Spouses Viloria

In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a travel
agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent,
Margaret Mager, advised the couple that they cannot travel by train because it was already fully booked;
that they must purchase plane tickets for Continental Airlines; that if they wont purchase plane tickets;
theyll never reach their destination in time. The couple believed Magers representations and so they
purchased two plane tickets worth $800.00.

Later however, the spouses found out that the train trip wasnt really fully booked and so they purchased
train tickets and went to their destination by train instead. Then they called up Mager to request for a
refund for the plane tickets. Mager referred the couple to Continental Airlines. As the couple were now
in the Philippines, they filed their request with Continental Airlines office in Ayala. The spouses Viloria
alleged that Mager misled them into believing that the only way to travel was by plane and so they were
fooled into buying expensive plane tickets.

Continental Airlines refused to refund the amount of the tickets and so the spouses sued the airline
company. In its defense, Continental Airlines claimed that the tickets sold to them by Mager were non-
refundable; that, if any, they were not bound by the misrepresentations of Mager because theres no
contract of agency existing between Continental Airlines and Mager.

The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the RTC.

ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager.

HELD: Yes. All the elements of agency are present, to wit:

there is consent, express or implied of the parties to establish the relationship;

the object is the execution of a juridical act in relation to a third person;

the agent acts as a representative and not for himself, and

the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it concluded an
agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter into
contracts of carriage with third persons on the airlines behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines
and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its
behalf. The fourth element is also present considering that Continental Airlines has not made any
allegation that Holiday Travel exceeded the authority that was granted to it.

Continental Airlines also never questioned the validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppel. Continental Airlines cannot be allowed to take an
altogether different position and deny that Holiday Travel is its agent without condoning or giving
imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses
Viloria, who relied on good faith on Continental Airlines acts in recognition of Holiday Travels authority.
Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an
innocent party due to its injurious reliance, the failure to apply it in this case would result in gross
travesty of justice.

..

MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L. LINSANGAN, respondent. G.R. No.
151319 November 22, 2004

FACTS:

Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial
Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under
Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject
to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured
Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred
to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed
to the original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and
typewritten receipts for these payments. Baluyot verbally advised Atty. Linsangan that Contract No.
28660 was cancelled for reasons the latter could not explain, and presented to him another proposal for
the purchase of an equivalent property. He refused the new proposal and insisted that Baluyot and
MMPCI honor their undertaking. For the alleged failure of MMPCI and Baluyot to conform to their
agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against the former. For
its part, MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the
contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an
independent contractor, and as such was not authorized to represent MMPCI or to use its name except
as to the extent expressly stated in the Agency Manager Agreement.

ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI.
RULING: NO. The acts of an agent beyond the scope of his authority do not bind the principal, unless he
ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own
unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify. No ratification
can be implied in the instant case. Atty. Linsangan failed to show that MMPCI had knowledge of the
arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to
Purchase signed by Atty. Linsangan and MMPCI's authorized officer. Likewise, this Court does not find
favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been
expressly conferred upon her; however, the same may have been derived impliedly by habit or custom
which may have been an accepted practice in their company in a long period of time." A perusal of the
records of the case fails to show any indication that there was such a habit or custom in MMPCI that
allows its agents to enter into agreements for lower prices of its interment spaces, nor to assume a
portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever
presented to this effect.

...

In 1994, Isabel Sugar Company, Inc. (ISCI) sold a parcel of land to Urban Bank, Inc. (UBI). The land was
sold for P240 million. As the land was occupied by unauthorized sub-tenants, ISCIs lawyer, Atty.
Magdaleno Pea had to negotiate with them for them to relocate. But the said occupants, knowing that
the land was already transferred to UBI, refused to recognize Pea. ISCI then communicated with UBI so
that the latter may authorize Pea to negotiate with the tenants. Pea had to barricade himself inside
the property to keep the tenants out who were forcing their way in especially so that the local cops are
now sympathetic to them. Pea then had a phone conversation with Teodoro Borlongan, president of
UBI, where Pea explained to him the situation. In said conversation, Pea asked authorization from
Borlongan to negotiate with the tenants. Pea also asked that he be paid 10% of the purchase price or
(P24 million) for his efforts. Borlongan agreed over the phone on the condition that Pea should be able
to settle with the tenants otherwise he forfeits said 10% fee. Pea also asked that said authorization be
put into writing.

The authorization was put into writing but no mention was made as regards the 10% fee, (in short, that
part was not written in the written authorization released by UBI). Pea was able to settle and relocate
the tenants. After everything was settled and the property is now formally under the possession of UBI,
Pea began sending demands to UBI for the latter to pay him the P24 million fee agreed upon, plus his
expenses for the relocation of the tenants and the hiring of security guards or an additional P3 million.
But UBI refused to make payment hence Pea filed a complaint for recovery against UBI.

The trial court ruled in favor of Pea as it found there indeed was a contract of agency created between
and UBI and that Pea is entitled to the 10% fee plus the expenses he incurred including litigation
expenses. In sum, the trial court awarded him P28 million.
The Court of Appeals however reversed the order of the trial court. It ruled that no agency was formed
but for his legal services, Pea is entitled to payment but applying the principle of unjust enrichment and
quantum meruit, Pea should only be paid P3 million.

ISSUE: Whether or not Atty. Magdaleno Pea is entitled to receive the P28 million.

HELD: No. The Supreme Court ruled that said amount is unconscionable. Pea is entitled to payment for
compensation for services rendered as agent of Urban Bank, but on the basis of the principles of unjust
enrichment and quantum meruit. In the first place, other than the self-serving testimony of Pea, there
was no other evidence presented to support his claim that Borlongan agreed to pay him that 10% over
the phone. The written authorization later issued merely confirms the power granted him to negotiate
with the tenants. The written authorization proved the existence of agency but not the existence of any
agreement as to how much Pea should be paid.

Absent any such agreement, the principle of quantum meruit should be applied. In this case, Pea is
entitled to receive what he merit for his services, or as much as he has earned. In dealing with the
tenants, Pea didnt have to perform any extraordinary acts or legal maneuvering. Hence, he is entitled
to receive P1.5 million for his legal services. He is also entitled to reimbursement for his expenses in
securing the property, to wit, P1.5 million for the security guards he had to hire and another P1.5 million
for settling and relocating the 23 tenants. Total of P4.5 million.

The Supreme Court emphasized that lawyering is not a business; it is a profession in which duty to public
service, not money, is the primary consideration.