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Bus Org1 Cases on Agency

ORIENT AIR SERVICES AND HOTEL REPRESENTATIVES vs. In an agent-principal relationship, the personality of the
COURT OF APPEALS principal is extended through the facility of the agent. In so
CASE NUMBER: GR. NO. 76931 doing, the agent, by legal fiction, becomes the principal,
DATE: MAY 29, 1991 authorized to perform all acts which the latter would have
him do. Such a relationship can only be affected with the
FACTS: consent of the principal, which must not, in any way, be
January 15 1977- American Airlines, Inc. an air carrier compelled by law or by any court. The Agreement itself
offering passenger and air cargo transportation in the between the parties states that "either party may terminate
Philippines, and Orient Air Services and Hotel the Agreement without cause by giving the other 30 days'
Representatives entered into a General Sales Agency notice by letter, telegram or cable." (Emphasis supplied) We,
Agreement, whereby the former authorized the latter to act therefore, set aside the portion of the ruling of the
as its exclusive general sales agent within the Philippines for respondent appellate court reinstating Orient Air as general
the sale of air passenger transportation. sales agent of American Air.
May 11 1981- American Air took charge of the collection WHEREFORE, with the foregoing modification, the Court
of the proceeds of tickets sold originally by Orient Air and AFFIRMS the decision and resolution of the respondent Court
terminated the Agreement in accordance with Paragraph 13 of Appeals, dated 27 January 1986 and 17 December 1986,
thereof (Termination). respectively. Costs against petitioner American Air.

13. Termination
American may terminate the Agreement on two days' RALLOS vs. FELIX GO CHAN & SONS REALTY
notice in the event Orient Air Services is unable to CORPORATION
transfer to the United States the funds payable by Orient CASE NUMBER: L-24332
Air Services to American under this Agreement. Either DATE: January 31, 1978
party may terminate the Agreement without cause by PONENTE: Munoz-Palma, J.
giving the other 30 days' notice by letter, telegram or
cable. FACTS:
May 15 1981- American Air instituted suit against Orient Concepcion and Gerundia Rallos were sisters and
Air with the Court of First Instance of Manila, for Accounting registered co-owners of a parcel of land known as Lot No.
with Preliminary Attachment or Garnishment, Mandatory 5983 of the Cadastral Survey of Cebu covered by Transfer
Injunction and Restraining Order Certificate of Title No. 11116 of the Registry of Cebu.
In its Answer with counterclaim dated 9 July 1981, Orient They executed a special power of attorney in favor of their
Air denied the material allegations of the complaint with brother, Simeon Rallos, authorizing him to sell such land for
respect to plaintiff's entitlement to alleged unremitted and in their behalf.
amounts, contending that after application thereof to the
After Concepcion died, Simeon Rallos sold the undivided
commissions due it under the Agreement, plaintiff in fact still
shares of his sisters Concepcion and Gerundia to Felix Go
owed Orient Air a balance in unpaid overriding commissions.
Chan & Sons Realty Corporation for the sum of P10,686.90.
Further, the defendant contended that the actions taken by
New TCTs were issued to the latter.
American Air in the course of terminating the Agreement as
Petitioner Ramon Rallos, administrator of the Intestate
well as the termination itself were untenable, Orient Air
Estate of Concepcion filed a complaint praying (1) that the
claiming that American Air's precipitous conduct had
sale of the undivided share of the deceased Concepcion
occasioned prejudice to its business interests.
Rallos in lot 5983 be unenforceable, and said share be
Trial Court ruled in favor of Orient Air
reconveyed to her estate; (2) that the Certificate of 'title
ON APPEAL: Intermediate Appellate Court affirmed the
issued in the name of Felix Go Chan & Sons Realty
ruling of TC
Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of
ISSUE: W/N the respondent appellate court correctly ruled
Concepcion Rallos" in equal undivided and (3) that plaintiff
that Orient Air be reinstated again as sales agent of American
be indemnified by way of attorney's fees and payment of
costs of suit.
CFI: [Plaintiffs Complaint]
By affirming this ruling of the trial court, respondent
Sale of land was null and void insofar as the one-half pro-
appellate court, in effect, compels American Air to extend its
indiviso share of Concepcion Rallos
personality to Orient Air. Such would be violative of the
principles and essence of agency, defined by law as a Ordered the issuance of new TCTs to respondent
contract whereby "a person binds himself to render some corporation and the estate of Concepcion in the proportion
service or to do something in representation or on behalf of of share each pro-indiviso and the payment of attorneys
another, WITH THE CONSENT OR AUTHORITY OF THE fees and cost of litigation

Bus Org1 Cases on Agency
[Respondent filed cross claim against Simon Rallos(*Simon CAUSE OF ACTION: Petition for review on certiorari assailing
and Gerundia died during pendency of case)] the Decision of then respondent Court of Appeals
Juan T. Borromeo, administrator of the Estate of Simeon promulgated "Jose G. Gana, et al. vs. Sociedad Nacionale Air
Rallos was ordered to pay defendant the price of the share France", which reversed the Trial Court's judgment dismissing
of the land (P5,343.45) plus attorneys fees the Complaint of private respondents for damages arising
from breach of contract of carriage, and awarding instead
[Borromeo filed a third party complaint against Josefina P90,000.00 as moral damages.
Rallos, special administratrix of the Estate of Gerundia]
Dismissed without prejudice to filing either a complaint FACTS:
against the regular administrator of the 1. Late Jose G. Gana and his family (the GANAS), purchased
Estate of Gerundia Rallos or a claim in the Intestate-Estate of from AIR FRANCE (9) "open-dated" air passage tickets
Cerundia Rallos, covering the same subject-matter for the Manila/Osaka/Tokyo/Manila route. On 24 April
1970, AIR FRANCE exchanged or substituted the
CA: CFI Decision reversed, upheld the sale of Concepcions aforementioned tickets with other tickets for the same
share. route. At this time, the GANAS were booked for the
MR: denied. Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May
1970, and for the Tokyo/Manila return trip on AIR FRANCE
ISSUES & RULING: Flight 187 on 22 May 1970.
1) WON sale was valid although it was executed after the 2. The aforesaid tickets were valid until 8 May 1971. The
death of the principal, Concepcion.? GANAS did not depart on 8 May 1970. Instead, Jose Gana
Sale was void. sought the assistance of Teresita Manucdoc, a Secretary of
o No one may contract in the name of another without being the Sta. Clara Lumber Company where Jose Gana was the
authorized by the latter, or unless he has by law a right to Director and Treasurer, for the extension of the validity of
represent him (Art. 1317 of the Civil Code). their tickets, which were due to expire on 8 May 1971.
o Simons authority as agent was extinguished upon 3. Teresita enlisted the help of Lee Ella Manager of the
Concolacions death Philippine Travel Bureau. Ella sent the tickets to Cesar Rillo,
Office Manager of AIR FRANCE. The tickets were returned
2) WON sale fell within the exception to the general rule that to Ella who was informed that extension was not possible
death extinguishes the authority of the agent unless the fare differentials resulting from the increase in
The sale did not fall under the exceptions to the fares triggered by an increase of the exchange rate of the US
general rule that death ipso jure extinguishes the dollar to the Philippine peso and the increased travel tax
authority of the agent were first paid. Ella then returned the tickets to Teresita
o Art. 1930 inapplicable: SPA in favor of Simon Rallos was not and informed her of the impossibility of extension.
coupled with interest 4. In the meantime, the GANAS had scheduled their
o Art. 1931 inapplicable: departure on 7 May 1971 or one day before the expiry
Simon Rallos knew (as can be inferred from his pleadings) date. Teresita requested travel agent Ella to arrange the
of principal Concepcions death revalidation of the tickets. Ella gave the same negative
For Art 1931 to apply, both requirements must be present answer and warned her that although the tickets could be
used by the GANAS if they left on 7 May 1971, the tickets
3) WON agents knowledge of the principals death is a would no longer be valid for the rest of their trip because
material factor. the tickets would then have expired on 8 May 1971.
Yes, agents knowledge of principals death is material. Teresita replied that it will be up to the GANAS to make
o Respondent asserts that: there is no provision in the Code the arrangements.
which provides that whatever is done by an agent having 5. With that assurance, Ella on his own, attached to the
knowledge of the death of his principal is void even with tickets validating stickers for the Osaka/Tokyo flight, one a
respect to third persons who may have contracted with him JAL. sticker and the other an SAS (Scandinavian Airways
in good faith and without knowledge of the death of the System) sticker. The SAS sticker indicates thereon that it
principal was "Reevaluated by: the Philippine Travel Bureau,
o Court says: this contention ignored the ignores the Branch No. 2" (as shown by a circular rubber stamp) and
existence of the general rule enunciated in Article 1919 that signed "Ador", and the date is handwritten in the center of
the death of the principal extinguishes the agency. Article the circle. Then appear under printed headings the notations:
1931, being an exception to the general rule, is to be strictly JL. 108 (Flight), 16 May (Date), 1040 (Time), OK (status).
construed. Apparently, Ella made no more attempt to contact AIR
FRANCE as there was no more time.
AIR FRANCE vs. COURT OF APPEALS 6. Notwithstanding the warnings, the GANAS departed
CASE NUMBER: G.R. No. L-57339 from Manila in the afternoon of 7 May 1971 on board
DATE: December 29, 1983 AIR FRANCE Flight 184 for Osaka, Japan. There is no
question with respect to this leg of the trip.

Bus Org1 Cases on Agency
7. However, for the Osaka/Tokyo flight on 17 May 1971, 6. TARIFF RULES
Japan Airlines refused to honor the tickets because of 7. APPLICABLE FARE ON THE DATE OF DEPARTURE
their expiration, and the GANAS had to purchase new 3.1 General Rule.
tickets. They encountered the same difficulty with respect to All journeys must be charged for at the fare (or charge) in
their return trip to Manila as AIR FRANCE also refused to effect on the date on which transportation commences from
honor their tickets. They were able to return only after pre- the point of origin. Any ticket sold prior to a change of fare
payment in Manila, through their relatives, of the readjusted or charge (increase or decrease) occurring between the date
rates. They finally flew back to Manila on separate Air of commencement of the journey, is subject to the above
France Frights on 19 May 1971 for Jose Gana and 26 May general rule and must be adjusted accordingly. A new ticket
1971 for the rest of the family. must be issued and the difference is to be collected or
8. On 25 August 1971, the GANAS commenced before the refunded as the case may be. No adjustment is necessary if
then Court of First Instance of Manila, Branch III, Civil Case the increase or decrease in fare (or charge) occurs when the
No. 84111 for damages arising from breach of contract of journey is already commenced.
9. AIR FRANCE traversed the material allegations of the The GANAS cannot defend by contending lack of
Complaint and alleged that the GANAS brought upon knowledge of those rules since the evidence bears out
themselves the predicament they found themselves in that Teresita, who handled travel arrangements for the
and assumed the consequential risks; that travel agent GANAS, was duly informed by travel agent Ella of the
Ella's affixing of validating stickers on the tickets without advice of Reno, the Office Manager of Air France, that
the knowledge and consent of AIR FRANCE, violated the tickets in question could not be extended beyond the
airline tariff rules and regulations and was beyond the period of their validity without paying the fare
scope of his authority as a travel agent; and that AIR differentials and additional travel taxes brought about by
FRANCE was not guilty of any fraudulent conduct or bad the increased fare rate and travel taxes.
faith. Teresita was the agent of the GANAS and notice to her of
10. TC dismissed the Complaint of the GANAS based on the rejection of the request for extension of the validity
Partial and Additional Stipulations of Fact . of the tickets was notice to the GANAS, her principals.
11. The GANAS appealed to the CA. During the pendency of PRINCIPAL)
the appeal, Jose Gana, the principal plaintiff, died. The circumstances that AIR FRANCE personnel at the ticket
12. CA set aside and reversed the TCs decision ordering Air counter in the airport allowed the GANAS to leave is not
France to pay appellants moral damages in the total sum tantamount to an implied ratification of travel agent Ella's
P90,000.00 plus costs. irregular actuations. It should be recalled that the GANAS left
13. Reconsideration sought by AIR FRANCE was denied, in Manila the day before the expiry date of their tickets and
hence, petitioner's recourse before this instance, to which we that "other arrangements" were to be made with respect to
gave due course. the remaining segments. Besides, the validating stickers that
Ella affixed on his own merely reflect the status of
ISSUE: reservations on the specified flight and could not legally
1. Whether or not, under the environmental milieu the serve to extend the validity of a ticket or revive an expired
GANAS have made out a case for breach of contract of one.
carriage entitling them to an award of damages? No! The conclusion is inevitable that the GANAS brought upon
themselves the predicament they were in for having
2. Whether or not Teresita was the agent of the GANAS
insisted on using tickets that were due to expire in an
and notice to her of the rejection of the request for
effort, perhaps, to beat the deadline and in the thought
extension of the validity of the tickets was notice to the
that by commencing the trip the day before the expiry
GANAS, her principals? YES!
date, they could complete the trip even thereafter.
It should be recalled that AIR FRANCE was even unaware
RULING: No! SC reversed the affirmative ruling of the CA. (As
of the validating SAS and JAL. stickers that Ella had
for the mainFIRST issue)
affixed spuriously. Consequently, Japan Air Lines and AIR
AIR FRANCE cannot be faulted for breach of contract
FRANCE merely acted within their contractual rights
when it dishonored the tickets of the GANAS after 8 May
when they dishonored the tickets on the remaining
1971 since those tickets expired on said date; nor when it
segments of the trip and when AIR FRANCE demanded
required the GANAS to buy new tickets or have their
payment of the adjusted fare rates and travel taxes for
tickets re-issued for the Tokyo/Manila segment of their
the Tokyo/Manila flight.
trip. Neither can it be said that, when upon sale of the new
WHEREFORE, the judgment under review is hereby reversed
tickets, it imposed additional charges representing fare
and set aside, and the Amended Complaint filed by private
differentials, it was motivated by self-interest or unjust
respondents hereby dismissed.
enrichment considering that an increase of fares took effect,
as authorized by the Civil Aeronautics Board (CAB) in April,
1971. This procedure is well in accord with the IATA tariff CASE NUMBER: G.R. No. L-20136
rules which provide:
Bus Org1 Cases on Agency
DATE: June 23, 1965 could not have possibly vested in him any property right in
his own name; (
FACTS: b. The children of Anatolio Buenconsejo had no authority to
1. Petitioner Jose A. Santos y Diaz seeks the reversal of an execute said power of attorney, because their father is still
order of the Court of First Instance of Albay, denying his alive and, in fact, he and his wife opposed the petition of
petition: Santos;
a. Cancellation of original certificate of title No. RO-3848 c. In consequence of said power of attorney (if valid) and
(25322), issued in the name of Anatolio Buenconsejo, redemption, Santos could have acquired no more than the
Lorenzo Bon and Santiago Bon, and covering Lot No. 1917 of share pro indiviso of Anatolio Buenconsejo in Lot No. 1917,
the Cadastral Survey of Tabaco, Albay, and so that petitioner cannot without the conformity of the
b. Issuance in lieu thereof, of a separate transfer certificate of other co-owners (Lorenzo and Santiago Bon), or a judicial
title in his name. decree of partition issued pursuant to the provisions of Rule
2. Lot No. 1917 covered by Original Certificate of Title No. 69 of the new Rules of Court (Rule 71 of the old Rules of
RO-3848 (25322) was originally owned in common by Court) which have not been followed By Santos adjudicate
Anatolio Buenconsejo to the extent of undivided portion to himself in fee simple a determinate portion of said Lot No.
and Lorenzo Bon and Santiago Bon to the extent of the other 1917, as his share therein, to the exclusion of the other co-
(Exh. B) owners.
3. Anatolio Buenconsejo's rights, interests and participation
over the portion abovementioned were by a Certificate of Inasmuch as the appeal is patently devoid of merit, the order
Sale executed by the Provincial Sheriff of Albay, transferred appealed from is hereby affirmed, with treble cost against
and conveyed to Atty. Tecla San Andres Ziga, awardee in petitioner-appellant Jose A. Santos y Diaz. It is so ordered.
the corresponding auction sale conducted by said Sheriff
4. By a certificate of redemption issued by the Provincial
Sheriff of Albay, the rights, interest, claim and/or or ALBADEJO y CIA vs. PHILIPPINE REFINING CO.
participation which Atty. Tecla San Andres Ziga may have DATE: December 20, 1923
acquired over the property in question by reason of the
aforementioned auction sale award, were transferred and FACTS:
conveyed to the herein petitioner in his capacity as It appears that Albaladejo y Cia. is a limited partnership,
Attorney-in-fact of the children of Anatolio Buenconsejo, organized in conformity with the laws of these Islands, and
namely, Anastacio Buenconsejo, Elena Buenconsejo and having its principal place of business at Legaspi, Albay. The
Azucena Buenconsejo (Exh. C). firm was engaged in the buying and selling of the products
5. Petitioner Santos had redeemed the aforementioned share of the country, especially copra.
of Anatolio Buenconsejo, upon the authority of a special The Visayan Refining Co. is a corporation organized engaged
power of attorney executed in his favor by the children of in operating its extensive plant at Opon, Cebu, for the
Anatolio Buenconsejo. manufacture of coconut oil.
6. Relying upon this power of attorney and redemption made On August 28, 1918, the plaintiff made a contract with the
by him, Santos now claims to have acquired the share of Visayan Refining Co., the material parts of which are as
Anatolio Buenconsejo in the aforementioned Lot No. follows: (important provisions)
1917; - The party of the first part (Albadejo) agrees and binds itself
7. As the alleged present owner of said share, Santos caused to sell to the party of the second part (Visayan Refining Co.) ,
a subdivision plan of said Lot No. 1917 to be made, in which and the party of the second part agrees and binds itself to
the portion he claims as his share thereof has been marked buy from the party of the first part, for a period of one (1)
as Lot No. 1917-A; and that he wants said subdivision at No. year
1917-A to be segregated from Lot No. 1917 and a certificate
of title issued in his name exclusively for said subdivision Lot - During the continuance of this contract the party of the
No. 1917-A. second part will not appoint any other agent for the
8. Lower court: ruled in favor of the respondents. purchase of copra in Legaspi, nor buy copra from any vendor
in Legaspi.
ISSUE: Whether or not petitioner Santos claim that he has
acquired the share of Anatolio Buenconsejo in Lot No. 1917 - The party of the second part will provide transportation by
relying upon a power of attorney and redemption made by sea to Opon, Cebu, for the copra delivered to it by the party
him is tenable? of the first part, but the party of the first part must deliver
such copra to the party of the second part free on board the
RULING: No! SC affirmed the lower courts decision that boats of the latter's ships or on the pier alongside the latter's
petitioner's claim is clearly untenable, for three reasons: ships.
a. Said special power of attorney authorized him to act on
behalf of the children of Anatolio Buenconsejo, and, hence, it Pursuant to this agreement the plaintiff bought copra
extensively for the Visayan Refining Co. for a year. At the end
Bus Org1 Cases on Agency
of said year both parties found themselves satisfied with the of copra from the time of its delivery to the party of the
existing arrangement, and they therefore continued by tacit second part till its arrival at Opon should fall upon the
consent to govern their future relations by the same plaintiff, from whence it is to be interfered that the parties
agreement. intended that the copra should be paid for according to its
weight upon arrival at Opon regardless of its weight when
When the contract above referred to was originally made, first purchased.
Albaladejo y Cia. apparently had only one commercial From what has been said it follows that the first cause of
establishment. After the Visayan Refining Co. had ceased to action set forth in the complaint is not well founded, and
buy copra, the supplies of copra already purchased by the the trial judge committed no error in absolving the
plaintiff were gradually shipped out and accepted by \the plaintiff therefrom.
Visayan Refining Co. In next eight or ten months the Second cause of action: Plaintiff seeks to recover the sum of
accounts between the two parties were liquidated. The last P110,000, the alleged amount expended by the plaintiff in
account rendered by the Visayan Refining Co. to the plaintiff maintaining and extending its organization for Visayan
was for the month of April, 1921, and it showed a balance of Refining Co.
P288 in favor of the defendant. As a basis for the defendant's liability in this respect it is
Under date of June 25, 1921, the plaintiff company addressed alleged that said organization was maintained and extended
a letter from Legaspi to the Philippine Refining Co. (which at the express request, or requirement, of the defendant, in
had now succeeded to the rights and liabilities of the Visayan conjunction with repeated assurances that the defendant
Refining Co.), expressing its approval of said account. In this would soon resume activity as a purchaser of copra.
letter no dissatisfaction was expressed by the plaintiff as to SC: We note that in his letter of July 10, 1920, Mr. Day
the state of affairs between the parties; but about six weeks suggested that if the various purchasing agents of the
thereafter the present action was begun. Visayan Refining Co. would keep their organization intact, the
This action was instituted in the CFI Albay by Albaladejo to company would endeavour to see that they should not lose
recover a sum of money from the Philippine Refining Co., as by the transaction in the long run. These words afford no
successor to the Visayan Refining Co., two causes of action sufficient basis for the conclusion, which the trial judge
being stated in the complaint. deduced there from, that the defendant is bound to
Upon hearing the cause, the trial judge absolved the compensate the plaintiff for the expenses incurred in
defendant from the first cause of action but gave judgment maintaining its organization. The correspondence sufficiently
for the plaintiff to recover the sum of P49,626.68, with costs, shows on its face that there was no intention on the part of
upon the second cause of action. the company to lay a basis for contractual liability of any sort;
The plaintiff appealed the first cause of action, and the and the plaintiff must have understood the letters in that
defendant appealed with respect to the action taken upon light. The parties could undoubtedly have contracted about
the second cause of action. It results that, by the appeal of it, but there was clearly no intention to enter into contractual
the two parties, the decision of the lower court is here under relation; and the law will not raise a contract by implication
review. against the intention of the parties.
ISSUE: Whether he defendant liable for the expenses The inducement held forth was that, when purchasing should
incurred by the plaintiff in keeping its organization intact be resumed, the plaintiff would be compensated by the
during the period now under consideration. profits then to be earned for any expense that would be
incurred in keeping its organization intact. It is needless to
RULING: NO say that there is no proof showing that the officials of the
First cause of action: The alleged negligent failure of the defendant acted in bad faith in holding out this hope.
Visayan Refining Co. to provide opportune transportation for In the appellant's brief the contention is advanced that the
the copra collected by the plaintiff and deposited for contract between the plaintiff and the VisayanRefining Co.
shipment. created the relation of principal and agent between the
Upon consideration of all the facts revealed in evidence parties, and the reliance is placed upon article1729 of the
(records of shipping), court found that the Visayan Refining Civil Code which requires the principal to indemnify the
Co. had used reasonable promptitude in its efforts to get out agent for damages incurred in carrying out the agency.
the copra from the places where it had been deposited for Attentive perusal of the contract is, however, convincing to
shipment, notwithstanding occasional irregularities due at the effect that the relation between the parties was not that
times to the condition of the weather as related to of principal and agent in so far as relates to the purchase of
transportation by sea and at other times to the inability of copra by the plaintiff. It is true that the Visayan Refining Co.
the Visayan Refining Co. to dispatch boats to the more made the plaintiff one of its instruments for the collection of
remote ports. This finding of the trial judge, that no copra; but it is clear that in making its purchases from the
negligence of the kind alleged can properly be imputed to producers the plaintiff was buying upon its own account
the Visayan Refining Co., is in our opinion supported by the In paragraph three of the contract it is declared that during
proof. the continuance of this contract the Visayan Refining Co.
The trial judge calls attention to the fact that it is expressly would not appoint any other agent forthe purchase of copra
provided in paragraph two of the contract that the shrinkage in Legaspi; and this gives rise indirectly to the inference that

Bus Org1 Cases on Agency
the plaintiff was considered its buying agent. But the use of the defendant could strip the business naked of all its stocks,
this term in one clause of the contract cannot dominate the leaving the plaintiff holding the bag, as it were, when the
real nature of the agreement as revealed in other clauses, no defendant's management was terminated. Unless Thomas
less than in the caption of the agreement itself. was willing to give away his property and its profits, no man
in his right senses would have given his manager an outright
In some of the trade letters also the various instrumentalities license such as the defendant claims to have gotten from his
used by the Visayan Refining Co. for the collection of copra employer.
are spoken of as agents. But this designation was evidently
used for convenience; and it is very clear that in its activities - The conclusion thus seems clear that the defendant owes
as a buyer the plaintiff was acting upon its own account and the plaintiff an accounting of his management of the
not as agents of the Visayan Refining Co. The title to all of plaintiff's business during the occupation. The exact legal
the copra purchased by the plaintiff undoubtedly remained character of the defendant's relation to the plaintiff matters
in it until it was delivered by way of subsequent sale to said not a bit. It was enough to show, and it had been shown, that
company. he had been entrusted with the possession and management
For the reasons stated we are of the opinion that no liability of the plaintiff's business and property for the owner's
on the part of the defendant is shown upon the plaintiff's benefit and had not made an accounting.
second cause of action, and the judgment of the trial court
on this part of the case is erroneous. - It was error for the court below to declare at this stage of
the proceeding, on the basis of defendant's incomplete and
indefinite evidence, that there were no surplus profits
CASE NUMBER: G.R. No. L-2411 - Monies and food stuffs which the defendant said he had
DATE: June 28, 1951 supplied the plaintiff and his daughters during the war are
appropriate items to be considered on taking account
Thomas bought the bar and restaurant known as Silver Dollar Upon plaintiffs release from the internment camp, he lost no
Caf at Plaza Sta. Cruz. time in looking for a site where he could open a saloon
He employed Pineda as a bartender-promoted to cashier The use of the old name suggested that the business was in
and manager fact an extension and continuation of the Silver Dollar Caf
During Japanese occupation, to prevent the business and - Upon the reopening of the bar in the original place- lease
its property from falling into enemy hands, Thomas made a was in the name of Thomas; calling cards saying Thomas is
fictitious sale to Pineda fictitious sale was admitted by both the proprietor == defendant was only a manager. 2nd CoA-
parties; Thomas is the owner of the trade name
2nd agreement which was a secret stating that the sale was - In the fictitious bill of sale Pineda acknowledged Thomas
fictitious ownership of the business
Original building was destroyed by fire, Pineda was able to - Business cards: Thomas is the proprietor
remove some furniture and a considerable qty of stocks to a - No abandonment because when Thomas set up a new
place of safety- a bar was opened on Calle Bambang-after 4 saloon it used the same name
months it was transferred to the original location
Thomas brought a CPA for the purpose of examining the The most that can be said is that the plaintiff instructed
books- Pineda threatened Thomas with a gun if they Pineda to renew the registration of the trade-name and the
persisted in their purpose. So Thomas filed a case and set up defendant understood the instruction as permission to make
another bar the registration in his favor
1st CoA- Thomas sought to compel an ACCOUNTING of As legal proposition and in good conscience, the defendants
Pinedas operations during the time he was in control of the registration of the trade name Silver Dollar Cafe must be
bar deemed to have been affected for the benefit of its owner of
- Pineda claims that there was a 3rd verbal agreement, the whom he was a mere trustee or employee.
import of which was that he was to operate the business with "The relations of an agent to his principal are fiduciary and it
no liability other than to turn over to the plaintiff as the is an elementary and very old rule that in regard to property
plaintiff would find it after the war forming the subject matter of the agency, he is estopped
from acquiring or asserting a title adverse to that of principal.
2nd CoA: ownership of Silver Dollar Caf trade name it His position is analogous to that of a trustee and he cannot
appears that Pineda registered the business as his own consistently, with the principles of good faith, be allowed to
create in himself an interest in opposition to that of his
RULING: principal or cestuique trust. A receiver, trustee, attorney,
1st CoA valid agent or any other person occupying fiduciary relations
- Little or no weight can be attached to Pinedas assertion .As respecting property or persons utterly disabled from
sole manager with full power to do as his fancies dictated;

Bus Org1 Cases on Agency
acquiring for his own benefit the property committed to his to the effect that Luisa, before her death, called her
custody for management. husband, the petitioner, and enjoined him to give her co-
The rule stands on the moral obligation to refrain from owners their shares in the parcel of land; but respondent
placing one's self in position which ordinarily excite conflicts told her then not to worry about it, for it was more
between self-interest at the expense of one's integrity and important to them to have her cured of the malady that
duty to another, by making it possible to profit by yielding to affected her. Petitioner answered his wife that she should
temptation, not worry because he would take care of the matter by
giving the co-owners their respective shares.
PALMA VS. CRISTOBAL After Luisa Cristobal, petitioners wife, died in 1922, instead
CASE NUMBER: G.R. No. L-49219 of moving for the partition of the property, considering
DATE: December 11, 1946 specially that petitioner had promised such a partition at the
deathbed of the deceased, respondent appeared as
FACTS: attorney for petitioner and prayed that a new certificate
A parcel of a land located in Quesada Street, Tondo, of title be issued in the name of said petitioner as the
Manila, covered by transfer certificate of title No. 31073 of sole owner of the property.
the Register of Deeds of Manila, issued in favor of petitioner
Petitioner assigns as first error of the Court of Appeals the
Pablo D. Palma, is the subject of contention between the
fact that it considered the oral testimony adduced in behalf
of respondent sufficient to rebut the legal presumption that
o Petitioner sought, at first, to eject respondent Eduardo
petitioner is the owner of the land in controversy. .
Cristobal Reyes from the land in question in a complaint filed
In Severino vs. Severino (43 Phil. 343), this court declared that
with the Municipal Court of Manila. As respondent raised the
Affirming the said doctrine in Barretto vs. Tuason (50 Phil.
question of ownership, the complaint was dismissed, and
888), the Supreme Court declared that In Palet vs. Tejedor (55
petitioner filed with the Court of First Instance of Manila the
Phil. 790), it was declared that This right to recover is
complaint which initiated this case, petitioner praying that he
sanctioned by section 55 of Act No. 496, as amended by Act
be declared the owner of the land and that respondent be
No. 3322.
ordered to restore its possession and to remove his house
There is no showing why the conclusions of facts of the Court
of Appeals should be disturbed, and upon said facts
o The complaint was dismissed and petitioner brought the
petitioners first assignment of errors appears to be
case to the Court of Appeals, where he again failed.
untenable in the light of law and of the decision of this court.
o The case is appealed by certiorari.
Petitioner alleged that the Court of Appeals erred in not
In 1909, after registration proceedings under the provisions
of Act No. 496, original certificate of title No. 1627 was issued
in the names of petitioner and his wife Luisa Cristobal.
ISSUE: Whether the respondent is estopped from claiming
In 1923, said certificate was cancelled and substituted by
that petitioner is not the absolute owner of the property in
certificate of title No. 20968 by virtue of a decree issued by
the Court of First Instance of Manila in connection with
Manila cadastre.
It was later substituted by certificate of title No. 26704, also The fact that respondent has been a party to the deception
in the name of petitioner and his wife. which resulted in petitioners securing in his name the title to
After the wifes death in 1922,a new certificate of title was a property not belonging to him, is not valid reason for
issued in 1923 only in the name of the name of the changing the legal relationship between the latter and its
petitioner, substituted in 1928 by certificate of title No. true owners to such an extent as to let them lose their
31073. ownership to a person trying to usurp it.
The Court of Appeals, upon the evidence, concluded with Respondent is not barred because his appearance as
the Court of First Instance of Manila that the parcel of land attorney for petitioner was not a misrepresentation which
in question is a community property held by petitioner in would induce petitioner to believe that respondent
trust for the real owners (the respondent being an heir of
recognized the former as the sole owner of the property in
one of them), the registration having been made in
accordance with an understanding between the co-
owners, by reason of the confidence they had in Respondents appearance, as attorney for petitioner in
petitioner and his wife. This confidence, close relationship, 1923, was a consequence of the understanding, and
and the fact that the co-owners were receiving their shares in petitioner could not legitimately assume that it had the effect
the rentals, were the reasons why no step had been taken to of breaking or reversing said understanding.
partition the property.
Lastly, it is contended by petitioner that, even conceding that
It was only after the death of Luisa Cristobal and petitioner
the controverted property was owned in common by several
had taken a second wife that trouble on religious matters
co-owners, yet the Court of Appeals erred in not holding
arose between petitioner and respondent, and it gives
that, as against respondent,
credence to the testimony of Apolonia Reyes and respondent
Bus Org1 Cases on Agency
ISSUE: Whether petitioner had acquired absolute ownership in the Philippines, consisting of the usufruct of a real
of the property through prescription. property located of Echague Street, City of Manila.
Upon the premise that the registration in 1909 in the name The defendant accepted both powers of attorney,
of petitioner and his wife, Luisa Cristobal, was in accordance managed plaintiff's property, reported his operations, and
with an agreement among the co-owners, petitioner rendered accounts of his administration; and on March 31,
advances the theory that when he, upon the death of his 1923 presented exhibit F to plaintiff, which is the final
wife in 1922, caused the trust property to be registered account of his administration for said month, wherein it
in his sole name in 1923, and subsequently partitioned appears that there is a balance of P3,058.33 in favor of the
between himself and his daughter, Ildefonsa Cristobal plaintiff.
Ditangco, as heirs of the decedent, he openly breached
The liquidation of accounts revealed that the plaintiff
the agreement of 1909 as well as the promise made to his
owed the defendant P1,100, and as misunderstanding
dying wife of giving the co-owners their respective shares,
arose between them, the defendant brought suit against
concluding that that breach was an assumption of
the plaintiff, civil case No. 23447 of this court. Judgment
ownership, and could be the basis of title by
prescription. was rendered in his favor on March 28, 1923, and after the
RULING No, Petitioners pretension of building his right to writ of execution was issued, the sheriff levied upon the
claim ownership by prescription upon his own breach of a plaintiff's right of usufruct, sold it at public auction and
trust cannot be countenanced by any court, being subversive adjudicated it to the defendant in payment of all of his claim.
of generally accepted ethical principles.
Petitioner held the property and secured its registration in o Subsequently, on May 11, 1923, the plaintiff sold his right
his name in a fiduciary capacity, and it is elementary that a of redemption to one Eduardo Hernandez, for the sum of
trustee cannot acquire by prescription the ownership of the P200 (Exhibit A). On September 4, 1923, this purchaser
property entrusted to him. conveyed the same right of redemption, for the sum of P200,
to the plaintiff himself, Federico Valera (Exhibit C).
The position of a trustee is of representative nature. His
o After the plaintiff had recovered his right of redemption,
position is the position of a cestui que trust.
one Salvador Vallejo, who had an execution upon a judgment
It is logical that all benefits derived by the possession and
against the plaintiff rendered in a civil case against the latter,
acts of the agent, as such agent, should accrue to the benefit
levied upon said right of redemption, which was sold by the
of his principal.
sheriff at public auction to Salvador Vallejo for P250 and was
The registration of the property in the name of the trustees
definitely adjudicated to him. Later, he transferred said right
in possession thereof, must be deemed to have been
of redemption to the defendant Velasco. This is how the title
effected for the benefit of the cestui que trust.
to the right of usufruct to the aforementioned property later
whether or not there is bad faith or fraud in obtaining a came to vest the said defendant.
decree with respect to a registered property, the same does
not belong to the person in whose favor it was issued, and ISSUE: Whether the lower court erred in holding that one of
the real owners be entitled to recover the ownership of the the ways of terminating an agency is by the express or tacit
property so long as the same has not been transferred to a renunciation of the agent; and that the institution of a civil
third person who has acquired it in good faith and for a action and the execution of the judgment obtained by the
valuable consideration. agent against his principal is but renunciation of the powers
conferred on the agent;
DATE: March 13, 1928 The lower court did not err. The fact that an agent institutes
an action against his principal for the recovery of the balance
Doctrine: The filing of a complaint by an agent against his in his favor resulting from the liquidation of the accounts
principal for the collection of a balance in his favor resulting between them arising from the agency, and renders a final
from the liquidation of the agency accounts between them, account of his operations, is equivalent to an express
and his rendering of a final account of his operations, are renunciation of the agency, and terminates the juridical
equivalent to an express renunciation of the agency and relation between them.
terminates the juridical relation between them. Article 1732 of the Civil Code reads as follows:
FACTS: Art. 1732. Agency is terminated:
This is an appeal taken by Federico Valera from the 1. By revocation;
judgment of the Court of First Instance of Manila dismissing 2. By the withdrawal of the agent;
his complaint against Miguel Velasco, on the ground that he 3. By the death, interdiction, bankruptcy, or insolvency of the
has not satisfactorily proven his right of action. principal or of the agent.
By virtue of the powers of attorney, Exhibits X and Z, And article 1736 of the same Code provides that:
executed by the plaintiff on April 11, 1919, and on August 8, Art. 1736. An agent may withdraw from the agency by giving
1922, the defendant was appointed attorney-in-fact of notice to the principal. Should the latter suffer any damage
the said plaintiff with authority to manage his property through the withdrawal, the agent must indemnify him
Bus Org1 Cases on Agency
therefore, unless the agent's reason for his withdrawal should 1. The Hospicio is a charitable institution established by the
be the impossibility of continuing to act as such without spouses Don Pedro Cui and Doa Benigna Cui, now
serious detriment to himself. deceased, "for the care and support, free of charge, of
The misunderstanding between the plaintiff and the indigent invalids, and incapacitated and helpless persons." It
defendant over the payment of the balance of P1,000 due was incorporated under Act No. 3239 of the Philippine
the latter, as a result of the liquidation of the accounts Legislature in 1925 and endowed with extensive properties
between them arising from the collections by virtue of the by the said spouses through a series of donations, principally
former's usufructuary right, who was the principal, made by the deed of donation executed in 1926.
the latter as his agent, and the fact that the said defendant 2. Section 2 of Act No. 3239 gave the initial management to
brought suit against the said principal on March 28, 1928 for the founders jointly and, in case of their incapacity or death,
the payment of said balance, more than prove the breach of to "such persons as they may nominate or designate, in the
the juridical relation between them; for, although the agent order prescribed to them."
has not expressly told his principal that he renounced the 3. Don Pedro Cui died in 1926, while his widow died in
agency, yet neither dignity nor decorum permits the latter to 1929. The administration passed to Mauricio Cui and
continue representing a person who has adopted such an Dionisio Jakosalem. The former died on 8 May 1931 and
antagonistic attitude towards him. the latter on 1 July 1931.
When the agent filed a complaint against his principal for 4. On 2 July 1931 Dr. Teodoro Cui, only son of Mauricio Cui,
recovery of a sum of money arising from the liquidation of became the administrator. Beginning 1932, a series of
the accounts between them in connection with the agency, controversies and court litigations ensued concerning the
Federico Valera could not have understood otherwise than position of administrator.
that Miguel Velasco renounced the agency; because his act 5. Plaintiff Jesus Ma. Cui and defendant Antonio Ma. Cui are
was more expressive than words and could not have caused brothers, being the sons of Mariano Cui, one of the nephews
any doubt. of the spouses Don Pedro Cui and Doa Benigna Cui. In
In order to terminate their relations by virtue of the agency 1960, the then incumbent administrator, Dr. Teodoro Cui,
the defendant, as agent, rendered his final account on March resigned in favor of Antonio Ma. Cui pursuant to a
31, 1923 to the plaintiff, as principal. "convenio" entered into between them. On February 28,
The defendant-appellee Miguel Velasco, in adopting a Antonio Ma. Cui took his oath of office. Jesus Ma. Cui, had no
hostile attitude towards his principal, suing him for the prior notice of either the "convenio" or of his brother's
collection of the balance in his favor, resulting from the assumption of the position.
liquidation of the agency accounts, ceased ipso facto to be 6. Dr. Teodoro Cui died on 27 August and the plaintiff wrote
the agent of the plaintiff-appellant, said agent's purchase a letter to the defendant demanding that the office be
of the aforesaid principal's right of usufruct at public auction turned over to him. The demand remained unheeded, the
held by virtue of an execution issued upon the judgment plaintiff filed the complaint. Romulo Cui later on intervened,
rendered in favor of the former and against the latter, is valid claiming a right to the same office, being a grandson of
and legal. Vicente Cui, one of the nephews mentioned by the founders
The defendant-appellee, Miguel Velasco, having acquired of the Hospicio in their deed of donation.
Federico Valera's right of redemption from Salvador Vallejo, 7. As between Jesus and Antonio the main issue turns upon
who had acquired it at public auction by virtue of a writ of their respective qualifications to the position of
execution issued upon the judgment obtained by the said administrator. Jesus is the older and under equal
Vallejo against the said Valera, the latter lost all right to said circumstances would be preferred pursuant to section 2 of
usufruct. the deed of donation. However, before the test of age may
be, applied the deed gives preference to the one, among the
The disagreements between an agent and his principal
legitimate descendants of the nephews named, "que posea
with respect to the agency, and the filing of a civil action by
titulo de abogado, o medico, o ingeniero civil, o
the former against the latter for the collection of the balance
farmaceutico, o a falta de estos titulos el que pague al estado
in favor of the agent, resulting from a liquidation of the
mayor impuesto o contribucion."
agency accounts, are facts showing a rupture of relations,
and the complaint is equivalent to an express renunciation of 8. What is being disputed is the meaning of the term "titulo
the agency, and is more expressive than if the agent had de abogado." Jesus Ma. Cui holds the degree of Bachelor of
merely said, "I renounce the agency." Laws from the University of Santo Tomas (Class 1926) but is
not a member of the Bar, not having passed the
examinations. Antonio Ma. Cui is a member of the Bar and
CUI vs. CUI although disbarred by the Court but was reinstated by
CASE NUMBER: L-7041 resolution about two weeks before he assumed the position
DATE: August 31, 1964 of administrator of the Hospicio.
9. The Court a quo, decied in favor of the plaintiff and
FACTS: held that the phrase "titulo de abogado," taken alone,
means that of a full-fledged lawyer, but that has used in
the deed of donation and considering the function or
Bus Org1 Cases on Agency
purpose of the administrator, it should not be given a first of all, because under Act No. 3239 the managers or
strict interpretation but a liberal one," and therefore trustees of the Hospicio shall "make regulations for the
means a law government of said institution (Sec. 3, b); shall "prescribe
degree or diploma of Bachelor of Laws. the conditions subject to which invalids and
10. Jesus Ma. Cui believed he was entitled to the office in as incapacitated and destitute persons may be admitted to
long ago as 1932. On January 26 of that year he filed a the institute" (Sec. 3, d); shall see to it that the rules and
complaint in quo warranto against Dr. Teodoro Cui, who conditions promulgated for admission are not in conflict
assumed the administration of the Hospicio. Mariano Cui, the with the provisions of the Act; and shall administer
plaintiff's father and Antonio Ma. Cui came in as intervenors. properties of considerable value for all of which work, it
The case was dismissed by the Court of First Instance upon a is to be presumed, a working knowledge of the law and a
demurrer by the. Upon appeal to the Supreme Court from license to practice the profession would be a distinct
the order of dismissal, the case was remanded. The plaintiff, asset.
did not prosecute the case as decided by the Court, but 3) WON Antonio Cui is entitled as administrator despite
entered into an arrangement whereby Teodoro Cui his past disbarment. YES.
It is argued that although the latter (Antonio) is a
continued as administrator, Mariano Cui was named "legal
member of the Bar he is nevertheless disqualified by
adviser" and plaintiff Jesus Ma. Cui accepted a position as
virtue of paragraph 3 of the deed of donation, which
assistant administrator.
provides that the administrator may be removed on the
11. The plaintiff tried to get the position by a series of extra- ground, among others, of ineptitude in the discharge of
judicial maneuvers. However, the Commissioner to the his office or lack of evident sound moral character.
Secretary of Justice ruled that the plaintiff, not being a Reference is made to the fact that the defendant was
lawyer, was not entitled to the administration of the disbarred by this Court in1957 for immorality and
Hospicio. unprofessional conduct. It is also a fact, however, that he
12. Defendant Antonio Ma. Cui was reinstated by this Court was reinstated in 1960, before he assumed the office of
as member of the Bar, and succeeded Dr. Teodoro Cui when administrator. His reinstatement is a recognition of his moral
he resigned as administrator pursuant to the "convenio" rehabilitation, upon proof no less than that required for his
between them. admission to the Bar in the first place.
As far as moral character is concerned, the standard
ISSUE & RULING: required of one seeking reinstatement to the office of
WON the administrator should only have possession of attorney cannot be less exacting than that implied in
the academic degree of Bachelor of Laws. NO. paragraph 3 of the deed of donation as a requisite for
The Court is of the opinion, that whether taken alone or the office which is disputed in this case. When the
in context the term "titulo de abogado" means not mere defendant was restored to the roll of lawyers the
possession of the academic degree of Bachelor of Laws but restrictions and disabilities resulting from his previous
membership in the Bar after due admission, qualifying one disbarment were wiped out.
for the practice of law. In Spanish the word "titulo" is
defined as "testimonies o instrumento dado para ejercer This action must fail on one other ground: it is already
un empleo, dignidad o profesion" and the word barred by lapse of time amounting the prescription or
"abogado," as follows: "Perito en el derecho positivo que laches. Under Section 16 of Rule 66, this kind of action
se dedica a defender en juicio, por escrito o de palabra, must be filed within one (1) year after the right of
los derechos o intereses de los litigantes, y tambien a dar plaintiff to hold the office arose.
dictmen sobre las cuestiones o puntos legales que se le 4) WON the action of the plaintiff for administrator has
consultan (Id., p.5) A Bachelor's degree alone, conferred by prescribed. YES.
The failure of the plaintiff to prosecute his claim
a law school upon completion of certain academic
judicially after this Court decided the first case of Cui v.
requirements, does not entitle its holder to exercise the legal
Cui in 1934 remanding it to the trial court for further
profession. The English equivalent of "abogado" is lawyer
proceedings; his acceptance instead of the position of
or attorney-at-law. This term has a fixed and general assistant administrator, allowing Dr. Teodoro Cui to
signification, and has reference to that class of persons continue as administrator and his failure to file an action
who are by license officers of the courts, empowered to in quo warranto against said Dr. Cui after 31 July 1956,
appear, prosecute and defend, and upon whom peculiar when the appeal in Civil Case No. R-1216 of the Cebu
duties, responsibilities and liabilities are devolved by law Court was dismissed upon motion of the parties precisely
as a consequence. so that the conflicting claims of the parties could be
2) WON Jesus Cui is disqualified as being an ventilated in such an action all these circumstances
administrator. YES. militate against the plaintiff's present claim in view of
He only has the academic degree of Bachelor of Laws. the rule that an action in quo warranto must be filed
The founders of the Hospicio de San Jose de Barili provided within one year after the right of the plaintiff to hold the
in the deed of donation that if not a lawyer, the administrator office arose. The excuse that the plaintiff did not file an
should be a doctor or a civil engineer or a pharmacist, in that action against Dr. Teodoro Cui after 31 July 1956 because
order; or failing all these, should be the one who pays the of the latter's illness did not interrupt the running of the
highest taxes among those otherwise qualified. A lawyer, statutory period. And the fact that this action was filed
10 | P a g e
Bus Org1 Cases on Agency
within one year of the defendant's assumption of office service by the laborers doing the arrastre and stevedoring
in September 1960 does not make the plaintiff's position work. This deteriorating situation was admitted as a fact by
any better, for the basis of the action is his own right to AFWU's president.
the office and it is from the time such right arose that the 5. To remedy the situation since MARITIMA's business was
one-year limitation must be counted, not from the date being adversely affected -Teves was forced to hire extra
the incumbent began to discharge the duties of said
laborers from among "stand-by" workers not affiliated to any
union to help in the stevedoring and arrastre work. The
5) WON Romulo Cui is entitled as administrator. NO.
wages of these extra laborers were paid by MARITIMA
Now for the claim of intervenor and appellant Romulo
through separate vouchers and not by AFWU. Moreover, said
Cui. This party is also a lawyer, grandson of Vicente Cui,
one of the nephews of the founders of the Hospicio wages were not charged to the consignees or owners of the
mentioned by them in the deed of donation. He is cargoes.
further, in the line of succession, than defendant Antonio 6. On July 23, 1954, AFWU presented to MARITIMA a written
Ma. Cui, who is a son of Mariano Cui, another one of the proposal for a collective bargaining agreement. This demand
said nephews. The deed of donation provides: "a la embodied certain terms and conditions of employment
muerte o incapacidad de estos administradores (those different from the provisions of the CONTRACT. No reply was
appointed in the deed itself) pasara a una sola persona made by MARITIMA.
que sera el varon, mayor de edad, que descienda 7. AFWU sued MARITIMA for unfair labor practice saying that
legitimamente de cualquiera de nuestros sobrinos MARITIMA refused to bargain collectively. CIR dismissed the
legitimos Mariano Cui, Mauricio Cui, Vicente Cui, Victor case on the ground that it has no jurisdiction over the case.
Cui, y que posea titulo de abogado ... En igualdad de
circumstancias, sera preferido el varon de mas edad ISSUES:
descendiente de quien tenia ultimamente la
1. Whether or not Maritima is can be considered an employer
administration." Besides being a nearer descendant than
of the members of AFWU? NO.
Romulo Cui, Antonio Ma. Cui is older than he and
therefore is preferred when the circumstances are 2. Whether or not AFWU is an agent of Maritima? NO.
otherwise equal. The intervenor contends that the intention
of the founders was to confer the administration by line and
1. There is no any direct employment relationship between
successively to the descendants of the nephews named in
MARITIMA and the laborers. The latter have no separate
the deed, in the order they are named. Thus, he argues, since
individual contracts with MARITIMA. In fact, the court a quo
the last administrator was Dr. Teodoro Cui, who belonged to
found that it was AFWU that hired them. Their only possible
the Mauricio Cui line, the next administrator must come from
connection with MARITIMA is through AFWU which
the line of Vicente Cui, to whom the intervenor belongs. This
contracted with the latter. Hence, they could not
interpretation, however, is not justified by the terms of the
possibly be in a better class than AFWU which dealt with
deed of donation.
judgment appealed from is reversed and set aside, and
the complaint as well as the complaint in intervention are a. Under the CONTRACT, AFWU was an independent
dismissed, with costs equally against plaintiff-appellee contractor of MARITIMA.
and intervenor-appellant.
i. The petitioner union operated as a labor contractor under
ALLIED FREE WORKERS UNION [PLUM] vs. COMPANIA the so-called "cabo" system has a complete set of officers
MARITIMA and office personnel and its organizational structure.
DATE: January 31, 1967 ii. The payrolls where laborers are listed and paid were
FACTS: prepared by the union itself without the intervention or
1. MARITIMA is a local corporation engaged in the shipping control of the respondent company and/or its agent at. The
business. Teves is its branch manager in the port of Iligan respondent never had any knowledge of the individual
City and AFWU is a duly registered legitimate labor names of laborers and/or workers listed in the union payroll
organization with 225 members. or in their roster of membership.
2. On August 11, 1952, MARITIMA, through Teves, entered
into a CONTRACT with AFWU to do and perform all the work iii. The union engaged the services of their members in
of stevedoring and arrastre services of all its vessels or boats undertaking the work of arrastre and stevedoring geither to
calling in the port of Iligan City, beginning August 12, 1952. haul shippers' goods from their warehouses to the
3. During the first month of the existence of the CONTRACT, MARITIMA boat or from the boat to the different consignees.
AFWU rendered satisfactory service. So, MARITIMA, through The charges for such service were known by the union and
Teves, verbally renewed the same. collected by them through their bill collector, who are
4. The harmonious relations between MARITIMA and AFWU employees of the union and not of the respondent. The
lasted up to the latter part of 1953 when the former respondent had no intervention whatsoever in the collection
complained to the latter of unsatisfactory and inefficient of those charges.
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Bus Org1 Cases on Agency
CA reversed the judgment, basing its decision of reversal
iv. The union members who were hired by the union to on the case of Jose Velasco v. Universal Trading where the
perform arrastre and stevedoring work on respondents' transaction therein involved was found by the court to be
vessels at Iligan port were being supervised and controlled one of purchase and sale and not of brokerage or agency.
by the general foreman of the petitioner union or by any
union assistant when performing arrastre and/or stevedoring ISSUE: Was the transaction one of agency that will exonerate
work aboard vessels of the Compaia MARITIMA. There were Far Eastern from liability, or one of purchase and sale?
no instances where offices and employees of the respondent
Compaia MARITIMA and/or its agent had interferred in the RULING: One of purchase and sale
giving of instructions to the laborers performing the arrastre SC agreed with the CA that the facts in this case are very
and/or stevedoring work. similar to those in the Velasco case.

b. It is true that MARITIMA admits that it did not answer o In the Velasco case, Universal Trading contends that it
AFWU's proposal for a collective bargaining agreement. From merely acted as agent for Velasco and could not be held
this it does not necessarily follow that it is guilty of unfair responsible for the substitution of Blended Whisky for
labor practice. Under the law the duty to bargain collectively Bourbon Whisky.
arises only between the "employer" and its "employees". o The Court held that the transaction was purchase and sale
Where neither party is an ''employer" nor an "employee" of and ordered the defendant to refund his deposit with legal
the other, no such duty would exist. Needless to add, where interest.
there is no duty to bargain collectively the refusal to bargain
violates no right. Where a foreign company has an agent here selling its
goods and merchandise, that same agent could not very well
c. The facts as found by the court a quo strongly indicate that act as agent for local buyers, because the interests of his
it is AFWU itself who is the "employer" of those laborers. The foreign principal and those of the buyer would be in direct
facts very succinctly show that it was AFWU, through its conflict.
officers, which (1) selected and hired the laborers, (2) paid o He could not serve two masters at the same
their wages, (3) exercised control and supervision over time.
them, and (4) had the power to discipline and dismiss o Far Eastern, being an agent of Frenkel, could not have
them. These are the very elements constituting an employer- acted as an agent or broker for Suan.
employee relationship. The transaction entered into by Far Eastern with Suan is
one of purchase and sale.
2. An agent can not represent two conflicting interests that o Far Eastern acted as agent for Frenkel International
are diametrically opposed. And that the cases sought to be Corporation, presumably the supplier of the textile sold.
relied upon did not involve representatives of opposing o Suan according to the first part of the agreement is said
interests. merely to be commissioning Far Eastern to procure for him
the merchandise in question.
FAR EASTERN EXPORT & IMPORT CO, vs. LIM TECK SUAN o The price of the merchandise bought was paid for by Suan
CASE NUMBER: L-7144 by means of an irrevocable letter of credit opened in favour
DATE: May 31, 1955
of the supplier, Frenkel International Corporation.
o The agreement speaks of the items involved as sold, and
the sale was even confirmed by Far Eastern.
Ignacio Delizalde, an agent of the Far Eastern Export &
o Far Eastern dealt directly with Suan without expressly
Import Company, went to the store of Lim Teck Suan in
indicating or revealing the principal.
Manila and offered to sell textile.
o There was no privity of contract between the buyer and
Having arrived at an agreement with Bernardo Lim, General
Manager of Lim Teck Suan, Delizalde returned with a buyers
o No commission or monetary consideration was paid or
agreed to be paid by the buyer to export company proof
Suan established a letter of credit in favour of Frenkel that there was no agency or brokerage, and that the profit of
International Corporation through HSBC. the latter was undoubtedly the difference between the price
The textile arrived and was received by Suan, but listed to the buyer and the net or special price quoted to the
complained to Far Eastern of the inferior quality of the textile. seller by the supplier.
Upon the instruction of Far Eastern, Suan deposited the
goods in a warehouse and withdrew the same and was NIELSON & CO., INC. vs LEPANTO CONSOLIDATED
offered for sale. The net direct loss is now being claimed MINING CO.
against Far Eastern. CASE NUMBER: L-21601
The defense set up is that Far Eastern only acted as a DATE: December 28, 1968
broker in this transaction.
The lower court acquitted Far Eastern. FACTS:
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Bus Org1 Cases on Agency
Nielson & Company, Inc. and Lepanto Consolidated Mining FACTS:
Company entered into a management contract. 1. A Plymounth car, owned by Salvador Sison, was brought
o Nielson had agreed, for a period of five years, with the by his son, Perlito Sison to the Shell Gasoline and Service
right to renew for a like period, to explore, develop and Station in Manila for washing, greasing and spraying.
operate the mining claims of Lepanto, and to mine, or mine 2. The operator of the station agreed to do service upon
and mill, such pay ore as may be found and to market the payment of P 8.00
metallic products recovered therefrom which may prove to 3. The car was placed on a hydraulic lifter under the direction
be marketable, as well as to render for Lepanto other services of the personnel of the station.
specified in the contract. 4. According to the testimony of son Perlito, the car was
o Nielson was to take complete charge, subject at all times to raised up to 6 feet high. After it was washed and greased, the
the general control of the Board of Directors of Lepanto, of grease men cannot reach the ungreased portion underneath
the exploration and development of the mining claims, of the the vehicle so they loosen the lifter a few feet lower. Because
hiring of a sufficient and competent staff and of sufficient of this, the car swayed and for a few second, it fell.
and capable laborers, of the prospecting and development of 5. This was immediately reported to the Manila Adjustor
the mine, of the erection and operation of the mill, and of Company, the adjustor of respondent insurance companies.
the benefication and marketing of the minerals found on the 6. As inspected by Mr. Baylon, the damaged car was taken to
mining properties. the repair shop and it was restored to running condition after
o Nielson was also to act as purchasing agent of supplies, repairs amounting to P 1,651.38.
equipment and other necessary purchases by Lepanto, but 7. Because the insurance companies paid for the damages,
no purchase shall be made without the prior approval of respondent Salvador Sison made assignments of his rights to
Lepanto and no commission shall be claimed or retained by recover damages in favor of the respondent-insurance
Nielson on such purchase. companies.
o The principal and paramount undertaking of Nielson under 8. However, according to the counter-statement of facts by
the management contract was the operation and defendant Porfirio de la Fuente, the operator of Shell
development of the mine and the operation of the mill. All gasoline Manila, the ff tasks were done by the ff people:
the other undertakings mentioned in the contract are Job of washing and greasing defendant Porfirio de la
necessary or incidental to the principal. Fuente through his two employees:
o In the performance of this principal undertaking, Nielson o Alfonso Adriano grease man
was not in any way executing juridical acts for Lepanto. o De los Ryees helper and washer
Lepanto terminated the contract in 1945, 2 years before its Respondent de la Fuente denied negligence in the
expiration, when it took over and assumed exclusive operation of the lifter
management of the work previously entrusted to Nielson 9. The insures and the owner of the car brought an action
under the contract. against petitioner Shell Company and de la Fuente to recover
Lepanto finally maintains that Nielson as an agent is not the sum of P 1, 651. 38 from them jointly and severally.
entitled to damages since the law gives to the principal the 10. Decision of CFI: Dismissed complaint
right to terminate the agency at will. 11. Decision of CA: reversed decision of CFI; Shell must pay
insurance companies the amount P 1,651. 38 with legal
ISSUE: Was the management contract entered into by and interest.
between Nielson and Lepanto a contract of agency such that
it has the right to revoke and terminate the contract at will, The car fell as a result of the jerking and swaying of the lift
or a contract of lease of services? when the valve was released and that the jerking was due to
some accident and unforeseen shortcoming of the
RULING: Contract of Lease of Services mechanism itself.
The management contract was one of contract of lease of Reasoning of CA: De la Fuente is NOT an independent
services and not a contract of agency. contractor BUT an AGENT of petitioner Shell
In both agency and lease of services, one of the parties o Respondent de la Fuente, the operator of the gasoline and
binds himself to render some service to the other party. service station was the AGENT of the petitioner Shell
Agency, however is distinguished from lease of work or Company of the Philippines, Ltd.
services in that: o Facts which show that de la Fuente is a mere agent:
o The basis of agency is representation, while in the lease of The operator, de la Fuente, owned his position to the
work or services, the basis is employment company and the company could remove him or terminate
his services at will
The service station belonged to the company and bore its
SHELL COMPANY OF THE PHILS., LTD. vs. FIREMENS INS. trade name and the operator sold only the products of the
DATE: January 29, 1957

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The equipment used by the operator belonged to the Secretary went over to the office to comply with the mandate
company and were just loaned to the operator and the of the resolutions. Finding the premises locked and unable to
company took charge of their remain and maintenance contact Mrs. Sevilla, he padlocked the premises to protect
An employee of the company supervised the operator and the interests of TWSI
conducted periodic inspection of the companys gasoline and 6. As such, petitioners Spouses Sevilla filed a complaint
service station, etc. against respondents TWSI, Canilao and Noguera, praying for
mandatory preliminary injunction. Petitioners claim that Mrs.
ISSUE: WON petitioner Shell should be liable for the acts of Sevillas relationship with TWSI was one of joint business
an agent or his employee acting within the scope of his venture and notone of employment.
authority? 7. In its answer, TWSI contend that Mrs. Sevilla was its
employee and as such was designated manager.
RULING: YES. The breach of the undertaking by the agent 8. The trial court held for the private respondents. It ruled
(defendant de la Fuente) is one for which the principal that TWSI, being the true lessee, has the privilege to
(Shell) is answerable. Decision: Judgment under review is terminate the lease and padlock the premises. It also held
AFFIRMED. Costs against petitioner that Mrs. Sevilla was a mere employee of TWSI and that she
1. Rule: As the act of the agent or his employees acting was bound by the act of her employer.
within the scope of his authority is the act of the 9. The Court of Appeals affirmed said decision, Hence, the
principal, the breach of the undertaking by the agent is instant petition.
one for which the principal is answerable.
2. The petitioner-company undertook to "answer and see to ISSUE: WON there is a contract of agency between
it that the equipments are in good running order and respondent-principal TWSI and petitioner Sevilla? If yes,
usable condition;" should principal TWSI be liable for damages for its
3. Also, the CA found that the Company's mechanic failed unwarranted revocation of the contract of agency?
to make a thorough check up of the hydraulic lifter and YES for both.
the check up made by its mechanic was "merely routine"
by raising "the lifter once or twice and after observing Decision: Decision of CA is REVERSED and SET ASIDE. Costs
that the operator was satisfactory, he (the mechanic) left against respondent TWSI
the place." RULING:
4. The latter was negligent and the company must answer 1. This case involves a contract of Agency. There is
for the negligent act of its mechanic which was the cause neither joint venture between nor partnership TWSI and
of the fall of the car from the hydraulic. Mrs. Sevilla
The relationship of said parties is one that of a principal
CASE NUMBER: L-41182-3 Case at bar:
DATE: APRIL 15, 1988 o Petitioner Sevilla agreed to man the Ermita office of
respondent TWSI based on a contract of agency.
o It is the essence of this contract that the agent renders
1. Mrs. Segundina Noguera leased her premises located at
services in representation or on behalf of another
Ermita, Manila to Tourist World Service, Inc. (TWSI),
o Sevilla solicited airline fares but she did so for and on
represented by Eliseo Canilao, for the latters use as branch
behalf of her principal TWSI. As compensation, she received
4% of the proceeds in the concept of commissions. Sevilla
2. In the said contract Mrs. Lina Sevilla held herself solidarily
pre-assumed her principals authority as owner of the
liable with TWSI for the prompt payment of the monthly
business undertaking. Considering the facts, this case
rental agreed on.
involves a principal-agent relationship rather than a joint
3. When the branch office was opened, the same was run by management or partnership.
petitioner Mrs. Sevilla, who was designated as branch
o But unlike simple grants of a power of attorney, the agency
manager by TWSI. For any fare bought in on the efforts of
that the Court here by declares to be compatible with the
Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by
intent of the parties cannot be revoked at will.
o The reason is that it is an agency coupled with an interest,
4. In November 1961, TWSI was allegedly informed that Mrs.
the agency having been created for mutual interest of the
Sevilla was connected with a rival travel firm. Since the
agent and the principal.
branch office was losing, TWSI considered closing it down.
o In this case, the agency cannot be revoked at the pleasure
The firms board of directors issued two resolutions; the first
of the principal. This unwarranted revocation of the contract
abolishing the office of manager of the Ermita Branch Office
of agency entitles petitioner Sevilla to damages
and the second, authorizing the corporate secretary to
Respondent TWIS is liable for P 25,000 moral damages, P
receive the property of TWSI in said branch
10,000 exemplary damages, P 5,000 nominal damages and/or
5. In January 1962, the lease contract to use the premises as
temperate damages.
branch office was terminated. In June 1962, the Corporate

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LIM vs. PEOPLE 2. Whether the provisions of the New Civil Code on Agency
CASE NUMBER: G.R. No. L-34338 (referring specifically to par. 8 of Article 1878) should apply
DATE: November 21, 1984 to judicial administrators.

1. Lourdes Lim went to the house of Maria de Guzman and Administrator has the power of administering the estate of
proposed to sell the latters tobacco. the deceased person. He may, therefore, exercise all acts of
2. Maria agreed with the proposalhence the execution of a administration without special authority of the court. For
receipt manifesting that Lourdes received 615 kilos of instance, he may lease the property without prior approval
tobacco to be sold at P1.30 per kilo, the overprice for which from the court, since leasing has been considered an act of
would be received by Lourdes. administration.
3. The receipt also states that the proceeds will be given to
Mariaas soon as it was sold. Par. 8 of Article 1878 states that Special powers of attorney
4. However, Lourdes paid only P240, despite repeated are necessary to lease any real property to another person
demands. for more than one (1) year. This provision, according to San
5. Thus, Maria filed a complaint, and Lourdes was found Diego, is a limitation to the right of a judicial administrator to
guilty of estafa. (Estafa is present where contract to sell lease real property without prior judicial authority if it
constituted another as mere agent) exceeds one (1) year. However, the same argument falls
6. Lourdes argued that the receipt was a contract of sale because provisions on Agency do not apply to judicial
and not a contract of agency to sell. administrators.
A judicial administrator is appointed by the court. He is not
ISSUE: Is Lourdes argument tenable? only the representative of the court, but also the heirs and
creditors of the estate. Before conducting his duties, he is
RULING: NO. required to file a bond. His actions are subject to specific
The contract was not a contract of sale because there was no provisions of law and orders of the appointing court. These
transfer of ownership of the goods to Lourdes. Instead, the circumstances are not true in case of agency.
agreement was a contract of agency to sell for it constituted
Lourdes as agent with the obligation to give the proceeds of DELA PENA VS. HIDALGO
the sale to Maria as soon as the same was sold. CASE NUMBER: G.R. No. L-5486
DATE: August 17, 1910
The obligation was immediately demandable as soon as the
tobacco was disposed of. Consequently, there is no need for
the court to fix the duration of the obligation, as contended
1. Before Jose de la Pea y Gomiz embarked for Spain, on
by Lourdes.
November 12, 1887, he executed a power of attorney in favor
of Federico Hidalgo, Antonio L. Rocha, Francisco Roxas and
Isidro Llado, so that, as his agents, they might represent him
CASE NUMBER: G.R. No. L-19265
and administer various properties he owned and possessed
DATE: May 29, 1964
in Manila.
FACTS: 2. After Federico Hidalgo had occupied the position of agent
1. While being the judicial administrator of the intestate and administrator of De la Pea's property, he wrote to the
estate subject of Special Proceeding 7279, AdeloNombre latter requesting him to designate a person who might
leased one of the properties (fishpond) of the said estate to substitute him in his said position in the event of his being
Pedro Escanlar for 3 years without approval of the court. obliged to absent himself from the country.
2. When Nombre was removed as judicial administrator, he one of those appointed in the said power of attorney had
was substituted by SofronioCampillanos. Campillanos filed a died and the others did not wish to take charge of the
motion asking for authority to execute a lease contract of the administration of their principal's property.
same fishpond in favour of Moises San Diego.This motion 3. Hidalgo stated that Pea y Gomiz, did not even answer his
was granted on the ground that the contract of lease entered letters, to approve or object to the former's accounts, and
into between Nombre and Escanlar was void for want of did not appoint or designate another person who might
judicial authority. substitute him.
3. Nombre and Escanlar appealed this order to the Court of 4. For reasons of health and by order of his physician,
Appeals, which reversed the same order. Federico Hidalgo was obliged to embark for Spain, and, on
4. Aggrieved, San Diego appealed to the Supreme Court. preparing for his departure, he rendered the accounts of his
administration by letter of the date of March 22, 1894,
ISSUE: San Diego raised the following legal questions: addressed to his principal, Pea y Gomiz.
1. Whether a judicial administrator can validly lease property 5. In this letter the defendant informed the dela Pena of the
of the estate without prior judicial authority and approval, his intended departure from this country and of his having
and provisionally turned over the administration of the said
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property to his cousin, Antonio Hidalgo, upon whom he The implied agency is founded on the lack of
had conferred a general power of attorney.He added contradiction or opposition, which constitutes
thatin case that this was not sufficient, that Pea send to simultaneous agreement on the part of the presumed
Antonio Hidalgo a new power of attorney. principal to the execution of the contract, while in the
6. TC concluded that despite the denial, the was sent to, and management of another's business there is no
was received by Jose de la Pea y Gomiz, during his lifetime simultaneous consent, either express or implied, but a
and that the constituent he was informed of the departure of fiction or presumption of consent because of the benefit
his agent of the latter's having turned over the received.
administration of the property to Antonio Hidalgo, and of his In the power of attorney executed by Pea y Gomizin favor of
agent's the defendant's petition that he send a new power of Federico Hidalgo, no authority was conferred upon the latter
attorney to the substitute. by his principal to substitute the power or agency in favor of
another person; wherefore the agent could not, by virtue of
ISSUE: the said power of attorney, appoint any person to substitute
(1) WON Federico had renounced his agency or relieve him in the administration of the principal's
(2) WON Federico can be held liable with the wrongful property, for the lack of a clause of substitution in the said
administration of the subsequent agents instrument authorizing him so to do.
HOWEVER, from the time of that notification the agent who,
RULING: for legitimate cause, ceased to exercise his trust, was free and
1. YES clear from the results and consequences of the management
Federico had definitely renounced his agency was duly of the person who substituted him with the consent, even
terminated, according to the provisions of article 1732 of the only a tacit one, of the principal, inasmuch as the said
Civil Code, because, althoughthe word "renounce" was not owner of the property could have objected to could have
employed in connection with the agency or power of prohibited the continuance in the administration thereof,
attorney executed in his favor, yet when the agent informs of the party designated by his agent, and could have
his principal that for reasons of health and by medical opportunely appointed another agent or mandatory of his
advice he is about to depart from the place where he is own confidence to look after his property and if he did not
exercising his trust and where the property subject to his do so, he is obliged to abide by the consequences of his
administration is situated, abandons the property, turns negligence and abandonment and has no right to claim
it over a third party, without stating when he may return damages against his previous agent, who complied with his
to take charge of the administration, renders accounts of duty and did all that he could and ought to have done, in
its revenues up to a certain date, December 31, 1893, and accordance with the law.
transmits to his principal a general statement which
summarizes and embraces all the balances of his 2. NO
accounts since he began to exercise his agency to the
If the defendant Federico is not responsible for the results of
date when he ceased to hold his trust, and asks that a
the administration of said property administered by Antonio
power of attorney in due form in due form be executed
Hidalgo during the second period before referred to, neither
and transmitted to another person who substituted him
is he responsible for that performed during the third period
and took charge of the administration of the principal's
property, it is then reasonable and just to conclude that the by Francisco Hidalgo, inasmuch as the latter was not even
said agent expressly and definitely renounced his agency, chosen when Francisco Hidalgo took charge of Peas'
and it may not be alleged that the designation of Antonio property that had been turned over to him by Antonio
Hidalgo to take charge of the said administration was that of Hidalgo. Hence, the defendant can in no manner be obliged
a mere proceed lasted for more than fifteen years, for such to pay to the plaintiff any sum that may be found owing by
an allegation would be in conflict with the nature of the Francisco Hidalgo.
In permitting Antonio Hidalgo to administer his property in
this city during such a number of years, it is inferredthatthe
DATE: November 11, 1922
deceased consented to have Antonio Hidalgo administer his
property, and in fact created in his favor an implied agency,
as the true and legitimate administrator.
this is a case filed by harry keeler, an electric co. which sold
Antonio Hidalgo administered the aforementioned property
a mathews electric plant to rodriguez.
of De la Pea y Gomiz, not in the character of business
harry keeler co. authorized ac montelibano to find buyers
manager, but as agent by virtue of an implied agency vested
for the mathews electric plant.
in him by its owner who was not unaware of the fact, who
knew perfectly well that the said Antonio Hidalgo took montelibano informed harry that he found a buyer in iloilo.
charge of the administration of that property on account of harry then shipped the electric plant to iloilo, which was
the obligatory absence of his previous agent for whom it was then installed by cenar
an impossibility to continue in the discharge of his duties. cenar, the mechanic of harry keeler, testified that he in fact
**Difference between agency and business management: presented a bill to rodriguez.
16 | P a g e
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when he presented this bill, rodriguez informed him that FACTS:
payment would just be made in manila. Yangco sent a letter of invitation to rallos.
allegedly, rodriguez already made payment to This was an invitation regarding the buying and selling of
montelibano. tobacco
when harry wanted to collect the 2500 pesos from In the letter, it was stated that collantes would be his agent
rodriguez, rodriguez said that he already paid montelibano. and that as agent collantes would be acting in his behalf.
a case for collection was the filed by harry against This arrangement was accepted by rallos
rodriguez At one point, rallos gave collantes 218 bundles of tobacco,
the lower court ruled in favor of rodriguez. which was sold at a price of 1744 pesos
the lower court said that: 206 pesos was deducted for charges involving the sale,
leaving the sum of 1537 pesos.
1.) that the bill was given to montelibano for collection This amount was not remitted by collantes to rallos.
2.) that harry represented montelibano as an agent Apparently, collantes used the money for his personal gain
authorized to collect.
Rallos was now claiming from yangco the unpaid amount
ISSUE: Was the lower court correct in ruling that
for the sale of tobacco.
montelibano was an agent of harry keeler authorized to
Yangco refused, saying that collantes was no longer
make collection?
connected with him.
Yangco also claims that at the time when the 218 bundles
RULING: NO, the lower court ruling is hereby reversed!!!
of tobacco was given to collantes, the latter was no longer
in the receipt presented by rodriguez(which was the receipt
acting as his factor.
given by montelibano) there was no showing that
This then forced rallos to file a collection case.
montelibano was an agent
The lower court ruled in favor of rallos.
it also did not contain that montelibano had authority to
receive money
ISSUE: Should yangco still be liable for the acts of collantes,
payment made by rodriguez to montelibano was at his
considering that collantes was no longer his agent at the
own risk.
time of the transaction?
rodriguez failed to exercise ordinary prudence and
reasonable diligence in making sure that montelibano was in
RULING: YES!! Yangco is still liable
fact authorized to receive payment.
Yangco did not even inform rallos that collantes was no
important things to remember in assuming that there is longer his agent.
Furthermore, yangco advertised collantes to be his agent,
1.)the law does not presume that an agency exists. it has to he should have given rallos timely notice that he had already
be proven through facts severed ties with collantes.
2.)the agent cannot establish his authority The negligence of yangco to give timely notice to rallos,
3.)authority cannot be established through mere rumor or makes him liable for the acts of collantes.
general reputation It was the duty of yangco to notify rallos regarding the
4.)general authority is not equal to unlimited authority severed relation with collantes.
5.)that every authority must find its ultimate source in
some act or omission by the principal MACKE vs. CAMPS
in assuming that there is authority, a person has to be very CASE NUMBER: G.R. No. 2962
cautious DATE: 27 February 1907
note: that the agent cannot enlarge or extend his authority
without the concurrence of the principal FACTS:
The plaintiffs are partners doing business under the firm
important provisions: name of Macke, Chandler & Company, allege that during the
art 1162: payment must be made to the person in whose months of February and March, 1905, they sold to the
favor the obligation is constituted, or to another authorized defendant and delivered at his place of business, known as
to receive it in his name the "Washington Cafe," various bills of goods amounting to
art 1727: the principal shall be liable as to matters with P351.50.
respect to which the agent has exceeded his authority only The plaintiffs further alleged that the defendant has only
when he ratifies the same expressly or by implication. paid on account of said accounts the sum of P174; that there
is still due sum of P177.50; that before instituting this action
RALLOS vs. YANGCO they made demand for the payment but the defendant had
CASE NUMBER: 6906 failed and refused to pay.
DATE: September 27, 1911 The plaintiffs, testified that on the order of one Ricardo
Flores, who represented himself to be agent of the

17 | P a g e
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defendant, he shipped the said goods to the defendants at parcels of land and send him the money in order that he
the Washington Cafe; that Flores later acknowledged the might pay his debts.
receipt of said goods and made various payments amounting
in all to P174. This letter contains no description of the land to be sold
On demand for payment of balance of the account Flores other than is indicated in the words "one of my parcels of
informed him that he did not have the necessary funds on land" ("uno de mis terrenos"). Acting upon this letter
hand, and that he would have to wait the return of his Nicolasa approached the defendant Pedro Rabot, and the
principal, the defendant, who was at that time visiting in the latter agreed to buy the parcel in question for the sum of
provinces. P500.

The plaintiffs were satisfied as to the credit of the Nicolasa admits having received this payment of P250 at
defendant and as to the authority of Flores to act as his the time stated; but there is no evidence that she sent any of
agent who was apparently in charge of the business and it to her brother. About one year later Gregorio came down
claiming to be the business manager of the defendant. to Alaminos and demanded that his sister should surrender
this piece of land to him, it being then in her possession. She
A written contract (for the hotel with a bar and restaurant refused upon some pretext.
business of the defendant) dated May 25, 1904, was
introduced in evidence to establish the relationship between Gregorio, in conjunction with others of his brothers and
the defendant and Flores. sisters, whose properties were also in the hands of Nicolasa,
instituted an action in the Court of First Instance for the
The defendant relies wholly on his contention that the purpose of recovering their land from her control. This action
foregoing facts are not sufficient to establish the fact that he was decided favorably to the plaintiffs upon August 12, 1913.
received the goods for which payment is demanded.
ISSUE: WON Flores was managing the business as agent? May 31, 1912, Nicolasa Jimenez executed and delivered to
Pedro Rabot a deed purporting to convey to him the parcel
RULING: of land which is the subject of this controversy.
YES, the evidence is sufficient to sustain a finding that
Flores was the agent of the defendant in the management of Pedro Rabot went into possession, and the property was
the bar of the Washington Cafe with authority to bind the found in his hands at the time when final judgment was
defendant, his principal, for the payment of the goods entered in favor of the plaintiffs in the action above
mentioned in the complaint. Lastly, from an examination of mentioned. It will thus be seen that Pedro Rabot acquired
the items of the account attached to the complaint, we are of possession under the deed from Nicolasa during the
opinion that Flores was acting within the scope of his pendency of the litigation in which she was defendant.
authority. ISSUE: WON the authority conferred on Nicolasa by the
letter of February 7, 1911, was sufficient to enable her to bind
It is a well settled rule that: One who clothes another her brother?
apparent authority as his agent, and holds him out to the RULING: YES, under Article 1713 of the Civil Code it requires
public as such, cannot be permitted to deny the authority of that the authority to alienate land shall be contained in an
such person to act as his agent, to the prejudice of innocent express mandate; while subsection 5 of section 335 of the
third parties dealing with such person in good faith and in Code of Civil Procedure says that the authority of the agent
the honest belief that he is what he appears to be. must be in writing and subscribed by the party to be
charged; as such we are of the opinion that the authority
JIMENEZ vs. RABOT expressed in the letter is a sufficient compliance with both
CASE NUMBER: G.R. No. L-12579 requirements and Nicolasa Jimenez acted within the scope of
DATE: July 27, 1918 her authority.
It is a rule that: where the owner of real property desires
FACTS: to confer upon an attorney in fact authority to sell the same,
It is admitted that the parcel of land in question, together it is necessary that the authority should be expressed in
with two other parcels in the same locality originally writing; but it is not necessary that the property to be sold
belonged to the plaintiff (Gregorio Jimenez), having been should be precisely described. It is sufficient if the authority is
assigned to him as one of the heirs in the division of the so expressed as to determine without doubt the limits of the
estate of his father. agents authority.

Gregorio was staying at Vigan, his property in Alaminos The purpose in giving a power of attorney is to substitute
was confided by him to the care of his elder sister Nicolasa the mind and hand of the agent for the mind and hand of
Jimenez. On 7 February 1911 of that year he wrote this sister the principal; and if the character and extent of the power is
a letter from Vigan in which he informed her that he was so far defined as to leave no doubt as to the limits within
pressed for money and requested her to sell one of his

18 | P a g e
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which the agent is authorized to act, and he acts within those special words of the contract a special and limited meaning
limits, the principal cannot question the validity of his act. to the exclusion of other general words of equal import.
4) The record contains no allegation on proof that Puno
LINAN VS. PUNO acted in bad faith or fraudulently in selling the land. It will be
CASE NUMBER: G.R. No. L-9608 presumed that he acted in good faith and in accordance with
DATE: August 7, 1915 his power as he understood it. That his interpretation of his
PONENTE: Johnson, J. power, as gathered from the contract (Exhibit A), is tenable
FACTS: cannot, we believe, be successfully denied. Neither have we
1) Linan was the owner of a certain parcel of subject land. He overlooked the fact in the brief of the appellants that the
executed a document, which conferred upon the Puno the plaintiff has not returned, nor offered to return, nor indicated
power, duties and obligations to administer the interest Linan a willingness to return, the purchase price. (Art. 1308 of the
including to purchase, sell, collect and pay, as well as sue Civil Code; Manikis vs. Blas, No. 7585.).
and be sued before any authority, appear before the courts
of justice and administrative officers in any proceeding or Disposition: In view of all the foregoing, we are of the
business concerning the good administration and opinion that the lower court committed the error complained
advancement of Linans said interests, and may, in necessary of in the second assignment, and, without discussing the
cases, appoint attorneys at law or attorneys in fact to other assignments of error, we are of the opinion, and so
represent him. hold, that the judgment of the lower court should be and is
2) The meaning, purport, and power conferred by this hereby revoked and that the appellants should be relieved
document constitute the very gist of the present action. from all liability under the complaint. Without any finding as
3) Defendant Puno, for the sum of P800, sold and delivered to costs, it is so ordered.
said parcel of land to the other defendants. The plaintiff
alleges that the said document (Exhibit A) did not confer KATIGBAK vs. TAI HING CO.
upon the defendant Puno the power to sell the land and CASE NUMBER: G.R. No. L-29917
prayed that the sale be set aside; that the land be returned to DATE: December 29, 1928
him, together with damages. PONENTE: Villareal, J.
ISSUE: Did the document (Exhibit A)give Puno authority to 1) Gabino Barreto Po Ejap, as attorney-in-fact of Po Tecsi,
sell the land? sold in favor of Jose M. Katigbak the subject land; after said
sale, Po Tecsi leased the property sold, from Gabino Barreto
RULING: Po Ejap, who administered it in the name of Jose M. Katigbak,
1) Contracts of agency as well as general powers of attorney at a rental of P1,500 per month, payable in advance, leaving
must be interpreted in accordance with the language used by unpaid the rents accrued from that date until his death which
the parties. The real intention of the parties is primarily to be occurred on November 26, 1926, having paid the accrued
determined from the language used. The intention is to be rents up to October 22, 1925;
gathered from the whole instrument. In case of doubt resort
must be had to the situation, surroundings and relations of 2) from November 26, 1926, the defendants Po Sun Suy and
the parties. The intention of the parties must be sustained Po Ching leased said land for the sum of P1,500 per month;
rather than defeated. If the contract be open to two on February 11, 1927, Po Sun Suy was appointed
constructions, one of which would uphold while the other administrator of the estate of his father Po Tecsi, and filed
would overthrow it, the former is to be chosen. The acts of with the court an inventory of said estate including the land
the parties will be presumed to have been done in in question; and on May 23, 1927, Jose M. Katigbak sold
conformity with and not contrary to the intent of the the same property to Po Sun Boo.
2) The lower court held that the "only power conferred was 3) Take note that all these transfers happened even though
the power to administer." Reading the contract we find it the power of attorney was not registered in the Registry of
says that the plaintiff "I confer ... power ... that ... he may deeds.
administer ... purchase, sell, collect and pay ... in any
proceeding or business concerning the good administration ISSUE: Can the Principal be bound by the acts of the agent
and advancement of my said interests." The words even though the power of attorney is not registered the
"administer, purchase, sell," etc., seem to be used Registry of deeds?
coordinately. Each has equal force with the other. There
seems to be no good reason for saying that Puno had RULING: YES
authority to administer and not to sell when "to sell" was as 1) Inasmuch as in accordance with section 39 of said Act No.
advantageous to the plaintiff in the administration of his 496, Every applicant receiving a certificate of title in
affairs as "to administer." pursuance of a decree of registration, and every subsequent
3) To hold that the power was "to administer" only when the purchaser of registered land who takes a certificate of title
power "to sell" was equally conferred would be to give to for value in good faith, shall hold the same free of all

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incumbrance except noted on said certificate, every field, and his whole effort was to forestall his competitor by
document which in any manner affects the registered land is being the first to find a purchaser and effect the sale.
ineffective unless it is recorded in the registry of deeds. But Danon found such a purchaser, but Brimo refused to sell
such inefficacy only refers to third persons who, in good the said factory without any justifiable motive or reason
faith, may have acquired some right to the registered land. therefor and without having previously notified Danon of its
desistance or variation in the price and terms of the sale.
2) While it is true that a power of attorney not recorded in RTC ruled in favor of Danon
the registry of deeds is ineffective in order than an agent or
CA affirmed RTCs ruling
attorney-in-fact may validly perform acts in the name of his
principal, and that any act performed by the agent by virtue
ISSUE: Was Danon as broker entitled to payment of his
of said with respect to the land is ineffective against a third
person who, in good faith, may have acquired a right thereto,
it does, however, bind the principal to acknowledge the acts
performed by his attorney-in-fact regarding said property
The broker must be the efficient agent or the procuring
(sec. 50, Act No. 496).
cause of sale. The means employed by him and his efforts
must result in the sale. He must find the purchaser, and the
3) In the present case, while it is true that the non-
sale must proceed from his efforts acting as broker.
registration of the power of attorney executed by Po Tecsi in
Under the proofs in this case, the most that can be said as to
favor of his brother Gabino Barreto Po Ejap prevents the sale
what the plaintiff had accomplished is, that he had found a
made by the latter of the litigated land in favor of Jose M.
person who might have bought the defendant's factory if the
Katigbak from being recorded in the registry of deeds, it is
defendant had not sold it to someone else. The evidence
not ineffective to compel Tecsi to acknowledge said sale.
does not show that the Santa Ana Oil Mill had definitely
decided to buy the property in question at the fixed price of
4) From the fact that said power and sale were not recorded
P1,200,000. The board of directors of said corporation had
in the registry of deeds, and from the omission of any
not resolved to purchase said property; and even if its
mention in the deed of sale of the mortgage lien in favor of
president could legally make the purchase without previous
Antonio M. H. Limjenco, and the lease of a part of said land
formal authorization of the board of directors, yet said
in favor of Uy Chia, the appellants deduce that said sale is
president does not pretend that he had definitely and
formally agreed to buy the factory in question on behalf of
his corporation at the price stated.
5) The record contains many indication that Po Tecsi was not
In all the cases, under all and varying forms of expression, the
unaware of said sale. His several letters complaining of the
fundamental and correct doctrine, is, that the duty assumed
pressing demands of his brother Gabino Barreto Po Ejap to
by the broker is to bring the minds of the buyer and seller to
send him the rents of the land, his promises to send them to
an agreement for a sale, and the price and terms on which it
him, and the remittance of the same were a tacit
is to be made, and until that is done his right to commissions
acknowledgment that he occupied the land in question no
does not accrue. It follows, as a necessary deduction from the
longer as an owner but only as lessee.
established rule, that a broker is never entitled to
commissions for unsuccessful efforts. The risk of a failure is
wholly his.
CASE NUMBER: G.R. No. 15823
The undertaking to procure a purchaser requires of the party
DATE: September 12, 1921
so undertaking, not simply to name or introduce a person
who may be willing to make any sort of contract in reference
to the property, but to produce a party capable, and who
Danon was employed byHolland American Oil Co thru its
ultimately becomes the purchaser.
manager, Antonio A. Brimo,to look for a purchaser of its
Where no time for the continuance of the contract is fixed by
factoryfor the sum of P1,200,000, payable in cash;
its terms either party is at liberty to terminate it at will ,
Brimopromised to pay the Danon, as compensation for his subject only to the ordinary requirements of good faith.
services, a commission of five per cent on the said sum of Usually the broker is entitled to a fair and reasonable
P1,200,000, if the sale was consummated, or if he should find opportunity to perform his obligation, subject of course to
a purchaser ready, able and willing to buy said factory for the the right of the seller to sell independently. But having been
said sum of P1,200,000; granted him, the right of the principal to terminate his
No definite period of time was fixed where Danon should authority is absolute and unrestricted, except only that he
effect the sale. It seems that another broker, Sellner, was also may not do it in bad faith, and as a mere device to escape
negotiating the sale, or trying to find a purchaser for the the payment of the broker's commissions.
same property and that the plaintiff was informed of the fact
either by Brimo himself or by someone else; at least, it is INFANTE vs. CUNANAN
probable that Dano was aware that he was not alone in the CASE NUMBER: G.R. No. L-5180

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DATE: August 31, 1953 subversion cannot be sanctioned and cannot serve as basis
for petitioner to escape payment of the commission agreed
FACTS: upon.
1. Consejo Infante owns of two parcels of land with a house
2. Infante contracted the services of Jose Cunanan and Juan CASE NUMBER: G.R. No. 94753
Mijares, to sell the property for a price of P30,000 subject to DATE: April 7, 1993.
the condition that the purchaser would assume the mortgage
existing thereon in the favor of the Rehabilitation Finance FACTS:
Corporation. The petitioner in this case is the owner of a parcel of land
3. Infante agreed to pay them a commission of 5% on the and building which was leased to the City of Manila and was
purchase price plus whatever overprice they may obtain for used by Claro M. Recto High school.
the property. Respondent here, Salvador Saligumba was the agent of the
4. Cunanan & Mijares found one Pio S. Noche who was petitioner who negotiated with the city for the sale of the
willing to buy the property under the terms agreed upon said property.
with Infante but when they introduced him to Infante the
latter informed them that she was no longer interested in Accordingly as such, he was given letters of authority that
selling the property and succeeded in making them sign a allowed him to negotiate the property at a price not less than
document stating therein that the written authority she had 425k
given them was already can-celled. He was to get a 5% commission from the said sale
5. However, Infantedealt directly with Pio S. Noche selling to His authority was extended several times, the last one
him the property for P31,000. lasting for 180 days from November 16, 1987, also it was at
6. Upon learning this transaction, Cunanan & Mijares this time that petitioner allowed the sale to be consummated
demanded from Infante the payment of their commission, for the amount of 410k.
but she refused and so they brought the present action. However, it was only on April 26, 1968, passed Ordinance
No. 6603, appropriating the sum of P410,816.00 for the
ISSUE: Were Cunanan and Mijares as brokers entitled to purchase of the property which private respondent was
payment of their commission? authorized to sell.
Said ordinance however, was signed by the City Mayor only
RULING: YES on May 17, 1968, one hundred eighty three (183) days after
1. After infante had given the written authority to the last letter of authorization.
respondents to sell her land for the sum of P30,000, On January 14, 1969, the parties signed the deed of sale of
respondents found a buyer in the person of one Pio S. Noche the subject property. The initial payment of P200,000.00
who was willing to buy the property under the terms agreed having been made, the purchase price was fully satisfied with
upon, and this matter was immediately brought to the a second payment on April 8, 1969 by a check in the amount
knowledge of Infante. of P210,816.00.
Respondent now asks that the 5% commission be paid to
2. Infante, perhaps by way of strategem, advised respondents him in the amount of P20,554.50.
that she was no longer interested in the deal and was able to But petitioners refused to pay up, arguing that:
prevail upon them to sign a document agreeing to the (1) Private respondent would be entitled to a commission
cancellation of the written authority. only if the sale was consummated and the price paid within
the period given in the respective letters of authority;
3. Infante had changed her mind even if respondents had (2) Private respondent was not the person responsible for
found a buyer who was willing to close the deal, is a matter the negotiation and consummation of the sale; instead it was
that would not give rise to a legal consequence if Filomeno E. Huelgas, the PTA president for 1967-1968 of the
respondents agree to call off the transaction in deference to Claro M. Recto High School.
the request of the petitioner. But the situation varies if one of Petitioner presented as its witnesses Filomeno Huelgas and
the parties takes advantage of the benevolence of the other the petitioner's President, Rufino Manotok.
and acts in a manner that would promote his own selfish Huelgas testified to the effect that after being inducted as
interest. This act is unfair as would amount to bad faith. This PTA president in August, 1967 he followed up the sale from
act cannot be sanctioned without according to the party the start with Councilor Magsalin until after it was approved
prejudiced the reward which is due him. This is the situation by the Mayor on May 17, 1968
in which respondents were placed by petitioner. He also said that he came to know Rufino Manotok only in
August, 1968, at which meeting the latter told him that he
4. Infante took advantage of the services rendered by would be given a "gratification" in the amount of P20,000.00
respondents, but believing that she could evade payment of if the sale was expedited.
their commission, she made use of a ruse by inducing them
to sign the deed of cancellation Exhibit 1. This act of
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Petitioners contention that as a broker, private Gregorio promised Teofilo of the 5% commission.
respondent's job is to bring together the parties to a Teofilo then introduced Oscar de Leon to Gregorio as a
transaction. prospective buyer.
Accordingly, if the broker does not succeed in bringing the Oscar submitted a written offer which was very much
minds of the purchaser and the vendor to an agreement with lower than the P2 per sq. m. price.
respect to the sale, he is not entitled to a commission. Vicente directed Gregorio to tell Oscar to raise his offer.
The Court ruled in favor of the respondent, with the CA After several conferences between the parties, Oscar
affirming the RTC decision. Hence the appeal raised his offer to P1.20 per sq. m. or P109k in total to which
Vicente agreed to said offer.
ISSUE: is the private respondent entitled to the 5% Upon Vicentes demand, Oscar issued a P1,000 check to
commission? -> Yes him as earnest money.
Vicente, then, advanced P300 to Gregorio.
RULING: Subsequently, Vicente asked for an additional P1,000 as
Court says: it is to be noted that the ordinance was earnest money, which Oscar promised to deliver to Vicente.
approved on April 26, 1968 when private respondent's The written agreement, Exhibit C, between the parties was
authorization was still in force. amended.
Moreover, the approval by the City Mayor came only three Oscar will vacate on or about September 15, 1956 his
days after the expiration of private respondent's authority. house and lot at Denver St., QC, which is part of the purchase
It is also worth emphasizing that from the records, the price later on, it was again amended to state that Oscar will
only party given a written authority by petitioner to vacate his house and lot on Dec.1, 1956 because his wife was
negotiate the sale from July 5, 1966 to May 14, 1968 was
pregnant at that time.
private respondent.
Oscar gave Gregorio P1,000 as a gift or propina for
When there is a close, proximate and causal connection
succeeding in persuading Vicente to sell his lot at P1.20 per
between the agent's efforts and labor and the principal's
sq. m.
sale of his property, the agent is entitled to a
Gregorio did not disclose said gift or propina to Vicente.
Oscar did not pay Vicente the additional P1,000 Vicente
Private respondent is the efficient procuring cause for
asked from him as earnest money.
without his efforts, the municipality would not have anything
The deed of sale was not executed since Oscar gave up on
to pass and the Mayor would not have anything to approve.
the negotiation when he did not receive his money from his
The SC agrees with respondent Court that the City of
brother in the US, which he communicated to Gregorio.
Manila ultimately became the purchaser of petitioner's
property mainly through the efforts of private respondent. Gregorio did not see Oscar for several weeks thus sensing
that something fishy might be going on.
Disposition: Decision of the RTC is affirmed. He went to Vicentes house where he read a portion of the
agreement to the effect that Vicente was still willing to pay
DOMINGO VS. DOMINGO him 5% commission, P5,450.
CASE NUMBER: GR No. L-30573 Gregorio went to the Register of Deeds of QC, where he
DATE: Oct. 29, 1971 discovered that a Deed of sale was executed by Amparo de
Leon, Oscars wife, over their house and lot in favor of
FACTS: Vicente. After discovering that Vicente sold his lot to Oscars
Vicente Domingo granted to Gregorio Domingo, a real wife, Gregorio demanded in writing the payment of his
estate broker, the exclusive agency to sell his Lot No. 883, commission.
Piedad Estate in a document. Gregorio also conferred with Oscar who told him that:
Vicente went to him and asked him to eliminate Gregorio
thelot has an area of 88,477 sq. m. in the transaction and that he would sell his property to him
According to the document, said lot must be sold for P2 for P104k.
per sq. m. In his reply, Vicente stated that Gregorio is not entitled to
Accordingly, Gregorio is entitled to 5% commission on the the 5% commission:
total price if the property is sold by Vicente or by anyone else Since he sold the property not to Gregorios buyer (Oscar
during the 30-day duration of the agency or by Vicente de Leon) but to another buyer (Amparo Diaz) who is the wife
within 3 months from the termination of the agency to a of Oscar de Leon.
purchaser to whom it was submitted by Gregorio during the CA said: the exclusive agency contract is genuine. The
effectivity of the agency with notice to Vicente. sale of the lot to Amparo de Leon is practically a sale to
This contract is in triplicate with the original and another Oscar.
copy being retained by Gregorio.
The last copy was given to Vicente. Subsequently, ISSUE: Does Gregorios act of accepting the gift or propina
Gregorio authorized Teofilo Purisima to look for a buyer from Oscar constitute fraud which would cause the forfeiture
without notifying Vicente. of his 5%commission? -> Yes

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RULING: Situations where the duty mandated by Art 1891 does not
Gregorio Domingo as the broker received a gift or propina apply:
from the prospective buyer Oscar de Leon, without the Agent or broker acted only as a middleman with the task
knowledge and consent of the principal, Vicente. of merely bringing together the vendor and vendee, who
His acceptance of said substantial monetary gift corrupted themselves thereafter will negotiate on the terms and
his duty to serve the interests only of his principal and conditions of the transaction.
undermined his loyalty to his principal, who gave him partial Agent or broker had informed the principal of the gift or
advance of P3000 on his commission. bonus or profit he received from the purchaser and his
As a consequence, instead of exerting his best to principal did not object
persuade his prospective buyer to purchase the property on
the most advantageous terms desired by his principal, Teofilo Purisimas entitlement to his share in the 5%
Gregorio Domingo, succeeded in persuading his principal to commission
accept the counter-offer of the prospective buyer to Teofilo can only recover from Gregorio his share of
purchase the property at P1.20 per sq. m. whatever amounts Gregorio Domingo received by virtue of
The duties and liabilities of a broker to his employer are the transaction as his sub-agency contract was with Gregorio
essentially those which an agent owes to his principal. Domingo alone and not with Vicente Domingo, who was not
even aware of such sub-agency.
An agent who takes a secret profit in the nature of a Since Gregorio already received a total of P1,300 from
bonus, gratuity or personal benefit from the vendee, Oscar and Vicente, P650 of which should be paid by Gregorio
without revealing the same to his principal, the vendor, is to Teofilo.
guilty of a breach of his loyalty to the principal and
forfeits his right to collect the commission from his Disposition: CA decision reversed.
principal, even if the principal does not suffer any injury by
reason of such breach of fidelity, or that he obtained better SIASAT vs. INTERMEDIATE APPELLATE COURT
results or that the agency is a gratuitous one, or that usage CASE NUMBER: G.R. No. L-67889
or custom allows it. DATE: October 10, 1985
This is to prevent the possibility of any wrong not to
remedy or repair an actual damage agent thereby assumes a FACTS:
position wholly inconsistent with that of being an agent for Teresita Nacianceno succeeded in convincing officials of
his principal, who has a right to treat him, insofar as his the Department of Education and Culture to purchase
commission is concerned, as if no agency had existed without public bidding, one million pesos worth of national
The fact that the principal may have been benefited by the flags for the use of public schools throughout the country.
valuable services of the said agent does not exculpate the Nancianceno was able to expedite the approval of the
agent who has only himself to blame for such a result by purchase.
reason of his treachery or perfidy. All the legal requirements had been complied with, except
As a necessary consequence of such breach of trust, the release of the purchase orders.
Gregorio Domingo must forfeit his right to the commission
She was informed by the Chief of the Budget Division of
and must return the part of the commission he received from
the Department that the purchase orders could not be
his principal.
released unless a formal offer to deliver the flags was first
Decisive Provisions Article 1891 and 1909 CC
submitted for approval
Article 1891 consists in changing the phrase "to pay" to
She contacted the owners of the United Flag Industry.
"to deliver", which latter term is more comprehensive than
Mr. Primitivo Siasat, owner and general manager of United
the former.
Flag Industry came up with a document which read:
Paragraph 2 of Article 1891 is a new addition designed to
Mrs. Tessie Nacianceno,
stress the highest loyalty that is required to an agent
This is to formalize our agreement for you to represent
condemning as void any stipulation exempting the agent
United Flag Industry to deal with any entity or organization,
from the duty and liability imposed on him in paragraph one
private or government in connection with the marketing of
our products-flags and all its accessories.
Article 1909 demands the utmost good faith, fidelity,
For your service, you will be entitled to a commission of
honesty, candor and fairness on the part of the agent, the
thirty (30%) percent.
real estate broker in this case, to his principal, the vendor.
Signed Mr. Primitive Siasat Owner and Gen. Manager
The law imposes upon the agent the absolute
The first delivery of 7,933 flags was made by the United
obligation to make a full disclosure or complete account
Flag Industry.
to his principal of all his transactions and other material
facts relevant to the agency, so much so that the law as Then, Nanciancenos authority to represent the United
amended does not countenance any stipulation Flag Industry was revoked by Primitivo Siasat on the
exempting the agent from such an obligation and ground that she was not authorized to sell 16, 666
considers such an exemption as void. Philippine flags to the Department.

23 | P a g e
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Nancianceno said that for the first delivery, United Flag negotiations leading to, and the execution of, a contract
Industry tendered the amount of P23,900.00 or five of sale of petitioners' merchandise with any entity or
percent (5%) of the amount received as payment of her organization.
commission. She refused to accept the said amount - There was nothing to prevent the petitioners from stating in
insisting on the 30% commission agreed upon. the contract of agency that the respondent could represent
She later learned that petitioner Siasat had already them only in the Visayas or to state that the Department of
received payment for the second delivery of 7,833 flags. Education and Culture and the Department of National
When she confronted the petitioners, they vehemently Defense, which alone would need a million pesos worth of
denied receipt of the payment, at the same time claimed flags, are outside the scope of the agency.
that the respondent had no participation whatsoever
with regard to the second delivery of flags and that the 2. NO, the revocation did not foreclose the respondents
agency had already been revoked. claime of 30% commission on the second transaction.
Nancianceno filed an action in the Court of First Instance of - The revocation of agency could not prevent the
Manila to recover the following commissions: 25%, as Nancianceno from earning her commission because the
balance on the first delivery and 30%, on the second delivery. contract of sale had been already perfected and partly
The trial court decided in favor of the respondent. executed.
The decision was affirmed in toto by the Intermediate - The principal cannot deprive his agent of the
Appellate Court. commission agreed upon by cancelling the agency and,
thereafter, dealing directly with the buyer.
1. Did Nancianceno have the capacity to represent United 3. NO, the award was not proper.
Flag in the transaction with the Department? - Moral damages: To support a judgment for damages, facts
2. Did the revocation of agency foreclose the respondent's which justify the inference of a lack or absence of good faith
claim of 30% commission on the second transaction? must be alleged and proven. There is no evidence on record
3. Was the award for attorneys fees and moral damages from which to conclude that the revocation of the agency
proper? was deliberately effected by the petitioners to avoid payment
of the respondent's commission.
RULING: - Attorneys fees: For one thing, the respondent did not come
1. YES, she had the capacity to represent United Flag In fact, to court with completely clean hands. For another, the
she was a general agent. petitioners apparently believed they could legally revoke the
agency in the manner they did and deal directly with
- There are several kinds of agents. An agent may be (1) education officials handling the purchase of Philippine flags.
universal: (2) general, or (3) special. A universal; agent is one They had reason to sincerely believe they did not have to pay
authorized to do all acts for his principal which can lawfully a commission for the second delivery of flags.
be delegated to an agent. So far as such a condition is The decision of the respondent court was MODIFIED. The
possible, such an agent may be said to have universal petitioners were ordered to pay the respondent the
her commission on the second delivery of flags with legal
interest from the date of the trial court's decision.
- A general agent is one authorized to do all acts
pertaining to a business of a certain kind or at a *The decision was modified to exclude the respondents right
particular place, or all acts pertaining to a business of a to collect 25% from the first delivery. The demand letter of
particular class or series. He has usually authority either the respondent's lawyer dated November 13, 1984 asked
expressly conferred in general terms or in effect made petitioner Siasat only for the 30% commission due from the
general by the usages, customs or nature of the business second delivery. The fact that the respondent demanded only
which he is authorized to transact. the commission on the second delivery without reference to
- An agent, therefore, who is empowered to transact all the alleged unpaid balance which was only slightly less than
the business of his principal of a particular kind or in a the amount claimed can only mean that the commission on
particular place, would, for this reason, be ordinarily the first delivery was already fully paid.
deemed a general agent.
- A special agent is one authorized to do some particular act GERMAN & CO. vs. DONALDSON, SIM, & CO.
or to act upon some particular occasion. lie actsusually in CASE NUMBER: G.R. No. L-439
accordance with specific instructions or under limitations DATE: November 11, 1901
necessarily implied from the nature of the act to be done.
- By the way general words were employed in the FACTS:
agreement, no restrictions were intended as to the A general power for suits was executed in Manila in favor
manner the agency was to be carried out or in the place of Fernando Kammerzell, a German national. It was
where it was to be executed. The power granted to the purported to be a substitution in favor of several attorneys of
respondent was so broad that it practically covers the
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powers conferred upon Kammerzell in an instrument
executed in Berlin, Germany by Max Leonard Tornow, the The judgment was affirmed.
sole owner of the business carried on in Berlin and Manila
under the name of Germann & Co. CABALLERO VS. DEIPARINE
Kammerzell, by virtue of the general power for suits, filed CASE NUMBER: L-39059
an action against Donaldson, Sim & Co. to recover a sum DATE: September 30, 1974
claimed to be due for freight under a charter party.
The Court of First Instance of Manila ruled in favor of FACTS:
Germann & Co. 1. This involves a dispute over a parcel of land and the acts
committed by the plaintiff lawyer which were not intended
ISSUE: by his client, the plaintiff.
1. Is the original power invalid under article 1280, No. 5, of 2. That during the lifetime of Bucao she with her second
the Civil Code, which provides that powers for suits must be husband acquired by joint purchase a parcel of land from the
contained in a public instrument? Talisay-Minglanilla Estate
3. That in 1932 Bucao and Tomas executed jointly a notarial
2. Can the original power be construed as conferring upon instrument identified as Annex "B" wherein they
Kammerzell authority to institute or defend suits? acknowledged that Antonio Caballero had contributed the
amount therein stated for the purchase of the property and
RULING: they sold 1/4 of the lot to him; when the title to said lot was
1. No, because no claim is made that the document was not issued, VicentaBucao and Tomas Raga held it in trust for their
executed with the formalities required by the German law in co-owner.
the case of such an instrument. The Court saw no reason why 4. That the portion mentioned as sold to plaintiff Antonio
the general principle that the formal validity of contracts is to Caballero remained unsegregated from Lot 2072 and the
be tested by the laws of the country where they are executed deed of sale, Annex "B" of the Complaint; nor had it been
should not apply. registered in the Register of Deeds; but he, had been in
occupation of a portion of this lot peacefully until the
2. Yes, because the instrument contains an explicit grant of a present.
power broad enough to authorize the bringing of the present 5. Bucaosold her undivided 1/2 of the above parcel to her co-
action, even assuming the applicability of the domestic law owner, Tomas Raga.
as claimed by the defendants. 6. Defendants Olimpio Raga, Adriano Raga, Magdalena Raga
- By this instrument Tornow constitutes Kammerzell his "true and Tomas Raga executed an instrument known as
and lawful attorney with full power to enter the firm name of "Declaration and confirmation of sale" without the
Germann & Co. in the Commercial Registry of the city of participation of plaintiffs Antonio Caballero and Concordia
Manila as a branch of the house of Germann & Co. in Berlin, Caballero, wherein they stated that they are the heirs of
it being the purpose of this power to invest said attorney will VicentaBucao of the 1/2 of the property to Tomas Raga, a
full legal powers and authorization to direct and administer certified true copy of which document is identified as Annex
in the city of Manila for us and in our name a branch of our "E" in the Complaint.
general commercial business of important and exportation, 7. Alma Deiparine acquired in good faith, with a just title and
for which purpose he may make contracts of lease and for a valuable consideration, the whole of Lot 2072 from
employ suitable assistants, as well as sign every kind of Tomas Raga as per deed of absolute sale identified as Annex
documents, accounts, and obligations connected with the "C" in the complaint which cancelled Transfer Certificate of
business which may be necessary, take charge in general of Title No. RT-2482 (T-17232) and the issuance in her name of
the receipt and delivery of merchandise connected with the Transfer Certificate of Title No. 9934 on April 1, 1963, a
business, sign all receipts for sums of money and collect certified true copy of which is identified as Annex "D" in the
them and exact their payment by legal means, and in general complaint;
execute all the acts and things necessary for the perfect 8. That defendant Alma Deiparine came to know only of
carrying on of the business committed to his charge in the Annex "B" when it was presented by plaintiff Antonio
same manner as we could do ourselves if we were present in Caballero at the trial of an ejectment case filed by the former
the same place. in the Municipal Court of Talisay.
- The Court did not consider the institution of the suit to 9. This case was decided in favor of Antonio Caballero but
collect a claim accruing in the ordinary course of the the decision was appealed by Alma Deiparine to the Court of
plaintiff's business, as properly belonging to the class of acts First Instance of Cebu which affirmed the decision for
described in article 1713 of the Civil Code as acts "of strict Caballero. The case is now in the Court of Appeals on appeal
ownership. by Alma Deiparine.
- It is necessarily a part of the mere administration of 10. Caballero and the defendant parties entered into a
such a business as that described in the instrument in compromise agreement. And the lawyer of Caballero
question and only incidentally, if at all, involving a power admitted to certain facts without the authority of his client,
to dispose of the title to property.
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ISSUE: Is the compromise valid, considering that the lawyer In this appeal certified to this Court by the Court of
admitted to facts which were not authorized by his client to Appeals as involving purely legal issues, we hold that a
make? No special power of attorney to mortgage real estate is limited
to such authority to mortgage and does not bind the grantor
RULING: personally to other obligations contracted by the grantee, in
1. A reading of the stipulation of facts convinced the court the absence of any ratification or other similar act that would
that it is a compromise agreement of the parties. The estop the grantor from questioning or disowning such other
stipulation concludes with this prayer: "WHEREFORE, it is obligations contracted by the grantee.
most respectfully prayed that the foregoing Stipulation of Plaintiff bank filed this action on February 10, 1961 against
Facts be approved and that a decision be handed down on defendant Maximo Sta. Maria and his six brothers and sisters,
the legal issues submitted on the basis of said Stipulation of defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin,
Facts." Apparently it is intended to terminate the case. Rosario and Leonila, all surnamed Sta. Maria, and the
2. Attorneys have authority to bind their clients in any case Associated Insurance & Surety Co., Inc. as surety, for the
by any agreement in relation thereto made in writing, and in collection of certain amounts representing unpaid balances
taking appeals, and in all matters of ordinary judicial on two agricultural sugar crop loans due allegedly from
procedure. But they cannot, without special authority, defendants. 1
compromise their client's litigation, or receive anything in The said sugar crop loans were obtained by defendant
discharge of a client's claim but the full amount in cash Maximo Sta. Maria from plaintiff bank under a special power
3. It may be true that during the pre-trial hearing held on of attorney, executed in his favor by his six brothers and
February 3, 1968, the parties concerned agreed to execute a sisters, defendants-appellants herein, to mortgage a 16-odd
stipulation of facts but it does not mean that the respective hectare parcel of land, jointly owned by all of them.
counsels of the contending parties can prepare a stipulation In addition, Valeriana Sta. Maria alone also executed in
of facts the contents of which is prejudicial to the interest of favor of her brother, Maximo, a special power of attorney to
their clients and sign it themselves without the intervention borrow money and mortgage any real estate owned by her.
of their clients. By virtue of the two above powers, Maximo Sta. Maria
4. Counsel for plaintiffs-appellants, Atty. Melecio C. Guba, applied for two separate crop loans, for the 1952-1953 and
agreed that defendant-appellee Alma Deiparine bought the 1953-1954 crop years, with plaintiff bank, one in the amount
land in question in good faith and for a valuable of P15,000.00, of which only the sum of P13,216.11 was
consideration; that during the lifetime of their mother actually extended by plaintiff, and the other in the amount of
VicentaBucao, she, with the conformity of her husband, sold P23,000.00, of which only the sum of P12,427.57 was actually
her undivided of the land in question to her co-owner and extended by plaintiff. As security for the two loans, Maximo
son, Tomas Raga. Sta. Maria executed in his own name in favor of plaintiff bank
5. All these adverse facts were made the basis of the two chattel mortgages on the standing crops, guaranteed by
appealed decision against the plaintiffs. No further evidence surety bonds for the full authorized amounts of the loans
was presented as there was no hearing. executed by the Associated Insurance & Surety Co., Inc. as
6. The attorney for the plaintiffs in making such admission surety with Maximo Sta. Maria as principal. The records of the
went beyond the scope of his authority as counsel and crop loan application further disclose that among the
practically gave away the plaintiffs' case. The admission does securities given by Maximo for the loans were a "2nd
not refer to a matter of judicial procedure related to the mortgage on 25.3023 Has. of sugarland, including sugar
enforcement of the remedy. It related to the very subject quota rights therein" including, the parcel of land jointly
matter of the cause of action, or to a matter on which owned by Maximo and his six brothers and sisters herein for
the client alone can make the admission binding on him. the 1952-1953 crop loan, with the notation that the bank
7. The broad implied or apparent powers of an attorney with already held a first mortgage on the same properties for the
respect to the conduct or control of litigation are, however, 1951-1952 crop loan of Maximo, and a 3rd mortgage on the
limited to matters which relate only to the procedure or same properties for the 1953-1954 crop loan.
remedy. The trial court rendered judgment in favor of plaintiff and
8. The employment of itself confers upon the attorney no against defendants: condemning the defendant Maximo R.
implied or power or authority over the subject matter of the Sta. Maria and his co-defendants Valeriana, Quintin, Rosario,
cause of action or defense; and, unless the attorney has Emeteria, Teofilo, and Leonila all surnamed Sta. Maria and
expressly been granted authority with respect thereto, the the Associated Insurance and Surety Company, Inc., jointly
power to deal with or surrender these matters is regarded as and severally, to pay the plaintiff, the Philippine National
remaining exclusively in the client. Bank, Del Carmen Branch the sum of P8,500.72 and
P14,299.79 .
PHILIPPINE NATIONAL BANK vs. STA. MARIA Defendant Maximo Sta. Maria and his surety, defendant
CASE NUMBER: G.R. No. L-24765 Associated Insurance & Surety Co., Inc. who did not resist the
DATE: August 29, 1969 action, did not appeal the judgment. This appeals been taken

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by his six brothers and sisters, defendants-appellants who Valeriana Sta. Maria's liability to plaintiff. Valeriana stands
reiterate in their brief their main contention in their answer to liable not merely on the mortgage of her share in the
the complaint that under this special power of attorney, they property, but also for the loans which Maximo had obtained
had not given their brother, Maximo, the authority to borrow from plaintiff bank, since she had expressly granted Maximo
money but only to mortgage the real estate jointly owned by the authority to incur such loans. The Court hold that
them; and that if they are liable at all, their liability should not Valeriana's liability for the loans secured by Maximo is not
go beyond the value of the property which they had joint and several or solidary as adjudged by the trial court,
authorized to be given as security for the loans obtained by but only joint, pursuant to the provisions of Article 1207 of
Maximo. In their answer, defendants-appellants had further the Civil Code that "the concurrence ... of two or more
contended that they did not benefit whatsoever from the debtors in one and the same obligation does not imply
loans, and that the plaintiff bank's only recourse against that ... each one of the (debtors) is bound to render entire
them is to foreclose on the property which they had compliance with the prestation. There is a solidary liability
authorized Maximo to mortgage. only when the obligation expressly so states, or when the law
or the nature of the obligation requires solidarity." It should
ISSUE: Whether the 6 brothers and sisters are liable for the be noted that in the additional special power of attorney,
loan obtained by Maximo. executed by Valeriana, she did not grant Maximo the
authority to bind her solidarity with him on any loans he
RULING: might secure thereunder.
The authority granted by defendants-appellants (except
Valeriana) unto their brother, Maximo, was merely to WHEREFORE, the judgment of the trial court against
mortgage the property jointly owned by them. They did not defendants-appellants Emeteria, Teofilo, Quintin, Rosario and
grant Maximo any authority to contract for any loans in their Leonila, all surnamed Sta. Maria is hereby reversed and set
names and behalf. Maximo alone, with Valeriana who aside, with costs in both instances against plaintiff. The
authorized him to borrow money, must answer for said loans judgment against defendant-appellant Valeriana Sta. Maria is
and the other defendants-appellants' only liability is that the modified in that her liability is held to be joint and not
real estate authorized by them to be mortgaged would be solidary.
subject to foreclosure and sale to respond for the obligations
contracted by Maximo. But they cannot be held personally BA FINANCE CORPORATION vs. COURT OF APPEALS
liable for the payment of such obligations, as erroneously DATE: July 3, 1992
held by the trial court.
It is not unusual in family and business circles that one On December 17, 1980, Renato Gaytano, doing business
would allow his property or an undivided share in real estate under the name Gebbs International, applied for and was
to be mortgaged by another as security, either as an granted a loan with respondent Traders Royal Bank in the
accommodation or for valuable consideration, but the grant amount of P60,000.00. As security for the payment of said
of such authority does not extend to assuming personal loan, the Gaytano spouses executed a deed of suretyship
liability, much less solidary liability, for any loan secured by whereby they agreed to pay jointly and severally to
the grantee in the absence of express authority so given by respondent bank the amount of the loan including interests,
the grantor. penalty and other bank charges.
In a letter dated December 5, 1980 addressed to
The outcome might be different if there had been an respondent bank, Philip Wong as credit administrator of BA
express ratification of the loans by defendants-appellants or Finance Corporation for and in behalf of the latter, undertook
if it had been shown that they had been benefited by the to guarantee the loan of the Gaytano spouses.
crop loans so as to put them in estoppel. Quintin Sta. Maria Partial payments were made on the loan leaving an unpaid
testified that he and his co-defendants executed the balance in the amount of P85,807.25. Since the Gaytano
authority to mortgage "to accommodate (my) brother Dr. spouses refused to pay their obligation, respondent bank
Maximo Sta. Maria ... and because he is my brother, I signed filed with the trial court complaint for sum of money against
it to accommodate him as security for whatever he may the Gaytano spouses and petitioner corporation as
apply as loan. Only for that land, we gave him as, security" alternative defendant.
and that "we brothers did not receive any centavo as The Gaytano spouses did not present evidence for their
benefit." The record further shows plaintiff bank itself defense. Petitioner corporation, on the other hand, raised the
admitted during the trial that defendants-appellants "did not defense of lack of authority of its credit administrator to bind
profit from the loan" and that they "did not receive any the corporation.
money (the loan proceeds) from (Maximo)." No estoppel, On December 12, 1988, the trial court: judgment in favor of
therefore, can be claimed by plaintiff as against defendants- plaintiff and against defendants/Gaytano spouses, ordering
appellants. the latter to jointly and severally pay the plaintiff the
following among others P85,807.25

27 | P a g e
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Not satisfied with the decision, respondent bank appealed vicinity, requiring extensive dredging by the Bureau of Public
with the Court of Appeals. On March 13, 1990, respondent Works in the mouth of said river.
appellate court rendered judgment modifying the decision of 4. This dredging operation requires the Director of Public
the trial court ordering the defendants Gaytano spouses and Works to find a place of deposit for the dirt and mud taken
alternative defendant BA Finance Corporation, jointly and from the places dredged.
severally, to pay the plaintiff the amount of P85,807.25 5. A contract was made between the DPW, representing the
Hence this petition was filed with the petitioner assigning Government of the Philippine Islands, and the four owners.
the following errors committed by respondent appellate DPW also required a bond to be supplied by the owners in
court: the amount of P150,000.00. This bond was made together
with the main contract; one of the signatures of the owner
ISSUE: Whether the plaintiff was guilty of estoppels despite was under the name of Casa Viuda de Tan Toco,
the fact that it never knew of such alledged letter-guaranty. purporting to be signed by M. de la Rama.
6. The dredging operation was conducted in substantial
RULING: compliance with the agreement; and the amount due from
Persons dealing with an assumed agent, whether the the owners was determined and demanded. No payment was
assumed agency be a general or special one are bound at made thus an action was instituted by the DPW to recover
their peril, if they would hold the principal liable, to ascertain the amount due to the Government under the said contract.
not only the fact of agency but also the nature and extent of a. Defense: government has not complied with the contract;
authority, and in case either is controverted, the burden of the material deposited on the land was not enough to raise
proof is upon them to establish it (Harry Keeler v. Rodriguez, the level of the land above water. Defendants asserted that
4 Phil. 19). they are not obliged to pay and subsequently sought to
that a power of attorney or authority of an agent should recover further damages.
not be inferred from the use of vague or general words. i. On part of Viuda de Tan Toco: the name Casa Viuda de
Guaranty is not presumed, it must be expressed and cannot Tan Toco signed under the contract of suretyship by M. de
be extended beyond its specified limits (Director v. Sing Juco, la Rama was signed without authority.
53 Phil. 205). b. Decision: Owners are obliged to pay and that Tan OngSze
We find that the said conclusion has no basis in fact. (widow of Tan Toco) and Viuda de Tan Toco is personally
Respondent bank had not shown any evidence aside from liable upon the contract of suretyship in case the principal
the testimony of the credit administrator that the disputed debtors should not satisfy their indebtedness.
transaction of guaranty was in fact entered into the official
records or files of petitioner corporation, which will show ISSUE: Whether or not TanOngSze, Viuda de Tan Toco is
notice or knowledge on the latter's part and its consequent liable upon the contract of suretyship?
ratification of the said transaction. In the absence of clear
proof, it would be unfair to hold petitioner corporation guilty RULING: No. Judgment in relation to Tan OngSze, Viuda de
of estoppel in allowing its credit administrator to act as Tan Toco was reversed.
though the latter had power to guarantee. The said contract purports to have been signed by Mariano
ACCORDINGLY, the petition is GRANTED and the assailed de la Rama, acting for this defendant under the power of
decision of the respondent appellate court dated March 13, attorney. But the Government did not exhibitevidence that
1990 is hereby REVERSED and SET ASIDE and another one is would prove that the defendant was authorized in creating
rendered dismissing the complaint for sum of money against an obligation in the nature of suretyship binding upon the
BA Finance Corporation. principal. The clauses noted in the documents exhibiting
powers of attorney, relate more specifically to the execution
DIRECTOR OF PUBLIC WORKS VS. SING JUCO, et al. of contracts relating to property. Neither of these powers
CASE NUMBER: 30181 officially confers upon Mariano de la Rama the power to bind
DATE: July 12, 1929 a principal by a contract of suretyship. Following the principle
PONENTE: Street, J. of ejusdem generis.
FACTS: Power to execute a contract such as a contract of
1. Involves a land located on Point Llorente at the mouth of suretyship or guaranty cannot be inferred from the general
Iloilo River, near Iloilo City. Mariano de la Rama, Gonzalo words contained in these powers. Article 1827 of the Civil
Mariano Tanboontien, Sing Juco, and Sing Bengco owned Code declared that guaranty should not be presumed; it
this land, in undivided shares. must be expressed and cannot be extended beyond its limit.
2. In 1920, the owners of the property conveyed it by way of By effect, a power of attorney to execute a contract of
mortgage to the PNB for the purpose of securing a credit in guaranty should not be inferred from vague or general
current account of not exceeding P170,000.00. words, especially when such words have their origin and
3. The subject land was subject to frequent flooding due to explanation in particular powers of a wholly different nature.
its low level. In 1921, the Government of the Philippine
Islands was planning extensive harbor improvements in this PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., vs.
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CASE NUMBER: G.R. No. L-23352
DATE: December 31, 1925 FACTS:
1. On January 12, 1981, Ederlinda M. Gallardo, married to
FACTS: Daniel Manzo, executed a special power of attorney in favor
1. Appellant, Doa Gabriela Andrea de Coster, executed to of Rufina S. Aquino authorizing him:
and in favor of her husband, Juan M.Poizat, a general power - To secure a loan from any institution for any amount or
of attorney. It authorized him to do "in her name, place and mortgage the property at Las Pinas, Rizal
stead, and making use of her rights and actions"; to loan or 2. On August 26, 1981, a Deed of Real Estate Mortgage was
borrow any amount of cash under the conditions he may executed by Rufino S. Aquino in favor of the Rural Bank of
deemed convenient, executing and signing private and Bombon(Camarines Sur), Inc. The property was secured for a
public document and making these transactions with or loan in the total sum of Three Hundred Fifty Thousand Pesos
without mortgage. only (P350,000.00), plus interest at the rate of fourteen (14%)
per annum.
2. Poizat obtained from the plaintiff a credit for the sum of 3. Spouses Gallardo filed an action against Rufino Aquino
10,000 Pounds Sterling to be drawn on the "Banco Espaol and Rural Bank. They alleged that Aquino mortgaged the
del Rio de la Plata. property to pay for his personal loans, from the same Bank.
- The trial court temporarily restrained the Rural Bank "from
3. To secure payment he executed a mortgage upon the real enforcing the real estate mortgage and from foreclosing it
property of his wife. either judicially or extrajudicially until further orders from the
4. Plaintiff then brought an action against the defendant for 4. Aquino, in his answer, alleged that the spouses allowed
failure to pay, to for lose the mortgage. The trial court's him to mortgage the property and use the use the proceeds
decision issued an order directing the sale of the mortgaged thereof to compensate for the pre-existing obligation of
property to satisfy the judgment. Consequently, the property P350,000 that the spouse owed him.
was sold to the plaintiff for P100,000.00 5. The trial court lifted the TRO against the bank and ordered
the foreclosure proceeding against the mortgaged property.
5. Appellant personally appeared and objected to the The Spouses Gallardo appealed to the Court of Appeals (CA).
confirmation of the sale. She alleged that the mortgage in The CA reversed the trial court and held that Rufino Aquino
question was illegally executed thus null and void, because had no authority to mortgage the land. Thus, this appeal
the agent of the defendant was not authorized to execute it. against the decision.
That the plaintiff was aware of such fact and that the
mortgage was executed to secure a loan, which was not ISSUE: Whether or not the Deed of Real Estate
made to this defendant or for her benefit but was made to Mortgageexecuted by Rufino S. Aquinoin favor of the Rural
him personally. Such objections were overruled, which Bank of Bombon (Cam. Sur), Inc. is with authority, thus valid?
prompted the appellant to appeal. NO, it was without authority.

ISSUE: Whether the act of defendant Poizant, in his capacity RULING:

as attorney in fact, binds her wife? Agent who signs a Deed of Mortgage in his name alone
does not validly bind the owner of the real estate
HELD: No. The mortgage is declared null and void ab initio. mortgaged.Aquino's act of signing the Deed of Real Estate
The sale is set aside Mortgage in his name alone as mortgagor, without any
RULING: indication that he was signing for and in behalf of the
Juan Poizat may have had the authority to borrow money property owner, Ederlinda Gallardo, bound himself alone in
and mortgage the real property of his wife, but the law his personal capacity as a debtor of the petitioner Bank and
specifically provided how and in what manner it must be not as the agent or attorney-in-fact of Gallardo.
done. The law requires that a power of attorney to mortgage The petitioner misapplied Art. 1883. The above provision of
or sell real property should be executed with all the the Civil Code relied upon by the petitioner Bank, is not
formalities required in a deed. In this case it was not applicable to the case at bar. Herein respondent Aquino
exercised. His personal signature, standing alone, does not acted purportedly as an agent of Gallardo, but actually acted
bind his principal. The deed in its face does not purport to be in his personal capacity. Involved herein are properties titled
the deed of the principal, made and signed by him in his in the name of respondent Gallardo against which the Bank
name and as his deed. The mortgage in question was held to proposes to foreclose the mortgage constituted by an agent
be executed by him and him only thus it is not binding to his (Aquino) acting in his personal capacity. Under these
wife. circumstances, we hold, that Gallardo's property is not liable
on the real estate mortgage.

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CASE NUMBER: G.R. Nos. L-18223-24 Lim Tiu filed an appeal, arguing that the following errors,
DATE: September 30, 1963 among others, were committed by the lower court
- Ruiz y Rementeria never had a notice that their business
FACTS: transactions with Domingo were by him as agent or
1. Defendant-appellant Damaso Perez has presented a employee of Lim Tiu
motion for new trial on the ground of newly discovered - They never notified Ruiz y Rementeria that Domingo could
evidence. sell their merchandise
2. Damaso Perez claims that he was not aware of the nature - No payments were accepted by them thru Domingo
of the power of attorney that Ramon Racelis used,
purportedly signed by him, to secure the loans for the ISSUE/RULING:
Republic Armored Car Service Corporation and the Republic a. W/N Ruiz y Rementeria purchased directly from Lim
Credit Corporation. Tiu?
3. He claims that Ramon Racelis only used a photastic copy
as proof of the Power of Attorney. He further presents the NO. They have no knowledge or information that the
original purporting the alleged true authority granted by the merchandise they were receiving from Domingo was the
movant. merchandise of Lim Tiu
- It is not expressly mentioned that this is the precise power Ruiz y Rementeria had been buying merchandise from
of attorney that Ramon Racelis Utilized to secure the loans Domingo for several months and paying for said
the collection of which is sought in these cases. merchandise by selling to Domingo certain goods in
exchange. Payments were likewise made to him
ISSUE: Whether or not the claim of the movant is tenable as Further, Ruiz y Rementerias books of account were kept by
to invalidate the security loans secured under the name of Domingo during the entire period they were doing business
movant? NO, it is not. Domingo even presented a bill in Ruiz y Rementerias favor
for every merchandise sold
RULING: Since Ruiz y Rementeria already paid to Domingo the
Assuming, for the sake of argument, that the said power of merchandise purchased, they are no longer liable to Lim Tiu
attorney incorporated in the motion for reconsideration was
the one used to obtain the loans. We find that the movant's b. W/N Domingo Tim Bun Liu acted in his own name in
contention has no merit. In accordance with the document, dealing with Ruiz y Rementeria?
Racelis was authorized to negotiate for a loan or various
loans .. with other being institution, financing corporation, YES. No notice was given by Domingo to Ruiz y Rementeria
insurance companies or investment corporations, in such that he was acting as Lim Tius agent in selling the
sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis, merchandise
may deem proper and convenient to my interests, ... and to What Domingo did was to purchase the all or nearly all the
execute any and all documents he deems requisite and merchandise from Lim Tiu then sell it to Ruiz y Rementeria
necessary in order to obtain such loans, always having in
Ruiz y Rementeria also believed that they were dealing
mind best interest; ... We hold that this general power
with Domingo without any knowledge that he is indeed an
attorney to secure loans from any banking institute was
agent of Lim Tiu
sufficient authority for Ramon Racelis to obtain the credits
Art. 1717 of the Civil Code: When an agent acts in his own
subject of the present suits.
name, the principal shall have no action against the persons
with whom the agent has contracted, nor the said persons
against the principal
DATE: March 2, 1910 Art. 246 of the Code of Commerce: When an agent
PONENTE: Johnson, J. transacts business in his own name, it shall not be necessary
FACTS: for him to state who is the principal, and he shall be directly
On May 26, June 5 and June 12, 1908, Lim Tiu sold to Ruiz liable, as if the business were for his own account, to the
y Rementeria certain merchandise totaling P1,043.57 persons with whom he transacts the same, said persons not
having any right of action against the principal, nor the latter
Said amount was due and unpaid therefore, an action was against the former, the liabilities of the principal and the
filed by Lim Tiu against Ruiz y Rementeria agent to each other always reserved

Lower Court ruling The judgment of the lower court is hereby affirmed.
- Ruiz y Rementeria purchased and paid the merchandise to
- Since they have already paid the merchandise, Ruiz y CASE NUMBER: GR No. L-39037
Rementeria is no longer liable DATE: Oct. 30, 1933
PONENTE: Villareal, J.

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FACTS: Murcia, Occidental Negros, P. I., by Miss Amparo A.
On Nov. 9, 1920, Paz Agudelo executed a special power of Garrucho, as evidenced by the public instrument dated
attorney (Exhibit K) in favor of her nephew, Mauro Garrucho November 25, 1925, executed before the notary public Mr.
In the said SPA, Garrucho is able to sell alienate and Genaro B. Benedicto, and do hereby further agree to the
mortgage in whatever manner or form he might deem amount of the lien thereon stated in the mortgage deed
convenient, all Agudelos properties in Murcia and Bacolod, executed by Miss Amparo A. Garrucho in favor of the
Negros Occidental Philippine National Bank.
On Dec. 22, 1920, Amparo Garrucho executed a special Pursuant to the said sale, the property and title was
power of attorney (Exhibit H) wherein she enabled her transferred in Pazs name
brother, Mauro, to sell, alienate, mortgage or otherwise CFI Ruling:
encumber all her properties in Murcia and Bago, Negros - Absolved Mauro from the complaint
Occidental - Paz Agudelo is ordered to pay PNB
However, nothing in the said SPAs expressly authorized
Mauro A. Garrucho to contract any loan nor to constitute a ISSUE: W/N the powers of attorney issued in Mauro
mortgage on the properties belonging to the respective Garruchos favor to mortgage their respective real estate,
principals, to secure his obligations authorized him to obtain loans secured by mortgage in the
On Dec. 23, 1920, a document (Exhibit G) was executed by properties in question?
Mauro in favor of Philippine National Bank (PNB) whereby he
constituted a mortgage on Lot No. 878 under Amparo A. RULING: NO
Garrucho, to secure the payment of credits, loans, Art. 1709 of the Civil Code states that by the contract of
commercial overdrafts, etc., not exceeding P6,000, together agency, one person binds himself to render some service, or
with interest thereon, which he might obtain from PNB, to do something for the account or at the request of another
issuing the corresponding promissory note to that effect
For the years 1921 and 1922, Mauro maintained a personal On the other hand, Art. 1717 states that when an agent
credit account with PNB acts in his own name, the principal shall have no right of
On Aug. 24, 1921, Mauro executed another document action against the persons with whom the agent has
(Exhibit J) in PNBs favor whereby he constituted a contracted, or such persons against the principal. In such
mortgage on Agudelos 2 lots, including the buildings and case, the agent is directly liable to the person with whom he
improvements to secure the payment of credits, loans and has contracted, as if the transaction were his own. Cases
commercial overdrafts which the said bank might furnish him involving things belonging to the principal are excepted xxx
to the amount of P16,000, payable on August 24, 1922,
executing the corresponding promissory note to that effect. There is nothing in the mortgage deeds to show that
Said mortgage contracts and promissory notes were Mauro A. Garrucho is attorney in fact of Amparo and Paz,
executed by Mauro in his own name and signed by him in his and that he obtained the loans mentioned in the aforesaid
personal capacity, authorizing PNB to take possession of the mortgage deeds and constituted said mortgages as security
mortgaged properties, by means of force if necessary, in case for the payment of said loans, for the account and at the
he failed to comply with any of the conditions stipulated request of said Amparo A. Garrucho and Paz Agudelo
Thereafter, PNB notified Mauro of his promissory note Mauros transactions with PNB appears to have been acted
within which to make a payment in his personal capacity
Eventually, Mauros commercial credit was closed starting
In the mortgage deeds, Mauro appears to have acted in his
May 22, 1922
personal capacity. In his capacity as mortgage debtor, he
PNB manager requested Mauro to liquidate his account
appointed the mortgage creditor PNB as his attorney in fact
amounting to P15,148.15, at the same time notifying him that
so that it might take actual and full possession of the
his promissory note for P16,000 giving as security for the
mortgaged properties by means of force in case of violation
commercial overdraft in question, had fallen due
of any of the conditions stipulated in the respective
As a result, another mortgage contract (Exhibit C) was mortgage contracts
executed by Mauro in PNBs favor over Agudelos lot in
Bacolod and Murcia As held in National Bank vs. Palma Gil, a mortgage on real
Mauro incurred credits and loans for a total of P21,000. A property of the principal not made and signed in the name of
new promissory note was executed for P21,000, thereby the principal is not valid as to the principal.
novating the first 2 notes
Sometime 1925, Amparo sold Lot 878 (which was under If Mauro A. Garrucho acted in his capacity as mere attorney
exhibit G) to Paz Agudelo (Exhibit M). in fact of Amparo A. Garrucho and of Paz Agudelo, he could
An affidavit (Exhibit N) was likewise signed by Paz not delegate his power, in view of the legal principle of
Agudelo which states: xxx do hereby agree and consent to "delegata potestas delegare non potest" (a delegated power
the transfer in my favor of lot No. 878 of the Cadastre of
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cannot be delegated), inasmuch as there is nothing in the 2. Moreover, from the rule established in Article 1717 of the
records to show that he has been expressly authorized to do Civil Code (when an agent acts in his own name, the
so principal shall have no right of action against the person with
whom the agent has contracted, cases involving things
Also, he executed the promissory notes evidencing the belonging to the principal are excepted):
aforesaid loans, under his own signature, without authority - According to this exception: the agent is bound to the
from his principal and, therefore, were not binding upon the principal although he does not assume the character of such
latter. There was no showing that the loan obtained was for agent and appears acting on his own name
his principal - Thus, in effect, the contract must be considered as entered
into between the principal and the third person; and,
What really happened was Mauro obtained such credit for consequently, if the obligations belong to the former, to him
himself in his personal capacity and secured the payment alone must also belong the rights arising from the contract.
thereof by mortgage constituted by him in his personal - The money with which the launch was bought having come
capacity, although on properties belonging to his principal from the Syjucos, the exception established in Article 1717 is
applicable to this case.
Thus, Mauro exceeded his scope of his authority and the 3. Concerning the casco No. 2584, Santiago himself admits it
principal is not liable for his acts was constructed by the Syjucos in the latter's ship-yard.
4. As to the automobile, there is sufficient evidence to show
In conclusion, when an agent negotiates a loan in his that its price was paid with the Syjucos money.
personal capacity and executes a promissory note under his 5. Concerning the casco No. 2545: (the RTC refrained from
own signature, without express authority from his principal, making any declaration about its ownership in view of the
giving as security therefor real estate belonging to the letter, fact that this casco had been leased and was sunk while in
also in his own name and not in the name and representation the lessee's hands before the complaint in this case was filed )
of the said principal, the obligation do constructed by him is
- The RTC should have made a pronouncement upon this
personal and does not bind his aforesaid principal.
- As it belonged to the Syjucos, and that the latter sold it
afterwards to Santiago- Santiagos ownership over it
absolves him from liability on it.
DATE: 12 Jan 1920
6. Concerning the rendition of accounts which the Syjucos
require of Santiago, Santiago is also absolved from this for it
appears that Santiago used to render accounts of his agency
1. Santiago was appointed by the plaintiffs (Syjucos for
after each transaction, to the Syjucos satisfaction.
brevity; Santiagos parents) as administrator of their property
and acted as such from 1902-1916.
2. The Syjucos allege that during his administration, Santiago
acquired the launch Malabon in his capacity as administrator
with their (Syjucos) money and for their benefit.
DATE: April 5, 1990
3. The RTC ruled in favor of the Syjucos and ordered Santiago
to return basically everything that the Syjucos asked for in FACTS:
the complaint. Medalla, as commission agent of Superior Shipping
4. The SC affirmed the RTC with the exception of casco No. Corporation (SSC), entered into a contract for hire of ship
2545 which was lawfully sold to Santiago. with the National Grains Authority (NGA), where sacks of rice
belonging to the latter would be transported from Occidental
ISSUE: Do the properties bought by Santiago in his own Mindoro to Manila. SSC then asked payments from NGA and
name, as an administrator, belong to him? (No; except the it requested that the payment be made to it and not to
casco 2545) Medalla. NGA replied that it could not grant its request
because the contract was entered into by NGA and Medalla
RULING: who did not disclose that he was acting as a mere agent of
1. Regarding the launch Malabon: though Santiago bought SSC. NGA paid Medalla. The SSC asked Medalla for the
it in his own name, such fact does not show that bought it for payment but the latter ignored the request.
himself and with his own money, as he claims.
- This transaction was within the agency which he had ISSUE: : Is NGA liable to SSC?
received from the Syjucos (the principal).
- The fact that he has acted in his own name may be only a RULING:
violation of the agency on his part. NGA is liable under Art 1883 of the Civil Code. Relevant
- The question is not in whose favor the document of sale of portion of the provision states, In such case the agent is the
the launch is executed nor in whose name same was one directly bound in favor of the person with whom he has
registered, but with whose money was said launch bought. contracted, as if the transaction were his own, except when
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the contract involves things belonging to the principal . to retain subject to the orders of the court in the two other
Consequently, when things belonging to the principal (in this cases. Hence, this appeal.
case, SSC) are dealt with, the agent is bound to the principal
although he does not assume the character of such agent ISSUE: Whether the defendant brought the merchandise in
and appears acting in his own name. Thus, in effect, the good faith.
contract must be considered as entered into between the
principal and the third person. RULING: Yes. Article 246 of the Code of Commerce states
AWAD vs. FILMA MAECANTILE CO. When the agent transacts business in his own name, it shall
CASE NUMBER: No. L-25950 not be necessary for him to state who is the principal and he
DATE: December 24, 1926 shall be directly liable, as if the business were for his own
account, to the persons with whom he transacts the same,
FACTS: said persons not having any right of action against the
Plaintiff, doing business in the Philippine Islands under the principal, nor the latter against the former, the liabilities of
name of E. Awad & Co., delivered certain merchandise with the principal and of the agent to each other always being
an invoice value of 11,140 to Chua Lioc, a merchant reserved.
operating under the name of Hang Chua Co. in Manila, and
sell it on commission basis. Chua Lioc, representing himself The plaintiff-appellant pointed out several circumstances
as the owner of the merchandise, sold it to Filma Mercantile which he believes indicate that the defendant-appellee was
(defendant) for 12,155.60. He owed the Philippine aware of the condition under which the merchandise was
Manufacturing Co. 3,480, which the defendant agreed to entrusted to the agent Chua Lioc and therefore did not
pay, and was also indebted to the defendant itself of the purchase the goods in good faith. But the court did not see
amount of 2,017.98. The total amount of the two debts, anything conclusive about the circumstances referred to and
5,497.98, was deducted from the purchase price, leaving a they are not sufficient to overcome the presumption of good
balance of 6,657.52 which the defendant promised to pay to faith.
Chua Lioc on or before October 9, 1924.
The merchandise purchased was delivered to the defendant,
who immediately offered it for sale. Three days later D. J.
Awad, plaintiffs representative in the Philippine Islands,
having ascertained that the goods entrusted to Chua Lioc
was being offered for sale by the defendant, obtained
authorization from Chua Lioc to collect 11,707 from the
defendant and informed the latter's treasurer of the said
transaction. On September 15, D. J. Awad, in behalf of E.
Awad & Co., wrote a letter to the defendant corporation
telling them that inasmuch the merchandise belonged to E.
Awad & Co., the purchase price should be paid to them, but
the defendant refused to comply in its reply letter.
On September 18, 1924, the Philippine Trust Company
brought an action against Chua Lioc for the recovery of the
sum of 1,036.36 and under a writ of attachment garnished
the balance due Chua Lioc from the defendant. On October
7, E. Awad also brought an action, against Chua Lioc for the
recovery of the sum of 11,140 (invoice value of the
merchandise) and also obtained a writ of attachment under
which notice of garnishment of the said aforesaid balance we
served upon the herein defendant.
The present action was filed on November 26, 1924 with the
plaintiff demanding payment of the same sum of 11,140 for
which action had already been brought against Chua Lioc.
The defendant averred, among others, that it brought the
merchandise in good faith and without any knowledge
whether of the person from whom or the condition under
which the said merchandise had been acquired by Chua Lioc
or Hang Chua Co. The trial court dismissed the case on the
ground that the plaintiff was only entitled to payment of the
sum of 6,657.52, but which sum the defendant had the right

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