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In 1994, Isabel Sugar Company, Inc. (ISCI) sold a parcel of land to Urban Bank, Inc. (UBI). The land was sold for
P240 million. As the land was occupied by unauthorized sub-tenants, ISCIs lawyer, Atty. Magdaleno Pea had to
negotiate with them for them to relocate. But the said occupants, knowing that the land was already transferred to
UBI, refused to recognize Pea. ISCI then communicated with UBI so that the latter may authorize Pea to
negotiate with the tenants. Pea had to barricade himself inside the property to keep the tenants out who were
forcing their way in especially so that the local cops are now sympathetic to them. Pea then had a phone
conversation with Teodoro Borlongan, president of UBI, where Pea explained to him the situation. In said
conversation, Pea asked authorization from Borlongan to negotiate with the tenants. Pea also asked that he be
paid 10% of the purchase price or (P24 million) for his efforts. Borlongan agreed over the phone on the condition
that Pea should be able to settle with the tenants otherwise he forfeits said 10% fee. Pea also asked that said
authorization be put into writing.
The authorization was put into writing but no mention was made as regards the 10% fee, (in short, that part was not
written in the written authorization released by UBI). Pea was able to settle and relocate the tenants. After
everything was settled and the property is now formally under the possession of UBI, Pea began sending
demands to UBI for the latter to pay him the P24 million fee agreed upon, plus his expenses for the relocation of the
tenants and the hiring of security guards or an additional P3 million. But UBI refused to make payment hence Pea
filed a complaint for recovery against UBI.
The trial court ruled in favor of Pea as it found there indeed was a contract of agency created between and UBI
and that Pea is entitled to the 10% fee plus the expenses he incurred including litigation expenses. In sum, the
trial court awarded him P28 million.
The Court of Appeals however reversed the order of the trial court. It ruled that no agency was formed but for his
legal services, Pea is entitled to payment but applying the principle of unjust enrichment and quantum meruit,
Pea should only be paid P3 million.
ISSUE: Whether or not Atty. Magdaleno Pea is entitled to receive the P28 million.
HELD: No. The Supreme Court ruled that said amount is unconscionable. Pea is entitled to payment for
compensation for services rendered as agent of Urban Bank, but on the basis of the principles of unjust enrichment
and quantum meruit. In the first place, other than the self-serving testimony of Pea, there was no other evidence
presented to support his claim that Borlongan agreed to pay him that 10% over the phone. The written authorization
later issued merely confirms the power granted him to negotiate with the tenants. The written authorization proved
the existence of agency but not the existence of any agreement as to how much Pea should be paid.
Absent any such agreement, the principle of quantum meruit should be applied. In this case, Pea is entitled to
receive what he merit for his services, or as much as he has earned. In dealing with the tenants, Pea didnt have
to perform any extraordinary acts or legal maneuvering. Hence, he is entitled to receive P1.5 million for his legal
services. He is also entitled to reimbursement for his expenses in securing the property, to wit, P1.5 million for the
security guards he had to hire and another P1.5 million for settling and relocating the 23 tenants. Total of P4.5
The Supreme Court emphasized that lawyering is not a business; it is a profession in which duty to public service,
not money, is the primary consideration.
CUISON vs. CA and Valiant
G.R. No. 88539
October 26, 1993
FACTS: Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond paper and scrap.

Valiant Investment Associates delivered various kinds of paper products to a certain Tan. The deliveries were made
by Valiant pursuant to orders allegedly placed by Tiac who was then employed in the Binondo office of petitioner.
Upon delivery, Tan paid for the merchandise by issuing several checks payable to cash at the specific request of
Tiac. In turn, Tiac issued nine (9) postdated checks to Valiant as payment for the paper products. Unfortunately, sad
checks were later dishonored by the drawee bank.
Thereafter, Valiant made several demands upon petitioner to pay for the merchandise in question, claiming that
Tiac was duly authorized by petitioner as the manager of his Binondo office, to enter into the questioned
transactions with Valiant and Tan. Petitioner denied any involvement in the transaction entered into by Tiac and
refused to pay Valiant.
Left with no recourse, private respondent filed an action against petitioner for the collection of sum of money
representing the price of the merchandise. After due hearing, the trial court dismissed the complaint against
petitioner for lack of merit. On appeal, however, the decision of the trial court was modified, but was in effect
reversed by the CA. CA ordered petitioner to pay Valiant with the sum plus interest, AF and costs.
ISSUE: WON Tiac possessed the required authority from petitioner sufficient to hold the latter liable for the disputed
As to the merits of the case, it is a well-established rule that one who clothes another with apparent authority as his
agent and holds him out to the public as such cannot be permitted to deny the authority of such person to act as his
agent, to the prejudice of innocent third parties dealing with such person in good faith and in the honest belief that
he is what he appears to be
It matters not whether the representations are intentional or merely negligent so long as innocent, third persons
relied upon such representations in good faith and for value. Article 1911 of the Civil Code provides:
Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers.
The above-quoted article is new. It is intended to protect the rights of innocent persons. In such a situation, both the
principal and the agent may be considered as joint tortfeasors whose liability is joint and solidary.
It is evident from the records that by his own acts and admission, petitioner held out Tiac to the public as the
manager of his store in Binondo. More particularly, petitioner explicitly introduced to Villanueva, Valiants manager,
as his (petitioners) branch manager as testified to by Villanueva. Secondly, Tan, who has been doing business with
petitioner for quite a while, also testified that she knew Tiac to be the manager of the Binondo branch. Even
petitioner admitted his close relationship with Tiu Huy Tiac when he said that they are like brothers There was thus
no reason for anybody especially those transacting business with petitioner to even doubt the authority of Tiac as
his manager in the Binondo branch.

Tiac, therefore, by petitioners own representations and manifestations, became an agent of petitioner by
estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon (Article 1431, Civil Code of the Philippines). A party cannot be
allowed to go back on his own acts and representations to the prejudice of the other party who, in good faith, relied
upon them. Taken in this light,. petitioner is liable for the transaction entered into by Tiac on his behalf. Thus, even
when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the
latter to fact as though he had full powers (Article 1911 Civil Code), as in the case at bar.
Finally, although it may appear that Tiac defrauded his principal (petitioner) in not turning over the proceeds of the
transaction to the latter, such fact cannot in any way relieve nor exonerate petitioner of his liability to private

respondent. For it is an equitable maxim that as between two innocent parties, the one who made it possible for the
wrong to be done should be the one to bear the resulting loss
FACTS: Respondent Leonor C. Cayetano (Cayetano) executed a special power of attorney in favor of her daughter
Teresita C. Tabing (Tabing) authorizing her to contract a loan from petitioner and to mortgage her two lots. Petitioner
loaned Tabing P100, 000.00, secured by two promissory notes and a real estate mortgage over Cayetanos two
properties. The mortgage document was signed by Tabing and her husband as mortgagors in their individual
capacities, without stating that Tabing was executing the mortgage contract for and in behalf of Cayetano. Petitioner
foreclosed the mortgage for failure of spouses Tabing to pay the loan. The mortgaged properties were sold to
petitioner through public auction. Subsequently, petitioner consolidated its title and obtained new titles in its name
after the lapse of redemption period. Five years later, Tabing, on behalf of Cayetano expressed the intention to
repurchase the properties for petitioner gave respondent the chance to buy back the properties by joining a bidding.
Respondent however, filed a complaint for annulment of mortgage and extrajudicial foreclosure sale as well as the
cancellation of petitioners title over the properties. The Regional Trial Court ruled in favor of respondents, holding
that Cayetano cannot be bound by the real estate mortgage executed by Tabing unless it is shown that the same
was made and signed in the name of principal. The Court of Appeals affirmed the RTCs ruling.
ISSUE: Whether or not the principal is bound by the real estate mortgage executed by the authorized agent in her
HELD: NO. It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real
property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the
principal; otherwise, it will bind the agent only. It is not enough that the agent was in fact authorized to make the
mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the
agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name
and has set in his own hand and seal to the mortgage. Notwithstanding the nullity of the real estate mortgage
executed by Tabing and her husband, we find that the equity principle of laches is applicable. Records show that
respondent could have filed an action to annul the mortgage on their properties, but for unexplained reasons, they
failed to do so. They only questioned the loan and mortgage transactions after the lapse of more than five years
from date of foreclosure sale.

Prime Marine Services, Inc. (PMSI), a crewing/manning outfit, procured Group PoIicy
from Insular Life Assurance Co., Ltd. to provide life insurance coverage to its sea-based employees
enrolled under the plan.

February 17 1986: 6 employees of the PMSI perished at sea when M/V Nemos, a Greek cargo vessel,
sunk somewhere in El Jadida, Morocco

The beneficiaries asked President and General Manager of PMSI, Capt. Roberto Nuval and issued
him special powers of attorney authorizing him to "follow up, ask, demand, collect and receive" for their
benefit indemnities. It only verbally pertained to the sinking of the fatal vessel

Unknown to them, however, the PMSI, in its capacity as employer and policyholder of the life insurance of
its deceased workers, filed with formal claims with their special power of attorney

Capt. Nuval, upon receipt of these checks from the treasurer, who happened to be his son-in-law, endorsed
and deposited them in his account with the Commercial Bank of Manila, now Boston Bank

Upon learning that they are entitled to the claim, they sought to recover from Insular Life but it denied on
the ground that they already delivered to PMSI

The fact that there was a verbal agreement between complainants-appellees and Capt. Nuval limiting the
authority of the latter to claiming specified death benefits cannot prejudice the insurance company which
relied on the terms of the powers of attorney which on their face do not disclose such limitation

Section 180 of the Insurance Code has been amended by the Family Code 17 which grants the father and
mother joint legal guardianship over the property of their unemancipated common child without the
necessity of a court appointment; however, when the market value of the property or the annual income of
the child exceeds P50,000.00, the parent concerned shall be required to put up a bond in such amount as
the court may determine.

Insurance Commission: favored petitioners

The Insular Life Assurance Company appealed stating that

(a) had no jurisdiction over the case considering that the claims exceeded P100,000

(b) erred in holding that the powers of attorney relied upon by Insular Life were insufficient to
convey absolute authority to Capt. Nuval to demand, receive and take delivery of the insurance
proceeds pertaining to the petitioners

(c) erred in not giving credit to the version of Insular Life that the power of attorney supposed to
have been executed in favor of the Alarcons was missing, and

(d) erred in holding that Insular Life was liable for violating Section 180 of the Insurance Code for
having released to the surviving mothers the insurance proceeds pertaining to the beneficiaries
who were still minors despite the failure of the former to obtain a court authorization or to post a

CA: eliminated the award to minor beneficiaries Dina Ayo and Lucia Lontok

ISSUE: W/N the minor beneficiaries award should be eliminated

HELD: YES. petition is GRANTED. CA Reversed. Insurance Commission Reinstated.

Being special powers of attorney, they must be strictly construed. Insular Life knew that a power of
attorney in favor of Capt. Nuval for the collection and receipt of such proceeds was a deviation from its
practice with respect to group policies.

Group Insurance

coverage terms for group insurance are usually stated in a master agreement or policy that is
issued by the insurer to a representative of the group or to an administrator of the insurance

employer acts as a functionary in the collection and payment of premiums and in performing
related duties

falling within the ambit of administration of a group policy is the disbursement of insurance
payments by the employer to the employees

employee is in the position of a real party to the master policy

employees is the true source of the benefits, which are a form of additional compensation to them

enables the employees to carry a larger amount of insurance than they could otherwise, and helps
to attract and hold a permanent class of employees

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

Nor can we agree with the opinion of the public respondent that since the shares of the minors in the
insurance proceeds are less than P50,000.00, then under Article 225 of the Family Code their mothers
could receive such shares without need of either court appointments as guardian or the posting of a bond

Art. 225. The father and the mother shall jointly exercise legal guardianship over the property of their
unemancipated common child without the necessity of a court appointment. In case of disagreement, the
father's decision shall prevail, unless there is judicial order to the contrary.

Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned
shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum
(10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for
general guardians.
It is clear from the said Article that regardless of the value of the unemancipated common child's property, the father
and mother ipso jure become the legal guardian of the child's property. However, if the market value of the property
or the annual income of the child exceeds P50,000.00, a bond has to be posted by the parents concerned to
guarantee the performance of the obligations of a general guardian.

It must, however, be noted that the second paragraph of Article 225 of the Family Code speaks of the
"market value of the property or the annual income of the child," which means, therefore, the aggregate of
the child's property or annual income; if this exceeds P50,000.00, a bond is required.

There is no evidence that the share of each of the minors in the proceeds of the group policy in question is
the minor's only property. Without such evidence, it would not be safe to conclude that, indeed, that is his
only property.


G.R. No. 146853
February 13, 2006

Respondents, together with their mother, Dominga, filed a complaint for annulment of document with
damages against petitioner. The complaint alleges that: respondents are the owners of a parcel of land
located in Ilocos Sur and the house built thereon; respondents acquired the subject property through their
earnings while working abroad; the subject property was declared for taxation purposes in Domingas name
as administrator thereof; petitioner caused the execution of a Deed of Donation over said property by taking
advantage of Domingas blindness, old age and physical infirmity; the said Deed of Donation is null and
void because: (a) Dominga had no right to donate the same since she is not its owner, (b) Dominga did not
give her consent and was misled to the execution of such document, (c) granting Dominga had authority to
donate, the donation is void because the property donated is the only property declared in her name and
therefore she could not have reserved for herself in full ownership sufficient property to support herself;
petitioner is in possession of the subject property, depriving respondents of its ownership and enjoyment of
its fruits.

Whether or not implied trust arise dove the subject property
In holding that an implied trust exists between respondents and Dominga in relation to the subject property
and therefore Dominga had no right to donate the same to petitioner, the CA merely clarified the RTCs
Article 1448 of the Civil Code on implied trust provides:
Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but
the price is paid by another for the purpose of having the beneficial interest of the property. The former is
the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money
resulting trust, the elements of which are: (a) an actual payment of money, property or services, or an
equivalent, constituting valuable consideration; and (b) such consideration must be furnished by the alleged
beneficiary of a resulting trust. Respondents have shown that the two elements are present in the instant
case. Dominga was merely a trustee of the respondents in relation to the subject property. Therefore,

Dominga could not have validly donated the subject property to petitioner, as expressly provided in Article
736 of the Civil Code, thus:
Art. 736. Guardians and trustees cannot donate the property entrusted to them.
Truly, nobody can dispose of that which does not belong to him.
Trusts: Heirs of Labiste vs Heirs of Labiste G.R. No. 162033
Facts: Epifanio is an heir of Jose Labiste, purchased a land. Before the execution of the deed of
conveyance, Epifanio executed an affidavit affirming that he and his uncle Tranquilino co-owned the lot
because the money came from them both. Later on it was divided and the heirs of Tranquilino bought half
interest. After the World War, the properties were destroyed and squatters lived on the land. Petitioner
learned that an heir of the respondent filed for reconstitution.
Issue: Whether the petitioner's cause of action prescribed.
Held: The court of appeals erred in applying the principle of Laches because was is involved in this case is
an express trust. The affidavit of Epifanio is in the nature of a trust agreement. The only act that can be
construed as repudiation was when the respondent filed the petition for reconstitution in 1993 and since
petitioners files their complaint in 1995, their cause has not yet prescribed. However, to recover half of the
property covered by a private document to execute a public deed of sale