
comanyKs ayroll. 8nlike an emloyee t#en$ %#o
earns a fixed salary &s&ally$ s#e earned
comensation in fl&ct&ating amo&nts deending on
#er booking s&ccesses.
/t is t#e Co&rtKs considered oinion$ t#at %#en t#e
etitioner$ =ina -evilla$ agreed to 0%o1man t#e
rivate resondent$ ,o&rist :orld -ervice$ /nc.Ks
9rmita office$ s#e m&st #ave done so &rs&ant to a
contract of agency. /t is t#e essence of t#is
contract t#at t#e agent renders services Iin
reresentation or on be#alf of anot#er. 1! /n t#e
case at bar$ -evilla solicited airline fares$ b&t s#e
did so for and on be#alf of #er rincial$ ,o&rist
:orld -ervice$ /nc. As comensation$ s#e received
DN of t#e roceeds in t#e concet of commissions.
And as %e said$ -evilla #erself based on #er letter
of ;ovember 2!$ 1("1$ re?ass&med #er rincialKs
a&t#ority as o%ner of t#e b&siness &ndertaking. :e
are convinced$ considering t#e circ&mstances and
from t#e resondent Co&rtKs recital of facts$ t#at
t#e ties #ad contemlated a rincial agent
relations#i$ rat#er t#an a joint managament or a
artners#i.
B&t &nlike simle grants of a o%er of attorney$ t#e
agency t#at %e #ereby declare to be comatible
%it# t#e intent of t#e arties$ cannot be revoked at
%ill. ,#e reason is t#at it is one co&led %it# an
interest$ t#e agency #aving been created for
m&t&al interest$ of t#e agent and t#e
1@1
rincial. 1( /t aears t#at =ina -evilla is a bona
fide travel agent #erself$ and as s&c#$ s#e #ad
acG&ired an interest in t#e b&siness entr&sted to
#er. 'oreover$ s#e #ad ass&med a ersonal
obligation for t#e oeration t#ereof$ #olding #erself
solidarily liable for t#e ayment of rentals. -#e
contin&ed t#e b&siness$ &sing #er o%n name$ after
,o&rist :orld #ad stoed f&rt#er oerations. 3er
interest$ obvio&sly$ is not to t#e commissions s#e
earned as a res&lt of #er b&siness transactions$ b&t
one t#at extends to t#e very s&bject matter of t#e
o%er of management delegated to #er. /t is an
agency t#at$ as %e said$ cannot be revoked at t#e
leas&re of t#e rincial. Accordingly$ t#e
revocation comlained of s#o&ld entitle t#e
etitioner$ =ina -evilla$ to damages.
Mendo=a v Paule
9ngineer 9d&ardo '. )a&le 0)A8=91 is t#e
rorietor of 9.'. )a&le Constr&ction and ,rading
09')C,1. 2n 'ay 2D$ 1((($ )A8=9 exec&ted a
secial o%er of attorney 0-)A1 a&t#ori6ing
_enaida 5. 'endo6a 0'9;72_A1 to articiate in
t#e re?G&alification and bidding of a ;ational
/rrigation Administration 0;/A1 roject and to
reresent #im in all transactions related t#ereto.
9')C,$ t#ro&g# '9;72_A$ articiated in t#e
bidding of t#e ;/A?Casecnan '&lti?)&rose
/rrigation and )o%er )roject 0;/A?C'/))1 and %as
a%arded )ackages A?10 and B?11 of t#e ;/A?C'/))
-c#ed&le A.
:#en 'an&el de la Cr&6 0C48_1 learned t#at
'9;72_A is in need of #eavy eG&iment for &se in
t#e ;/A roject$ #e met & %it# '9;72_A in
Bay&ga$ '&Bo6$ ;&eva 9cija$ in an aartment
%#ere t#e latter %as #olding office &nder an 9')C,
signboard.
2n Aril 2A$ 2000$ )A8=9 revoked t#e -)A #e
revio&sly iss&ed in favor of '9;72_AE
conseG&ently$ ;/A ref&sed to make ayment to
'9;72_A on #er billings. C48_$ t#erefore$ co&ld
not be aid for t#e rent of t#e eG&iment. 8on
advice of '9;72_A$ C48_ addressed #is demands
for ayment of lease rentals directly to ;/A b&t t#e
latter ref&sed to ackno%ledge t#e same and
informed C48_ t#at it %o&ld be remitting ayment
only to 9')C, as t#e %inning contractor for t#e
roject.
3o%ever$ %it#o&t resolving '9;72_AFs motion to
declare )A8=9 non?s&ited$ and %it#o&t granting #er
t#e oort&nity to resent #er evidence ex arte$
t#e trial co&rt rendered its decision #olding )A8=9
liable. '9;72_A %as d&ly constit&ted as 9')C,Fs
agent for &roses of t#e ;/A roject and t#at
'9;72_A validly contracted %it# C48_ for t#e
rental of #eavy eG&iment t#at %as to be &sed
t#erefor. /t fo&nd &navailing )A8=9Fs assertion t#at
'9;72_A merely borro%ed and &sed #is
contractorFs license in exc#ange for a consideration
of @N of t#e aggregate amo&nt of t#e roject. ,#e
trial co&rt #eld t#at t#ro&g# t#e -)As #e exec&ted$
)A8=9 clot#ed '9;72_A %it# aarent a&t#ority
and #eld #er o&t to t#e &blic as #is agentE as
rincial$ )A8=9 m&st comly %it# t#e obligations
%#ic# '9;72_A contracted %it#in t#e scoe of #er
a&t#ority and for #is benefit. +&rt#ermore$ )A8=9
kne% of t#e transactions %#ic# '9;72_A entered
into since at vario&s times %#en s#e and C48_ met
at t#e 9')C, office$ )A8=9 %as resent and
offered no objections. ,#e trial co&rt declared t#at
it %o&ld be &nfair to allo% )A8=9 to enric# #imself
and diso%n #is acts at t#e exense of C48_.
CA. ,#e aellate co&rt #eld t#at t#e -)As iss&ed
in '9;72_AFs favor did not grant t#e latter t#e
a&t#ority to enter into contract %it# C48_ for
#a&ling servicesE t#e -)As limit '9;72_AFs
a&t#ority to only reresent 9')C, in its b&siness
transactions %it# ;/A$ to articiate in t#e bidding
of t#e roject$ to receive and collect ayment in
be#alf of 9')C,$ and to erform s&c# acts as may
be necessary andLor reG&ired to make t#e said
a&t#ority effective. ,#&s$ t#e engagement of
C48_Fs #a&ling services %as done beyond t#e
scoe of '9;72_AFs a&t#ority.
-C. 4ecords s#o% t#at )A8=9 and '9;72_A #ad
entered into a artners#i in regard to t#e ;/A
roject. )A8=9Ts contrib&tion t#ereto is #is
contractorFs license and exertise$ %#ile '9;72_A
%o&ld rovide and sec&re t#e needed f&nds for
labor$ materials and servicesE deal %it# t#e
s&liers and s&b?contractorsE and in general and
toget#er %it# )A8=9$ oversee t#e effective
imlementation of t#e roject. +or t#is$ )A8=9
%o&ld receive as #is s#are t#ree er cent 0@N1 of
t#e roject cost %#ile t#e rest of t#e rofits s#all go
to '9;72_A. )A8=9 admits to t#is arrangement in
all #is leadings.
Alt#o&g# t#e -)As limit '9;72_AFs a&t#ority to
s&c# acts as reresenting 9')C, in its b&siness
transactions %it# ;/A$ articiating in t#e bidding
of t#e roject$ receiving and collecting ayment in
be#alf of 9')C,$ and erforming ot#er acts in
f&rt#erance t#ereof$ t#e evidence s#o%s t#at %#en
'9;72_A and C48_ met and disc&ssed 0at t#e
9')C, office in Bay&ga$ '&Bo6$ ;&eva 9cija1 t#e
lease of t#e latterFs #eavy eG&iment for &se in t#e
roject$ )A8=9 %as resent and interosed no
objection to '9;72_AFs act&ations. /n #is
leadings$ )A8=9 does not even deny t#is. H&ite
t#e contrary$ '9;72_AFs actions %ere in accord
%it# %#at s#e and )A8=9 originally agreed &on$
as to division of labor and delineation of f&nctions
%it#in t#eir artners#i. 8nder t#e Civil Code$
every artner is an agent of t#e artners#i for t#e
&rose of its b&sinessE eac# one may searately
exec&te all acts of administration$ &nless a
secification of t#eir resective d&ties #as been
agreed &on$ or else it is sti&lated t#at any one of
t#em s#all not act %it#o&t t#e consent of all t#e
ot#ers. At any rate$ )A8=9 does not #ave any valid
ca&se for oosition beca&se #is only role in t#e
artners#i is to rovide #is contractorFs license
and exertise$ %#ile t#e so&rcing of f&nds$
materials$ labor and eG&iment #as been relegated
to '9;72_A.
1@2
'oreover$ it does not seak %ell for )A8=9 t#at #e
reinstated '9;72_A as #is attorney?in?fact$ t#is
time %it# broader o%ers to imlement$ exec&te$
administer and s&ervise t#e ;/A roject$ to collect
c#ecks and ot#er ayments d&e on said roject$
and act as t#e )roject 'anager for 9')C,$ even
after C48_ #as already filed #is comlaint. 7esite
kno%ledge t#at #e %as already being s&ed on t#e
-)As$ #e roceeded to exec&te anot#er in
'9;72_AFs favor$ and even granted #er broader
o%ers of administration t#an in t#ose being s&ed
&on. /f #e tr&ly believed t#at '9;72_A exceeded
#er a&t#ority %it# resect to t#e initial -)A$ t#en
#e %o&ld not #ave iss&ed anot#er -)A. /f #e
t#o&g#t t#at #is tr&st #ad been violated$ t#en #e
s#o&ld not #ave exec&ted anot#er -)A in favor of
'9;72_A$ m&c# less grant #er broader a&t#ority.
,#ere %as no valid reason for )A8=9 to revoke
'9;72_AFs -)As. -ince '9;72_A took care of t#e
f&nding and so&rcing of labor$ materials and
eG&iment for t#e roject$ it is only logical t#at s#e
controls t#e finances$ %#ic# means t#at t#e -)As
iss&ed to #er %ere necessary for t#e roer
erformance of #er role in t#e artners#i$ and to
disc#arge t#e obligations s#e #ad already
contracted rior to revocation. :it#o&t t#e -)As$
s#e co&ld not collect from ;/A$ beca&se as far as it
is concerned$ 9')C, O and not t#e )A8=9?
'9;72_A artners#i O is t#e entity it #ad
contracted %it#. :it#o&t t#ese ayments from ;/A$
t#ere %o&ld be no so&rce of f&nds to comlete t#e
roject and to ay off obligations inc&rred. As
'9;72_A correctly arg&es$ an agency cannot be
revoked if a bilateral contract deends &on it$ or if
it is t#e means of f&lfilling an obligation already
contracted$ or if a artner is aointed manager of
a artners#i in t#e contract of artners#i and #is
removal from t#e management is &nj&stifiable.
Coleon#co v Claparols
9d&ardo =. Claarols$ oerated a factory for t#e
man&fact&re of nails in ,alisay$ 2ccidental ;egros$
&nder t#e style of IClaarols -teel P ;ail )lantI.
,#e ra% material$ nail %ire$ %as imorted from
foreign so&rces$ secially from Belgi&mE and
Claarols #ad a reg&lar dollar allocation t#erefor$
granted by t#e /mort Control Commission and t#e
Central Bank. ,#e marketing of t#e nails %as
#andled by t#e IABC7 CommercialI of Bacolod$
%#ic# %as o%ned by a C#inaman named S#o ,o.
=osses comelled Claarols in 1(C@ to look for
someone to finance #is imorts of nail %ires. At
first$ S#o ,o agreed to do t#e financing$ b&t on
Aril 2C$ 1(C@$ t#e C#inaman introd&ced #is
comadre$ aellant Micente Coleongco$ to t#e
aellee$ recommending said aellant to be t#e
financier in t#e stead of S#o ,o. Claarols agreed$
and on Aril 2C of t#at year a contract 09x#ibit B1
%as erfected bet%een t#em %#ereby Coleongco
&ndertook to finance and &t & t#e f&nds reG&ired
for t#e imortation of t#e nail %ire$ %#ic# Claarols
bo&nd #imself to convert into nails at #is lant.
/nstead of &tting & all t#e necessary
money needed to finance t#e imorts of ra%
material$ Coleongco merely advanced 2CN in cas#
on acco&nt of t#e rice and #ad t#e balance
covered by s&rety agreements exec&ted by
Claarols and ot#ers as solidary$ 0joint and several1
g&arantors 0see 9x#ibits 5$ 3$ /1. ,#e &s#ot of t#is
arrangement %as t#at Claarols %as made to
s#o&lder @LD of t#e ayment for t#e imorts$
contrary to t#e financing agreement. )aragra# 11
of t#e latter exressly denied Coleongco any o%er
or a&t#ority to bind Claarols %it#o&t revio&s
cons&ltation and a&t#ority. :#en t#e balances for
t#e cost of t#e imortations became d&e$
Coleongco$ in some instances$ aid it %it# t#e
dealersK advances to t#e nail factory against f&t&re
sales %it#o&t t#e kno%ledge of Claarols 09x#ibits
ISI to S?11$ S?1@1. 8nder aragra#s ! and 11 of
t#e financing agreement$ Coleongco %as to give
reference to t#e oerating exenses before
s#aring rofits$ so t#at &ntil t#e oerating costs
%ere rovided for$ Coleongco #ad no rig#t to aly
t#e factoryKs income to ay #is o%n obligations.
Aro&nd mid?;ovember of 1(C"$ aellee Claarols
%as disagreeably s&rrised by service of an alias
%rit of exec&tion to enforce a j&dgment obtained
against #im by t#e )#iliine ;ational Bank$
desite t#e fact t#at on t#e receding -etember
#e #ad s&bmitted an amorti6ation lan to settle t#e
acco&nt. :orried and alarmed$ Claarols
immediately left for 'anila to confer %it# t#e bank
a&t#orities. 8on arrival$ #e learned to #is dismay
t#at t#e exec&tion #ad been roc&red beca&se of
derogatory information against aellee 0in t#e
form of t%o letters1 t#at #ad reac#ed t#e bank
from #is associate$ aellant Coleongco.
:#en Claarols got back to t#e factory$ #e
dismissed Coleongco as assistant manager and
learned of t#e bad fait# of Coleongco t#ro&g# #is
mac#inery s&erintendent and t#ro&g# some
letters #e fo&nd in ColeongcoFs office.
it m&st not be forgotten t#at a o%er of attorney
can be made irrevocable by contract only in t#e
sense t#at t#e rincial may not recall it at #is
leas&reE b&t co&led %it# interest or not$ t#e
a&t#ority certainly can be revoked for a j&st ca&se$
s&c# as %#en t#e attorney?in?fact betrays t#e
interest of t#e rincial$ as #aened in t#is case.
/t is not oen to serio&s do&bt t#at t#e
irrevocability of t#e o%er of attorney may not be
&sed to s#ield t#e eretration of acts in bad fait#$
breac# of confidence$ or betrayal of tr&st$ by t#e
agent for t#at %o&ld amo&nt to #olding t#at a
o%er co&led %it# an interest a&t#ori6es t#e
agent to commit fra&ds against t#e rincial.
2&r ne% Civil Code$ in Article 11A2$ exressly
rovides t#e contrary in rescribing t#at
resonsibility arising from fra&d is demandable in
all obligations$ and t#at any %aiver of action for
f&t&re fra&d is void. /t is also on t#is rincile t#at
t#e Civil Code$ in its Article 1!00$ declares t#at t#e
o%ers of a artner$ aointed as manager$ in t#e
1@@
articles of co?artners#i are irrevocable %it#o&t
j&st or la%f&l ca&seE and an agent %it# o%er
co&led %it# an interest can not stand on better
gro&nd t#an s&c# a artner in so far as
irrevocability of t#e o%er is concerned.
;o error %as$ t#erefore$ committed by t#e trial
co&rt in declaring t#e financing contract roerly
resolved by Claarols or in rendering j&dgment
against aellant in favor of aellee for t#e said
amo&nt of )!1$@!A.@A. ,#e basic r&le of contracts
reG&ires arties to act loyally to%ard eac# ot#er in
t#e &rs&it of t#e common end$ and aellant
clearly violated t#e r&le of good fait# rescribed by
Art. 1@1C of t#e ne% Civil Code.
,#e lo%er co&rt also allo%ed Claarols )C0$000 for
damages$ material$ moral$ and exemlary$ ca&sed
by t#e aellant ColeongcoKs acts in malicio&sly
&ndermining aelleeKs credit t#at led t#e
)#iliine ;ational Bank to sec&re a %rit of
exec&tion against Claarols. 8ndeniably$ t#e
attemts of Coleongco to discredit and IsG&ee6eI
Claarols o&t of #is o%n factory and b&siness co&ld
not b&t ca&se t#e latter mental ang&is# and
serio&s anxiety$ as fo&nd by t#e co&rt belo%$ for
%#ic# #e is entitled to comensationE and t#e
malevolence t#at lay be#ind aelleeKs actions
j&stified also t#e imosition of exemlary or
deterrent damages 0Civ. Code$ Art. 22@21. :#ile
t#e a%ard co&ld #ave been made larger %it#o&t
violating t#e canons of j&stice$ t#e discretion in
fixing s&c# damages rimarily lay in t#e trial co&rt$
and %e feel t#at t#e same s#o&ld be resected.
*ammani v CA
/s#%ar$ C#oit#ram and ;avalrai$ all s&rnamed
*et#mal 4amnani$ are brot#ers of t#e f&ll blood.
/s#%ar and #is so&se -onya #ad t#eir main
b&siness based in ;e% >ork. 4eali6ing t#e diffic&lty
of managing t#eir investments in t#e )#iliines
t#ey exec&ted a general o%er of attorney on
*an&ary 2D$ 1("" aointing ;avalrai and
C#oit#ram as attorneys?in?fact$ emo%ering t#em
to manage and cond&ct t#eir b&siness concern in
t#e )#iliines. 1
2n +ebr&ary 1$ 1("" and on 'ay 1"$ 1(""$
C#oit#ram$ in #is caacity as aforesaid attorney?in?
fact of /s#%ar$ entered into t%o agreements for t#e
&rc#ase of t%o arcels of land located in Barrio
8gong$ )asig$ 4i6al$ from 2rtigas P Comany$ =td.
)artners#i 02rtigas for s#ort1 %it# a total area of
aroximately 10$0D! sG&are meters.
-ometime in 1(A0 /s#%ar asked C#oit#ram to
acco&nt for t#e income and exenses relative to
t#ese roerties d&ring t#e eriod 1("A to 1(A0.
C#oit#ram failed and ref&sed to render s&c#
acco&nting. As a conseG&ence$ on +ebr&ary D$
1(A1$ /s#%ar revoked t#e general o%er of
attorney. C#oit#ram and 2rtigas %ere d&ly notified
of s&c# revocation on Aril 1$ 1(A1 and 'ay 2D$
1(A1$ resectively. -aid notice %as also registered
%it# t#e -ec&rities and 9xc#ange Commission and
%as &blis#ed in t#e iss&e of ,#e 'anila ,imes for
t#e information of t#e general &blic.
/s#%ar and -onya 0so&ses /s#%ar for s#ort1 filed a
comlaint in t#e Co&rt of +irst /nstance of 4i6al
against C#oit#ram andLor so&ses ;irmla and 'oti
0C#oit#ram et al. for brevity1 and 2rtigas for
reconveyance of said roerties or ayment of its
val&e and damages. An amended comlaint for
damages %as t#ereafter filed by said so&ses.
,#e center of controversy is t#e testimony of
/s#%ar t#at d&ring t#e latter art of 1("C$ #e sent
t#e amo&nt of 8- U1C0$000.00 to C#oit#ram in t%o
bank drafts of 8-U"C$000.00 and 8-U!C$000.00 for
t#e &rose of investing t#e same in real estate in
t#e )#iliines. ,#e trial co&rt considered t#is lone
testimony &n%ort#y of fait# and credit. 2n t#e
ot#er #and$ t#e aellate co&rt fo&nd t#at t#e trial
co&rt misare#ended t#e facts in comlete
disregard of t#e evidence$ doc&mentary and
testimonial.
Anot#er cr&cial iss&e is t#e claim of C#oit#ram t#at
beca&se #e %as t#en a Britis# citi6en$ as a
temorary arrangement$ #e arranged t#e &rc#ase
of t#e roerties in t#e name of /s#%ar %#o %as an
American citi6en and %#o %as t#en G&alified to
&rc#ase roerty in t#e )#iliines &nder t#e t#en
)arity Amendment. ,#e trial co&rt believed t#is
acco&nt b&t it %as deb&nked by t#e aellate
co&rt.
,#e environmental circ&mstances of t#is case
b&ttress t#e claim of /s#%ar t#at #e did entr&st t#e
amo&nt of 8- U 1C0$000.00 to #is brot#er$
C#oit#ram$ %#ic# t#e latter invested in t#e real
roerty b&siness s&bject of t#is litigation in #is
caacity as attorney?in?fact of /s#%ar. ,r&e it is
t#at t#ere is no receit %#atever in t#e ossession
of /s#%ar to evidence t#e same$ b&t it is not
&n&s&al among brot#ers and close family members
to entr&st money and val&ables to eac# ot#er
%it#o&t any formalities or receit d&e to t#e secial
relations#i of tr&st bet%een t#em.
-o&ses /s#%ar filed an &rgent motion for t#e
iss&ance of a %rit of reliminary attac#ment and to
reG&ire C#oit#ram$ et al. to s&bmit certain
doc&ments$ inviting t#e attention of t#is Co&rt to
t#e follo%ing.
a1 7onation by C#oit#ram of #is 2$C00 s#ares of
stock in 5eneral 5arments Cororation in favor of
#is c#ildren on 7ecember 2($ 1(!(E
b1 -ale on A&g&st 2$ 1((0 by C#oit#ram of #is 100
s#ares in Biflex 0)#ils.1$ /nc.$ in favor of #is
c#ildrenE and
c1 'ortgage on *&ne 20$ 1(!( by ;irmla t#ro&g#
#er attorney?in?fact$ C#oit#ram$ of t#e roerties
s&bject of t#is litigation$ for t#e amo&nt of U@
'illion in favor of 2verseas 3olding$ Co. =td.$
02verseas for brevity1$ a cororation %#ic# aears
to be organi6ed and existing &nder and by virt&e of
t#e la%s of Cayman /slands$ %it# a caital of only
U100.00 divided into 100 s#ares of U1.00 eac#$ and
%it# address at ).2. Box 1A(0$ 5rand Cayman$
Cayman /slands.
All t#ese contemoraneo&s and s&bseG&ent acts of
C#oit#ram$ et al.$ betray t#e %eakness of t#eir
1@D
ca&se so t#ey #ad to take an stes$ even as t#e
case %as already ending in Co&rt$ to render
ineffective any j&dgment t#at may be rendered
against t#em.
,#e roblem is como&nded in t#at resondent
2rtigas is ca&g#t in t#e %eb of t#is bitter fig#t. /t
#ad all t#e time been dealing %it# C#oit#ram as
attorney?in?fact of /s#%ar. 3o%ever$ evidence #ad
been add&ced t#at notice in %riting #ad been
served not only on C#oit#ram$ b&t also on 2rtigas$
of t#e revocation of C#oit#ramKs o%er of attorney
by /s#%arKs la%yer$ on 'ay 2D$ 1(A1. A &blication
of said notice %as made in t#e Aril 2$ 1(A1 iss&e
of ,#e 'anila ,imes for t#e information of t#e
general &blic. -&c# notice of revocation in a
ne%saer of general circ&lation is s&fficient
%arning to t#ird ersons incl&ding 2rtigas. A notice
of revocation %as also registered %it# t#e
-ec&rities and 9xc#ange Commission on 'arc# 2($
1 (A1.
:e #ave a sit&ation %#ere t%o brot#ers engaged
in a b&siness vent&re. 2ne f&rnis#ed t#e caital$
t#e ot#er contrib&ted #is ind&stry and talent.
*&stice and eG&ity dictate t#at t#e t%o s#are
eG&ally t#e fr&it of t#eir joint investment and
efforts. )er#as t#is -olomonic sol&tion may ave
t#e %ay to%ards t#eir reconciliation. Bot# %o&ld
stand to gain. ;o one %o&ld end & t#e loser. After
all$ blood is t#icker t#an %ater.
3o%ever$ t#e Co&rt cannot j&st close its eyes to t#e
devio&s mac#inations and sc#emes t#at C#oit#ram
emloyed in attemting to disose of$ if not
dissiate$ t#e roerties to derive so&ses /s#%ar
of any ossible means to recover any a%ard t#e
Co&rt may grant in t#eir favor. -ince C#oit#ram$ et
al. acted %it# evident bad fait# and malice$ t#ey
s#o&ld ay moral and exemlary damages as %ell
as attorneyKs fees to so&ses /s#%ar.
79C/-/2;. 7ividing eG&ally bet%een resondents
so&ses /s#%ar$ on t#e one #and$ and etitioner
C#oit#ram 4amnani$ on t#e ot#er$ 0in 5.4. ;o.
!CD(D1 t#e t%o arcels of land s&bject of t#is
litigation$ incl&ding all t#e imrovements t#ereon$
resently covered by transfer Certificates of ,itle
;os. D0@1C0 and D0@1C2 of t#e 4egistry of 7eeds$
as %ell as t#e rental income of t#e roerty from
1("A to t#e resent.
5ustan v CA
)etitioner Adoracion =&stan is t#e registered o%ner
of a arcel of land ot#er%ise kno%n as =ot !0"( of
t#e Cadastral -&rvey of Calinog$ /loilo containing
an area of 10.00CA #ectares and covered by ,C,
;o. ,?C"1. 2n +ebr&ary 2C$ 1("($ etitioner leased
t#e above described roerty to rivate
resondent ;icolas )arangan for a term of ten 0101
years and an ann&al rent of 2ne ,#o&sand
0)1$000.001 )esos. 7&ring t#e eriod of lease$
)arangan %as reg&larly extending loans in small
amo&nts to etitioner to defray #er daily exenses
and to finance #er da&g#terKs ed&cation. 2n *&ly
2($ 1(A0$ etitioner exec&ted a -ecial )o%er of
Attorney in favor of )arangan to sec&re an
agric&lt&ral loan from rivate resondent )#iliine
;ational Bank 0);B1 %it# t#e aforesaid lot as
collateral. 2n +ebr&ary 1!$ 1(A2$ a second -ecial
)o%er of Attorney %as exec&ted by etitioner$ by
virt&e of %#ic#$ )arangan %as able to sec&re fo&r
0D1 additional loans$ to %it. t#e s&ms of )2D$000.00$
)@!$000.00$ )@!$"00.00 and )2C$000.00 on
7ecember 1C$ 1(AC$ -etember "$ 1(A"$ *&ly 2$
1(A( and *&ne 2$ 1(!0$ resectively. ,#e last t#ree
loans %ere %it#o&t t#e kno%ledge of #erein
etitioner and all t#e roceeds t#erefrom %ere
&sed by )arangan for #is o%n benefit. 1 ,#ese
enc&mbrances %ere d&ly annotated on t#e
certificate of title. 2n Aril 1"$ 1(A@$ etitioner
signed a 7eed of )acto de 4etro -ale 2 in favor of
)arangan %#ic# %as s&erseded by t#e 7eed of
7efinite -ale @ dated 'ay D$ 1(A( %#ic# etitioner
signed &on )aranganKs reresentation t#at t#e
same merely evidences t#e loans extended by #im
&nto t#e former.
+or fear t#at #er roerty mig#t be rej&diced by
t#e contin&ed borro%ing of )arangan$ etitioner
demanded t#e ret&rn of #er certificate of title.
/nstead of comlying %it# t#e reG&est$ )arangan
asserted #is rig#ts over t#e roerty %#ic#
allegedly #ad become #is by virt&e of t#e
aforementioned 7eed of 7efinite -ale. 8nder said
doc&ment$ etitioner conveyed t#e s&bject
roerty and all t#e imrovements t#ereon &nto
)arangan absol&tely for and in consideration of t#e
s&m of -eventy +ive ,#o&sand 0)AC$000.001 )esos.
,%o main iss&es confront &s in t#is case$ to %it.
%#et#er or not t#e 7eed of 7efinite -ale is in
reality an eG&itable mortgage and %#et#er or not
etitionerKs roerty is liable to );B for t#e loans
contracted by )arangan by virt&e of t#e secial
o%er of attorney. ,#e lo%er co&rt and t#e CA
arrived at different fact&al findings t#&s
necessitating a revie% of t#e evidence on record.
)etitioner #ad no kno%ledge t#at t#e
contract 12 s#e signed is a deed of sale. ,#e
contents of t#e same %ere not read nor exlained
to #er so t#at s#e may intelligibly form&late in #er
mind t#e conseG&ences of #er cond&ct and t#e
nat&re of t#e rig#ts s#e %as ceding in favor of
)arangan. )etitioner is illiterate and #er condition
constrained #er to merely rely on )aranganKs
ass&rance t#at t#e contract only evidences #er
indebtedness to t#e latter. :#en one of t#e
contracting arties is &nable to read$ or if t#e
contract is in a lang&age not &nderstood by #im$
and mistake or fra&d is alleged$ t#e erson
enforcing t#e contract m&st s#o% t#at t#e terms
t#ereof #ave been f&lly exlained to t#e
former. 1@ -ettled is t#e r&le t#at %#ere a arty to
a contract is illiterate or cannot read or cannot
&nderstand t#e lang&age in %#ic# t#e contract is
%ritten$ t#e b&rden is on t#e arty interested in
enforcing t#e contract to rove t#at t#e terms
t#ereof are f&lly exlained to t#e former in a
lang&age &nderstood by #im. 1D ,o o&r mind$ t#is
b&rden #as not been satisfactorily disc#arged.
1@C
,#ird ersons %#o are not arties to a loan may
sec&re t#e latter by ledging or mortgaging t#eir
o%n roerty. 20-o long as valid consent %as
given$ t#e fact t#at t#e loans %ere solely for t#e
benefit of )arangan %o&ld not invalidate t#e
mortgage %it# resect to etitionerKs roerty. /n
consenting t#ereto$ even granting t#at etitioner
may not be ass&ming ersonal liability for t#e debt$
#er roerty s#all nevert#eless sec&re and resond
for t#e erformance of t#e rincial
obligation. 21 /t is admitted t#at etitioner is t#e
o%ner of t#e arcel of land mortgaged to );B on
five 0C1 occasions by virt&e of t#e -ecial )o%ers of
Attorney exec&ted by etitioner in favor of
)arangan. )etitioner arg&es t#at t#e last t#ree
mortgages %ere void for lack of a&t#ority. -#e
totally failed to consider t#at said -ecial )o%ers of
Attorney are a contin&ing one and absent a valid
revocation d&ly f&rnis#ed to t#e mortgagee$ t#e
same contin&es to #ave force and effect as against
t#ird ersons %#o #ad no kno%ledge of s&c# lack
of a&t#ority. Article 1(21 of t#e Civil Code
rovides.
Art. 1(21. /f t#e agency #as been entr&sted for t#e
&rose of contracting %it# secified ersons$ its
revocation s#all not rej&dice t#e latter if t#ey
%ere not given notice t#ereof.
,#e -ecial )o%er of Attorney exec&ted by
etitioner in favor of )arangan d&ly a&t#ori6ed t#e
latter to reresent and act on be#alf of t#e former.
3aving done so$ etitioner clot#ed )arangan %it#
a&t#ority to deal %it# );B on #er be#alf and in t#e
absence of any roof t#at t#e bank #ad kno%ledge
t#at t#e last t#ree loans %ere %it#o&t t#e exress
a&t#ority of etitioner$ it cannot be rej&diced
t#ereby. As far as t#ird ersons are concerned$ an
act is deemed to #ave been erformed %it#in t#e
scoe of t#e agentKs a&t#ority if s&c# is %it#in t#e
terms of t#e o%er of attorney as %ritten even if
t#e agent #as in fact exceeded t#e limits of #is
a&t#ority according to t#e &nderstanding bet%een
t#e rincial and t#e agent. 22 ,#e -ecial )o%er
of Attorney artic&larly rovides t#at t#e same is
good not only for t#e rincial loan b&t also for
s&bseG&ent commercial$ ind&strial$ agric&lt&ral
loan or credit accommodation t#at t#e attorney?in?
fact may obtain and &ntil t#e o%er of attorney is
revoked in a &blic instr&ment and a coy of %#ic#
is f&rnis#ed to );B. 2@ 9ven %#en t#e agent #as
exceeded #is a&t#ority$ t#e rincial is solidarily
liable %it# t#e agent if t#e former allo%ed t#e
latter to act as t#o&g# #e #ad f&ll o%ers 0Article
1(11$ Civil Code1. 2D ,#e mortgage directly and
immediately s&bjects t#e roerty &on %#ic# it is
imosed. 2C,#e roerty of t#ird ersons %#ic#
#as been exressly mortgaged to g&arantee an
obligation to %#ic# t#e said ersons are foreign$ is
directly and jointly liable for t#e f&lfillment t#ereofE
it is t#erefore s&bject to exec&tion and sale for t#e
&rose of aying t#e amo&nt of t#e debt for %#ic#
it is liable. 2" 3o%ever$ etitioner #as an
&nG&estionable rig#t to demand roortional
indemnification from )arangan %it# resect to t#e
s&m
79C=A4/;5 ,39 7997 2+ 79+/;/,9 -A=9 A- A;
9H8/,AB=9 '24,5A59E 24794/;5 )4/MA,9
49-)2;79;, ;/C2=A- )A4A;5A; ,2 49,84; ,39
)2--9--/2; 2+ ,39 -8B*9C, =A;7 8;,2
)9,/,/2;94 8)2; ,39 =A,,94K- )A>'9;, 2+ ,39
-8' 2+ )AC$000.00 :/,3/; ;/;9,> 0(01 7A>-
+42' 49C9/), 2+ ,3/- 79C/-/2;E 79C=A4/;5 ,39
'24,5A59- /; +AM24 2+ );B A- MA=/7 A;7
-8B-/-,/;5 A;7 'A> ,3949+249 B9 -8B*9C,97
,2 9W9C8,/2; -A=9. 24794/;5 )4/MA,9
49-)2;79;, )A4A;5A; ,2 )A> )9,/,/2;94 ,39
A'28;, 2+ )1C$000.00 B> :A> 2+ A,,24;9>K-
+99- A;7 ,2 )A> ,39 C2-,- 2+ ,39 -8/,.
Pere= v P'B
2n A&g&st 2($ 1(@($ Micente )ere6 mortgaged =ot
;o. 2!"?9 of t#e Sabankalan Cadastre$ %it#
,ransfer certificate of ,itle ;o. 2(C@0$ to t#e
aellant )#iliine ;ational Bank$ Bacolod Branc#$
in order to sec&re ayment of a loan of )2$C00$
l&s interest$ ayable in yearly installments. 2n
2ctober A$ 1(D2$ Micente )ere6$ mortgagor$ died
intestate$ s&rvived by #is %ido% and c#ildren
0aellees #erein1. At t#at time$ t#ere %as an
o&tstanding balance of )1$(1A.00$ and
corresonding interest$ on t#e mortgage
indebtedness.
2n 2ctober 1!$ 1(C"$ t#e %ido% of )ere6 instit&ted
-ecial )roceedings ;o. C12 of t#e Co&rt of +irst
/nstance of 2ccidental ;egros for t#e settlement of
t#e estate of Micente )ere6. ,#e %ido% %as
aointed Administratrix and notice to creditors
%as d&ly &blis#ed. ,#e Bank did not file a claim.
,#e roject of artition %as s&bmitted on *&ly 1!$
1(C"E it %as aroved and t#e roerties
distrib&ted accordingly. -ecial )roceedings ;o.
C12 %as t#en closed.
/t aears also t#at$ as early as 'arc# of 1(DA$ t#e
%ido% of t#e late Micente )ere6 inG&ired by letter
from t#e Bank t#e stat&s of #er #&sbandKs acco&ntE
and s#e %as informed t#at t#ere %as an
o&tstanding balance t#ereon of )2$AC!.!D earning
a daily interest of )0.DD!!. -#e %as f&rnis#ed a
coy of t#e mortgage and$ on Aril 2$ 1(DA$ a coy
of t#e ,ax 7eclaration 04ec. A. . DC?D!1.
2n *an&ary 2$ 1("@$ t#e Bank$ &rs&ant to
a&t#ority granted it in t#e mortgage deed$ ca&sed
t#e mortgaged roerties to be extraj&dicially
foreclosed. ,#e )rovincial -#eriff accordingly sold
=ot ;o. 2!"?9 at a&ction$ and it %as &rc#ased by
t#e Bank. /n t#e ordinary co&rse after t#e lase of
t#e year of redemtion$ Certificate of ,itle ;o. ,?
2(C@0 in t#e name of Micente )ere6 %as cancelled$
and Certificate ,?@20""$ dated 'ay 11$ 1("2$ %as
iss&ed in t#e name of t#e Bank. ,#e %ido% and
#eirs %ere not notified.1a%#c1.Bdt
,#ree mont#s later$ on A&g&st 1C$ 1("2$ t#e %ido%
and #eirs of Micente )ere6 instit&ted t#is case
against t#e Bank in t#e co&rt belo%$ seeking to
ann&l t#e extra?j&dicial foreclos&re sale and t#e
transfer of t#e Certificate of ,itle as %ell as to
1@"
recover damages$ claiming t#at t#e Bank #ad
acted illegally and in bad fait#. ,#e Bank
ans%ered$ denying t#e c#arges. After trial$ t#e
co&rt a G&o$ on 7ecember 1C$ 1("2$ rendered
j&dgment #olding t#at$ according to t#e doctrine of
t#is -&reme Co&rt in )asno vs. 4avina CD )#il.
@!2$ t#e Bank s#o&ld #ave foreclosed its mortgage
in co&rtE t#at t#e o%er to sell contained in t#e
deed of mortgage #ad terminated &on t#e deat#
of t#e mortgagor$ Micente )ere6. :#erefore$ t#e
trial co&rt declared n&ll and void t#e extra?j&dicial
foreclos&re sale to t#e Bank$ as %ell as t#e
cancellation of t#e Certificate of ,itle of Micente
)ere6 and iss&ance in itKs stead of a ne% certificate
in t#e name of t#e Bank$ and ordered t#e latter to
ay t#e laintiffs )@$000 damages and )2$000
attorneyKs fees and cost.
,#e r&ling in )asno vs. 4avina not #aving been
reiterated in any ot#er case$ :e #ave caref&lly
reexamined t#e same after mat&re deliberation
#ave reac#ed t#e concl&sion t#at t#e dissenting
oinion is more in conformity %it# reason and la%.
2f t#e t#ree alternative co&rses t#at section A$
4&le !A 0no% 4&le !"1$ offers t#e mortgage
creditor$ to %it$ 011 to %aive t#e mortgage and
claim t#e entire debt from t#e estate of t#e
mortgagor as an ordinary claimE 021 to foreclose
t#e mortgage j&dicially and rove any deficiency as
an ordinary claimE and 0@1 to rely on t#e mortgage
excl&sively$ foreclosing t#e same at any time
before it is barred by rescrition$ %it#o&t rig#t to
file a claim for any deficiency$ t#e majority oinion
in )asno vs. 4avina$ in reG&iring a j&dicial
foreclos&re$ virt&ally %ies o&t t#e t#ird alternative
conceded by t#e 4&les to t#e mortgage creditor$
and %#ic# %o&ld recisely incl&de extra?j&dicial
foreclos&res by contrast %it# t#e second
alternative. ,#is res&lt %e do not consider
%arranted by t#e text of t#e 4&lesE and$ in
addition$ t#e recognition of creditorKs rig#t to
foreclose extra?j&dicially resents &ndo&bted
advantages for t#e estate of t#e mortgagor$ as
ointed o&t by t#e dissenting oinion in )asno vs.
4avina$ s&ra. /n t#e lig#t of t#ese considerations$
%e #ave decided to overr&le t#e majority decision
in said case$ and &#old t#e rig#t of t#e mortgage
creditor to foreclose extra?j&dicially in accordance
%it# section A$ 4&le !"$ of t#e 4evised 4&les 0old
4&le !A1.
,#e arg&ment t#at foreclos&re by t#e Bank &nder
its o%er of sale is barred &on deat# of t#e
debtor$ beca&se agency is exting&is#ed by t#e
deat# of t#e rincial$ &nder Article 1A@2 of t#e
Civil Code of 1!!( and Article 1(1( of t#e Civil
Code of t#e )#iliines$ neglects to take into
acco&nt t#at t#e o%er to foreclose is not an
ordinary agency t#at contemlates excl&sively t#e
reresentation of t#e rincial by t#e agent b&t is
rimarily an a&t#ority conferred &on t#e
mortgagee for t#e latterKs o%n rotection. /t is$ in
fact$ an ancillary sti&lation s&orted by t#e
same ca&sa or consideration for t#e mortgage and
forms an essential and insearable art of t#at
bilateral agreement. As can be seen in t#e
receding G&otations from )asno vs. 4avina$ CD
)#il. @!2$ bot# t#e majority and t#e dissenting
oinions conceded t#at t#e o%er to foreclose
extraj&dicially s&rvived t#e deat# of t#e mortgagor$
even &nder t#e la% rior to t#e Civil Code of t#e
)#iliines no% in force.
;evert#eless$ %#ile &#olding t#e validity of t#e
aellant BankKs foreclos&re$ :e can not close o&r
eyes to t#e fact t#at t#e Bank %as arised since
1(DA of t#e deat# of its debtor$ Micente )ere6$ yet
it failed and neglected to give notice of t#e
foreclos&re to t#e latterKs %ido% and #eirs as
exressly fo&nd by t#e co&rt a G&o. -&c# fail&re$ in
effect$ revented t#em from blocking t#e
foreclos&re t#ro&g# seasonable ayment$ as %ell
as imeded t#eir effect&ating a seasonable
redemtion. /n vie% of t#ese circ&mstances$ it is
o&r vie% t#at bot# j&stice and eG&ity %o&ld be
served by ermitting #erein aellees to redeem
t#e foreclosed roerty %it#in a reasonable time$
by aying t#e caital and interest of t#e
indebtedness & to t#e time of redemtion$ l&s
foreclos&re and &sef&l exenses$ less any rents
and rofits obtained by t#e Bank from and after t#e
same entered into its ossession.
,errado v CA
,#ro&g# t#e ma6e and m&ddle of t#is rotracted
legal controversy$ it is lain and clear t#at t#e
comlaints and etitions incl&ding all legal
incidents and motions filed in t#e trial co&rt$ t#e
aellate co&rt and before t#is ,rib&nal are
traceable. in origin to t#e enactment and
imlementation of '&nicial 2rdinance ;o. !$
series of 1(AD$ of t#e '&niciality of Bayambang$
)angasinan$ establis#ing t#e Bayambang +is#ery P
3&nting )ark and '&nicial :aters#ed coveting
t#e so?called 'angab&l +is#eries. As stated in
-ection of t#e 2rdinance$ t#e &roses of t#e )ark
are. 1. ,o attract to&rists to Bayambang and t#&s
increase t#e income of t#e m&niciality and create
ne% emloyment and ne% so&rces of income for
t#e eoleE 2. ,o restore and conserve t#e nat&ral
environment of t#e area by means of reforestation
of t#e forest or timberland reserved$ t#r&
engineering %orks$ and ot#er means %it#in t#e /d?
(2 areaE @. ,o restore or imrove$ conserve and
develo t#e fis#eries$ 6ones$ and exloit t#e fis#
reso&rces of all t#e fis#eries t#ereinE D. ,o s&ly
agro?ind&strial enterrises t#at may be establis#ed
in Bayambang %it# ra% materials from t#e areaE
and C. ,o rovide sorts and recreation facilities
and %#olesome sorts and recreational activities
for t#e eole.
+&rt#er$ &nder t#e 2rdinance$ t#e '&niciality
designated$ aointed and constit&ted rivate
resondent =ac&esta as 'anager?Administrator for
a eriod of t%enty?five 02C1 years$ rene%able for
anot#er t%enty?five 02C1 years &on m&t&al
agreement 0-ection D1. Among t#e o%ers$ d&ties
and obligations of t#e 'anager?Administrator are.
1@A
1. ,o reforest %it# %oods or economic val&e all t#e
timberland ortions indicated in )lan /d?(2 and
t#ose t#at need to be reforested for ecological
&rosesE 2. ,o stock t#e forest %it# %ildlife or
economic val&e$ rotect t#e forest rod&cts and
%ildlife and reg&late t#eir m&ltilication in
accordance %it# existing la%sE @. ,o deeen t#e
fis#eries$ s%ams and trib&tary streams by
dredging$ emloying modern scientific and
tec#nological met#ods to restore or imrove and
develo t#e fis#eries to increase t#e fees yieldE D.
,o cond&ct and reg&late sorts fis#ing and #&nting
in t#e ark and collect fees t#erefromE C. ,o &se or
disose of t#e fis#eries ortion in accordance %it#
t#e general la% on m&nicial %atersE ". ,o
establis# in a s&itable site %it#in t#e ark a fis#ing
and #&nting cam to be called ICam /melda.I /n
-ection A of t#e 2rdinance$ t#e 'anager?
Administrator s#all ay to t#e m&nicial
government t#e s&m eG&ivalent to ten 010N1
ercent of t#e ann&al gross income derived from
an fees c#arged for fis#ing and #&nting in t#e ark
and entry into Cam /melda$ from t#e sale of forest
rod&cts$ %ild games and fis# from t#e area$ b&t
not less t#an )200$000.00.
/n accordance %it# t#e 2rdinance$ a Contract of
'anagement and Administration %as exec&ted by
t#e '&niciality$ reresented by its '&nicial
'ayor as t#e 8s&fr&ct&ary and Atty. 5er&ncio
=ac&esta as t#e 'anager?Administrator$ setting
fort# t#erein t#e terms and conditions laid do%n in
t#e 2rdinance as %ell as t#e mode and manner of
t#e ayment of t#e s&m of )200$000.00 ann&ally
d&e to t#e '&niciality incl&ding t#e osting of a
s&rety bond and ot#er details of t#e management
and administration of t#e fis#eries by t#e 'anager?
Administrator$ %#ic# contract %as exec&ted on
*an&ary 2!$ 1(AC at Bayambang$ )angasinan.
,#&s$ t#e validity or legality of t#e '&nicial
2rdinance in G&estion is t#e cr&cial and vital iss&e
t#at m&st be resolved once and for all to &t an
end to t#is raging litigation t#at #as become t#e
t&g?of?%ar bet%een t#e '&niciality and =ac&esta$
toget#er %it# ot#er interested arties$ over t#e
vast and ric# fis#ing gro&nds. /n resolving said
iss&e and &ltimately t#e very root of t#e conflict$
t#e follo%ing &ndis&ted facts are controlling and
decisive. 1. ,#at '&nicial 2rdinance ;o. ! #as
been disaroved by t#e -ecretary of Agric&lt&re
and ;at&ral 4eso&rcesE and 2. ,#at rivate
resondent #as since died as s#o%n in t#e 4et&rn
of t#e )ostmaster of Bayambang as noted in 2&r
4esol&tion of *&ly 2$ 1(!D.
,#e 2rdinance is clearly against t#e rovisions of
t#e la% for it granted excl&sive fis#ery rivileges to
t#e rivate resondent %it#o&t benefit of &blic
bidding. 8nder t#e +is#eries Act$ t#e '&niciality
may not delegate to a rivate individ&al as
'anager?Administrator to I&se or disose of t#e
fis#eries ortion in accordance %it# t#e general la%
on m&nicial %atersI nor to c#arge foes for fis#ing
and #&nting in t#e ark$ m&c# less sell forest
rod&cts$ %ild games and fis# from t#e area.
+rom t#e foregoing concl&sion t#at t#e ordinance is
illegal and void$ er force t#e contract of
management and administration bet%een t#e
'&niciality and =ac&esta is like%ise n&ll and void.
/t also follo%s t#at t#e comlaint filed by =ac&esta
for ro#ibition in Civil Case ;o. C1" to enjoin t#e
'&nicial Co&ncil of Bayambang from leasing t#e
'angab&l +is#eries &on &blic bidding as
a&t#ori6ed in its 4esol&tionK ;o. @1$ series of 1(AA
is %it#o&t legal basis and merit for =ac&esta #as no
rig#t or interest &nder t#e void ordinance and
contract. ,#e s&it m&st be dismissed and :e
#ereby order its immediate dismissal.
2. :e #ave noted earlier t#e deat# of =ac&esta in
2&r 4esol&tion of *&ly 2$ 1(!D. 3is deat# is an
irreversible fact t#at t#ro%s an entirely ne%
bearing on t#e legal controversy at #and. +or
essentially$ t#e contract of management and
administration bet%een t#e '&niciality and
=ac&esta is one of agency %#ereby a erson binds
#imself to render some service or to do somet#ing
in reresentation or on be#alf of anot#er$ %it# t#e
consent or a&t#ority of t#e latter. 0Article 1!"!$
;e% Civil Code1. 3ere in t#e case at bar$ =ac&esta
bo&nd #imself as 'anager?Administrator of t#e
Bayambang +is#ing P 3&nting )ark and '&nicial
:aters#ed to render service or erform d&ties and
resonsibilities in reresentation or on be#alf of
t#e '&niciality of Bayambang$ %it# t#e consent or
a&t#ority of t#e latter &rs&ant to 2rdinance ;o. !.
8nder Article 1(1($ ;e% Civil Code$ agency is
exting&is#ed by t#e deat# of t#e agent. 3is rig#ts
and obligations arising from t#e contract are not
transmittable to #is #eirs. 0Art. 1@11 $ ;e% Civil
Code1.
1@!

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Partnership Digests PDF

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AGENCY 2009 (PASCUAL)

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